Air Canada 2011 Annual Report Download - page 40

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2011 Air Canada Annual Report
40
9.6. Capital Expenditures and Related Financing Arrangements
Boeing
As at December 31, 2011, Air Canada 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 as described
below. Air Canada also has purchase rights for 16 Boeing 777 aircraft (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 current pricing). In 2011, Air Canada exercised purchase rights for two Boeing 777 aircraft
with scheduled deliveries in mid-2013. Air Canada is currently reviewing operating alternatives for these two aircraft and, as a
result, these two aircraft have not been included in the fleet table in section 9.8 of this MD&A, however, they have been
included in the table below.
The first seven deliveries of its Boeing 787 aircraft are currently scheduled for delivery in 2014 and the remaining 30 between
2015 and 2019.
Air Canada 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 are 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.
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 million (of which $3,110 million is subject to committed financing, subject to the
fulfillment of certain terms and conditions). Other capital purchase commitments relate principally to building and leasehold
improvement projects.
The table below provides Air Canada’s current projected, planned and committed capital expenditures for 2012, for the next
four years and after 2016.
(Canadian dollars in millions) 2012 2013 2014 2015 2016 Thereafter Total
Projected committed expenditures $ 155 $ 318 $755 $575 $1,017 $ 2,156 $ 4,976
Projected planned but uncommitted
expenditures 122 120 120 120 120
not
available
not
available
Total projected expenditures(1) (2) 277 438 875 695 1,137
not
available
not
available
Projected financing on committed
expenditures – – (604) (460) (813) (1,233) (3,110)
Total projected expenditures, net of
financing $ 277 $ 438 $271 $235 $324
not
available
not
available
(1) U.S. dollar amounts are converted using the December 31, 2011 closing exchange rate of US$1 = C$1.017. Final aircraft delivery prices include estimated escalation and,
where applicable, interest on deferred delivery payments.
(2) The table above excludes certain maintenance events that are capitalized under IFRS amounting to $60 million in 2012. Future capitalized maintenance amounts for 2013
and beyond are not yet determinable.