Air Canada 2009 Annual Report Download - page 30

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2009 Air Canada Annual Report
30
The table below provides Air Canada’s fuel cost per litre, excluding and including hedging, for the periods indicated.
(Canadian dollars in millions, except
where indicated)
Full Year Change
2009 2008 $ %
Aircraft fuel expense - GAAP (1) $ 2,437 $ 3,401 $ (964) (28)
Add: Fuel hedging gains (losses) included in aircraft
fuel expense (419) 79 (498) (630)
Add: Net cash settlements on maturing fuel
derivatives (designated under hedge accounting
and economic hedges) (2) 88
(129) 217 168
Economic cost of fuel - Non-GAAP (3) $ 2,106 $ 3,351 $ (1,245) (37)
Fuel consumption (thousands of litres) 3,509,918 3,762,698 (252,780) (7)
Fuel costs per litre (cents) - GAAP 69.4 90.4 (21.0) (23)
Fuel costs per litre (cents) - excluding fuel hedges 57.5 92.5 (35.0) (38)
Economic fuel costs per litre (cents) - Non-GAAP 60.0 89.0 (29.0) (33)
(1) Fuel expense excludes fuel related to third party carriers, other than Jazz, operating under capacity purchase agreement.
(2) Excluding early terminated hedging contracts both in Q1 2009 for $172 million covering 2009 and 2010 fuel consumption and in the fourth quarter of 2009 for
$20 million covering 2010 fuel consumption.
(3) Economic cost of fuel is Air Canada’s best estimate of the cash cost of fuel. It is a non-GAAP measure used by the Corporation and may not be comparable to measures
presented by other public companies.
Wages, salaries and benefi ts expense amounted to $1,751 million in 2009, a decrease of $126 million or 7% from 2008.
Wages and salaries expense totaled $1,492 million in 2009, a decrease of $36 million or 2% from 2008. Factors contributing
to the year-over-year change in wage and salaries expense included:
• A decrease of an average of 1,286 full-time equivalent (“FTE”) employees or 5.3%, which was mainly the result of
the 4.4% ASM capacity reduction.
• In 2009, Air Canada recorded expenses of $25 million related to the “Sharing our Success” employee profi t sharing
program versus expenses of $29 million in 2008.
The above-noted decreases were partially offset by the following:
• The impact of a year-over-year increase in average wages of 1.8%, mainly due to contractual progression increases
for unionized employees.
• In 2009, Air Canada recorded expenses of $30 million related to staff reduction programs compared to expenses of
$21 million in 2008.
• In 2008, Air Canada reversed previously recorded stock-based compensation expense of $5 million. No such reversal
occurred in 2009.
Employee benefi ts expense amounted to $259 million in 2009, a decrease of $90 million or 26% from 2008, mainly due to
reduced pension expense and post-employment benefi ts expenses as a result of revised actuarial assumptions.
Airport and navigation fees decreased 3% from 2008
In 2009, airport and navigation fees of $971 million decreased $30 million or 3% from 2008, on a 3% reduction in aircraft
frequencies. Effective January 1, 2010, the Greater Toronto Airports Authority (GTAA) reduced both landing fees and terminal
charges by 10% at Toronto Pearson International Airport. Based on current levels of activity, Air Canada estimates that this
rate reduction would result in annual savings of $30 million.