Air Canada 2008 Annual Report Download - page 105

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Consolidated Financial Statements and Notes
105
3. PROPERTY AND EQUIPMENT
2008 2007
Cost
Flight equipment, including spare engines (a) $ 6,235 $ 5,433
Assets under capital leases (b) 1,940 1,899
Buildings, including leasehold improvements 643 603
Ground and other equipment 160 136
8,978 8,071
Accumulated depreciation and amortization
Flight equipment, including spare engines (a) 1,101 685
Assets under capital leases (b) 562 438
Buildings, including leasehold improvements 148 118
Ground and other equipment 49 35
1,860 1,276
7,118 6,795
Purchase deposits, including capitalized interest (c) 351 1,124
Propertyandequipmentatnetbookvalue(d) $ 7,469 $ 7,919
(a) Included in flight equipment as at December 31, 2008 are rotable parts, including spare engines with a cost of $798
(2007 - $560) less accumulated depreciation of $279 (2007 - $121) for a net book value of $519 (2007 - $439).
Also included in flight equipment are 30 aircraft and 1 engine (2007 – 33 aircraft) which are leased to Jazz (Note 14)
and third parties with a cost of $942 (2007 - $753) less accumulated depreciation of $289 (2007 - $152) for a net
book value of $653 (2007 - $601).
(b) Included in capital leases as at December 31, 2008 are 41 aircraft (2007 - 39) with a cost of $1,874 (2007 - $1,825)
less accumulated depreciation of $554 (2007 - $409) for a net book value of $1,320 (2007 - $1,416), computer
equipment with a cost of nil (2007 - $28) less accumulated depreciation of nil (2007 - $23) for a net book value of
nil (2007 - $5) and facilities with a cost of $66 (2007 - $46) less accumulated depreciation $8 (2007 - $6) for a net
book value of $58 (2007 - $40).
(c) Includes $259 (2007 - $867) for Boeing B777/787 aircraft, nil (2007 - $26) for Empresa Brasileira de Aeronautica
S.A. (“Embraer”) aircraft, $58 (2007 - $205) for the aircraft interior refurbishment program and $34 (2007 - $26)
for equipment purchases and internal projects. Refer to Note 6(l) relating to the financing of Boeing pre-delivery
payments.
(d) Net book value of Property and equipment includes $836 (2007 - $973) consolidated for aircraft leasing entities and
$150 (2007 - $123) consolidated for fuel facility corporations; both of which are consolidated under AcG-15.
As at December 31, 2008, flight equipment included 21 aircraft (2007 - 12), that are retired from active service with a net
carrying value of $33 (2007 - $5).
Interest and fees capitalized during 2008 amounted to $37 (2007 - $108) with $10 at an interest rate of 1 month US LIBOR
plus 1.14%, $6 at an interest rate of 3 month US LIBOR plus 3.00%, $17 at an interest rate of 7.72%, and $4 of fees.
During 2008:
• TheCorporationreceiveddeliveryofeightBoeing777aircraft.Threeaircraftwerenancedwithguaranteesupport
from the Export-Import Bank of the United States (“EXIM”) (Note 6). Five of the aircraft were financed under sale
and leaseback transactions with proceeds of $708. The resulting gain on sale of $81 was deferred and is being
recognized as a reduction to Aircraft rent expense over the term of the leases. The leases are accounted for as
operating leases with 12 year terms, paid monthly.
• TheCorporationrecordedanimpairmentchargeof$38onitseetofB767-200aircraftduetotherevisedretirement
date of the aircraft.