Air Canada Reports March Traffic Results and Provides Updates for the First Quarter and Full Year 2014

For the month of March, Air Canada reported a system wide traffic growth of 1.4 per cent on a capacity increase of 3.6 per cent. Air Canada's system load factor was 81.7 per cent, versus 83.5 per cent in March 2013, a decrease of 1.8 percentage points. Air Canada reports traffic results on a system-wide basis, including Air Canada rouge^TM, which began operations on July 1, 2013, and regional airlines from which Air Canada purchases capacity.

"I am pleased to report solid traffic growth and a load factor of 81.7 per cent for the month of March," said Calin Rovinescu, President and Chief Executive Officer.  "For the month, traffic grew overall by 1.4 per cent led by the U.S. transborder market, and for the quarter traffic grew 2.9 per cent with increases in all markets Air Canada serves.

  During the first quarter, we continued to execute our priorities to build a sustainably profitable airline. Based on the ongoing positive results of our cost transformation and revenue enhancement initiatives, we now expect EBITDAR for the first quarter to be in line with last year's level for the same period. In addition, based on forward bookings, we expect a strong summer travel season ahead. I would like to thank our employees for their hard work and transporting our customers safely to their destinations despite the ongoing challenges of severe winter weather during the month and the quarter."

Updated Outlook

Further to the initial projections regarding the first quarter EBITDAR provided by Air Canada in its February 12, 2014 press release, Air Canada now expects its first quarter 2014 EBITDAR to be in line with last year's level.  The expected improvement in the first quarter 2014 EBITDAR (compared to the $15-$30 million shortfall to last year's level projected in the February 12, 2014 press release) is the result of both higher revenue and RASM performance, as well as a better CASM performance than originally projected.

For the first quarter of 2014, based on preliminary results, Air Canada reported system ASM capacity growth of 3.8 percent, compared to the first quarter of 2013, which was at the lower end of the range of the 3.5 to 4.5 percent increase projected in its February 12, 2014 press release.  Air Canada now projects full year 2014 ASM capacity growth of 6.5 to 8.0 percent when compared to the full year 2013 (as compared to 7 to 9 percent growth projected in its February 12, 2014 press release).  Domestic Canada ASM growth for 2014 is now projected at between 3.0 and 4.0 percent (as compared to 3.5 to 4.5 percent growth projected in Air Canada's February 12, 2014 press release).  The projected reduction in both annual system and domestic ASM growth is the result of various minor network adjustments.

In the first quarter of 2014, Air Canada now expects adjusted CASM to have decreased in the range of 2.0 to 2.5 percent when compared to the first quarter of 2013 (as opposed to the 1.0 to 2.0 percent decrease projected in its February 12, 2014 press release).  This projected improvement in adjusted CASM results from various additional cost reduction initiatives executed in the quarter designed to mitigate the impact of the Canadian dollar and severe weather conditions.  For the full year 2014, Air Canada continues to expect adjusted CASM to decrease 2.5 to 3.5 percent when compared to the full year 2013.

Air Canada's outlook assumes Canadian GDP growth of 2.0 to 3.0 per cent for 2014. Air Canada's outlook also assumes that the Canadian dollar will trade, on average at $1.10 per U.S. dollar in the first quarter of 2014 and $1.11 per U.S. dollar for the full year 2014 and that the price of jet fuel will average 95 cents per litre for the first quarter of 2014 and 91 cents per litre for the full year 2014.

All financial figures reported with respect to the first quarter of 2014 are preliminary estimates only, have not been reviewed by Air Canada's auditors and are subject to change as Air Canada's first quarter 2014 financial results are finalized.  The outlook and preliminary estimates provided in this press release constitute forward-looking statements within the meaning of applicable securities laws, are based on a number of assumptions and are subject to a number of risks and uncertainties.  Please see section below entitled 'Caution regarding Forward Looking Information.'

About Air Canada

Air Canada is Canada's largest domestic and international airline serving more than 180 destinations on five continents.  Canada's flag carrier is among the 20 largest airlines in the world and in 2013 served more than 35 million customers.  Air Canada provides scheduled passenger service directly to 60 Canadian cities, 49 destinations in the United States and 72 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air Canada is a founding member of Star Alliance, the world's most comprehensive air transportation network serving 1,269 destinations in 193 countries.  Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax that ranked Air Canada in a worldwide survey of more than 18 million airline passengers as Best Airline in North America in 2013 for the fourth consecutive year.  For more information, please visit: www.aircanada.com.

CAUTION REGARDING FORWARD-LOOKING INFORMATION

This press release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable.  These statements may involve, but are not limited to, comments relating to preliminary results, guidance, strategies, expectations, planned operations or future actions.  Forward-looking statements are identified by the use of terms and phrases such as "preliminary", "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions.

Forward-looking statements, by their nature, are based on assumptions, including those described herein and are subject to important risks and uncertainties.  Forward-looking statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business.  Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including without limitation, industry, market, credit and economic conditions, the ability to reduce operating costs and secure financing, energy prices, currency exchange and interest rates, competition, employee and labour relations, pension issues, war, terrorist acts, epidemic diseases, environmental factors (including weather systems and other natural phenomena and factors arising from man-made sources), insurance issues and costs, changes in demand due to the seasonal nature of the business, supply issues, changes in laws, regulatory developments or proceedings, pending and future litigation and actions by third parties as well as the factors identified throughout this press release and those identified in section 18 "Risk Factors" of Air Canada's 2013 MD&A dated February 12, 2014.  The forward-looking statements contained in this press release represent Air Canada's expectations as of the date of this press release (or as of the date they are otherwise stated to be made), and are subject to change after such date.  However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

SOURCE Air Canada

Contacts: 
Isabelle Arthur (Montréal)  514 422-5788
Peter Fitzpatrick (Toronto)  416 263-5576
Angela Mah (Vancouver)  604 270-5741