Jazz reported net income of $C42.3 million for the third quarter, up 6.4 percent from the year-ago period at the same time it recorded operating revenue of $437.4 million, up 14 percent. The airline, which has a cpa with Air Canada earned $C4.1 million in operating incentives and finished the quarter with distributable cash of $C44.3 million, up 1.8 percent.
“I am very pleased with our results this quarter, especially in light of these difficult economic times,” said President and Chief Executive Officer Joseph Randell “The Jazz team’s delivery of excellent operational performance, and focus on cost control have contributed to record profit performance with an impressive $42.3 million in net income.”
The company cited one-time maintenance expenses as impacting the first half results this year, saying the problems have been addressed. It added that its de Havilland Dash 8s (CRJ 200s) remain in high demand as charter aircraft. “We remain focused on opportunities to diversify our business and are cautiously optimistic about our future,” concluded Randell.
For the third quarter of 2008, operating revenue was $C437.4 million, compared to $C383.8 million in the same period of 2007, representing an increase of $C53.7 million or 14.0 percent. The increase in operating revenue was primarily attributable to a $C45.5 million increase in pass-through costs under the Capacity Purchase Agreement (CPA) with Air Canada. For the three-month period ended September 30, 2008, performance incentives payable by Air Canada to Jazz under the CPA amounted to $C4.1 million or 1.7 percent of Jazz’s Scheduled Flights Revenue, as compared to $5.0 million or 2.1 percent for the same period in 2007. This translates to 73 percent of the incentives available under the CPA for the quarter versus a 91 percent attainment in 2007. Incentives earned in the third quarter of 2008 were lower primarily due to inclement weather which led to lower on-time performance than 2007. Quarter-over-quarter, other revenue (charter flights and other revenue sources) increased from $2.7 million to $4.1 million.
Total operating expenses increased from $C342.9 million in the third quarter of 2007 to $C392.1 million for the same period in 2008, an increase of $C49.2 million or 14.3 percent. Pass-through costs represented $C45.5 million or 92.5 percent of the total increase in operating costs, rising primarily as a result of the continuing rise in fuel prices. Controllable Costs (includes costs related to operations not covered under the CPA) represented $C3.7 million or 7.5 percent of the total increase in operating costs, rising primarily as a result of increased costs related to depreciation, salaries, wages and benefits and other expenses.
For the third quarter of 2008, EBITDA1 was $52.8 million compared to $47.4 million in the third quarter 2007, an increase of $5.4 million or 11.4 percent. Operating income of $45.4 million represented a $4.5 million or 10.9 percent increase from the same period last year.
Costs per Available Seat Mile, excluding fuel, for the three month period ended September 30, increased by 3.9 percent over the same period in 2007. Distributable cash was $C44.3 million up $C0.8 million or 1.8 percent from the third quarter of 2007.
The Controllable Adjusted Actual Margin established under the CPA for the third quarter of 2008 was 16.70 percent, which is greater than the CPA target of 14.09 percent by 261 basis points or the equivalent of approximately $C6.3 million. This compares to the third quarter of 2007 margin of 14.93 percent which was greater than the target of 14.09 percent by 84 basis points or the equivalent of approximately $C2.0 million.
In the third quarter of 2008, non-operating expense amounted to $C3.1 million, an increase of $C1.9 million from the third quarter 2007. The change is mainly attributable to increased net interest expense resulting from lower interest income, and a foreign exchange loss arising as a result of the reduction in value of the Canadian dollar relative to the US dollar.