Air Canada 2013 Annual Report Download - page 28

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2013 Air Canada Annual Report
28
Factors contributing to the year-over-year change in full year non-operating expense included:
• Losses on foreign exchange, mainly related to U.S. denominated long-term debt, which amounted to $120 million in 2013
compared to gains of $106 million in 2012. The losses in 2013 were mainly attributable to a weaker Canadian dollar at
December 31, 2013 when compared to December 31, 2012. The December 31, 2013 closing exchange rate was US$1 =
C$1.0636 while the December 31, 2012 closing exchange rate was US$1 = C$0.9949. In 2013, losses on foreign exchange
translation of $187 million were partly offset by gains on foreign currency derivatives of $68 million. Refer to section 12
of this MD&A for further information on foreign exchange risk management practices.
• In 2013, Air Canada recorded a charge of $95 million in interest expense pertaining to the purchase of its senior secured
notes which were to become due in 2015 and 2016, comprised of $61 million related to tender premiums paid to
noteholders, in respect of notes purchased, and $34 million related to the write-off of existing transaction costs and
discounts. Refer to section 9.8 of this MD&A for additional information.
• An increase in interest capitalized of $28 million which was mainly due to a standby charge related to the EETC financing
incurred prior to aircraft delivery and to higher purchase deposit balances. Refer to section 9.6 for additional information.
• A decrease in net financing expense relating to employee benefits of $80 million which was mainly due to the impact of
lower pension liabilities.
• Gains related to fair value adjustments on financial instruments which amounted to $37 million in 2013 versus losses of
$20 million in 2012. Refer to section 12 of this MD&A for additional information.
In 2012, Air Canada recorded a loss on its investment in Aveos’ parent holding company as a result of Aveos’ filing for court
protection pursuant to the CCAA and ceasing operations in March 2012. As a result, Air Canada reduced the carrying value of
its investment in Aveos’ parent holding company as well as the carrying value of a long term note receivable from Aveos to nil,
and recorded an aggregate loss on investments of $65 million. In addition, in 2012, Air Canada recorded a liability of
$55 million, which was charged to Discontinued Operations, related to Air Canada’s commitment under an employee
separation program. In 2013, a cash outflow of $29 million (a cash outflow of $26 million in 2012) was incurred in relation to
this separation program.