Air Canada 2011 Annual Report Download - page 30
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2011 Air Canada Annual Report
30
CASM increased 4.9% from the fourth quarter of 2010. Excluding fuel expense and excluding the cost of ground
packages at Air Canada Vacations, CASM decreased 1.5% from the fourth quarter of 2010
The following table compares Air Canada’s CASM for the fourth quarter of 2011 to Air Canada’s CASM for the corresponding
period in 2010.
Fourth Quarter Change
(cents per ASM) 2011 2010 cents %
Wages and salaries 2.57 2.69 (0.12) (4.5)
Benefits 0.71 0.58 0.13 22.4
Aircraft fuel 5.29 4.29 1.00 23.3
Airport and navigation fees 1.55 1.54 0.01 0.6
Capacity purchase agreements 1.65 1.62 0.03 1.9
Ownership (DAR)(1) 1.70 2.10 (0.40) (19.0)
Aircraft maintenance 1.39 1.10 0.29 26.4
Sales and distribution costs 0.92 0.98 (0.06) (6.1)
Food, beverages and supplies 0.35 0.37 (0.02) (5.4)
Communications and information technology 0.31 0.34 (0.03) (8.8)
Other 1.85 1.83 0.02 1.1
Total operating expense 18.29 17.44 0.85 4.9
Remove:
Cost of fuel expense and cost of ground packages at Air Canada Vacations (5.66) (4.62) (1.04) 22.5
Operating expense, excluding fuel expense and excluding the cost of
ground packages at Air Canada Vacations(2) 12.63 12.82 (0.19) (1.5)
(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 fourth quarter CASM, excluding fuel and the cost of ground
packages at Air Canada Vacations, included:
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;
The 2.5% capacity growth, which resulted in Air Canada’s fixed costs being allocated over a greater number of ASMs; and
An increase in average stage length of 0.8%.
These above-noted decreases were partly offset by an increase in aircraft maintenance expense and an increase in employee
benefits expense.
Excluding fuel expense, CASM decreased 1.1% from the fourth quarter of 2010. The 1.1% decrease in CASM, excluding fuel
expense, was better than the 0.5% to 1.0% increase projected in Air Canada’s news release dated November 4, 2011. The
better than expected performance was mainly due to lower than forecasted food, beverages and supplies expense and
depreciation, amortization and impairment expense.
Operating expenses increased 8% from the fourth quarter of 2010
Air Canada recorded operating expenses of $2,797 million, an increase of $196 million or 8% from the operating expenses of
$2,601 million recorded in the fourth quarter of 2010. The more significant variances are discussed below.