Air Canada 2013 Annual Report Download - page 130

2013 Air Canada Annual Report
130
16. COMMITMENTS
Boeing
As at December 31, 2013, the Corporation has outstanding purchase commitments with The Boeing Company (“Boeing”) for
the acquisition of 37 Boeing 787 aircraft. The first six deliveries are scheduled for 2014 and the remaining 31 between 2015
and 2019. The Corporation also has purchase options for 13 Boeing 787 aircraft (entitling Air Canada to purchase aircraft
based on previously determined pricing and delivery positions), and purchase rights for 10 Boeing 787 aircraft (entitling
Air Canada to purchase aircraft based on Boeing’s then current pricing).
The Corporation has financing commitments covering 31 of the 37 Boeing 787 firm aircraft orders. The financing terms for 28
out of the 31 covered aircraft is for 80% of the aircraft delivery price and the term to maturity is 12 years with straight-line
principal repayments. For the remaining 3 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 installment payments of principal and interest over the term to maturity.
In addition, the Corporation has an outstanding purchase commitment for the acquisition of one Boeing 777 aircraft,
scheduled for delivery in February 2014. This aircraft, together with four Boeing 777 aircraft which were delivered in 2013, is
financed through the proceeds from the private offering of enhanced equipment trust certificates as described in Note 8. The
Corporation also has purchase rights for 13 Boeing 777 (entitling Air Canada to purchase aircraft based on previously
determined pricing).
In December 2013, as part of the narrowbody fleet renewal plan, the Corporation announced an agreement with Boeing,
which is subject to conclusion of final documentation and other conditions, which includes firm orders for 33 737 MAX 8 and
28 737 MAX 9 aircraft with substitution rights between them as well as for the 737 MAX 7 aircraft. It also provides for options
for 18 aircraft and certain rights to purchase an additional 30. Deliveries are scheduled to begin in 2017 with 2 aircraft, and
with the remaining deliveries between 2018 to 2021, subject to deferral and acceleration rights. These Boeing 737 aircraft
orders are not included in the capital commitments disclosure until such time as final documentation and other conditions are
met.
Operating Lease and Capital Commitments
The estimated aggregate cost of the future firm Boeing 787 aircraft deliveries and other capital purchase commitments as at
December 31, 2013 approximates $4,986 (of which $3,392 is subject to committed financing, subject to the fulfillment of
certain terms and conditions). US dollar amounts are converted using the December 31, 2013 closing rate of CDN$1.0636.
The estimated aggregate cost of aircraft is based on delivery prices that include estimated escalation and, where applicable,
deferred price delivery payment interest calculated based on the 90-day US LIBOR rate at December 31, 2013.
2014 2015 2016 2017 2018 Thereafter Total
Capital commitments $ 916 $ 727 $ 1,067 $ 1,378 $ 643 $ 255 $ 4,986
As at December 31, 2013 the future minimum lease payments under existing operating leases of aircraft and other property
amount to $1,744 using year end exchange rates.
2014 2015 2016 2017 2018 Thereafter Total
Aircraft $ 313 $ 263 $ 223 $ 195 $ 169 $ 266 $ 1,429
Other property 46 43 27 24 22 153 315
Total $ 359 $ 306 $ 250 $ 219 $ 191 $ 419 $ 1,744