Air Canada 2013 Annual Report Download - page 27
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2013 Management’s Discussion and Analysis
27
Depreciation, amortization and impairment expense decreased 14% from 2012
In 2013, depreciation, amortization and impairment expense of $578 million decreased $91 million or 14% from 2012.
In 2013, Air Canada recorded an impairment charge of $30 million, including $24 million related to four Airbus A340-300
aircraft (none of which were operated by Air Canada). No such impairment charge was recorded in 2012. More than offsetting
this increase was the impact of certain engine and airframe maintenance events becoming fully amortized, the disposal of
CRJ-100 aircraft (previously leased to and operated by Jazz), and a decrease in depreciation expense related to the airline’s
interior refurbishment programs.
Aircraft rent expense decreased 5% from 2012
In 2013, aircraft rent expense of $318 million decreased $18 million or 5% from 2012. The decline in aircraft rent expense was
mainly due to lower lease rates when compared to 2012 (due to the impact of more favourable rates on lease renewals) and
to aircraft lease terminations (for aircraft not being operated by Air Canada). Partly offsetting these decreases was a
$4 million unfavourable currency impact.
Other operating expenses increased 3% from 2012
In 2013, Other operating expenses of $1,338 million increased $33 million or 3% from 2012, mainly due to higher terminal
handling costs, an increase in Air Canada Vacations’ land costs which was primarily due to higher passenger volumes, and an
increase of $12 million in Remaining other expenses which included one-time startup expenses related to the transfer of
EMBRAER 175 aircraft to Sky Regional.
The following table provides a breakdown of the more significant items included in Other expenses:
Full Year Change
(Canadian dollars in millions) 2013 2012 $ %
Terminal handling $196 $ 184 $12 7
Air Canada Vacations' land costs 327 319 8 3
Building rent and maintenance 131 124 7 6
Crew cycle 120 116 4 3
Miscellaneous fees and services 128 138 (10) (7)
Remaining other expenses 436 424 12 3
Other operating expenses $1,338 $ 1,305 $33 3
Non-operating expense amounted to $617 million in 2013 compared to non-operating expense of $522 million
in 2012
The following table provides a breakdown of non-operating expense for the periods indicated:
Full Year Change
(Canadian dollars in millions) 2013 2012 $
Foreign exchange gain (loss) $(120) $ 106 $(226)
Interest income 32 37 (5)
Interest expense (397) (304) (93)
Interest capitalized 46 18 28
Net financing expense relating to employee benefits (208) (288) 80
Gain (loss) on financial instruments recorded at fair value 37 (20) 57
Loss on investment in Aveos – (65) 65
Other (7) (6) (1)
Total non-operating expense $(617) $ (522) $(95)