Air Canada 2007 Annual Report Download - page 28

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2007 Air Canada Annual Report
28
The following table compares Air Canada’s operating expenses per ASM for 2007 to Air Canada’s operating expenses per
ASM for 2006. The stronger Canadian dollar versus the US dollar was a factor in the overall unit cost decrease over 2006,
particularly in aircraft fuel.
Change
(cents per ASM) 2007 2006 $ %
Wages and salaries 2.43 2.35 0.08 3.4
Benefi ts 0.63 0.62 0.01 1.6
Ownership (DAR) (1) 1.32 1.37 (0.05 ) (3.6 )
Airport and navigation fees 1.63 1.61 0.02 1.2
Aircraft maintenance, materials and supplies 1.21 1.26 (0.05 ) (4.0 )
Communications and information technology 0.44 0.45 (0.01 ) (2.2 )
Food, beverages and supplies 0.50 0.53 (0.03 ) (5.7 )
Commissions 0.32 0.39 (0.07 ) (17.9 )
Capacity purchase with Jazz 1.47 1.43 0.04 2.8
Other 2.25 2.24 0.01 0.4
Operating expense, excluding fuel expense
and the special charge for labour restructuring (2) 12.20 12.25 (0.05 ) (0.4 )
Aircraft fuel 4.06 4.17 (0.11 ) (2.6 )
Special charge for labour restructuring - 0.03 (0.03 ) (100.0 )
Total operating expense 16.26 16.45 (0.19 ) (1.2 )
(1) DAR refers to the combination of Aircraft rent and Depreciation, amortization and obsolescence.
(2) Refer to section 19 “Non-GAAP Financial Measures” in this MD&A for additional information.
Wages, salaries and benefi ts amounted to $1,920 million in 2007, an increase of $104 million or 6% from 2006.
Wages and salaries expense totaled $1,525 million in 2007, an increase of $88 million or 6% from 2006. Factors contributing
to the year-over-year change in wages and salaries expense included:
■ All quarters of 2007 with the exception of the fi rst quarter refl ected increases over the same periods in 2006,
resulting in a net increase of 298 full-time equivalent (“FTE”) employees or 1.3%. The growth in FTE employees
was mainly related to pilots, fl ight attendants and ground handling personnel required to support the 2.8% growth
in ASM capacity.
■ The total average number of FTEs included an increase of 204 pilots, comparatively at a higher average wage than
other groups, driving the overall average salaries up.
■ Higher average wage rates established during the wage review process with the Corporation’s unionized employees.
■ A $9 million increase in provisions for voluntary separation packages.
■ An increase of $3 million in overtime expenses.
Employee benefi ts expense amounted to $395 million in 2007, an increase of $16 million or 4% from 2006. Factors
contributing to the year-over-year change in benefi ts expense included:
■ A revised contractual agreement with respect to benefi ts expenses allocated to ACTS
which resulted in an increase of $20 million over 2006.
■ An increase of $12 million related to health benefi ts for active employees.
■ A decrease of $8 million in 2006 related to an updated valuation of workers’ compensation liabilities.
■ Other miscellaneous increases of $4 million over 2006.