Air Canada 2008 Annual Report Download - page 83

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2008 Management’s Discussion and Analysis
83
20. NON-GAAP FINANCIAL MEASURES
EBITDAR
EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) is a non-GAAP financial measure
commonly used in the airline industry to view operating results before aircraft rent and depreciation and amortization as
these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets.
Air Canada presents EBITDAR before and after the provision for cargo investigations as this item could potentially distort
the analysis of trends in business performance. EBITDAR is not a recognized measure for financial statement presentation
under Canadian GAAP and does not have a standardized meaning and is therefore not likely to be comparable to similar
measures presented by other public companies.
EBITDAR before the provision for cargo investigations and EBITDAR for Air Canada (previously “Air Canada Services”) are
reconciled to operating income (loss) as follows:
(Canadian dollars in millions)
Fourth Quarter Full Year
2008 2007 $ Change 2008 2007 $ Change
GAAP operating income (loss) before the
provision for cargo investigations $ (146) $ 72 $ (218) $ (39) $ 433 $ (472)
Addback:
Aircraft rent 80 62 18 279 282 (3)
Depreciation and amortization 174 140 34 694 548 146
EBITDARbeforetheprovisionforcargo
investigations $ 108 $ 274 $ (166) $ 934 $ 1,263 $ 329
Add back:
Provision for cargo investigations - - - (125) - (125)
EBITDAR $ 108 $ 274 $ (166) $ 809 $ 1,263 $ (454)
Operating Expense excluding Fuel Expense
Air Canada uses operating expense excluding fuel expense to assess the operating performance of its ongoing business
without the effects of fuel expense. This item is excluded from Air Canada’s results as it could potentially distort the analysis
of trends in business performance. Fuel expense fluctuates widely depending on many factors including international
market conditions, geopolitical events and the Canada/US exchange rate and excluding this expense from GAAP results
allows Air Canada to compare its operating performance on a consistent basis. The following measure is not a recognized
measure for financial statement presentation under Canadian GAAP and does not have a standardized meaning and is
therefore not likely to be comparable to similar measures presented by other public companies.
Operating expense, excluding fuel expense, for Air Canada (previously “Air Canada Services”) is reconciled to operating
expense as follows:
(Canadian dollars in millions)
Fourth Quarter Full Year
2008 2007 $ Change 2008 2007 $ Change
GAAP operating expense $ 2,644 $ 2,441 $ 203 $ 11,121 $ 10,213 $ 908
Remove:
Aircraft fuel (792) (615) (177) (3,419) (2,552) (867)
Operating expense, excluding fuel expense $ 1,852 $ 1,826 $ 26 $ 7,702 $ 7,661 $ 41