Westjet 2004 Annual Report Download - page 37

WESTJET ANNUAL REPORT 2004
15, 2004 against the Corporation, an officer and a
former officer (the “defendants”). The principal
allegations are that the defendants conspired together
to unlawfully obtain Jetsgo's proprietary information
and to use this proprietary information to harm Jetsgo
and benefit WestJet. The Plaintiff is seeking damages,
in an amount to be determined plus $50 million, but
the Plaintiff has provided no details or evidence to
substantiate its claim.
Based on the results to date of (i) an internal investigation,
(ii) advice from independent industry experts, and (iii)
cross-examinations of witnesses in the Air Canada
proceedings, management believes the amounts claimed
are substantially without merit. The amount of loss, if
any, to the Corporation as a result of these two claims
cannot be reasonably estimated. The defence and
investigation of these claims are continuing.
Accounting Policies and Critical
Accounting Estimates
Critical accounting estimates are defined as those that
require the Company to make assumptions about
matters that are highly uncertain at the time the
accounting estimates are made, and could potentially
result in materially different results under different
assumptions and conditions. For further discussion of
these and other accounting policies we follow, see Note
1 to our consolidated financial statements.
We make estimates about the expected useful lives,
projected residual values and the potential for
impairment of our property and equipment. In
estimating the lives and expected residual values of
our fleet of aircraft, WestJet has relied upon annual
independent appraisals, recommendations from
Boeing, and actual experience with the same aircraft
types. Revisions to the estimates for our fleet can be
caused by changes in the utilization of the aircraft or
changing market prices of used aircraft of the same
type. We evaluate our estimates and potential
impairment on all property and equipment annually
and when events and circumstances indicate that the
assets may be impaired .
We make estimates in accounting for our liability related
to certain types of non-refundable guest credits. We
may issue future travel credits related to guest
compensation for flight delays, missing baggage and
other inconveniences as a gesture of good faith. These
types of credits are non-refundable and expire one year
from the date of issue. We record a liability based on
the estimated incremental cost of a one-way flight in Shane Anderson, CARE Coordinator
Contractual Obligations
(millions)
Total 2005 2006 2007 2008 2009 Thereafter
Long-term debt repayments $ 1,003 $ 97 $ 92 $ 92 $ 98 $ 91 $ 533
Capital lease
obligations (1)(2) 77–––––
Operating leases (3) 838 82 87 85 85 83 416
Purchase obligations (4) 491 302189––––
Total contractual obligations $ 2,339 $ 488 $ 368 $ 177 $ 183 $ 174 $ 949
(1) The Company’s capital leases are denominated in US dollars. The obligations in 2005 is US $5,800,000.
(2) Includes imputed interest at 8.09% totalling $420,000.
(3) Included in operating leases are US dollar operating leases primarily related to aircraft. The obligations of these operating leases in US dollars are 2005 – $58,312,000;
2006 – $66,776,000; 2007 – $66,711,000; 2008 – $66,711,000; 2009 – $66,711,000; 2010 and thereafter – $330,083,000.
(4) Relates to purchases of aircraft, live satellite television systems, winglets, fixed-base trainer and Next-Generation flight simulator.
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