Air Canada 2014 Annual Report Download - page 67

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67
2014 Management’s Discussion and Analysis
17. SENSITIVITY OF RESULTS
Air Canada’s financial results are subject to many different internal and external factors which can have a
significant impact on operating results. The following table describes, on an indicative basis, the financial
impact that changes in certain assumptions would generally have had on Air Canada’s operating results. These
guidelines were derived from 2014 levels of activity and make use of management estimates. The impacts
are not additive, do not reflect the interdependent relationship of the elements and actual results may vary
significantly due to a wide range of factors many of which are beyond the control of Air Canada. An equivalent
but opposite movement of the sensitivity factor in the table below would generally result in a similar impact in
the opposite direction.
CANADIAN DOLLARS IN MILLIONS,
EXCEPT WHERE INDICATED
KEY VARIABLE 2014 MEASURE SENSITIVITY FACTOR
FAVOURABLE/
(UNFAVOURABLE)
ESTIMATED OPERATING
INCOME IMPACT
REVENUE MEASURES
Passenger yield (cents) System 18.9 1% increase in yield $ 110
Canada 24.5 $ 41
Traffic (RPMs) (millions) System 61,616 1% increase in traffic $ 105
Canada 17,662 $ 39
Passenger load factor (%) System 83.4 1 percentage point increase in
passenger load factor $ 126
PRASM (cents) System 15.8 1% increase in PRASM $ 107
COST MEASURES
Fuel – Jet fuel price (US$/barrel) (1) 124 US$1/barrel increase in price of jet
fuel $ (29)
Fuel – jet fuel price (CAD cents/litre) (1) 89 1% increase in price of jet fuel
(CAD cents/litre) $ (33)
Cost per ASM (cents) 16.9 1% increase in CASM $ (125)
Adjusted cost per ASM (cents) (2) 11.3 1% increase in adjusted CASM $ (83)
1 Excludes the impact of fuel surcharges and fuel hedging. Refer to section 12 “Financial Instruments and Risk Management” of this MD&A for information on Air Canada’s
fuel derivative instruments.
2 Adjusted CASM is a non-GAAP financial measure. Refer to section 20 “Non-GAAP Financial Measures” of this MD&A for additional information.
CANADIAN DOLLARS IN
MILLIONS KEY VARIABLE
2014
MEASURE SENSITIVITY FACTOR
FAVOURABLE/
(UNFAVOURABLE)
ESTIMATED
OPERATING
INCOME IMPACT
CURRENCY EXCHANGE
C$ to US$ C$1 = US$1.16 1 cent increase in exchange rate
(i.e. $1.16 to $1.15 per U.S. dollar)
Operating income (1) $ 33
Net interest expense $ 2
Revaluation of long-term debt, U.S. dollar cash and short-
term investments and other long-term monetary items, net $ 33
Remeasurement of outstanding currency derivatives $ (23)
PRE-TAX INCOME IMPACT $ 45
1 The operating income impact of currency exchange movements is before the impact of hedging activities, such as through the use of foreign currency derivatives and holding U.S.
dollar cash reserves. The gains and losses related to these hedging activities are recorded in non-operating income (expense) on Air Canada’s consolidated statement of operations.