Cathay Pacific 2010 Annual Report Download - page 67

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Cathay Pacific Airways Limited Annual Report 2010
65
12. Fixed assets (continued)
(b) Operating leased assets
Certain aircraft, buildings and other equipment are under operating leases.
Under the operating lease arrangements for aircraft, the lease rentals are fixed and subleasing is not allowed. At
31st December 2010, fourteen Airbus A330-300s (2009: fifteen), four Airbus A340-300s (2009: four), five
Boeing 747-400s (2009: six), one Boeing 747-400BCF (2009: one), nine Boeing 777-300ERs (2009: eight), six
Airbus A320-200s (2009: four) and four Airbus A321-200s (2009: four) held under operating leases, most with
purchase options, were not capitalised. The estimated capitalised value of these leases being the present value
of the aggregate future lease payments is HK$12,572 million (2009: HK$11,687 million).
Operating leases for buildings and other equipment are normally set with fixed rental payments with options to
renew the leases upon expiry at new terms.
The future minimum lease payments payable under operating leases committed as at 31st December 2010 for
each of the following periods are as follows:
2010
HK$M
2009
HK$M
Aircraft and related equipment:
– within one year 2,686 2,707
– after one year but within two years 2,328 2,420
– after two years but within five years 5,925 5,470
– after five years 8,358 7,227
19,297 17,824
Buildings and other equipment:
– within one year 498 552
– after one year but within two years 315 384
– after two years but within five years 383 559
– after five years 66 35
1,262 1,530
20,559 19,354
(c) Advance payments are made to manufacturers for aircraft and related equipment to be delivered in future years.
As at the year end, advance payments included in owned aircraft and related equipment amounted to
HK$4,849 million (2009: HK$2,810 million) for the Group and HK$359 million (2009: HK$292 million) for the
Company. No depreciation is provided on these advance payments.
(d) Security, including charges over the assets concerned and relevant insurance policies, is provided to the leasing
companies or other parties that provide the underlying finance. Further information is provided under note 17 to
the accounts.
(e) The Group revised the estimated residual values of certain aircraft and as a result, the depreciation charge of
the Group increased by HK$549 million in 2010. This will also increase the depreciation charge for future
periods up to the year ending 31st December 2020 by HK$1,086 million.
(f) Parked aircraft with no existing plan for reactivation are recognised at the lower of their carrying value and fair
value less costs to sell. An impairment loss amounting to HK$153 million was recognised for these aircraft and
related equipment for the year ended 31st December 2010 (2009: HK$219 million). On the other hand, the
Group reversed an impairment loss of HK$251 million (2009: nil) for aircraft which have now been brought back
to service.
Notes to the Accounts STATEMENT OF FINANCIAL POSITION