Air Canada 2011 Annual Report Download - page 72

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2011 Air Canada Annual Report
72
20. NON-GAAP FINANCIAL MEASURES
EBITDAR
EBITDAR (earnings before interest, taxes, depreciation, amortization and impairment, and aircraft rent) is a non-GAAP
financial measure commonly used in the airline industry to view operating results before depreciation, amortization and
impairment, and aircraft rent as these costs can vary significantly among airlines due to differences in the way airlines finance
their aircraft and other assets. EBITDAR is not a recognized measure for financial statement presentation under GAAP, does
not have a standardized meaning, and therefore may not be comparable to similar measures presented by other public
companies.
EBITDAR before a provision adjustment for cargo investigations and EBITDAR are reconciled to operating income (loss) as
follows:
Fourth Quarter Full Year
(Canadian dollars in millions) 2011 2010 Change $ 2011 2010 Change $
GAAP operating income (loss) before a
provision adjustment for cargo
investigations, net(1) $ (98) $15 $(113) $179 $232 $ (53)
Add back:
Aircraft rent 86 86 – 335 353 (18)
Depreciation, amortization and impairment 174 227 (53) 728 801 (73)
EBITDAR before a provision adjustment for
cargo investigations, net(1) $ 162 $328 $(166) $1,242 $1,386 $ (144)
Add back:
Provision adjustment for cargo
investigations, net(1) – 46 (46) – 46 (46)
EBITDAR $ 162 $374 $(212) $1,242 $1,432 $ (190)
(1) In the first quarter of 2008, Air Canada recorded a provision for cargo investigations of $125 million. In the fourth quarter of 2010, Air Canada recorded a net reduction of
$46 million to this provision.
Operating Expense, Excluding Fuel Expense and Excluding the Cost of Ground Packages at Air Canada Vacations
Air Canada uses operating expense, excluding fuel expense and excluding the cost of ground packages at Air Canada Vacations,
to assess the operating performance of its ongoing airline business as such expenses may distort the analysis of certain
business trends and render comparative analyses to other airlines less meaningful. Fuel expense fluctuates widely depending
on many factors, including international market conditions, geopolitical events, jet fuel refining costs, the Canada/U.S.
currency exchange rate, and excluding this expense from GAAP expense results, allows Air Canada to more effectively
compare its operating performance. Air Canada incurs expenses related to ground packages at Air Canada Vacations, which
some airlines generally do not incur, and excluding these expenses from GAAP results, allows its operating expense
performance to be more comparable to those of other airlines. In addition, these costs do not generate ASMs and therefore
excluding these costs from GAAP expense results, provides for a more meaningful comparison across periods when ground
package costs are changing. Operating expense, excluding fuel expense and excluding the cost of ground packages at Air
Canada Vacations, is not a recognized measure for financial statement presentation under GAAP, does not have a
standardized meaning and therefore may not be comparable to similar measures presented by other public companies.