Air Canada 2013 Annual Report Download - page 110

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2013 Air Canada Annual Report
110
8. LONG-TERM DEBT AND FINANCE LEASES
Final Maturity Weighted Average
Interest Rate (%) 2013 2012
Aircraft financing (a)
Fixed rate US dollar financing 2014 – 2025 6.52 $1,706 $ 1,278
Floating rate US dollar financing 2015 – 2021 2.39 609 650
Floating rate Japanese yen financing 2020 0.28 116 152
Senior secured notes – US dollar (b) 2019 – 2020 7.61 745 –
Senior secured notes – CDN dollar (b) 2019 7.63 300 –
Senior secured notes – US dollar (b) 2013 – – 796
Senior secured notes – CDN dollar (b) 2013 – – 300
Other secured financing – US dollar (b) and (c) 2014 – 2019 6.01 467 245
Other secured financing – CDN dollar (d) 2015 9.15 126 26
Long-term debt 6.03 4,069 3,447
Finance lease obligations (e) 2014-2033 10.12 328 363
Total debt and finance leases 6.33 4,397 3,810
Unamortized discount – (9)
Unamortized debt issuance costs (64) (43)
Current portion (374) (499)
Long-term debt and finance leases $ 3,959 $ 3,259
The total weighted average interest rate presented above excludes the impact of interest rate swaps applicable to certain
aircraft financing arrangements.
(a) Aircraft financing (US$2,177, and JPY11,476) is secured primarily by specific aircraft with a carrying value of $3,222
(2012 – $3,193). For the majority of the financing, principal and interest is repayable quarterly until maturity and can be
repaid at any time with the payment of applicable fees. US$264 and JPY11,476 of the financing is supported by a loan
guarantee by the Export-Import Bank of the United States (“EXIM”).
On May 9, 2013, in connection with the financing of five new Boeing 777-300ER aircraft, four of which were delivered in
2013, with the remaining aircraft scheduled for delivery in February 2014, Air Canada completed a private offering of
three tranches of enhanced equipment trust certificates (“EETC”) with a combined aggregate face amount of US$715.
The private offering is comprised of Class A, Class B and Class C certificates.
• The Class A certificates, with a US$425 face amount, have an interest rate of 4.125% per annum and a final expected
distribution date of May 15, 2025.
• The Class B certificates, with a US$182 face amount, have an interest rate of 5.375% per annum and a final expected
distribution date of May 15, 2021.
• The Class C certificates, with US$108 face amount, will have an interest rate of 6.625% per annum and a final
expected distribution date of May 15, 2018.
The trust certificates have a weighted average interest rate of approximately 4.7% per annum.
The trust certificates represent an interest in three separate pass through trusts. The trusts consist of a separate trust for
each of the Class A, B and C certificates. The trusts use the proceeds from the offering to acquire equipment notes that
are issued to finance the acquisition of each of the five new Boeing 777-300ER aircraft. The proceeds from the offering of
the trust certificates are held in escrow until the delivery of the respective aircraft. Funds held in escrow by the
depositary are not assets of Air Canada and are not reported as assets or debt on Air Canada’s consolidated statement of
financial position. In connection with the acquisition of the first four aircraft, an amount of US$571 was drawn from the
proceeds held in escrow in connection with the delivery and is included in Aircraft financing in the table above.