Air Canada 2011 Annual Report Download - page 18

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2011 Air Canada Annual Report
18
CASM increased 3.5% from 2010. Excluding fuel expense and excluding the cost of ground packages at Air
Canada Vacations, CASM decreased 2.9% from 2010
The following table compares Air Canada’s CASM for the full year of 2011 to Air Canada’s CASM for the corresponding period
in 2010.
Full Year Change
(cents per ASM) 2011 2010 cents %
Wages and salaries 2.31 2.39 (0.08) (3.3)
Benefits 0.69 0.62 0.07 11.3
Aircraft fuel 5.08 4.18 0.90 21.5
Airport and navigation fees 1.52 1.51 0.01 0.7
Capacity purchase agreements 1.51 1.53 (0.02) (1.3)
Ownership (DAR)(1) 1.60 1.82 (0.22) (12.1)
Aircraft maintenance 1.03 1.03 – –
Sales and distribution costs 0.92 0.92 – –
Food, beverages and supplies 0.42 0.44 (0.02) (4.5)
Communications and information technology 0.29 0.31 (0.02) (6.5)
Other 1.83 1.87 (0.04) (2.1)
Total operating expense 17.20 16.62 0.58 3.5
Remove:
Cost of fuel expense and cost of ground packages at Air Canada Vacations (5.54) (4.61) (0.93) 20.2
Operating expense, excluding fuel expense and excluding the cost of
ground packages at Air Canada Vacations(2) 11.66 12.01 (0.35) (2.9)
(1) DAR refers to the combination of depreciation, amortization and impairment, and aircraft rent expenses.
(2) Refer to section 20 “Non-GAAP Financial Measures” of this MD&A for additional information.
The main factors contributing to the year-over-year change in CASM, excluding fuel expense and excluding the cost of ground
packages at Air Canada Vacations, in the full year included:
The favourable impact of a stronger Canadian dollar on foreign currency denominated operating expenses (mainly U.S.
dollars), which reduced operating expenses by $60 million;
The 4.7% capacity growth, which resulted in the airline’s fixed costs being allocated over a greater number of ASMs;
An increase in both aircraft utilization and average stage length of 2.7%;
A decrease in depreciation, amortization and impairment expense;
A decrease in wages and salaries largely reflecting reduced expenses related to incentive compensation programs partly
offset by higher average salaries; and
The impact of CTP initiatives which reduced various operating expense categories, including: wages and salaries, capacity
purchase costs, food, beverage and supplies, communications and information technology and other operating expenses.
These above-noted decreases were partly offset by an increase in employee benefits expense.
Excluding fuel expense, CASM decreased 2.6% from 2010. The 2.6% decrease in CASM, excluding fuel expense, was in line
with the 2.0% to 3.0% decrease projected in Air Canada’s news release dated November 4, 2011.