CzeCh airlines - České aerolinie

Notes to the Consolidated Financial Statements
For the Year ended 31 December 2010
annual report 2010 | 114
Allowance for Diminution in Value
Buildings, halls
and structures
Machinery and
equipment
Tangible assets
under construction
1 January 2009
CZK’000
Charge
for the year
CZK’000
In 2009, the Group mainly created the allowance for rotables in the amount of
CZK 243,395 thousand as it is expected that their value will be covered by sale rather
than by use.
In 2010, the financial leasing of three Boeing B737 was expired and the aircraft were
added to the assets at acquisition costs of CZK 484,996 thousand. Furthermore, the
financial leasing of other four B737 aircraft was prematurely expired and the aircraft
were added to the assets at acquisition costs of CZK 736,954 thousand.
The finance lease of three Boeing B737-500 expired in 2009 and the aircraft were
added to the assets of the Group at the acquisition cost of CZK 383,518 thousand.
Significant Fixed Assets Disposals in 2010
Release
during the year
CZK’000
(15,798) 15,798
31 December 2009
CZK’000
(24,037) (244,091) 22,580 (245,548)
(60,713) (2,553) 409 (62,857)
(100,548) (246,644) 38,787 (308,405)
Revenue from the sale
CZK’000
Net book value
CZK’000
Hangar F including land 815,886 129,648
6 aircraft Boeing B737 1,186,039 1,005,313
Land around the APC building 68,894 53,325
Land around Hangar F 34,089 34,089
Land under Hangar G 89,025 89,025
Significant Fixed Assets Disposals in 2009
Revenue from the sale
CZK’000
Net book value
CZK’000
Aircraft Airbus A310 247,125 1,886
APC building including land 606,710 437,910
Advances
The advances paid in the amount of CZK 503,145 thousand as of 31 December 2010
(as of 31 December 2009: CZK 132,376 thousand) represent advances for 8 Airbus
A319 aircraft, which will be delivered in 2011 – 2014. The Group has an option for the
purchase of these aircraft. The prepayments are classified as unrefundable and they
are recalculated using a historical foreign exchange rate.
The advances in the amount of CZK 0 thousand as of 31 December 2010 (as of 31
December 2009: CZK 990,316 thousand) related to Boeing B737 aircraft are not refinanced
by a finance lease and became part of the acquisition costs of the respective
aircraft at the expiry of the finance lease when the aircraft became property of
the Group. The decrease of the advances of CZK 990,316 thousand in 2010 relates to
the expiry of financial leasing of seven Boeing B737 and its addition to the assets of
the Company. The decrease in the advances in 2009 in the amount of CZK 287,095
thousand relates to the expiry of the finance leasing of three Boeing B737 aircraft
and their addition to the assets of the Group.
Allowance for Diminution in Value
The Group creates an allowance for assets under construction – technical improvement
of aircraft under finance lease, when the lessor did not approve the depreciation
thereof. The Group further creates an allowance if the carrying value of an asset
is greater than its estimated recoverable value; the carrying value is then reduced by
an allowance to the recoverable value.
The fair value of aircraft purchased by the Parent Company after the expiry of the
finance leases is significantly higher than their carrying amount.