Air Canada 2012 Annual Report Download - page 35

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2012 Management’s Discussion and Analysis
35
Factors contributing to the year-over-year change in fourth quarter non-operating income (expense) included:
Gains on foreign exchange amounted to $9 million in the fourth quarter of 2012 compared to gains of $114 million in the
fourth quarter of 2011. The gains in the fourth quarter of 2012 were mainly attributable to fair value adjustments on
foreign currency derivatives used to hedge U.S. dollar exposures. These gains were partially offset by losses on U.S.
currency denominated long-term debt due to a weaker Canadian dollar at December 31, 2012 when compared to
September 30, 2012. The December 31, 2012 closing exchange rate was US$1 = C$0.9949 while the September 30, 2012
closing exchange rate was US$1 = C$0.9832.
A decrease in interest expense of $8 million which was mainly due to lower debt levels. In addition, in the fourth quarter
of 2012, Air Canada recorded a one-time interest expense reduction of $5 million related to revised estimated cash flows
on certain aircraft financings.
Gains related to fair value adjustments on derivative instruments which amounted to $7 million in the fourth quarter of
2012 versus losses of $5 million in the fourth quarter of 2011. Refer to section
12 of this MD&A for additional
information.