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77
AER LINGUS GROUP PLC - ANNUAL REPORT 2008
19 Provisions for liabilities and charges
Business
repositioning
(a)
Aircraft
maintenance
(b)
Maintenance
contracts
(c)
Other
(d)
Total
€’000 €’000 €’000 €’000 €’000
At 1 January 2008 8,646 57,369 8,263 16,715 90,993
Provided during the year 129,207 18,777 - 1,034 149,018
Written back during the year - (4,497) (8,716) (2,001) (15,214)
Finance charge on discounted provisions - - 453 - 453
Utilised during the year (9,887) (20,579) - (1,570) (32,036)
Reclassifications 1,532 - - (1,532) -
Translations adjustment 525 - 64 589
At 31 December 2008 129,498 51,595 - 12,710 193,803
Analysed as current liabilities
31 December 2008 129,498 27,501 - 205 157,204
31 December 2007 8,646 10,479 8,263 3,189 30,577
Analysed as non-current liabilities
31 December 2008 - 24,094 - 12,505 36,599
31 December 2007 - 46,890 - 13,526 60,416
Total provision – end of the year
31 December 2008 129,498 51,595 - 12,710 193,803
31 December 2007 8,646 57,369 8,263 16,715 90,993
(a) Business repositioning
A provision for business repositioning costs is recognised when a constructive obligation exists. The amount of the provision is
based on the terms of business repositioning measures, including employee severance and early retirement measures which
have been communicated to employees. They represent the Directors’ best estimate of the cost of these measures, having
regard to the current status of negotiations. This provision is expected to be materially utilised within the coming year.
(b) Aircraft maintenance
A provision is made on monthly basis for maintenance of aircraft held under operating leases. The provision will be utilised
as the major airframe and engine overhauls take place. Aircraft maintenance also includes provision for the costs to meet the
contractual return conditions on these aircraft. When aircraft leases expire and the aircraft pass into group ownership, the
related maintenance provisions are transferred to fixed assets. If the aircraft does not pass into group ownership upon expiry
of the lease, any remaining balance is released or charged to the income statement.
(c) Maintenance contracts
A provision was made for the onerous element of contracts entered into as part of the disposal of the Group’s maintenance
activities and was fully utilised during the year.
(d) Other
Other provisions relate mainly to the frequent flyer programme and ‘post cessation of employment’ obligations to current and
former employees. The frequent flyer provision is utilised when points are used or when they become non-redeemable. Points
are redeemable for a maximum of 3 years. The ‘post cessation of employment’ obligations provision is accrued or utilised based
on actuarial valuations carried out on an annual basis.