Westjet 2007 Annual Report Download - page 28

PAGE 26 WESTJET ANNUAL REPORT 2007
To accommodate our current and future growth and to
ensure our people have an effi cient work environment,
we are building new offi ces adjacent to our existing
hangar near the Calgary airport. The “Campus” will
centralize our corporate office departments and
will have the ability to accommodate at least 1,250
WestJetters in addition to the 450 currently at the
Calgary hangar. The Campus is expected to cost $96.5
million and will be fi nanced from operating cash fl ow.
During 2007, we incurred a total of $11.8 million relating
to the Campus.
Contractual obligations, off-balance-sheet
arrangements and commitments
Our contractual obligations for each of the next fi ve
years, which do not include commitments for goods and
services required in the ordinary course of business, are
indicated in the table below:
At December 31, 2007
Series
600s 700s 800s Total Fleet
Leased Owned Total Leased Owned Total Leased Owned Total Leased Owned Total
Fleet at December 31, 2006 — 13 13 13 32 45 5 — 5 18 45 63
Fleet at December 31, 2007 — 13 13 16 35 51 5 1 6 21 49 70
Commitments:
2008 — — — 2 3 5 2 — 2 4 3 7
2009 — — — 7 — 7 3 — 3 10 — 10
2010 — — — 4 — 4 1 — 1 5 — 5
2011 — — — 4 — 4 — — — 4 — 4
2012 — — — — 14*14 — — — — 14 14
2013 — — — — 6*6———— 6 6
Total commitments — — — 17 23 40 6 — 6 23 23 46
Committed fl eet as of 2013 — 13 13 33 58 91 11 1 12 44 72 116
*We have an option to convert any of these future aircraft to 737-800s.
These loan guarantees from the U.S. government
represent approximately 85 per cent of the purchase
price of these aircraft. This fi nancing activity brings
the cumulative number of aircraft fi nanced with loan
guarantees to 49, with an outstanding debt balance of
$1.4 billion associated with those aircraft. All of this
debt has been fi nanced in Canadian dollars at fi xed
rates ranging from 4.6 per cent to 6.0 per cent, thus
eliminating all future foreign exchange and interest rate
exposure on these US-dollar aircraft purchases.
To facilitate the fi nancing of our Ex-Im Bank supported
aircraft, we utilize fi ve special-purpose entities. We
have no equity ownership in the special-purpose
entities, however, we are the benefi ciary of the special-
purpose entities’ operations. The accounts of the
special-purpose entities have been consolidated in the
fi nancial statements.
Investing cash fl ow
Cash used in investing activities for 2007 totalled $200.3
million compared to $477.1 million in the previous year.
In the current year, our investing activities included the
addition of four new aircraft totalling $191.4 million, as
well as $26.8 million in Boeing deposits on 23 future-
owned aircraft deliveries partially offset by $13.7 million
received in the fi rst quarter related to the sale of two
engines. In 2006, cash used in investing activities
related to 12 new aircraft acquisitions of $438.9 million,
as well as $43.6 million of additions to property and
equipment primarily related to the development of the
aiRES project.
Capital resources
WestJet increased its aircraft commitment by 31
aircraft, bringing the total committed fl eet to 116 by
2013. On July 12, 2007, we signed a Letter of Intent
to lease three aircraft in 2010 with options to lease
three more aircraft in 2011, which were exercised on
October 26, 2007. On July 31, 2007, we announced an
agreement to purchase 20 Boeing 737-700 aircraft with
14 scheduled for delivery in 2012 and six in 2013. On
August 7, 2007, we signed another Letter of Intent to
lease three aircraft with two scheduled for delivery in
2010 and one in 2011, and on November 6, 2007, we
signed a Letter of Intent for two more 737-800 aircraft
to be delivered in November 2008 and January 2009. As
at December 31, 2007, total aircraft commitment was
$947.5 million, or US $968.9 million.
At December 31, 2007, we had existing commitments
to take delivery of an additional 46 aircraft as
summarized below:
Contractual obligations (thousands) Total 2008 2009 2010 2011 2012 Thereafter
Long-term debt repayments $ 1,429,518 $ 172,992 $ 157,173 $ 156,504 $ 169,228 $ 154,797 $ 618,824
Capital lease obligations(1) 1,624 444 444 698 38 — —
Operating leases(2) 1,487, 676 107,143 130,315 154,692 169,906 176,691 748,929
Purchase obligations(3) 947,513 101,157 7,446 36,367 79,027 509,650 213,866
$ 3,866,331 $ 381,736 $ 295,378 $ 348,261 $ 418,199 $ 841,138 $ 1,581,619
(1) Includes weighted average imputed interest at 5.29% totalling $141.
(2) Included in operating leases are US-dollar operating leases primarily related to aircraft. The obligations of these operating leases in US dollars are: 2008 – $94,885; 2009 – $125,394; 2010 –
$152,720; 2011 – $171,180; 2012 – $178,151; 2013 and thereafter – $743,404.
(3) Relates to purchases of aircraft, live satellite television systems, and winglets. These purchase obligations in US dollars are: 2008 – $103,443; 2009 – $7,614; 2010 – $37,189; 2011 – $80,813;
2012 – $521,168; 2013 and thereafter – $218,699.