TORONTO, ON / ACCESSWIRE / May 10, 2024 / Canada Jetlines Operations Ltd. (Cboe CA:CJET) ("Canada Jetlines" or the "Company"), one of Canada's leading leisure airlines, today reported financial results for the first quarter ended March 31, 2024. All financial figures are in Canadian dollars and in accordance with IFRS as presented in the annual consolidated financial statements.
Q1 2024 Three-Month Period Financial Results:
Operating revenues of $11.5 million, representing a sequential increase of $6.4 compared to Q1 2023.
Flying hours of 1802 as compared to 571 hours in Q1 2023, an increase of 215%.
Growth in number of aircrafts from 2 during Q4, 2023 to 3 in the current quarter.
Adjusted EBITDAR* of $(4.2) million, an increase of $2.2 million compared to Q1 2023.
A net loss of $(6.4) million, an increase of $2.7 million compared to Q1 2023.
Eddy Doyle, CEO and President of Canada Jetlines commented, "This quarter, we are pleased to announce that Canada Jetlines has achieved significant milestones in expanding our operations and enhancing our fleet to meet the growing demand for leisure air travel. With our fifth and sixth aircraft being delivered in the second quarter of 2024, new strategic wet lease agreements, and the upcoming launch of our new Toronto to Miami route in June 2024, we are well positioned to offer Canadians exceptional vacation options and travel experiences."
Total operating revenue for the first quarter 2024 was $11.5 million compared to $5.1 million in the same period of the prior year, representing an increase of $6.4 million. The increase is comprised of flight revenue and subservice ACMI (Aircraft, Crew, Maintenance, and Insurance) and charter revenue. The Company also operated three aircraft in Q1 2024 compared to two aircraft in the Q1 2023.
Total operating expenses for Q1 2024 were $17.1 million as compared to $8.2 million in the same period of the prior year, an increase of 109.9%. This increase was primarily due to the increase in operational activity with the Company's larger fleet.
The loss and comprehensive loss were higher for Q1 2024 compared to the same period of the prior year as a result of the Company operating an additional aircraft during the current period and therefore had increased fixed and variable costs which were not offset by increased revenue from flight operations.
Total assets increased by 77.5% to $50,344,626 at the end of Q1 2024, from $28,366,094 as of March 31, 2023. This increase is mainly due to the increase in deposits made for operations, property and equipment additions, as well as an increase in right-of-use assets consisting of three aircraft leases, office leases, maintenance reserve provision, and aircraft return maintenance provision.
Total liabilities increased by 64.6% to $54,891,617 at the end of Q1 2024, from $33,351,536 as of March 31, 2023. The increase was made up of the liabilities associated with lease liabilities for the three aircraft, office leases, maintenance reserve provision, and aircraft return maintenance provision. The increase is also attributable to an increase in deferred revenue, and an increase in accounts payable and accrued liabilities, explained by the timing of payments and invoices received at the end of the period.
*Adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) IS referred to in this news release. Such measure is a non-GAAP financial measures, non-GAAP ratios, or supplementary financial measures, are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. Refer to the "Non-GAAP Financial Measures" section of this news release for descriptions of these measures, and for a reconciliation of Canada Jetlines non-GAAP measures used in this news release to the most comparable GAAP financial measure.
Summary of Quarterly Results
Q1
March 31, 2024
Q4
December 31, 2023
Q3
September 30, 2023
Q2
June 30, 2023
Revenues
$
11,498,074
$
9,876,898
$
13,398,728
$
8,808,521
Net Income (Loss) and Comprehensive Income / (Loss)
$
(6,355,149
)
$
(7,057,489
)
$
120,976
$
(940,007
)
Income / (Loss) per share
$
(0.04
)
$
(0.09
)
$
0.00
$
(0.01
)
Total Assets
$
50,344,626
$
50,218,049
$
45,247,736
$
27,860,429
Total Liabilities
$
54,891,617
$
55,925,115
$
50,982,110
$
33,753,436
Liquidity
The Company ended the quarter with $5.3 million in current assets, an increase of $0.2 million compared to Q1 2023. The increase is primarily attributable to increase in receivables due to an increase in operational activity.
Current liabilities increased $8.3 million from Q1 2023 to $20.2 million at the end of the current quarter, mainly due to increased operational activity and growth in the aircraft fleet.
To increase its working capital, the Company has closed a non-convertible term Loan Agreement for a $2,000,000 loan (the "Loan"). The terms of the Loan include:
the Loan was advanced in a single tranche of $2,000,000 on May 10, 2024;
the Loan bears interest at the rate of 1.00% per annum and has a maturity date of June 21, 2024;
principal and interest amounts are payable in four equal weekly installments commencing May 31, 2024;
no shares are issuable in connection with the Loan;
the Borrower shall pay the document closing costs of the lender; and
the Loan is unsecured.
The lender (Square Financial Investment Corporation) ("Lender") is a wholly owned holding company for Reg Christian, a director of the Company and travel industry veteran. The Company intends to use the net proceeds of the Loan for general corporate and working capital purposes.
The Lender is an affiliate of a director of the Company (Reg Christian). The Lender's participation in the Loan is considered a related party transaction within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). As the transaction is a non-convertible loan, the formal valuation requirements of MI 61-101 are not applicable to the transaction. The transaction is exempt from the minority shareholder approval and information circular requirements of MI 61-101 pursuant to section 5.7(1)(a) of MI 61-101, as neither the fair market value of the consideration to be issued under the transaction nor the consideration to be paid by the insiders will exceed 25% of the Company's market capitalization, and section 5.7(1)(f) of MI 61-101, as the Loan represents a loan from a related party on reasonable commercial terms that are not less advantageous to the Company than if the Loan were obtained from a person dealing at arm's length and the Loan is not convertible or repayable in securities. The Company will not file a material change report related to this financing more than 21 days before the expected closing of the Loan as required by MI 61-101 since the details of the participation by the related parties of the Company were not settled until just prior to closing and the Company wished to close on an expedited basis for sound business reasons. The securities that will be acquired by the related parties will be acquired pursuant to an exemption from the prospectus requirement in section 2.24 of National Instrument 45-106.
In connection with the Loan, Reg Christian has been appointed Executive Vice President of the Company.
Even with the proceeds of the Loan, based on the Company's working capital position, the Company will need to raise additional capital during the current quarter to continue operations and to support its business plan. Canada Jetlines is seeking additional capital in the form of debt, convertible debt or equity in order to further invest in the business and facilitate the continued growth of the fleet, including the acquisition of additional leased aircraft, as well as additional working capital.
This news release should be read in conjunction with Canada Jetlines' Annual Audited Financial Statements and Management's Discussion and Analysis for the period ended March 31, 2024 available on SEDAR+ at sedarplus.ca.
Conference Call
The Company announced today the cancellation of its previously scheduled Q1 2024 conference call and webcast, set for Monday, May 13, 2024 at 1PM EST.
"Following the successful conclusion of our year-end activities a few weeks ago and the positive trajectory of our operations, we have decided to forgo this quarter's earnings call to focus on executing our strategic initiatives and delivering strong results for our shareholders as discussed last quarter," stated Percy Gyara, Canada Jetlines' CFO. "Please disregard any previous information regarding the call. We apologize for any confusion and remain committed to transparent and effective communication with the investment community. We encourage interested parties to reach out to our Investor Relations team for any questions or inquiries."
Non-GAAP Financial Measures
Below is a description of certain non-GAAP financial measures including adjusted EBITDAR used by Canada Jetlines to provide readers with additional information on its financial and operating performance. Such measures are not recognized measures for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities and should not be considered a substitute for or superior to GAAP results. These non-GAAP financial measures are provided as supplemental information to the financial information presented in this press release that is calculated and presented in accordance with GAAP and these non-GAAP financial measures are presented because management believes that they supplement or enhance management's, analysts' and investors' overall understanding of the Company's underlying financial performance and trends and facilitate comparisons among current, past and future periods.
Because the non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related GAAP financial measures presented in the press release and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in the method of calculation and in the items being adjusted. We encourage investors to review our financial statements and other filings with applicable Canadian Securities Regulators in their entirety and not to rely on any single financial measure.
The information below provides an explanation of certain adjustments reflected in the non-GAAP financial measures and shows a reconciliation of non-GAAP financial measures reported in this press release (other than forward-looking non-GAAP financial measures) to the most directly comparable GAAP financial measures. Within the financial tables presented, certain columns and rows may not add due to the use of rounded numbers. Per unit amounts presented are calculated from the underlying amounts.
EBITDA, Adjusted EBITDA and Adjusted EBITDAR
EBITDA (earnings before interest, taxes, depreciation and amortization) is commonly used in the airline industry and is used by Canada Jetlines as a means to assess operating results before interest, taxes, depreciation and amortization as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets. In calculating adjusted EBITDA, Canada Jetlines excludes share based compensation as this may distort the analysis of certain business trends and render comparative analysis across periods or to other airlines less meaningful. In calculating adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and rent expense), Canada Jetlines excludes aircraft rent as this provides for a comparative analysis across periods or to other airlines that does not consider whether the airline leases or owns its aircraft.
About Canada Jetlines
Canada Jetlines Operations Ltd. (Cboe CA: CJET), trading as "Canada Jetlines," is a Canadian leisure airline committed to providing an exciting travel experience to its passengers. With a growing network of destinations, Canada Jetlines is dedicated to connecting Canadians with some of the world's most captivating and sought-after locations.
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" concerning anticipated developments and events that may occur in the future. Forward-looking information contained in this news release includes but is not limited to the Company's status as a leading leisure airline, the number of aircraft it intends to operate, the destinations of intended flights, the Company's growth strategy, the expansion of operations and fleet enhancement to meet the growing demand for leisure air travel, new strategic wet lease agreements, the upcoming launch of our new Toronto to Miami route in June 2024, offering Canadians exceptional vacation options and travel experiences, the use of proceeds of the Loan and the repayment of the loan.
In certain cases, forward-looking information can be identified by the use of words such as "plans", "expects" "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information contained in this news release is based on certain factors and assumptions regarding, among other things, the receipt of financing to continue airline operations, the accuracy, reliability and success of Jetlines' business model; the continued compliance with the terms of governmental approvals; Jetlines concluding definitive agreements for additional aircraft; the success of operations by Jetlines the legislative and regulatory environments of the jurisdictions where Jetlines will carry on business or have operations; the impact of competition and the competitive response to Jetlines' business strategy; and the availability of aircraft. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include risks related to, the ability to obtain financing at acceptable terms, the impact of general economic conditions, domestic and international airline industry conditions, the failure of the Company to conclude definitive agreements to acquire additional aircraft, supply chain disruptions causing delays in expected timelines, the impact of the global uncertainty created by any resurgence of COVID-19, future relations with shareholders, volatility of fuel prices, increases in operating costs, terrorism, pandemics, natural disasters, currency fluctuations, interest rates, risks specific to the airline industry, the ability of management to implement Jetlines' operational strategy, the ability to attract qualified management and staff, labour disputes, regulatory risks, including risks relating to the acquisition of (or compliance with) the necessary licenses from regulatory agencies, and the additional risks identified in the "Risk Factors" section of the Company's reports and filings with applicable Canadian securities regulators. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this news release. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update any forward-looking information.
