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First Quarter 2002. May 2, 2002. Note to Internet viewers: Please use “NOTES PAGES” view to access all notes and text. Agenda - 1st Quarter. Highlights Economic Environment Operating Statistics Competitive Environment Revenue Highlights Income Highlights. 1st Quarter Results.

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first quarter 2002

First Quarter 2002

May 2, 2002

Note to Internet viewers: Please use “NOTES PAGES” view to access all notes and text.

agenda 1st quarter
Agenda - 1st Quarter
  • Highlights
  • Economic Environment
  • Operating Statistics
  • Competitive Environment
  • Revenue Highlights
  • Income Highlights
1st quarter results
1st Quarter Results
  • Recovery accelerated in quarter
  • Traffic almost back to 2001 levels
  • Decisive capacity reduction and cuts to cost more than offset ongoing impact of September 11 and weak economy
  • Aircraft flying hours reduced by 12%
  • Unit revenues rose while unit costs continue to decline
  • Operating results improve by $133 million
  • Best operating results among major international carriers in NA.
1st quarter results1
1st Quarter Results
  • System load factor up 4.7 PP in quarter
  • Tango load factor 83.4%
  • Manpower level down 5,859 or 14.8% from 1st quarter 2001
  • Employee productivity up 11%
  • Fuel prices still positive
  • Net unit costs down 4.0%
  • Quarter end cash of $0.9 billion
recent development zip
Recent Development - Zip
  • Air Canada’s low cost carrier, Zip, will launch this summer in Western Canada, with six 737-200s
  • Replaces mainline flying and regional (Jazz)
  • Will eventually grow to twenty 737-200s all transferred from existing mainline fleet
  • Zip unit costs will be lower than Tango, already 25% below mainline
  • Labour costs will be significantly below mainline and Tango
  • Designed to significantly improve contribution on intra west routes
q1 stats at a glance
Q1 Stats At a Glance

Mainline Operations

business fares canada continues to strengthen international also up
Business Fares - Canada continues to strengthen - International also up

(Air Fare* Changes)

% Change Y-O-Y

*Average BSP fare

leisure fares domestic again up 20 data for chart becoming misleading
Leisure Fares - Domestic again up 20% - Data for chart becoming misleading

(Air Fare* Changes)

% Change Y-O-Y

*Average BSP fare

q1 capacity reductions in all markets but u s
Q1 Capacity Reductions In All Markets But U.S.

(Y-O-Y Changes in Mainline Capacity)

% Change in ASMs

traffic recovering in all markets
Traffic Recovering In All Markets

(Y-O-Y Changes in Mainline Traffic)

% Change in RPMs

domestic yields up 4 2 while improving u s yields still way down due to leisure expansion
Domestic Yields Up 4.2% - While improving, U.S. yields still way down due to leisure expansion

(Y-O-Y Changes in Mainline Passenger Yield)

% Change in Yield

canada other int l rasms way up us still weak but much improved
Canada & Other Int’l RASMs Way Up - US still weak but much improved

(Y-O-Y Changes in Mainline Revenue per ASM)

% Change in RASM

strong yield and traffic drive canada revenue up u s improving
Strong Yield And Traffic Drive Canada Revenue Up - U.S. improving

(Y-O-Y Changes in Mainline Passenger Revenue)

% Change in Revenue

canada rasm powers ahead on load factor and yield
Canada RASM Powers Ahead On Load Factor And Yield

Load Factor- Canada(Y-O-Y Changes in Load Factor)

Capacity - Canada(Y-O-Y Changes in Capacity)

PP Change in Load Factor

% Change in ASMs

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

RASM - Canada(Y-O-Y Changes in Revenue per ASM)

Yield - Canada(Y-O-Y Changes in Passenger Yield)

% Change in Yield

% Change in RASM

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

us rasm down on yield as leisure demand expands
US RASM Down On Yield As Leisure Demand Expands

Load Factor- Transborder (Y-O-Y Changes in Load Factor)

Capacity - Transborder(Y-O-Y Changes in Capacity)

PP Change in Load Factor

% Change in ASMs

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Yield - Transborder

(Y-O-Y Changes in Passenger Yield)

RASM - Transborder (Y-O-Y Changes in Revenue per ASM)

% Change in Yield

% Change in RASM

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

other int l rasm up on capacity reduction higher load factor
Other Int’l RASM Up On Capacity Reduction & Higher Load Factor

Load Factor- Other Int’l (Y-O-Y Changes in Load Factor)

Capacity - Other Int’l(Y-O-Y Changes in Capacity)

PP Change in Load Factor

% Change in ASMs

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Yield - Other Int’l

(Y-O-Y Changes in Passenger Yield)

RASM - Other Int’l (Y-O-Y Changes in Revenue per ASM)

% Change in Yield

% Change in RASM

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

higher load factor drives higher rasm
Higher Load Factor Drives Higher RASM

Load Factor- Total (Y-O-Y Changes in Load Factor)

Capacity - Total(Y-O-Y Changes in Capacity)

PP Change in Load Factor

% Change in ASMs

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Yield - Total

(Y-O-Y Changes in Passenger Yield)

RASM - Total (Y-O-Y Changes in Revenue per ASM)

% Change in Yield

% Change in RASM

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

major improvements in rasm casm
Major Improvements In RASM & CASM

USA RASM

Canada RASM

% Change Y-O-Y

% Change Y-O-Y

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Total System

Other Int’l RASM

% Change Y-O-Y

% Change Y-O-Y

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

Q1’01 Q2’01 J&A’01 Q4’01 Q1’02

air canada recorded the best traffic results of any major n a carrier
Air Canada Recorded The Best Traffic Results Of Any Major N.A. Carrier

(Y-O-Y Traffic Change)

% Change in RPMs

average salary up 7 6 employee levels down 15 0
Average Salary Up 7.6%, Employee Levels Down 15.0%

(Y-O-Y Change - Total Salaries * & Employees*)

% Change Y-O-Y

*Mainline

fuel price sharply down
Fuel: Price sharply down

(Air Canada - Mainline)

mainline cost per litre down 22 while productivity up 4 8
Mainline Cost Per Litre Down 22% While Productivity Up 4.8%

(Fuel Productivity* & Unit Cost*)

% Change Y-O-Y

*Mainline

all expense categories down except aircraft rent and user fees

A/C

MTCE

USER

FEES

ASMs

RPMs

COMM.

DEP.

FOOD

& BAR

A/C

RENT

OTHER

All Expense Categories Down except Aircraft Rent And User Fees

% Change Y-O-Y

Q1 2002/2001

*Mainline

q1 net unit cost down 4 0 in spite of 5 3 capacity cut
Q1 Net Unit Cost Down 4.0% In Spite Of 5.3% Capacity Cut

(Cost Per ASM*)

% Change Y-O-Y

*Mainline, adjusted for non-ASM revenue

net casm improves 4 0 improves 6 excluding 2001 s w reversals
Net CASM* Improves 4.0% - Improves 6% excluding 2001 S&W reversals

$40 mln S&W Q1’01 accrual reversals

Net unit cost adjusted for reversals

Fuel

Effect of

non-ASM revenue

Unit cost decrease net of non-ASM revenue

Other

Labour

*Mainline

air canada has lowest net unit cost of n a majors
Air Canada Has Lowest Net Unit Cost Of N.A. Majors

(Unit Cost* per ASM* - Q1‘02 & Q1‘01)

U.S. cents

*Adjusted for non-ASM producing activity.

balance sheet liquidity is good
Balance Sheet - Liquidity is Good

(Air Canada - Consolidated)

NM - not meaningful