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60 Cathay Pacific Airways Limited Annual Report 2005
8. Fixed assets (continued)
(a) Finance leased assets
Certain aircraft are subject to leases with purchase options to be exercised at the end of the respective leases.
The remaining lease terms range from 1 to 12 years. Some of the rent payments are on a floating basis which
are generally linked to market rates of interest. All leases permit subleasing rights subject to appropriate consent
from lessors. Early repayment penalties would be payable on some of the leases should they be terminated prior
to their specified expiry dates.
(b) Operating leased assets
Certain aircraft, buildings and other equipment are under operating leases.
Under the operating lease arrangements for aircraft, the lease rentals are fixed and subleasing is not allowed. At
31st December 2005, three B747-400s (2004: three), four A340-300s (2004: four), three A340-600s (2004: three)
and three A330-300s (2004: nil), all with purchase options, held under operating leases were not capitalised. The
estimated capitalised value of these leases being the present value of the aggregate future lease payments is
HK$2,347 million (2004: HK$1,315 million).
Operating leases for buildings and other equipment are normally set with fixed rental payments with options to
renew the leases upon expiry at new terms.
The future minimum lease payments payable under operating leases committed as at 31st December 2005 for
each of the following periods are as follows:
2005 2004
HK$M HK$M
Aircraft and related equipment:
– within one year 941 1,144
– after one year but within five years 3,880 1,883
– after five years 4,706 389
9,527 3,416
Buildings and other equipment:
– within one year 232 261
– after one year but within five years 339 418
– after five years 129 175
700 854
10,227 4,270
(c) Advance payments are made to manufacturers for aircraft and related equipment to be delivered in future years.
Advance payments included in owned aircraft and related equipment amounted to HK$2,036 million (2004:
HK$2,698 million) for the Group and HK$222 million (2004: HK$197 million) for the Company. No depreciation is
provided on these advance payments.
(d) Security, including charges over the assets concerned and relevant insurance policies, is provided to the leasing
companies or other parties that provide the underlying finance. Further information is provided under note 13 to
the accounts.
Notes to the Accounts Balance Sheet