MONTREAL, April 2 /CNW Telbec/ - Air Canada reported today an operating
loss before reorganization and restructuring items of $684 million for the
year ended December 31, 2003 compared to an operating loss before non-
recurring labour expenses of $192 million for the year ended December 31,
2002.
On April 1, 2003, Air Canada obtained an order from the Ontario Superior
Court of Justice providing creditor protection under CCAA. Air Canada also
made a concurrent petition under Section 304 of the U.S. Bankruptcy Code.
As a result of restructuring under CCAA, the Corporation has and will
continue to record a number of significant reorganization and restructuring
items directly associated with the restructuring. These "reorganization and
restructuring items" represent revenues, expenses, gains and losses, and
provisions for losses that can be directly associated with the reorganization
and restructuring of the business under CCAA, and do not relate to the normal
operating expenses of the airline. For the year 2003, these mainly non-cash
reorganization and restructuring items amounted to $1,050 million.
Including these reorganization and restructuring items, the net loss was
$1,867 million compared to a net loss of $828 million in 2002. In 2002, an
income tax valuation allowance was recorded to reduce the value of the
Mainline carrier's future income tax asset by its full carrying value of
$400 million. This allowance had no impact on Air Canada's cash position or
operating results.
As at December 31, 2003, the Corporation's cash and cash equivalents
amounted to $670 million. At December 31, 2003, CDN$840 million was available
from the US$700 million debtor-in-possession (DIP) financing facility from GE
Canada Finance Holding Company. In January 2004, CDN$300 million of funds were
drawn from this facility.
As at April 1, 2004, the Corporation's combined cash balance, measured on
the basis of cash in its Canadian and United States bank accounts, amounted to
an estimated $910 million remaining before taking into account the amounts
available under the DIP facility.
"Our restructuring has become more challenging as a result of record high
fuel prices, increased domestic capacity by our low cost competitors and the
geopolitical issues faced by the airline industry as a whole", said Robert
Milton, President and Chief Executive Officer. "However, our 2004 revenues are
tracking in line with what we projected in our business plan last October.
Furthermore, we are seeing year over year unit cost declines in the range
of 14%. Our cash balances are healthy. We have made major progress on most key
aspects of our restructuring, including a significant fleet, debt and lease
restructuring, major reductions in supplier arrangements and changes to our
fare structures and distribution channels. We are well positioned to carry on
business effectively while seeking alternative equity arrangements in light of
today's announcement by Trinity Time Investment Limited that it is not seeking
extension of its Investment Agreement beyond April 30, 2004. We trust that our
unions and other stakeholders will recognize the urgency of resolving the
remaining obstacles to our exit from CCAA, particularly since the arrangements
with GECAS and Deutsche Bank also expire at the end of April, unless extended
by agreement.
"The past year has been particularly difficult for Air Canada's
employees. I thank them for their hard work and dedication in taking care of
our customers whose continued support has been heartening. It remains business
as usual for our customers as it has throughout our restructuring," concluded
Mr. Milton.
Air Canada's 2003 Management's Discussion & Analysis and Audited
Consolidated Financial Statements & Notes will be available on Air Canada's
website www.aircanada.com and will also be available at SEDAR.com . A copy may
also be obtained on request by contacting Air Canada Shareholder Relations at
(514) 422-5787 or 1-800-282-7427.