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3. PROPERTY AND EQUIPMENT
2006
2005
Cost
Flight equipment $ 3,666 $ 3,029
Assets under capital leases (a) 1,813 1,758
Buildings and leasehold improvements 662 646
Ground and other equipment 122 118
6,263 5,551
Accumulated depreciation and amortization
Flight equipment 476 206
Assets under capital leases (a) 285 142
Buildings and leasehold improvements 95 53
Ground and other equipment 24 18
880 419
5,383 5,132
Purchase deposits, including capitalized interest (b) 563 319
Property and equipment at net book value (c) $ 5,946 $ 5,451
(a) Included in capital leases as at December 31, 2006 are 37 aircraft (2005 — 35) with a cost of $1,739 (2005
— $1,684) less accumulated depreciation of $265 (2005 — $130) for a net book value of $1,474 (2005 —
$1,554), computer equipment with a cost of $28 (2005 — $28) less accumulated depreciation of $16 (2005
— $9) for a net book value of $12 (2005 — $19) and facilities with a cost of $46 (2005 — $46) less
accumulated depreciation $4 (2005 — $3) for a net book value of $42 (2005 — $43).
(b) Includes $287 (2005 — $189) for Boeing B777/787 aircraft, $66 (2005 — $65) for Embraer aircraft, $175
(2005 — $25) for the aircraft interior refurbishment program and $35 (2005 — $40) for equipment
purchases and internal projects.
(c) Net book value of Property and equipment includes $1,137 (2005 — $1,224) consolidated for aircraft and
engine leasing entities, $111 (2005 — $109) consolidated for fuel facility corporations, and $199 (2005 —
$194) consolidated for Jazz; all of which are consolidated under AcG-15.
During 2006:
- The Corporation sold one of its buildings with a carrying value of $35, for proceeds of $40 resulting in a gain
on sale of $5.
- The Corporation recorded an impairment loss of $7 on one of its buildings being held for sale, which is to be
sold to an affiliate in early 2007, within non-operating expenses of the Air Canada Services segment.
During 2005, the Corporation recorded provisions of $17, including $13 for spare parts, to reflect the excess of
the carrying value over fair value.
As at December 31, 2006, flight equipment included 28 aircraft (2005 — 32), that are retired from active service
with a net carrying value of $5 (2005 — $10), which approximates fair value.
Interest capitalized during 2006 amounted to $61 (2005 - $14) with $33 at an interest rate of LIBOR plus 3.0%
and $28 at an interest rate of 8.05%.
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