Air Canada 2009 Annual Report Download - page 102

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2009 Air Canada Annual Report
102
3. PROPERTY AND EQUIPMENT
2009 2008
Cost
Flight equipment, including spare engines (a) $ 5,866 $ 6,235
Assets under capital leases (b) 1,959 1,940
Buildings, including leasehold improvements 688 643
Ground and other equipment 157 160
8,670 8,978
Accumulated depreciation and amortization
Flight equipment, including spare engines (a) 1,407 1,101
Assets under capital leases (b) 683 562
Buildings, including leasehold improvements 187 148
Ground and other equipment 62 49
2,339 1,860
6,331 7,118
Purchase deposits, including capitalized interest (c) 38 351
Property and equipment at net book value (d) $ 6,369 $ 7,469
(a) Included in fl ight equipment as at December 31, 2009 are rotable parts, including spare engines with a cost of $821
(2008 - $798) less accumulated depreciation of $327 (2008 - $279) for a net book value of $494 (2008 - $519).
Also included in fl ight equipment are 25 aircraft (2008 – 30 aircraft and 1 engine) which are leased to Jazz (Note
14) and third parties with a cost of $630 (2008 - $942) less accumulated depreciation of $253 (2008 - $289) for a
net book value of $377 (2008 - $653).
(b) Included in capital leases as at December 31, 2009 are 40 aircraft (2008 - 41) with a cost of $1,893 (2008 -
$1,874) less accumulated depreciation of $672 (2008 - $554) for a net book value of $1,221 (2008 - $1,320) and
facilities with a cost of $66 (2008 - $66) less accumulated depreciation $11 (2008 - $8) for a net book value of $55
(2008 - $58).
(c) Includes $17 (2008 - $259) for Boeing B777/787 aircraft, $21 (2008 - $34) for equipment purchases and internal
projects and nil (2008 - $58) for the aircraft interior refurbishment program. Refer to Note 6K relating to the
fi nancing of Boeing pre-delivery payments
(d) Net book value of Property and equipment includes $798 (2008 - $836) consolidated for aircraft leasing entities and
$165 (2008 - $150) consolidated for fuel facility corporations, both of which are consolidated under AcG-15.
As at December 31, 2009, fl ight equipment included 17 aircraft (2008 - 21) that are retired from active service with a net
carrying value of $22 (2008 - $33).
Interest capitalized during 2009 amounted to $4 at an interest rate of 7.38% (2008 - $37 with $10 at an interest rate of
1 month US LIBOR plus 1.14%, $6 at an interest rate of 3 month US LIBOR plus 3.00%, $17 at an interest rate of 7.72%,
and $4 of fees).
Depreciation of property and equipment in 2009 amounted to $602 (2008 - $646).
During 2009:
• The Corporation took delivery of one Boeing 777 aircraft. The aircraft was fi nanced with guarantee support from the
Export-Import Bank of the United States (“EXIM”).
• The Corporation entered into a sale-leaseback transaction which closed during Quarter 1 2009 for a Boeing 777
aircraft, which was originally delivered in 2007 and debt fi nanced. The proceeds from the transaction of $172 were
used to repay the outstanding loan of $114. The Corporation recorded a charge of $17 in interest expense for this
transaction including a prepayment fee of $14. The gain on sale of the aircraft of $26 has been deferred and will be