Jazz Profits Up

Jazz Air LP reported net income for year-end 2007 was $150.7 million compared to $140.0 million recorded for year end 2006, an improvement of $10.6 million or 7.6 percent. At the same time, it reported Q4 profits were up 9.9 percent to $35.1 million in net income. Operating revenues for Q4 jumped 5.8 percent...

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Jazz Air LP reported net income for year-end 2007 was $150.7 million compared to $140.0 million recorded for year end 2006, an improvement of $10.6 million or 7.6 percent. At the same time, it reported Q4 profits were up 9.9 percent to $35.1 million in net income. Operating revenues for Q4 jumped 5.8 percent to $372.1 million, while operating income rose 10.1 percent to $36 million. For 2007, operating income increased 8.3 percent to nearly $1.5 billion, while operating income increased 6.5 percent to $153.2 million.
For the three-month period ended December 31, performance incentives from Air Canada reached $4.0 million or 1.8 percent of Jazz's Scheduled Flights Revenue, up 1.4 percent from the year-ago period. The airline cited a reduction in controllable flight cancellations resulting from technology and process improvements. Year-over-year for the fourth quarter, other revenue sources increased from $1.3 million to $1.4 million.
"The year 2007 marked many accomplishments and events for Jazz, including positive financial results, strong operational performance and a significant change in ownership structure," said Joseph Randell, president and chief executive officer. "I am very pleased with the improvements we made in all areas over 2006 - which in itself was also a good year for Jazz. We've met our target cash distribution levels for the year and are confident this trend will continue into 2008."
For the fourth quarter of 2007, operating revenue was $372.1 million, compared to $351.9 million in the same period of 2006, representing an increase of $20.3 million or 5.8 percent. The airline cited a 3.7 percent increase in the block hours flown and a $17.7 million increase in pass-through costs for the increase in operating revenue.
In line with the growth in revenue, total operating expenses increased from $319.1 million in the fourth quarter of 2006 to $336.1 million for the same period in 2007, an increase of $16.9 million or 5.3 percent. This translated into a unit cost increase on a CASM basis of 2.3 percent. Fuel saw the largest dollar increase which amounted to $14.2 million and was driven mostly as a result of jet fuel price increases. CASM, excluding fuel, was down 1.8 percent for the period, and when isolated to Controllable Cost, was down 3.2 percent. Part of the decrease in controllable CASM was a result of the impact of the lower US dollar exchange rate in aircraft rent offset by maintenance costs.
The Controllable Adjusted Actual Margin for the fourth quarter of 2007 was 14.15 percent, which is over the target of 14.09 percent by six basis points or approximately $0.1 million. This compares to the fourth quarter of 2006 margin of 13.0 percent which was approximately $2.4 million less than the target of 14.09 percent.
Overall during the fourth quarter, the CPA Scheduled Flights Revenue decreased on an Available Seat Mile (ASM) basis by 2.2 percent while Controllable Costs decreased by 3.2 percent. The airline cited fixed revenue fees being used over more ASMs and lower US exchange rates on aircraft leases for the reduction in revenue on an ASM basis. The decrease in Controllable Cost on an ASM basis resulted from lower aircraft rent unit costs owing to lower US exchange rates, offset by an increase in maintenance unit cost as the majority of new CRJs came off warranty, the heavy check cycle on the CRJ 705 fleet, heavy maintenance work on the Dash 8 fleet, and general price level increases on certain annual service contracts.
For the year end of 2007, operating revenue was $1,495.4 million, compared to $1,381.2 million in the same period of 2006, representing an increase of $114.2 million or 8.3 percent. The increase results from an increase in the number of aircraft operated by Jazz, an 8.3 percent increase in the block hours flown, as well as a $58.6 million increase in pass-through costs. For the year ended December 31, Jazz earned 78 percent of the incentives available under the CPA. Performance incentives from Air Canada amounted to $16.7 million or 1.8 percent of Jazz's Scheduled Flights Revenue as compared to $13.5 million or 1.6 percent for year end 2006. Year-over-year, other revenue sources increased from $7.0 million to $8.3 million.
In 2007, total operating expenses increased from $1,237.4 million in 2006 to $1,342.2 million, an increase of $104.8 million or 8.5 percent. This correlates with an 8.3 percent increase in block hours flown and an 8.6 percent increase in ASMs for the year. Correspondingly, the unit cost on a CASM basis was relatively consistent year-over-year. Fuel saw the largest dollar increase which amounted to $35.6 million as a result of the increased volume of flying, mostly with regional jet equipment, and the price increase experienced in jet fuel. CASM, excluding fuel, was down 1.2 percent and Controllable CASM was down 2.2 percent for the year.
The Controllable Adjusted Actual Margin for 2007 was 14.54 percent, which is over the target of 14.09 percent by 45 basis points or approximately $4.1 million. This compares to the year end 2006 margin of 14.77 percent, which was approximately $5.8 million better than the target of 14.09 percent.