2001 Annual Report - Edmonton International Airport

Edmonton Airports remains focused on its ongoing strategy of managing the airports for which it is responsiblein a safe, secure and efficient manner, and to advance economic and community development by promotingairline and transportation service and an expanded aviation industry.Five-Year Financial InformationEdmonton Airports’ lease with the Crown requires that we provide a five-year outlook for Edmonton Airports’combined financial results. The following outlook is based on assumptions that we consider most likely, butwhich are nevertheless conservative. The most material assumptions have to do with passenger volumes,utilization by passengers of new Central Hall concession and retail, rent formula and new revenues from EIAland leases. The revenue increase in 2002 is primarily attributable to a July 1, 2002 increase in AIF from theexisting $10 per enplaned passenger to $15. In addition, increased Crown rent and security costs and therecovery of those costs inflate both revenue and expenses.(in millions of $) 2002 2003 2004 2005 2006Revenue (net of AIF collection costs) 65.5 75.2 79.5 81.7 83.9Operating expenses 36.9 43.2 45.0 46.7 48.4Earnings before interest and amortization(Free Cash Flow) 28.6 32.0 34.5 35.0 35.5Debt service amount(net of interest income) 15.0 16.1 17.5 19.2 19.5Debt Service Coverage Ratio 1.91 1.98 1.95 1.83 1.82Cash flow in excess of that required to service debt is reinvested in infrastructure through Edmonton Airports’ongoing capital program.Capital ExpendituresThe following table summarizes the infrastructure investment for the next five years and includes all elementsof our capital spending: ATR Project, General Capital, Cost-recovery Capital, and Revenue Investment Capital. TheATR element now includes $44 million for Phase 4, which has been approved in principle. Provision has alsobeen made for an additional $20 million related to security-related infrastructure and equipment.(in millions of $) 2002 2003 2004 2005 2006Estimated aggregate capital 62.6 44.5 26.0 36.2 10.0AccountabilityEdmonton Airports’ public accountability requirements with respect to planning, reporting, conduct andoperational effectiveness are documented in its leases with the Government of Canada and the City ofEdmonton, and the appropriate Provincial Legislation, including the Regional Airport Authorities Act. Theseagreements and legislation set out specific requirements with respect to such matters as business ethics,conflict of interest, audit, periodic performance reviews and disclosure. In addition to information includedearlier in this 2001 Management Discussion and Analysis, the following items require disclosure.37