Air Canada Q2 net income $139 million
EBITDAR (earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent) amounted to $456 million compared to EBITDAR of $385 million in the second quarter of 2013. On a GAAP basis, Air Canada reported net income of $223 million or $0.75 per diluted share in the second quarter of 2014 compared to a net loss of $23 million or $0.09 per diluted share in the second quarter of 2013.
Air Canada's second quarter 2014 EBITDAR and GAAP net income results included favourable tax-related provision adjustments of $41 million. These provisions are excluded from Air Canada's adjusted (net income and CASM) results.
System passenger revenues amounted to $2,965 million, an increase of $208 million or 7.5 percent from the second quarter of 2013, on a 9.9 percent growth in traffic as yield declined 2.1 percent year-over-year. Average stage length, on a system-basis, increased 2.5 percent from the same quarter of 2013 and had the effect of reducing yield by 1.5 percentage points.
Passenger revenue per available seat mile (PRASM) decreased 0.8 percent from the same quarter in 2013 on the lower yield as passenger load factor improved 1.1 percentage points. In the second quarter of 2014, system premium cabin revenues increased $14 million or 2.4 percent on yield growth of 3.6 percent partly offset by a traffic decline of 1.2 percent.
Operating expenses amounted to $3,060 million, an increase of $177 million or 6 percent from the second quarter of 2013 on an 8.5 percent increase in capacity. Included in Other operating expenses in the second quarter of 2014 were favourable tax-related provision adjustments of $41 million.
The unfavourable impact of a weaker Canadian dollar on foreign currency denominated operating expenses (mainly U.S. dollars), when compared to same quarter in 2013, increased operating expenses by $110 million. This unfavourable currency impact on operating expenses was partially offset by a favourable currency impact on passenger revenues of $70 million.
Air Canada's adjusted cost per available seat mile (adjusted CASM(1)), which excludes fuel expense, the cost of ground packages at Air Canada VacationsTM and unusual items, decreased 4.7 percent compared to the second quarter of 2013.
The 4.7 percent reduction in adjusted CASM surpassed the adjusted CASM decrease of 3.5 to 4.5 percent projected in Air Canada's news release dated May 15, 2014, largely the result of ASM capacity coming at the top end of the expected range and a slight improvement in the value of the Canadian dollar versus what Air Canada assumed in its May 15, 2014 projections.
In the second quarter of 2014, Air Canada recorded operating income of $245 million compared to operating income of $174 million in the second quarter of 2013, an improvement of $71 million. Air Canada's second quarter 2014 operating income results included favourable tax-related provision adjustments of $41 million. ■