Qantas 2001 Annual Report Download - page 47

THE SPIRIT OF AUSTRALIA p45
QANTAS GROUP
2001 2000
$M $M
11. CONTINGENT LIABILITIES
RELATED PARTIES
Guarantees and letters of comfort to support operating lease commitments
and other arrangements entered into with other parties by controlled entities 24.4 15.2
Guarantees and letters of comfort to support leveraged and operating lease
commitments to other parties on behalf of associated companies 0.1 3.0
24.5 18.2
OTHER PARTIES
General guarantees in the normal course of business 137.1 118.5
Contingent liabilities relating to current and threatened litigation 36.0 33.7
173.1 152.2
197.6 170.4
TERMINAL FUEL FACILITIES
The Qantas Group, together with other airlines, has entered into various agreements in order to facilitate the funding and installation of jet
turbine fuel hydrant systems and terminal equipment facilities at Los Angeles and Hawaii airports. The airlines have jointly and severally agreed
to repay any unpaid balance (including interest) of the loans totalling $315.9 million (2000: $244.1 million) in the event the agreements are
terminated prior to expiry of the loans.
AIRCRAFT FINANCING
As part of the financing arrangements for the acquisition of aircraft, the Qantas Group has provided certain guarantees and indemnities to
various lenders and equity participants in leveraged lease transactions. Only in exceptional circumstances, including the insolvency of major
international banks, will the Qantas Group be required to make any payments under these guarantees. The Qantas Group has guaranteed
that the lessors will receive all of the funds due to them under the lease arrangements.
Qantas and certain controlled entities have entered into asset value underwriting arrangements with lenders under certain aircraft secured
financings. These arrangements protect the value of the aircraft security to the lenders to a predetermined level. This is reflected by the
balance of aircraft security deposits held with certain financial institutions and included in current and non-current receivables totalling
$537.6 million (2000: $562.6 million).
The Qantas Group has provided standard tax indemnities to the equity investors in certain leveraged leases. The indemnities effectively
guarantee the after tax rate of return of the investors and the Qantas Group may be subject to additional financing costs on future lease
payments if certain assumptions made at the time of entering the transactions, including assumptions as to the rate of income tax,
subsequently become invalid.
UNREALISED LOSSES – BACK TO BACK HEDGES
Where long-term foreign currency borrowings have been denominated in surplus net revenue currencies, offsetting forward foreign
exchange contracts have been used to match the cash flows arising under the borrowings with the expected revenue surpluses used to
hedge the borrowings. To the extent a gain or loss is incurred, this is deferred until the net revenue is realised. As at 30 June 2001, total
unrealised exchange losses on hedges of net revenue designated to service long-term debt were $329.6 million compared to $374.7 million
as at 30 June 2000.
12. EVENTS SUBSEQUENT TO BALANCE DATE
There has not arisen in the interval between the end of the financial year and the date of this report, any item, transaction or event of a
material and unusual nature that, in the opinion of the Directors, has significantly affected, or may significantly affect, the operations of the
Qantas Group, the results of those operations, or the state of affairs of the Qantas Group, in this financial year or in future financial years.