Air Canada 2014 Annual Report Download - page 80

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80 2014 Annual Report
ADJUSTED CASM
Air Canada uses Adjusted CASM to assess the operating performance of its ongoing airline business
without the effects of fuel expense, the cost of ground packages at Air Canada Vacations and unusual items
as these items may distort the analysis of certain business trends and render comparative analysis to other
airlines less meaningful.
Adjusted CASM is not a recognized measure for financial statement presentation under GAAP, does not have a
standardized meaning and may not be comparable to similar measures presented by other public companies.
Fuel expense is excluded from operating expense results as it fluctuates widely depending on many factors,
including international market conditions, geopolitical events, jet fuel refining costs and Canada/U.S. currency
exchange rates. Air Canada also incurs expenses related to ground packages at Air Canada Vacations which
some airlines, without comparable tour operator businesses, may not incur. In addition, these costs do not
generate ASMs and therefore excluding these costs from operating expense results provides for a more
meaningful comparison across periods when such costs may vary.
Therefore, excluding fuel expense, the cost of ground packages at Air Canada Vacations and unusual items
from operating expenses generally allows for more meaningful analysis of Air Canada’s operating expense
performance and a more meaningful comparison to those of other airlines.
Adjusted CASM is reconciled to GAAP operating expense as follows:
CANADIAN DOLLARS IN MILLIONS,
EXCEPT WHERE INDICATED
FOURTH QUARTER FULL YEAR
2014 2013 $ Change 2014 2013 $ Change
GAAP OPERATING EXPENSE $ 2,998 $ 2,759 $ 239 $ 12,457 $ 11,763 $ 694
Adjusted for:
Aircraft fuel (791) (831) 40 (3,747) (3,534) (213)
One-time payments – ACPA (1) (30) -(30) (30) -(30)
Benefit plan amendments (2) - 82 (82) - 82 (82)
Tax-related provision adjustments (3) - - - 41 -41
Ground packages costs at Air Canada Vacations (74) (66) (8) (377) (327) (50)
Impairment charge (4) -(6) 6 - (30) 30
OPERATING EXPENSE, ADJUSTED FOR THE
ABOVE-NOTED ITEMS $ 2,103 $ 1,938 $ 165 $ 8,344 $ 7,954 $ 390
ASMs (MILLIONS) 17,403 16,033 8.5% 73,889 68,573 7.8%
ADJUSTED CASM (CENTS) ¢ 12.08 ¢ 12.09 - ¢ 11.29 ¢ 11.60 (2.6)%
1 In 2014, one-time payments totaling $30 million were made to ACPA members under a collective agreement concluded in October 2014.
2 In 2013, Air Canada recorded an operating expense reduction of $82 million related to amendments to defined benefit pension plans.
3 In 2014, Air Canada recorded favourable tax-related provision adjustments of $41 million.
4 In 2013, Air Canada recorded impairment charges amounting to $30 million.