Air Canada 2009 Annual Report Download - page 19

2009 Management’s Discussion and Analysis
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Other revenues increased 2% from the fourth quarter of 2008
Other revenues of $208 million in the fourth quarter of 2009 increased $5 million or 2% from the fourth quarter of 2008,
primarily due to an $18 million increase in third party revenues at Air Canada Vacations, mainly driven by higher passenger
volumes. This increase was partly offset by lower aircraft sublease revenues in the quarter largely driven by the unfavourable
impact of a stronger Canadian dollar on U.S. denominated aircraft leases and the sale of two Airbus A340-300 aircraft which
were subleased to a third party in the fourth quarter of 2008.
CASM decreased 9.8% from the fourth quarter of 2008. Excluding fuel expense, CASM decreased 3.2% from the
fourth quarter of 2008
Operating expenses were $2,431 million in the fourth quarter of 2009, a decrease of $213 million or 8% from the fourth
quarter of 2008. In the fourth quarter of 2009, a stronger Canadian dollar versus the U.S. dollar compared to the
fourth quarter of 2008 reduced operating expenses by $105 million from the fourth quarter of 2008.
Unit cost in the fourth quarter of 2009, as measured by operating expense per available seat mile (CASM), decreased 9.8%
over the fourth quarter of 2008. Excluding fuel expense, CASM decreased 3.2% year-over-year. The main contributing
factors in the CASM decrease (excluding fuel expense) were the favourable impact of a stronger Canadian dollar versus
the U.S. dollar, which accounted for approximately 85% of the CASM decrease (excluding fuel expense), and lower wages,
salaries and benefi ts expense. Partly offsetting these decreases to CASM (excluding fuel expense) was a $45 million
year-over-year increase in aircraft maintenance expense from the same period in 2008.
The 3.2% decrease in CASM (excluding fuel expense) for the fourth quarter of 2009 was in line with the 3% to 4% CASM
(excluding fuel expense) decrease projected in Air Canada’s news release dated November 6, 2009.
The following table compares Air Canada’s operating expenses per ASM for the fourth quarter of 2009 to Air Canada’s
operating expenses per ASM for the corresponding period in 2008.
(cents per ASM)
Fourth Quarter Change
2009 2008 cents %
Wages and salaries 2.61 2.71 (0.10) (3.7)
Benefi ts 0.41 0.56 (0.15) (26.8)
Ownership (DAR) (1) 1.81 1.87 (0.06) (3.2)
Airport user fees 1.65 1.70 (0.05) (2.9)
Capacity purchase with Jazz 1.64 1.74 (0.10) (5.7)
Aircraft maintenance 1.46 1.16 0.30 25.9
Food, beverages and supplies 0.49 0.52 (0.03) (5.8)
Communications and information technology 0.46 0.53 (0.07) (13.2)
Commissions 0.33 0.29 0.04 13.8
Other 2.35 2.56 (0.21) (8.2)
Operating expense, excluding fuel expense (2) 13.21 13.64 (0.43) (3.2)
Aircraft fuel 4.36 5.84 (1.48) (25.3)
Total operating expense 17.57 19.48 (1.91) (9.8)
(1) DAR refers to the combination of Depreciation and amortization, and Aircraft rent.
(2) Refer to section 21 “Non-GAAP Financial Measures” in this MD&A for additional information.
Fuel expense decreased 24% from the fourth quarter of 2008
Fuel expense amounted to $601 million in the fourth quarter of 2009, a decrease of $191 million or 24% from the fourth
quarter of 2008. Factors contributing to the year-over-year change in fourth quarter fuel expense included:
• A lower base fuel price, which accounted for a decrease of $112 million.
• The favourable impact of a stronger Canadian dollar versus the U.S. dollar, which accounted for a decrease of
$55 million to fuel expense in the fourth quarter of 2009.