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WestJet 2012 Annual Report / 40
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INANCIAL I
N
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ur financial
a
d
erivative instr
u
W
e are expose
d
u
se various fin
a
e
t fuel prices.
W
O
verall, our B
o
n
cluding thos
e
r
elated to fina
n
a
ctivities.
F
uel risk
T
he airline ind
u
p
rices. Fuel pr
ensions, refin
e
h
edge a portio
D
uring the first
a
bility to adjus
t
c
omparison to
n
o fuel derivati
v
P
reviously, up
o
a
ccounting, th
e
w
hile the ineff
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he effective g
a
ircraft fuel ex
w
ere recognize
F
or a discussio
n
cluding the fi
n
p
lease refer to
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oreign exch
a
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oreign exchan
r
esult of chang
r
ates on our
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m
ainly aircraft
o
ur exposure,
U
pon proper q
u
F
or a discussi
o
p
urposes they
a
nd loss associ
a
2
0
1
2 Results o
f
I
nterest rate
nterest rate ri
s
m
arket interes
t
e
quivalents bal
e
arnings of $5
e
quivalents. W
e
N
STRUMENT
S
a
ssets and lia
b
u
ments, identi
f
d
to market, c
a
ncial derivati
v
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e do not hol
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o
ard of Direc
t
e
related to fi
n
n
cial instrume
n
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stry is inhere
n
ices are affec
t
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ry capacity, a
n
n of our futur
quarter of 20
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t
to volatile fu
e
its potential b
e
v
e contracts o
u
o
n proper qu
a
e
effective port
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ctive portion
w
ains and loss
e
pense. We ex
c
d in non-oper
a
n of the natur
n
ancial statem
e
2012 Results
o
a
nge risk
ge risk is the r
es in foreign
e
S-dollar-deno
m
fuel, aircraft l
e
we periodicall
y
u
alification, we
o
n of the nat
u
serve; risk ma
a
ted with the i
f
operations –
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risk
s
k is the risk t
h
t
rates. We ar
e
ance. A chang
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e
are also ex
p
S
AND RISK
M
b
ilities consist
f
ied interest-b
e
r
edit and liqui
d
v
es to reduce
m
d
or use any d
e
t
ors has resp
o
n
ancial instru
m
n
ts are revie
w
n
tly dependent
t
ed by a host
n
d global dem
a
e anticipated
j
1
2, we decide
d
e
l prices along
e
nefits. As a r
e
u
tstanding at
D
a
lification, we
t
ion of the cha
n
w
as recognize
d
e
s previously r
c
luded time v
a
a
ting income (
e
r
e and extent
o
e
nt classificati
o
o
f operations
isk that the fai
e
xchange rate
s
m
inated mone
t
e
asing expens
e
y
use financial
designate our
u
re and exten
nagement acti
v
nstruments; a
n
F
oreign excha
n
h
at the value o
e
exposed to i
n
e of 50 basis
the year end
e
p
osed to inter
e
M
ANAGEMEN
primarily of
e
aring deposits
,
d
ity risks asso
c
m
arket risk ex
p
e
rivative instru
m
o
nsibility for t
h
m
ents. Manage
m
w
ed and addr
e
upon jet fuel
t
of factors ou
a
nd and suppl
y
j
et fuel purch
a
d
to cease our
f
with the com
p
e
sult, all remai
n
D
ecember 31,
2
accounted fo
n
ge in the fair
d
in non-opera
ecognized in
h
a
lue from the
e
xpense) durin
g
o
f our use of
f
o
n and amoun
t
Aircraft fuel
o
n
r value of reco
s
. We are exp
o
t
ary assets an
d
e
, certain mai
n
derivative in
s
foreign excha
n
t of our use
vities; the fina
n
d the signific
a
n
g
e
on page 2
7
r future cash f
n
terest rate fl
u
points in the
m
e
d December
3
e
st rate fluctu
a
T
cash and cas
,
accounts pay
a
c
iated with our
p
osures from
c
ments for trad
i
h
e establishm
e
m
ent perform
s
e
ssed in light
t
o operate and
tside our con
t
y
. Under our f
u
a
ses for up to
fuel hedging p
r
p
letion of an in
n
ing contracts
2
012.
r fuel derivati
value of the h
ting income (
e
h
edge reserve
s
measurement
g
the period th
f
uel derivative
s
t
of income, ex
n
page 24 of t
h
gnized assets
a
o
sed to foreign
d
liabilities an
d
n
tenance costs
s
truments, incl
n
ge forward c
o
of US-dollar
f
ncial stateme
n
a
nt assumptio
n
7
of this MD&A
f
lows of a fina
n
u
ctuations on
s
m
arket interes
t
3
1, 2012 (20
1
a
tions on our
d
s
h equivalents
,
able and accr
u
r
financial asse
t
c
hanges in for
e
i
ng or speculat
e
nt and appr
o
s
continuous a
of changes t
o
d
, therefore, w
e
t
rol, such as
s
u
el price risk
m
36 months,
a
rogram based
-depth interna
were extingui
s
i
ves as cash
h
edging instru
m
e
xpense). Upo
n
s
were record
e
of effectivene
e change occu
s
for the year
s
x
pense, gain a
n
h
is MD&A.
a
nd liabilities
o
exchange ris
k
d
our US-dolla
and a portion
uding US-doll
a
o
ntracts as cas
h
f
oreign excha
n
n
t classificatio
n
n
s made in det
e
A
.
n
cial instrumen
s
hort-term inv
e
t
rate would h
a
1
1 – $4.4 mill
i
d
eposits that
r
s
,
restricted c
a
u
ed liabilities a
n
ts and liabiliti
e
e
ign exchange
t
ive purposes.
o
val of our ri
s
a
ssessments s
o
o
market cond
e
are exposed
s
ignificant we
a
m
anagement p
o
a
s approved b
y
on our strong
l analysis on t
h
s
hed during th
e
flow hedges.
m
ent was reco
g
n
maturity of t
e
d in net ear
n
e
ss; accordingl
y
u
rred.
s
ended Dece
m
n
d loss associa
o
r future cash f
k
s arising from
r-denominate
d
n
of airport op
e
a
r foreign exc
h
h
flow hedges
n
ge derivative
s
n
and amount
o
e
rmining their
t will fluctuate
e
stments inclu
d
a
ve had an a
p
i
on) as a res
u
r
elate to purc
h
s
a
sh, accounts
n
d long-term d
e
s. From time
t
rates, interes
t
s
k manageme
n
o
that all signi
itions and ou
r
to the risk of
v
a
ther events,
g
o
licy, we are p
e
y
our Board o
f
financial positi
h
e cost of the
e
second quar
t
Under cash f
g
nized in hedg
t
he derivative i
n
ings as a co
m
y
, changes in
m
ber 31, 2012
ted with the i
n
f
lows would flu
fluctuations i
n
d
operating ex
p
e
ration costs.
T
h
ange forward
for accounting
s
, including th
of income, ex
p
fair value, ple
a
as a result of
d
ed in our cas
h
p
proximate im
p
u
lt of our cas
h
h
ased aircraft
a
receivable,
ebt.
t
o time, we
t
rates and
n
t policies,
ficant risks
r
operating
v
olatile fuel
g
eopolitical
e
rmitted to
f
Directors.
on and our
program in
t
er, leaving
f
low hedge
e reserves,
nstrument,
m
ponent of
time value
and 2011,
n
struments,
ctuate as a
n
exchange
p
enditures,
T
o manage
d
contracts.
purposes.
e business
p
ense, gain
a
se refer to
changes in
h
and cash
p
act on net
h
and cash
a
nd airport