Air Canada 2012 Annual Report Download - page 129

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2012 Consolidated Financial Statements and Notes
129
16. COMMITMENTS
Boeing
As at December 31, 2012, the Corporation has outstanding purchase commitments with The Boeing Company (“Boeing”) for
the acquisition of 37 Boeing 787 aircraft. The first seven deliveries are scheduled for 2014 and the remaining 30 between
2015 and 2019. The Corporation also has purchase options for 13 Boeing 787 aircraft (entitling Air Canada to purchase
aircraft based on previously determined pricing and delivery positions), and purchase rights for 10 Boeing 787 aircraft
(entitling Air Canada to purchase aircraft based on Boeing’s then current pricing).
The Corporation has financing commitments from Boeing and the engine manufacturer covering 31 of the 37 Boeing 787 firm
aircraft orders. The financing terms for 28 out of the 31 covered aircraft is for 80% of the aircraft delivery price and the term
to maturity is 12 years with straight-line principal repayments. For the remaining three out of the 31 covered aircraft, the
financing under the commitment covers up to 90% of the capital expenditure and the term to maturity is 15 years with
principal payments made on a mortgage style basis resulting in equal installment payments of principal and interest over the
term to maturity.
In addition, the Corporation has outstanding purchase commitments for the acquisition of five Boeing 777 aircraft, with
scheduled deliveries in the second half of 2013 and the first half of 2014. The Corporation is evaluating financing alternatives
in the approximate range of $550 to $650, covering all five aircraft. The Corporation also has purchase rights for 13 Boeing
777 (entitling Air Canada to purchase aircraft based on previously determined pricing).
Operating Lease and Capital Commitments
The estimated aggregate cost of the future firm Boeing 787 aircraft deliveries and other capital purchase commitments as at
December 31, 2012 approximates $4,963 (of which $3,043 is subject to committed financing, subject to the fulfillment of
certain terms and conditions). US dollar amounts are converted using the December 31, 2012 closing rate of CDN$0.9949.
The estimated aggregate cost of aircraft is based on delivery prices that include estimated escalation and, where applicable,
deferred price delivery payment interest calculated based on the 90-day US LIBOR rate at December 31, 2012. Other capital
purchase commitments relate principally to building and leasehold improvement projects.
2013 2014 2015 2016 2017 Thereafter Total
Capital commitments $ 558 $ 834 $ 550 $ 973 $ 1,246 $ 802 $4,963
As at December 31, 2012 the future minimum lease payments under existing operating leases of aircraft and other property
amount to $1,788 using year end exchange rates.
2013 2014 2015 2016 2017 Thereafter Total
Aircraft $ 318 $ 253 $ 207 $ 174 $ 152 $ 333 $1,437
Other property 57 46 43 33 30 142 351
Total $ 375 $ 299 $ 250 $ 207 $ 182 $ 475 $ 1,788
The above minimum lease payments include residual value guarantees, except for those for which the Corporation has
obtained residual value support.