Air Canada 2012 Annual Report Download - page 44

2012 Air Canada Annual Report
44
Capital Commitments
As outlined in the table below, the estimated aggregate cost of the future firm Boeing aircraft deliveries and other capital
purchase commitments, as at December 31, 2012, approximates $4,963 million (of which $3,043 million is subject to
committed financing, subject to the fulfillment of certain terms and conditions). Other capital purchase commitments relate
principally to building and leasehold improvement projects.
(Canadian dollars in millions) 2013 2014 2015 2016 2017 Thereafter Total
Projected committed expenditures $ 558 $ 834 $550 $973 $1,246 $ 802 $ 4,963
Projected planned but uncommitted
expenditures 215 236 182 180 160
not
available
not
available
Projected planned but uncommitted
capitalized maintenance(1) 75 67 55 55 55
not
available
not
available
Total projected expenditures(2) 848 1,137 787 1,208 1,461
not
available
not
available
Projected financing on committed
expenditures - (591) (451) (797) (1,080) (124) (3,043)
Total projected expenditures, net of
financing $ 848 $ 546 $336 $411 $381
not
available
not
available
(1) The table above includes certain maintenance events which are capitalized under IFRS. Future capitalized maintenance amounts for 2016 and beyond are not yet
determinable however an estimate of $55 million has been made.
(2) U.S. dollar amounts are converted using the December 31, 2012 closing exchange rate of US$1 = C$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 U.S. LIBOR rate at December 31,
2012.
9.7. Pension Funding Obligations
Air Canada maintains several pension plans, including defined benefit and defined contribution pension plans and plans
providing other retirement and post-employment benefits to its employees. Based on actuarial valuations completed in the
second quarter of 2012, the aggregate solvency deficit in Air Canada’s domestic registered pension plans as at January 1, 2012
was $4.2 billion. The next required valuations, to be made as of January 1, 2013, will be completed in the first half of 2013,
but as described below, they will not increase the 2013 pension past service cost funding obligations. For illustrative purposes
only, based on the actuarial valuations dated January 1, 2012, an increase in the discount rate of 1% results in a decrease of
$1,840 million to the pension solvency liability, and a decrease in the discount rate of 1% results in an increase of
$2,348 million to the pension solvency liability.
In July 2009, the Government of Canada adopted the Air Canada 2009 Pension Regulations. The Air Canada 2009 Pension
Regulations relieved Air Canada from making any past service contributions (i.e. special payments to amortize the plan
solvency deficits) to its ten domestic defined benefit registered pension plans in respect of the period beginning April 1, 2009,
and ending December 31, 2010. Thereafter, in respect of the period from January 1, 2011 to December 31, 2013, the
aggregate annual past service contribution is the lesser of (i) $150 million, $175 million, and $225 million in 2011, 2012, and
2013, respectively, on an accrued basis, and (ii) the maximum past service contribution permitted under the Income Tax Act
(Canada). Current service contributions continue to be made in the normal course while the Air Canada 2009 Pension
Regulations are in effect.
After consideration of the effect of the Air Canada 2009 Pension Regulations, as outlined above, total employer pension
funding contributions in 2012 amounted to $433 million.
(Canadian dollars in millions) 2012 2011
Past service domestic registered plans $173 $ 138
Current service domestic registered plans 169 171
Other pension arrangements(1) 91 76
Pension funding obligations $433 $ 385
(1) Includes retirement compensation arrangements, supplemental plans and international plans.