Calin Rovinescu - November 12, 2010

Well, with all that research Nick did, I think he covers half my speech. Any questions? I'll follow the miniskirt rule: long enough to cover the essentials, but short enough to keep your attention. I'll try to get through this in half an hour and convince you that Toronto has enormous opportunities if we play our cards correctly. Air Canada is the 14th or 15th largest airline in the world based on traffic, out of almost a thousand airlines. We've grown to this size even though Canada is only 36th in population. Each day we operate more than 1,300 flights, with 26,000 employees on five continents and nearly $11 billion in annual revenue. 31 to 32 million people walk through our aircraft doors each year. Toronto is our biggest hub: over 650 flights daily from Pearson, 50,000 customers passing through, 11,500 employees in Toronto with a payroll of about $1 billion. This past summer we hired over 500 people in Toronto despite the recession. In my 18 months, we faced volcanoes, hurricanes, earthquakes, and an underwear bomber. Most challenging was the severe recession, which reduced our business by up to 30% in key markets. But we worked through it. Air Canada was named Skytrax best airline in North America. In 2010, our stock price almost tripled. We reported operating income of $327 million in Q3, up nearly 400%. Passenger revenue increased $780 million year-to-date, cargo up 34%, traffic up 8.5% with 22% growth in the Pacific. We doubled liquidity to over $2.2 billion. Our success came from hard work by 26,000 people and partnerships with unions, Aeroplan, Jazz, and others. We identified key priorities: a cost transformation program targeting $530 million in sustainable improvements by 2011; we're on track with $300 million achieved this year. On customer service, we play to our strengths, emphasizing our premium product and safety. We're changing the culture to be more welcoming and entrepreneurial. We're building on our position as a leading international carrier. Through the Star Alliance, we connect to nearly 1,200 airports. This year we added flights to Copenhagen, Brussels, Barcelona, Athens, Geneva, and will start service to Haneda. We increased capacity to Asia dramatically; Pacific traffic is up 22%. We deploy over $2 billion in aircraft to Asia routes. I believe Toronto can become a global hub. Pearson is located in the heart of one of the most populous regions of North America; 25% of Canada's population is within 160 km. It's within a one-day drive for 150 million people, over 40% of the US population. Flight times to Tokyo and Beijing are shorter than from New York or Chicago, and Toronto has better weather and less congestion. We've had success marketing to US connecting passengers, doubling that traffic. Our A++ alliance with Lufthansa and United allows metal neutrality. A similar venture in the Canada-US market should be transformative. But to capitalize on these advantages, Canada needs a supportive policy framework. The airline industry is a powerful engine of economic growth. We need to amend outdated policies: airport rent, fuel excise taxes, security charges, etc. Canada's aviation sector faces more taxes than tobacco or alcohol. Airport rent alone costs nearly $300 million annually, something no other developed country does. If Air Canada were a US airline, we'd save about $1 billion. We also need competitive infrastructure, like a high-speed airport link in Toronto. We need balanced trade agreements. We support fair open skies with reciprocal demand, but not demolishing our hubs for state-supported carriers. We acknowledge the efforts of the GTAA; Pearson was named most improved airport. Our message is that Toronto has huge opportunities with the right policies. Air Canada is developing the mindset, culture, and capabilities to win globally. Thank you very much.