Air Canada 2012 Annual Report Download - page 34
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2012 Air Canada Annual Report
34
Sales and distribution costs decreased 5% from the fourth quarter of 2011
In the fourth quarter of 2012, sales and distribution costs of $133 million decreased $7 million or 5% from the fourth quarter
of 2011 on passenger revenue growth of 5.8%. An increase in credit card fees, which was largely in line with sales and revenue
growth, was more than offset by lower commission expense at Air Canada, in part due to program changes.
Food, beverages and supplies expense increased 28% from the fourth quarter of 2011
In the fourth quarter of 2012, food, beverages and supplies expense of $68 million increased $15 million or 28% from the
fourth quarter of 2011 on passenger traffic growth, including in the premium class cabin. In addition, in 2011, Air Canada
recorded favourable accrual adjustments of $10 million related to prior quarters as certain previously estimated costs did not
materialize.
Other operating expenses increased 6% from the fourth quarter of 2011
In the fourth quarter of 2012, other operating expenses of $304 million increased $17 million or 6% from the fourth quarter
of 2011, mainly due to an increase of $15 million or 16% in “remaining other expenses”. The increase in “remaining other
expenses” in the fourth quarter of 2012 was largely due to expenses incurred, such as engine and rotable equipment rentals,
resulting from the Aveos closure.
The following table provides a breakdown of the more significant items included in other expenses:
Fourth Quarter Change
(Canadian dollars in millions) 2012 2011 $ %
Air Canada Vacations' land costs $57 $57 $ – –
Terminal handling 42 43 (1) (2)
Building rent and maintenance 32 29 3 10
Crew cycle 29 30 (1) (3)
Miscellaneous fees and services 33 32 1 3
Remaining other expenses 111 96 15 16
Other operating expenses $304 $287 $ 17 6
Non-operating expense amounted to $38 million in the fourth quarter of 2012 compared to non-operating
income of $38 million in the fourth quarter of 2011
The following table provides a breakdown of non-operating income (expense) for the periods indicated:
Fourth Quarter Change
(Canadian dollars in millions) 2012 2011 $
Foreign exchange gain $9 $114 $ (105)
Interest income 9 10 (1)
Interest expense (68) (76) 8
Interest capitalized 7 2 5
Net financing expense relating to employee benefits (3) (4) 1
Gain (loss) on financial instruments recorded at fair value 7 (5) 12
Other 1 (3) 4
Total non-operating income (expense) $(38) $38 $ (76)