Air Canada 2012 Annual Report Download - page 47

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2012 Management’s Discussion and Analysis
47
9.8. Contractual Obligations
The table below provides updated information on Air Canada’s long-term debt and finance lease obligations, including interest
and principal repayment obligations as at December 31, 2012.
(Canadian dollars in millions) 2013 2014 2015 2016 2017 Thereafter Total
Principal
Long-term debt obligations $ 446 $268 $1,383 $473 $ 555 $ 519 $3,644
Finance lease obligations 60 56 50 25 25 147 363
506 324 1,433 498 580 666 4,007
Interest
Long-term debt obligations 220 201 140 49 68 31 709
Finance lease obligations 34 28 22 18 15 49 166
254 229 162 67 83 80 875
Total long-term debt and finance
lease obligations $ 760 $553 $1,595 $565 $ 663 $ 746 $4,882
Operating lease obligations $ 375 $299 $250 $207 $ 182 $ 475 $1,788
Committed capital expenditures $ 558 $834 $550 $973 $ 1,246 $ 802 $4,963
Total obligations(1) (2) $ 1,693 $1,686 $2,395 $1,745 $ 2,091 $ 2,023 $11,633
(1) Total contractual obligations exclude commitments for goods and services required in the ordinary course of business. Also excluded are other long-term liabilities mainly
due to reasons of uncertainty of timing of cash flows and items that are non-cash in nature.
(2) The table above excludes the future minimum non-cancelable commitment under the Jazz CPA of $785 million in 2013, the future minimum non-cancelable commitment
under capacity purchase agreements with other regional carriers of $110 million in 2013 and the minimum annual commitment to purchase Aeroplan® Miles from
Aeroplan of $224 million for 2013. Future commitments for 2014 and beyond are not yet determinable. The rates under the Jazz CPA are subject to change based upon,
amongst other things, changes in Jazz’s costs and the results of benchmarking exercises, which compare Jazz costs to other regional carriers. The results of the most recent
benchmarking exercise, which is currently subject to arbitration proceedings, will be implemented with retroactive effect to January 1, 2010.
Covenants in Credit Card Agreements
Air Canada has various agreements with companies that process customer credit card transactions. Approximately 85% of Air
Canada’s sales are processed using credit cards, with remaining sales processed through cash based transactions. Air Canada
receives payment for a credit card sale generally in advance of when the passenger transportation is provided.
In 2012, Air Canada transitioned its principal credit card processing agreements for credit card processing services in North
America to a new service provider. The terms of the new agreements are for five years each and the agreements contain
triggering events upon which Air Canada is required to provide the credit card processor with cash deposits. The obligation to
provide cash deposits and the required amount of deposits are each based upon a matrix measuring, on a quarterly basis, both
a fixed charge coverage ratio for Air Canada and the unrestricted cash and short-term investments of Air Canada. In 2012, Air
Canada made no cash deposits under these agreements (nil in 2011).
Air Canada also has agreements with another processor for the provision of certain credit card processing services
requirements for markets other than North America and for its cargo operations worldwide where such agreements also
contain deposit obligations.