Westjet 2005 Annual Report Download - page 33

2005 WESTJET ANNUAL REPORT
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the year. Included in investing activities in 2005 is both
the purchase and sale of eight Next-Generation aircraft
for which we completed sale and leaseback transactions
in the year, resulting in a gain on disposal of $8.5 million
that we have deferred on our balance sheet. These deferred
gains are being amortized as an offset to the aircraft
leasing costs over the lease term. Aircraft additions in
2005 consist of payments totalling $574.2 million for three
737-600 aircraft, seven 737-700 aircraft, five 737-800
aircraft net of previous deposits paid on those aircraft and
the purchase of two previously leased 200-series aircraft.
In addition to those payments, aircraft additions also
include $39.2 million paid in progress payments on future
aircraft deliveries. Aircraft disposals in 2005 includes
the subsequent sale of three 737-700 and five 737-800
aircraft for which we entered into sale and leaseback
transactions in the year, as previously mentioned. We also
disposed of 13 737-200 aircraft during the year.
During 2005, we also incurred other capital expenditures
for $33.7 million relating to information technology and
$59.9 million to purchase live satellite television,
miscellaneous aircraft parts and ground handling and
training equipment.
The year 2005 was another important year in securing
the future financial strength and flexibility of our balance
sheet, as we were able to secure a final commitment
from the Ex-Im Bank to support the financing of 13
aircraft consisting of five Boeing 737-700s and eight
Boeing 737-600s. With the support of the Ex-Im Bank
guarantee, we completed financing arrangements for US
$386 million for the delivery of all 13 aircraft. This facility
will be drawn in Canadian dollars in separate instalments
with 12-year terms for each new aircraft. During 2005,
we took delivery of seven aircraft under this facility, and
have drawn a total of $256.4 million at an average fixed
rate of 4.79%. This financing activity brings the cumulative
number of aircraft financed with loan guarantees to 33,
with an outstanding debt balance of $1.12 billion associated
with those aircraft. All of this debt has been financed in
Canadian dollars at fixed rates ranging from 4.62% to 5.98%,
thus eliminating all future foreign exchange and interest
rate exposure on these US-dollar aircraft purchases.
In addition to the final commitment described above, Ex-Im
Bank has also provided us with a preliminary commitment
of US $324 million to cover an additional 10 aircraft to be
delivered between July 2006 and November 2007.
Maika Schulz
Maintenance Administrator
The year 2005 was another important year
in securing the future financial strength
and flexibility of our balance sheet...