Westjet 2006 Annual Report Download - page 48

46 2006 | WestJet Annual Report
WestJet Airlines Ltd.
Years ended December 31, 2006 and 2005
(Tabular Amounts are Stated in Thousands of Dollars, Except Share and Per Share Data)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Long-term debt (continued):
During 2006, the Corporation acquired 12 aircraft supported by loan guarantees from the Export-Import Bank of
the United States (Ex-Im Bank). In 2005, the Corporation completed fi nancing arrangements for US $386.1 million
for the purchase of seven aircraft delivered in 2005 and six aircraft delivered between February and June 2006.
In 2006, the Corporation completed fi nancing arrangements for US $191.1 million to support the acquisition of
six aircraft delivered between July and December 2006. As at December 31, 2006, the Corporation has accepted
the 12 2006 aircraft deliveries under these facilities and drew a total of CAD $409.6 million (US $360.6 million).
These facilities were drawn in Canadian dollars, in separate instalments, with fi ve- and 12-year terms for live
satellite television equipment and new aircraft, respectively. Each loan is amortized on a straight-line basis over
the respective terms in quarterly principal instalments, and interest is calculated on the outstanding balance.
As at December 31, 2006, the Corporation has an unutilized and uncancelled balance of a fi nal commitment from
Ex-Im Bank totalling US $1 million for the purchase of live satellite television systems. The Corporation also
has a total preliminary commitment from Ex-Im Bank for US $240.2 million for seven aircraft to be delivered
in 2007 and 2008.
The Corporation will be charged a commitment fee of 0.125% per annum on the unutilized and uncancelled
balance of the Ex-Im Bank facility, payable at specifi ed dates and upon delivery of an aircraft, and is charged a
3% exposure fee on the fi nanced portion of the aircraft price, payable upon delivery of an aircraft.
The Corporation has available two facilities with a Canadian chartered bank totalling $15,000,000 (2005 –
$8,000,000) for letters of guarantee. At December 31, 2006, letters of guarantee totalling $9,858,000 (2005 –
$6,830,000) have been issued under this facility. These facilities are secured by a general security agreement,
an assignment of insurance proceeds and $1,858,000 of cash.
5. Other liabilities:
Included in other liabilities is $6,000,000 (2005 – $8,000,000) of unearned revenue related to the BMO Mosaik®,
AIR MILES
®
, Mastercard
®
credit card for future net retail sales and for bounty on newly activated credit cards.
During the year ended December 31, 2006, the Corporation recognized $2,000,000 (2005 – $2,000,000) of this
unearned revenue. The remaining unearned revenue balance will be recognized during the next two years with
$3,000,000 earned in 2007 and $3,000,000 in 2008.
At December 31, 2006, included in other liabilities are deferred gains from the sale and leaseback of aircraft
totalling $7,007,000 (2005 – $7,875,000), net of amortization, which are being deferred and amortized over the
lease term with the amortization included in aircraft leasing. During the year ended December 31, 2006, the
Corporation recognized amortization of $868,000 (2005 – $604,000).
In 2006, the Corporation has also included in other liabilities $1,107,000 (2005 – $1,107,000) pertaining to the
estimated lease return costs on its Next-Generation leased aircraft.