Air Canada 2011 Annual Report Download - page 118

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2011 Air Canada Annual Report
118
17. COMMITMENTS
Boeing
As at December 31, 2011, the Corporation had outstanding purchase commitments with The Boeing Company (“Boeing”) for
the acquisition of 37 Boeing 787 aircraft and two Boeing 777 aircraft following the exercise of its purchase rights described
below. The Corporation also has purchase rights for 16 Boeing 777 (entitling Air Canada to purchase aircraft based on
previously determined pricing), purchase options for 13 Boeing 787 aircraft (entitling Air Canada to purchase aircraft based on
previously determined pricing and delivery position), and purchase rights for 10 Boeing 787 aircraft (entitling Air Canada to
purchase aircraft based on Boeing’s then current pricing). In 2011, the Corporation exercised purchase rights for two Boeing
777 with scheduled deliveries in mid-2013.
The first seven deliveries of its Boeing 787 aircraft are currently scheduled for delivery in 2014 and the remaining 30 between
2015 and 2019.
The Corporation has financing commitments from Boeing and the engine manufacturer covering 31 of the 37 Boeing 787 firm
aircraft orders. The financing 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
financing 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.
Operating Lease and Capital Commitments
The estimated aggregate cost of the future firm Boeing 787 aircraft deliveries and other capital purchase commitments as at
December 31, 2011 approximates $4,976 (of which $3,110 is subject to committed financing, subject to the fulfillment of
certain terms and conditions). US dollar amounts are converted using the December 31, 2011 closing rate of CDN$1.017. 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, 2011. Other capital
purchase commitments relate principally to building and leasehold improvement projects.
2012 2013 2014 2015 2016 Thereafter Total
Capital commitments $ 155 $ 318 $ 755 $ 575 $ 1,017 $ 2,156 $ 4,976
As at December 31, 2011 the future minimum lease payments under existing operating leases of aircraft and other property
amount to $2,117 using year end exchange rates.
2012 2013 2014 2015 2016 Thereafter Total
Aircraft $ 345 $ 320 $ 257 $ 211 $ 177 $ 494 $ 1,804
Other property 50 42 39 36 28 118 313
Total $ 395 $ 362 $ 296 $ 247 $ 205 $ 612 $ 2,117
The above minimum lease payments include residual value guarantees, except for those for which the Corporation has
obtained residual value support.