Air Canada 2010 Annual Report Download - page 28

2010 Air Canada Annual Report
28
The table below provides Air Canada’s fuel cost per litre, excluding and including hedging, for the periods indicated.
(Canadian dollars in millions, except
where indicated)
Full Year Change
2010 2009 $%
Aircraft fuel expense - GAAP (1) $ 2,638 $ 2,437 $ 201 8
Remove: Fuel hedging gains (losses) reclassified from AOCL
into fuel expense (183) (419) 236 56
Add: Net cash payments on fuel derivatives (2) 60 88 (28) (32)
Economic cost of fuel - Non-GAAP (3) $ 2,515 $ 2,106 $ 409 19
Fuel consumption (thousands of litres) 3,790,911 3,509,918 280,993 8
Fuel cost per litre (cents) - GAAP 69.6 69.4 0.2 -
Fuel cost per litre (cents) - excluding fuel hedging gains
(losses) 64.8 57.5 7.3 13
Economic fuel cost per litre (cents) - Non-GAAP 66.4 60.0 6.4 11
(1) Excludes fuel expense related to third party carriers, other than Jazz, operating under capacity purchase agreements.
(2) Excludes early terminated hedging contracts of $172 million in the first quarter of 2009 and $20 million in the fourth quarter of 2009 covering 2009 and 2010 fuel
consumption. Includes early terminated hedging contracts of $5 million in the second quarter of 2010 covering 2010 fuel consumption. Includes net cash settlements
on maturing fuel derivatives and premium costs associated with those derivatives.
(3) The economic cost of fuel is a non-GAAP measure used by Air Canada and may not be comparable to measures presented by other public companies. Air Canada uses
this measure to calculate its cash cost of fuel. It includes the actual net cash settlements from maturing fuel derivative contracts during the period and premium costs
associated with those derivatives. It excludes non-cash accounting gains and losses from fuel derivative instruments.
Wages, salaries and benefits expense amounted to $1,885 million in 2010, an increase of $134 million or 8% from 2009
Wages and salaries expense totaled $1,520 million in 2010, an increase of $28 million or 2% from 2009.
t *O"JS$BOBEBSFDPSEFEFYQFOTFTPGNJMMJPOSFMBUJOHUPJODFOUJWFDPNQFOTBUJPOQSPHSBNTMJOLFEUP"JS
Canada’s financial and operational performance. In 2009, expenses related to these programs amounted to $29 million.
t *O"JS$BOBEBSFDPSEFEFYQFOTFTSFMBUFEUPTUBGGSFEVDUJPOQSPHSBNTPGNJMMJPO/PTVDIFYQFOTFTXFSF
recorded in 2010.
Employee benefits expense amounted to $365 million in 2010, an increase of $106 million or 41% from 2009. The increase
in employee benefits expense was mainly due to higher pension expense as a result of changes in actuarial assumptions.
Capacity purchase costs with Jazz decreased 4% from 2009
Capacity purchase costs with Jazz, pursuant to the Jazz CPA, amounted to $934 million in 2010 compared to $973 million
in 2009, a decrease of $39 million or 4%. This year-over-year decrease in capacity purchase costs was mainly due to the
favourable foreign exchange impact on U.S. currency denominated Jazz CPA charges paid by Air Canada, which accounted
for a decrease of $33 million. In addition, the impact of the CTP-related amendment to the Jazz CPA effective August 1,
2009, accounted for a net decrease of $22 million, comprised of a decrease related to the reduction to the mark-up on Jazz
CPA rates and an increase in charges relating to the return of aircraft. Furthermore, the impact of reduced flying, accounted
for a decrease of $8 million. Partly offsetting these decreases was a year-over-year increase in Jazz CPA rates of $29 million,
including $13 million related to maintenance costs for Jazz’s fleet.