Air Canada 2011 Annual Report Download - page 21

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2011 Management’s Discussion and Analysis
21
The following table provides a breakdown of the more significant items included in other expenses:
Full Year Change
(Canadian dollars in millions) 2011 2010 $ %
Air Canada Vacations' land costs $307 $ 272 $35 13
Terminal handling 193 185 8 4
Building rent and maintenance 127 126 1 1
Crew cycle 115 117 (2) (2)
Miscellaneous fees and services 108 110 (2) (1)
Remaining other expenses 380 384 (4) (1)
$1,230 $ 1,194 $36 3
Factors contributing to the year-over-year change in Other expenses in the full year included:
The 4.7% growth in capacity;
An increase of $35 million or 13% in expenses related to ground packages at Air Canada Vacations which was due to
increased passenger volumes;
An increase of $8 million or 4% in terminal handling expenses which was largely due to a 2.5% increase in system
frequencies and to costs associated with Air Canada’s new service between Billy Bishop Toronto City Airport and
Montreal Trudeau Airport; and
The favourable impact of CTP initiatives which reduced various other operating expenses.
Non-operating expense amounted to $429 million in 2011 compared to non-operating expense of $303 million
in 2010
The following table provides a breakdown of non-operating expenses for the periods indicated:
Full Year Change
(Canadian dollars in millions) 2011 2010 $
Foreign exchange gain (loss) $(54) $ 184 $(238)
Interest income 36 19 17
Interest expense (320) (397) 77
Net financing expense relating to employee benefit liabilities (16) (75) 59
Loss on financial instruments recorded at fair value (63) (3) (60)
Other (12) (31) 19
$(429) $ (303) $(126)
Factors contributing to the year-over-year increase in non-operating expense in the full year included:
Losses on foreign exchange (mainly related to U.S. currency denominated long-term debt) which amounted to
$54 million in 2011 compared to gains of $184 million in 2010. The losses in 2011 were mainly attributable to a weaker
Canadian dollar at December 31, 2011 compared to December 31, 2010. The December 31, 2011 closing exchange rate
was US$1 = C$1.017 while the December 31, 2010 closing exchange rate was US$1 = C$0.9946.
An increase in interest income of $17 million which was mainly due to higher returns on investments.