Air Canada 2009 Annual Report Download - page 22

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2009 Air Canada Annual Report
22
Other operating expenses decreased 6% from the fourth quarter of 2008
Other operating expenses amounted to $326 million in the fourth quarter of 2009, a decrease of $22 million or 6% from
the fourth quarter of 2008. The decrease in other operating expenses was mainly driven by favourable rate adjustments on
foreign currency transactions.
The following table provides a breakdown of the more signifi cant items included in other expenses:
(Canadian dollars in millions)
Fourth Quarter Change
2009 2008 $ %
Air Canada Vacations’ land costs $ 47 $ 49 $ (2) (4)
Credit card fees 45 44 1 2
Terminal handling 45 45 - -
Building rent and maintenance 35 35 - -
Miscellaneous fees and services 33 30 3 10
Crew expenses (meals, transportation and hotels) 29 30 (1) (3)
Remaining other expenses 92 115 (23) (20)
$ 326 $ 348 $ (22) (6)
Non-operating expense amounted to $83 million in the fourth quarter of 2009
Non-operating expense amounted to $83 million in the fourth quarter of 2009 compared to non-operating expense of
$44 million in the fourth quarter of 2008. Factors contributing to the year-over-year change in fourth quarter non-operating
expense included:
• Net interest expense increased $14 million from the fourth quarter of 2008 due to:
- A $9 million decrease in interest income, which was driven by lower rates of interest;
- A $1 million decrease in interest expense, which was mainly due to the impact of new fi nancing transactions
completed in 2009. In addition, in the fourth quarter of 2009, Air Canada recorded a charge of $8 million
in interest expense related to the sale and leaseback of three Boeing aircraft. These increases were offset
by the impact of lower average interest rates year-over-year, the favourable impact of foreign exchange on
interest expense in the fourth quarter of 2009, and by a reduction of interest expense on aircraft pre-delivery
payments related to Boeing 777 aircraft versus the same period in 2008;
- A lower amount of capitalized interest of $6 million compared to 2008.
• In the fourth quarter of 2009, Air Canada recorded a loss on assets of $24 million pertaining to the sale and leaseback
of three Boeing 777 aircraft. This compared to a loss on assets of $5 million recorded in the fourth quarter of 2008.
• Gains related to fair value adjustments on derivative instruments amounted to $22 million in the fourth quarter of
2009 versus gains of $32 million in the fourth quarter of 2008. The mark-to-market gains on fi nancial instruments
recorded in 2009 were mainly related to the change in the fair value of fuel derivatives.
Gains on foreign exchange amounted to $108 million in the fourth quarter of 2009
Gains on foreign exchange, which were mainly related to U.S. denominated long-term debt, amounted to $108 million in
the fourth quarter of 2009 compared to losses of $527 million in the fourth quarter of 2008. The gains in the fourth quarter
of 2009 were mainly attributable to a stronger Canadian dollar at December 31, 2009 compared to September 30, 2009. The
December 31, 2009 noon day exchange rate was US$1 = C$1.0466 while the September 30, 2009 noon day exchange rate was
US$1 = C$1.0722.
Income tax recovery of $6 million in the fourth quarter of 2009
Air Canada recorded an income tax recovery of $6 million on a pre-tax loss of $62 million in the fourth quarter of 2009,
which related mainly to an adjustment to current taxes payable.