Air Canada 2014 Annual Report Download - page 43

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43
2014 Management’s Discussion and Analysis 43
2014 Management’s Discussion and Analysis
The following table provides a breakdown of the more significant items included in Other expenses:
CANADIAN DOLLARS IN MILLIONS
FOURTH QUARTER CHANGE
2014 2013 $ %
Terminal handling $ 58 $ 48 $ 10 21
Building rent and maintenance 35 34 1 3
Crew cycle 36 30 6 20
Miscellaneous fees and services 30 28 2 7
Remaining other expenses 135 103 32 31
OTHER OPERATING EXPENSES $ 294 $ 243 $ 51 21
NON-OPERATING EXPENSE AMOUNTED TO $206 MILLION IN THE FOURTH QUARTER
OF 2014 COMPARED TO NON-OPERATING EXPENSE OF $141 MILLION IN THE
FOURTH QUARTER OF 2013
The following table provides a breakdown of Non-operating expense for the periods indicated:
CANADIAN DOLLARS IN MILLIONS
FOURTH QUARTER CHANGE
2014 2013 $
Foreign exchange loss $ (115) $ (55) $ (60)
Interest income 10 10 -
Interest expense (83) (73) (10)
Interest capitalized 9 10 (1)
Net financing expense relating to employee benefits (32) (53) 21
Fuel and other derivatives 9 22 (13)
Other (4) (2) (2)
TOTAL NON-OPERATING EXPENSE $ (206) $ (141) $ (65)
Factors contributing to the year-over-year change in fourth quarter non-operating expense included:
• Losses on foreign exchange, mainly related to U.S. denominated long-term debt, which amounted to
$115 million in the fourth quarter of 2014 compared to losses of $55 million in the fourth quarter of 2013.
The losses in the fourth quarter of 2014 were mainly attributable to a weaker Canadian dollar at
December 31, 2014 when compared to December 31, 2013. Partially offsetting these losses were gains
of $41 million on foreign currency derivatives. The December 31, 2014 closing exchange rate was
US$1 = C$1.1601 while the September 30, 2014 closing exchange rate was US$1 = C$1.1200. Refer to
section 12 “Financial Instruments and Risk Management” of this MD&A for additional information.
• A decrease in net financing expense relating to employee benefits of $21 million which was mainly due to
the impact of lower pension liabilities.
• Gains on fuel and other derivatives which amounted to $9 million in the fourth quarter of 2014 versus
gains of $22 million in the fourth quarter of 2013. Refer to section 12 “Financial Instruments and Risk
Management” of this MD&A for additional information.