Air Canada 2008 Annual Report Download - page 30

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2008 Air Canada Annual Report
30
The following table compares Air Canada’s operating expenses per ASM for 2008 to Air Canada’s operating expenses per
ASM for the corresponding period in 2007.
Change
(cents per ASM) 2008 2007 cents %
Wages and salaries 2.46 2.43 0.03 1.2
Benefits 0.56 0.63 (0.07) (11.1)
Ownership (DAR) (1) 1.57 1.32 0.25 18.9
Airport user fees 1.61 1.63 (0.02) (1.2)
Capacity purchase with Jazz 1.53 1.47 0.06 4.1
Aircraft maintenance 1.06 1.21 (0.15) (12.4)
Food, beverages and supplies 0.51 0.50 0.01 2.0
Communications and information technology 0.46 0.44 0.02 4.5
Commissions 0.31 0.32 (0.01) (3.1)
Other 2.34 2.25 0.09 4.0
Operating expense, excluding fuel expense (2) 12.41 12.20 0.21 1.7
Aircraft fuel 5.51 4.06 1.45 35.7
Total operating expense 17.92 16.26 1.66 (10.2)
(1) DAR refers to the combination of Aircraft rent and Depreciation and amortization.
(2) Refer to section 20 “Non-GAAP Financial Measures” in this MD&A for additional information.
Fuel expense increased 34% from 2007
Fuel expense amounted to $3,419 million in 2008, an increase of $867 million or 34% from 2007. Factors contributing to
the year-over-year change in fuel expense included:
• Ahigherbasefuelpriceaccountedforanincreaseof$1,131millionover2007.
The above-noted increase was partially offset by the following:
• Fuelhedginggainsof$79millionin2008versusfuelhedginggainsof$31millionin2007,anincreaseof$48million
over 2007.
• Avolume-relateddecreaseof$78million,includingthereductionMD-11freighterying.AirCanadaoperatedone
MD-11 freighter aircraft to Europe in the first half of 2008 versus one MD-11 freighter to Europe for the full year
2007 and one freighter to Asia in the first half of 2007.
• ThefavourableimpactofastrongerCanadiandollarversustheUSdollarwhichaccountedforadecreaseof$138
million to fuel expense compared to 2007.
The following table provides Air Canada’s quarterly fuel price per litre and fuel consumption information for 2008.
2008 First Quarter Second Quarter Third Quarter Fourth Quarter Year
Fuel volume (millions of litres) 947 946 1,048 822 3,763
Fuel price per litre ( cents) 75.2 89.2 101.0 95.8 90.4
Wages,salariesandbenetsexpenseamountedto$1,877millionin2008,adecreaseof$43millionor2%from
2007.
Wages and salaries expense totaled $1,528 million in 2008, an increase of $3 million from 2007. Factors contributing to
the year-over-year change in wages and salaries expense included:
• Ayear-over-yearincreaseof1.1%oranaverageof274full-timeequivalent(“FTE”)employeesonacapacitydecrease
of 1.2%. The insourcing of supply chain management in the aircraft maintenance division accounted for an increase
of approximately 200 FTE employees compared to the same period in 2007.