Air Canada 2012 Annual Report Download - page 32

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2012 Air Canada Annual Report
32
CASM decreased 1.3% from the fourth quarter of 2011. Adjusted CASM decreased 2.0% from the fourth quarter
of 2011
The following table compares Air Canada’s fourth quarter 2012 and fourth quarter 2011 CASM.
Fourth Quarter Change
(cents per ASM) 2012 2011 cents %
Wages and salaries 2.70 2.57 0.13 5.1
Benefits 0.71 0.71 – –
Aircraft fuel 5.30 5.29 0.01 0.2
Capacity purchase agreements 1.70 1.65 0.05 3.0
Airport and navigation fees 1.49 1.55 (0.06) (3.9)
Ownership (DAR)(1) 1.54 1.69 (0.15) (8.9)
Aircraft maintenance 1.04 1.39 (0.35) (25.2)
Sales and distribution costs 0.86 0.92 (0.06) (6.5)
Food, beverages and supplies 0.44 0.35 0.09 25.7
Communications and information technology 0.30 0.31 (0.01) (3.2)
Other 1.97 1.86 0.11 5.9
CASM 18.05 18.29 (0.24) (1.3)
Remove:
Fuel expense and the cost of ground packages at Air Canada Vacations (5.67) (5.66) (0.01) 0.2
Adjusted CASM(2) 12.38 12.63 (0.25) (2.0)
(1) DAR refers to the combination of depreciation, amortization and impairment, and aircraft rent expenses.
(2) Adjusted CASM is a non-GAAP financial measure. Refer to section 20 “Non-GAAP Financial Measures” of this MD&A for additional information.
Operating expenses decreased $2 million from the fourth quarter of 2011
In the fourth quarter of 2012, operating expenses of $2,795 million decreased $2 million from operating expenses of
$2,797 million recorded in the fourth quarter of 2011. The decrease in operating expenses was mainly due to lower aircraft
maintenance expense and a decrease in ownership costs (comprised of depreciation, amortization and impairment and aircraft
rent). Mostly offsetting these decreases were increases in wages, salaries and benefits expense, fuel expense, capacity
purchase costs, food, beverage and supplies expense and other expenses.
In the fourth quarter of 2012, the favourable impact of a stronger Canadian dollar on foreign currency denominated operating
expenses (mainly U.S. dollars), when compared to the fourth quarter of 2011, reduced operating expenses by $31 million.
Fuel expense increased 2% from the fourth quarter of 2011
In the fourth quarter of 2012, fuel expense of $821 million increased $13 million or 2% from the fourth quarter of 2011. The
increase in fuel expense was mainly due to the impact of higher jet fuel prices year-over-year, which accounted for an
increase of $23 million, and a greater volume of fuel consumed, which accounted for an increase of $9 million. Partly
offsetting these increases was the favourable impact of a stronger Canadian dollar in the fourth quarter of 2012 when
compared to the fourth quarter of 2011, which accounted for a decrease of $19 million. The higher jet fuel price in 2012 was
mainly due to higher refining costs (also known as crack spreads) as the WTI-equivalent price was only slightly higher than in
2011.