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32
YOUR OWNERS’ MANUAL
As at February 28, 2006, we had 120,028,091 common
voting shares outstanding, 9,550,214 variable voting shares
outstanding and 11,359,986 stock options outstanding.
To facilitate the financing of our Ex-Im Bank supported
aircraft, we utilize three special-purpose entities. We
have no equity ownership in the special-purpose entities;
however, we are the primary beneficiary of the
special-purpose entities’ operations. The accounts of
the special-purpose entities have been consolidated in
the financial statements.
Contractual Obligations (MILLIONS)
Total 2006 2007 2008 2009 2010 Thereafter
Long-term debt repayments $ 1,160 $ 114 $ 114 $ 127 $ 112 $ 112 $ 581
Capital lease obligations(1), (2) 531––1–
Operating leases(3) 839 91 97 98 94 85 374
Purchase obligations(4) 728432167129–––
Total contractual obligations $ 2,732 $ 640 $ 379 $ 354 $ 206 $ 198 $ 955
(1) The Company’s capital leases are denominated in US dollars. The obligation in 2006 is US $1,900.000.
(2) Includes imputed interest at 6.09% totalling $364,000.
(3) Included in operating leases are US-dollar operating leases primarily related to aircraft. The obligations of these operating leases in US dollars are: 2006 – $67,468,000;
2007 – $75,507,000; 2008 – $77,276,000; 2009 – $77,264,000; 2010 – $70,636,000; 2011 and thereafter – $304,837,000.
(4) Relates to purchases of aircraft, live satellite television systems, winglets and a Next-Generation flight simulator.
Russell Munroe
Shipping Administrator
Contractual Obligations,
Off-Balance Sheet Arrangements
and Commitments
Our contractual obligations for each of the next five
years, which do not include commitments for goods and
services required in the ordinary course of business, are
indicated in the table below (see “Contractual Obligations”).
We currently have 18 Next-Generation aircraft under
operating leases in our fleet, and have entered into an
agreement with an independent third party to lease two
additional 737-700 aircraft to be delivered during February
and April 2007 for an eight-year term in US dollars. These
amounts have been included at their Canadian-dollar
equivalent in the table below. Although the obligations
related to these agreements are not recognized on our
balance sheet, we nevertheless include these commitments
in assessing our overall leverage. Our debt-to-equity ratio,
including off-balance-sheet debt of $481.3 million, was
2.5 to 1 at the end of 2005 compared to 2.2 to 1 at the end of
2004. In an industry that is often characterized by high debt,
we believe the ideal debt-to-equity ratio is no more than 3.0
to 1. Although we have increasing debt obligations from
new
aircraft purchases, we have successfully maintained an
enviable debt-to-equity ratio that reflects our ability to
effectively manage our balance sheet.