Air Canada 2009 Annual Report Download - page 125

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Consolidated Financial Statements and Notes
125
14. COMMITMENTS
Boeing
As at December 31, 2009, the Corporation has outstanding purchase commitments with The Boeing Company (“Boeing”)
for the acquisition of 37 Boeing 787 aircraft. The Corporation also has purchase rights for 18 Boeing 777, purchase options
for 13 Boeing 787 aircraft and purchase rights for 10 Boeing 787 aircraft. During 2009, the Corporation and Boeing agreed
to amend certain commercial terms, including revisions to delivery dates. The Corporation’s fi rst Boeing 787 aircraft is now
scheduled for delivery in the second half of 2013.
For the fi rm aircraft orders, the Corporation has fi nancing commitments from Boeing and the engine manufacturer covering
31 of the 37 Boeing 787 aircraft. The fi nancing terms for 28 out of the 31 covered aircraft is for 80% of the aircraft delivery
price and the term to maturity is 12 years with straight-line principal repayments. For the remaining three out of the
31 covered aircraft, the fi nancing under the commitment covers up to 90% of the capital expenditure and the term to
maturity is 15 years with principal payments made on a mortgage style basis resulting in equal instalment payments of
principal and interest over the term to maturity.
Capital Commitments
The estimated aggregate cost of the future fi rm Boeing 787 aircraft deliveries and other capital purchase commitments as at
December 31, 2009 approximates $4,812 (of which $3,117 is subject to committed fi nancing, subject to the fulfi llment of
certain terms and conditions). US dollar amounts are converted using the December 31, 2009 noon day rate of CDN$1.0466.
The estimated aggregate cost of aircraft is based on delivery prices that include estimated escalation and, where applicable,
deferred price delivery payment interest calculated based on the 90-day US LIBOR rate at December 31, 2009. Other capital
purchase commitments relate principally to building and leasehold improvement projects.
2010 2011 2012 2013 2014 Thereafter Total
Capital
Commitments $ 74 $ 47 $ 121 $ 731 $ 979 $ 2,860 $ 4,812
Operating Lease Commitments
During 2009, the Corporation took delivery of its last two planned Boeing 777 aircraft, one of which was leased under an
operating lease.
As at December 31, 2009 the future minimum lease payments under existing operating leases of aircraft and other property
amount to $2,630 using year end exchange rates.
2010 2011 2012 2013 2014 Thereafter Total
Aircraft $ 370 $ 334 $ 317 $ 295 $ 232 $ 754 $ 2,302
Other property 49 41 38 27 25 148 328
Total $ 419 $ 375 $ 355 $ 322 $ 257 $ 902 $ 2,630
The above minimum lease payments include residual value guarantees, except for those for which the Corporation has
obtained residual value support.
The Corporation subleases certain aircraft to Jazz on a fl ow through basis, which are reported net on the statement of
operations. These subleases relate to 29 Bombardier CRJ-200 aircraft and 15 Bombardier CRJ-705 aircraft. The operating
lease commitments under these aircraft, which are recovered from Jazz, are not included in the aircraft operating lease
commitments table above but are summarized as follows:
2010 2011 2012 2013 2014 Thereafter Total
$ 81 $ 80 $ 80 $ 80 $ 80 $ 553 $ 954
The subleases with Jazz have the same terms and maturity as the Corporation’s corresponding lease commitments to
the lessors.