Air Canada 2011 Annual Report Download - page 41

2011 Management’s Discussion and Analysis
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9.7. Contractual Obligations
The table below provides updated information on Air Canada’s long-term debt and finance lease obligations, including interest
and principal repayment obligations as at December 31, 2011. The table also includes the impact of the loan facility as
described in section 9.3 of this MD&A, assuming the full commitment will be drawn upon, including the balance available in
2012 of US$42 million related to the refinancing of the last four Airbus A319 aircraft under this facility.
(Canadian dollars in millions) 2012 2013 2014 2015 2016 Thereafter Total
Principal
Long-term debt obligations $ 367 $535 $261 $1,261 $ 455 $ 1,090 $3,969
Finance lease obligations 57 61 57 52 25 174 426
424 596 318 1,313 480 1,264 4,395
Interest
Long-term debt obligations 231 226 193 142 51 108 951
Finance lease obligations 41 34 28 22 18 65 208
272 260 221 164 69 173 1,159
Total long-term debt, finance leases
and interest repayment obligations(1-5) $ 696 $856 $539 $1,477 $ 549 $ 1,437 $5,554
Net impact of loan facility (34) 9 9 9 9 5 7
Total long-term debt and finance
lease obligations, including net impact
of loan facility $ 662 $865 $548 $1,486 $ 558 $ 1,442 $5,561
Operating lease obligations $ 395 $362 $296 $247 $ 205 $ 612 $2,117
Committed capital expenditures $ 155 $318 $755 $575 $ 1,017 $ 2,156 $4,976
Total obligations, including net
impact of loan facility $ 1,212 $1,545 $1,599 $2,308 $ 1,780 $ 4,210 $12,654
(1) The interest repayment obligations relate to long-term debt, debt consolidated under special purpose entities and finance leases.
(2) The operating lease obligations above mainly relate to U.S. dollar aircraft operating leases.
(3) The committed capital expenditures above mainly relate to U.S. dollar aircraft-related expenditures. These expenditures also include purchases relating to system
development costs, facilities and leasehold improvements.
(4) Total contractual obligations exclude commitments for goods and services required in the ordinary course of business. Also excluded are other long-term liabilities mainly
due to reasons of uncertainty of timing of cash flows and items that are non-cash in nature.
(5) The table above excludes the future minimum non-cancellable commitment under the Jazz CPA of $760 million in 2012, the future minimum non-cancellable
commitment under capacity purchase agreements with other regional carriers of $57 million in 2012 and the minimum annual commitment to purchase Aeroplan® Miles
from Aeroplan of $222 million for 2012. Future commitments for 2013 and beyond are not yet determinable.
Covenants in Credit Card Agreements
Air Canada has various agreements with companies that process customer credit card transactions. Approximately 85% of the
Air Canada’s sales are processed using credit cards, with remaining sales processed through cash based transactions. Air
Canada receives payment for a credit card sale generally in advance of when the passenger transportation is provided.
Air Canada’s principal credit card processing agreements for card processing services requirements in North America have an
expiry date of May 2012. Air Canada is in the process of negotiating longer-term arrangements. Air Canada’s obligation to
provide a deposit to the credit card processor under these agreements, as well as the amount of such deposit, are determined
pursuant to a matrix measuring, on a quarterly basis, both a fixed charge coverage ratio for Air Canada and the unrestricted
cash of Air Canada. Air Canada also has agreements with this processor for the provision of certain credit card processing
services requirements for markets other than North America and for its cargo operations worldwide and such agreements
contain deposit obligations similar to the obligations set forth above.