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2006F inancialReport
Annual Report 2006Consolidated Financial StatementsWinnipeg Airports Authority Inc.Year Ended December 31, 2006
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Management’s Responsibility for F inancial StatementsYear ended December 31, 2006
1
The consolidated fi nancial statements of the Winnipeg Airports Authority Inc. have been prepared
by management and approved by the Board of Directors and the Members of the Winnipeg Airports
Authority Inc. Management is responsible for the preparation and presentation of the information
contained in the consolidated fi nancial statements and other sections of this Annual Report. The
Winnipeg Airports Authority Inc. maintains appropriate systems of internal control, policies and
procedures which provide management with reasonable assurance that assets are safeguarded and
that fi nancial records are reliable and form a proper basis for the preparation of fi nancial statements.
The Winnipeg Airports Authority Inc.’s independent auditors, KPMG LLP, have been appointed by the
Members of the Authority to express their professional opinion on the fairness of these consolidated
fi nancial statements.
The Board of Directors ensures that management fulfi lls their responsibilities for fi nancial reporting
and internal controls through an Audit Committee which is comprised solely of directors who are
neither offi cers nor employees of the Authority. This committee reviews the consolidated fi nancial
statements and reports to the Board of Directors. The auditors have full and direct access to the
Audit Committee.
February 16, 2007
Barry W. RempelPresident and Chief Executive Offi cer
Catherine J. Kloepfer, CGA, FCASenior Vice President, Administration and Chief Financial Offi cer
2
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Management’s Discussion and AnalysisFor the year ended December 31, 2006Dated February 16, 2007
Forward–Looking Statements
This Management’s Discussion and Analysis (“MD&A”)
contains certain forward-looking statements. By their
nature, forward-looking statements require assumptions
and are subject to inherent risks and uncertainties.
Please refer to the section titled “Caution Regarding
Forward-Looking Statements” contained at the end of
this MD&A for a discussion of such risks and uncertainties
and the material factors and assumptions related to
forward-looking statements.
Introduction
This Management Discussion and Analysis complements
and supplements the consolidated fi nancial statements
of Winnipeg Airports Authority Inc. (“WAA”) for the
year ended December 31, 2006. It is provided to explain
management’s view of the conditions and events that
shaped the information contained in the fi nancial
statements and help in understanding how these
conditions and events are expected to affect the
business of WAA moving forward. This MD&A should
be read in conjunction with the fi nancial statements.
WAA is responsible for the management, operation and
development of Winnipeg James Armstrong Richardson
International Airport, formerly known as the Winnipeg
International Airport, (the “airport”) under a 60 year
lease entered into in 1997 with Transport Canada. WAA
is a non-share, community based corporation. WAA is
responsible for fi nancing its capital investments and
all excess revenues are for re-investment in airport
infrastructure. WAA considers Earnings Before Interest,
Taxes, Depreciation and Amortization (“EBITDA”) to be an
appropriate indicator of its ability to service its debt as
EBITDA is a measure of the ability to generate cash fl ow
and is used by other airports in Canada, investors and
analysts for comparison purposes.
WAA uses non-GAAP measures, including EBITDA to
provide users with an alternate method for assessing
performance and to provide a consistent basis for
comparison. These measures are not in accordance
with or an alternative to GAAP and may be different from
measures used by other companies.
Operating Activity
In a year where the Manitoba economy grew at
a brisk pace, activity at the Winnipeg James
Armstrong Richardson International Airport also
grew at a very healthy rate. Total passenger traffi c
was recorded at 3.4 million. This fi gure continues a
trend in year over year increases averaging above
six percent over the period 2003 to 2006.
During 2006 a number of air service changes were
made, offering the traveling public more choices.
Air Canada entered the US market with twice weekly
service to Las Vegas. WestJet had previously been
operating the same route, however increased their
frequency per week from two to four for the winter.
New non-stop fl ights were added between Winnipeg
and London, Ontario. Zoom increased their service to
London-Gatwick from twice per month, to once per
week for the summer season. Aeromexico began service
between Winnipeg and Cancun for Toronto based tour
operator Sunwing for the winter charter season.
Passenger Traffi c for last fi ve years:
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2002 2003 2004 2005 2006(in thousands)
3
Cargo movement through an airport is a key economic
indicator. Because of its geographic location, Winnipeg
is a strategic point for the movement of goods within
Canada and internationally. Winnipeg is Canada’s number
one freighter airport. Winnipeg handled a combined
total of 155,000 tonnes of freight in 2006, three percent
higher than the amount of freight handled in 2005 and
36% above the fi gure recorded in 2003. This performance
places Winnipeg in the top three airports in Canada for
cargo tonnage, behind only Toronto and Vancouver.
Cargo tonnage:
175,000
150,000
125,000
100,000
75,000
50,000
25,000
0
2002 2003 2004 2005 2006 (in metric tonnes)
Total
Domestic
Transborder
International
4
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Results of Operations
Net Operating Results
WAA’s operating results for the years ended December 31 are summarized in the following table:
(in thousands) 2006 2005
Revenue $ 60, 364 $ 56,707Operating expenses 31,849 30,497
Revenue over expenses1 28,515 26, 210
Amortization 6,026 3,515Interest expense 2,989 1,187Income taxes of subsidiaries (12) 23
Revenue over expenses 19,512 21,485
Note 1: Revenue over expenses before interest, income taxes, depreciation and amortization of capital assets (EBITDA)
The above table demonstrates that for each year,
the revenue generated by WAA were more than
suffi cient to cover operating expenses, amortization
and interest expense.
Revenue over expensesDespite an improvement in EBITDA in 2006 of $2.3
million (or 8.8%), revenue over expenses declined by
$1.9 million. This decline is a result of increased
amortization of $2.5 million and interest expense of
$1.8 million. These changes are a result of decisions
made to issue the Revenue Bonds in 2005 and to plan
for an end to the useful life of the existing air terminal
building in 2009.
RevenueTotal revenue for 2006 was $60.4 million compared to
$56.7 million for 2005. This 6.4% increase was generated
primarily from AIF revenues which were up $1.0 million,
or 5.3%. The AIF revenue is recorded net of the commission
paid to the air carriers for the collection of the AIF, which
is 6% of the $15 WAA charges per enplaned passenger.
AIF revenue is used for airport improvements such
as the Airport Redevelopment Program, including
associated debt service costs.
Aeronautical revenue (comprised of aircraft landing
fees, general terminal fees and passenger security fees)
increased to $21.3 million, up almost $1 million from the
prior year. In general, aircraft landing fees are charges
to cover the costs of operating and maintaining the
airfi eld while general terminal charges are designed
to cover the costs of operating and maintaining the air
terminal building. Aircraft landing fees are charged on
the basis of gross takeoff weight of each aircraft while
general terminal charges are based on number of
passengers. The passenger security fees are on a per
passenger basis and are charged on a cost-recovery basis
for specifi c security costs.
The increases in aeronautical revenue and AIF are a
result of a 4.8% increase in passengers and an increase in
scheduled fl ights. Because of the increased traffi c at the
airport, WAA has also experienced an increase in the
utilization of parking and concession facilities. This has
resulted in an increase of 5.5% in revenue from parking
and concessions combined.
Rental revenue from land and building occupancy has
increased from $4.3 million in 2005 to $4.6 million in
2006, an increase of 6.3%. Developments on the airport
lands include several new hangars and buildings for
customers such as Calm Air and Fast Air, and additional
space occupied by Bison Transport.
WAA is focusing on increasing the non-aeronautical
revenues generated on the airport campus,
including leasing and development opportunities.
Operating ExpensesTotal operating expenses incurred to operate and
maintain the airport campus were $31.8 million in
2006, an increase of $1.4 million over 2005. The majority
of operating expenses are incurred for salaries, wages
and benefi ts, reaching 47% of the consolidated total.
WAA has both union and non-union employees and
both groups are compensated with salaries and benefi ts,
including pension plan, medical and life insurance
benefi ts, and certain other benefi ts. The cost of providing
these benefi ts adds 28% to the salaries and wages expense.
The second largest area of expense is categorized as
materials, supplies and services. This is comprised of
expenses for such items as sand and ice melting sup-
plies for runways and ground side roadways, utilities,
maintenance costs for equipment, parking and security
services, and other administrative costs. This expense
was $11.2 million in 2006 versus $10.8 million in 2005, or
an increase of $.4 million.The majority of the costs in this
area are driven largely by weather conditions.
Property taxes paid to the City of Winnipeg and the
Rural Municipality of Rosser declined in 2006 to $1.7
million, a reduction of $0.5 million. In 2005 WAA incurred
an assessment for four years property taxes on a right
of way adjacent to WAA’s leased lands. The reduction
in the expense is also due partly to WAA successfully
lobbying the City to change the methodology used on
the assessment of the airport property.
An expense that is imposed upon WAA is the payments
required to the Government of Canada under the terms
of the Ground Lease. Total payments in 2006 amounted
to $3.9 million which represents an increase from 2006
of $30,000. Rent charges for 2007 will be $4.0 million
in accordance with the terms of the lease. Rent charges
are fi xed in the lease through 2009. Subsequent to
that point, escalation of rent payments will be tied to
revenues earned by WAA.
AmortizationAmortization expense has increased by $2.5 million over
2006 to $6.0 million. Increased amortization is a result
of two factors: accelerated amortization of the existing
air terminal building and some related equipment;
plus the beginning of amortization on the new parkade
structure (which came into service in November 2006).
Interest expenseInterest expense for 2006 was $3.0 million which is an
increase of $1.8 million over 2005. During 2005, interest
was incurred for the fi nal three months of the year after
the bonds were issued at the end of September 2005.
For 2006, interest was incurred for the entire year with
partial capitalization to the Airport Redevelopment
Program. The coupon rate on the issued bonds is at
5.205% while the effective rate is 5.75%, taking into
account forward contracts used in 2005 to limit WAA’s
exposure to interest rate risk.
Airport Site Redevelopment and Capital Program
WAA’s fi ve year Airport Site Redevelopment program
fi nished its second year with the completion of a 1,559
stall parkade at a cost of $37.5 million. This expands the
total car parking capacity at the Airport to approximately
4,000 stalls, an increase of 63%.
Total expenditures on the Airport Site Redevelopment
program in 2006 reached $92.9 million. Construction
of a new apron was started, including laying of base
materials and associated land drainage works. Tunnel
work and roadways were constructed to line up with
the new airport campus layout, and work began on
upgrades to the central utilities building.
5
6
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Plans are underway to begin construction of the new air
terminal building in the spring of 2007 along with an
elevated roadway, central utilities building and completion
of the new apron. Construction is expected to be
completed in late 2009 with eleven loading bridges
plus an additional seven ground loading position. In
2015 it is expected that the new air terminal building
will be expanded to add another three loading bridges
in order to meet expected passenger volumes.
Other expenditures in the capital program were $5.9
million for items including runway lighting rehabilitation,
runway fi llets, roadways and biometric access controls.
Assets and Liabilities
Assets Current assets, excluding cash and cash held in trust,
totaled $4.9 million at December 31, 2006, versus $6.5
million at the prior year end. The decline of $1.6 million
was primarily a result of a decrease in accounts receivable
of $1.6 million due to the timing of receipt of payments.
Capital assets have increased to $183.1 million for 2006.
This represents a net increase of $92.7 million over 2005.
During the year, $98.8 was invested in new capital asset
acquisition and construction related to the Airport Site
Redevelopment program.
The balance in investments has declined since 2005 as
payments are made for the Airport Site Redevelopment
program. At the end of 2006, the balance remaining
in investments was $195.3 million, a reduction of $68.4
over 2005’s balance. Investments are held with a third
party and are invested in short term debt instruments
with maturities less than one year.
Other assets include accrued pension asset, deferred
fi nancing costs and organizational costs. The increase in
the accrued pension asset of $2.4 million is a result of
funding payments being made in excess of the current
year’s pension expense, as determined by actuarial
estimate. The deferred fi nancing costs and organization
costs were amortized during the year which is the cause of
their decline in value to $10.4 million and nil respectively.
Liabilities
Current liabilities, excluding bank indebtedness,
increased by $11.7 to a total of $19.9 million. This
increase is due primarily to increased accounts
payable and accrued liabilities, due to the timing of
payments related to the Airport Site Redevelopment
program. Out of the total accounts payable and
accrued liabilities at December 31, 2006, $6.5 million
relates to this program.
Long term employee benefi ts relate to separation
and post-employment benefi ts for employees.
This liability is determined actuarially based upon
current employee and pensioner data. The balance at
December 31, 2006 has increased to $3.2 million versus
the 2005 balance of $2.5 million.
The Government of Canada agreed to defer lease payments
of $762,000 to be repaid over a 10 year period beginning in
2006. The reduction in the balance to $686,000 represents
the fi rst year of such payments.
In order to protect WAA from adverse changes in interest
rates, WAA entered into long term swap contracts in
mid-2005. Losses were incurred on these contracts up to
the point where adequate effectiveness documentation
was in place. These losses are being carried on the balance
sheet as a liability until the contracts expire in 2009. At
that time the fi nal loss/gain will be included as a cost of
issuing any subsequent debt.
The balance of the Revenue Bonds series A issued in 2005
are unchanged at December 31, 2006 at $250 million.
Principal payments on these bonds begin in 2010.
Cash Flows
OperationsThe cash fl ow generated from operations for 2006 was
$37.3 million. This is an increase of $13.8 million over
2005 or 59%. The primary driver of this increase was an
improved working capital position due to decreased
accounts receivable and increased accounts payable and
accrued liabilities, caused by the construction activity.
FinancingWAA had a net outfl ow of cash in 2006 for fi nancing
activities of $2.4 million as a result of re-payment of
operating line of credit. In 2005, $245.8 million was
generated from fi nancing activities via the issuance
of the Revenue Bonds.
InvestingThe net cash outfl ow on investing activities was $30.5
million as a result of incurring $98.9 million on construc-
tion costs and other capital additions, net of a reduction
in investments to pay for those additions. This compares
to a net outfl ow last year of $270.2 million, primarily
due to the movement of bond proceeds into investments.
Liquidity and Capital Resources
As a non-share corporation WAA is funded through
operating revenues, AIF revenue, reserve funds, the debt
capital markets and its syndicated bank credit facility.
An overall Capital Markets Platform was established
in 2005 by WAA with a Trust Indentures setting out
the terms of all debt, including bank facilities and
revenue bonds. The Platform is being used to fund the
Airport Site Redevelopment program. At December 31,
2006, $250 million of debt was outstanding in the
form of Revenue Bonds. The syndicated bank credit
facility is for $200 million related to the Airport Site
Redevelopment program plus an operating line of
credit for $20 million. WAA has not drawn on these
credit facilities at December 31, 2006.
Signifi cant Accounting Policies and Estimates
The signifi cant accounting policies adopted by WAA are
detailed in note 1 to the consolidated fi nancial statements.
In preparing fi nancial statements, management is
required to make certain estimates or assumptions,
including estimates for amortization of capital assets,
revenue recognition and the fair value of fi nancial in-
struments. Actual results could differ from estimates.
Capital assets of WAA include improvements to leased
land, runways, terminal and other buildings, equipment
and roadways. These assets are recorded at cost and each
asset type is amortized over their estimated useful lives.
Amortization of such assets begins when the asset is
completed and brought into service.
The timing of revenue recognition depends on the type
of revenue and the specifi c arrangements in place.
Landing fees, terminal charges and car parking are
recognized as the facilities are used. Airport improvement
fees, net of the airline administration fee, are recorded
based upon the estimated enplanement of passengers.
Revenues from concessions, ground transportation, and
space or property rentals are recognized in accordance
with their respective agreements. At each month
end there are certain estimates for the number of
passengers, aircraft movements, sales and other criteria
to determine the revenue earned for each of these
respective revenue types.
Financial Instruments and Other Instruments
In 2005, the Canadian Institute of Chartered Accountants
issued three new accounting standards: Handbook Section
1530, Comprehensive Income, Handbook Section 3855,
Financial Instruments – Recognition and Measurement,
and Handbook Section 3865 – Hedges. These new
standards are effective for WAA on January 1, 2007.
Section 1530 and the guidance report entitled Financial
Instruments – Proposed new Accounting Standards –
A Summary for Not-for-Profi t Organization issued by the
Accounting Standards Board introduces the concept of
Unrealized Changes in Net Assets (“UCNA”). UCNA
represent unrealized gains and losses on fi nancial
assets classifi ed as available-for-sale and changes in the
fair value of the effective portion of cash fl ow hedging
instruments. UCNA and the cumulative amount,
Accumulated Unrealized Changes in Net Assets (“AUCNA”)
will be presented as a new category of Net Assets, in the
Consolidated Statement of Operations and Net Assets.
Section 3855 establishes standards for the recognition
and measurement of fi nancial assets, fi nancial liabilities
and non-fi nancial derivatives (“fi nancial instruments”).
Section 3855 requires changes in the value of certain
fi nancial instruments to be recorded in the fi nancial
7
8
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
statements of a company. All fi nancial instruments are
to be recognized on the balance sheet and are to be
measured at fair value at inception. Measurement in
subsequent periods depends on whether the fi nancial
instrument has been designated as held-for-trading,
available-for-sale or held-to-maturity. Changes in the
value of fi nancial instruments designated as held-for-
trading will be recognized in Revenue over Expenses.
Unrealized gains and losses on fi nancial instruments
designated as available- for-sale will be recognized in
UCNA. Financial instruments designated as held-to-
maturity are measured at amortized cost using the
effective interest method of amortization. Other
signifi cant accounting implications arising on the
adoption of Section 3855 include the use of the effective
interest method of amortization for any transaction costs
of fees, premiums or discounts earned or incurred for
fi nancial instruments measured at amortized cost.
Section 3865 specifi es criteria under which hedge
accounting can be applied and how hedge accounting
should be executed for permitted hedging strategies.
Hedge accounting is optional. WAA has in place forward
swap derivative contracts in the notional amount of $200
million to fi x the benchmark interest rate on planned
bond issues. As of August 10, 2005 hedge accounting was
applicable for these derivative contracts. The effectiveness
of these derivative contracts is re-evaluated each quarter.
As of January 1, 2007, the effectiveness criteria of Section
3865 will be applied. Any ineffectiveness in the hedge
relationship will be recognized in Revenue over Expenses.
Section 3855 requires certain opening adjustments to the
fi nancial statements effective January 1, 2007. Financial
liabilities must be recognized at their fair value and as a
result the value of debt will be adjusted by unamortized
transaction costs such as bond issue costs. The unamortized
portion of the deferred loss on long-term swap contracts at
December 31, 2006 will be recorded in the January 1, 2007
opening balance of UCNA. Other impacts of section 3855
on the fi nancial statements are not expected to be material
in nature. The overall amounts of these adjustments to the
fi nancial statements are still being quantifi ed.
Risks and Uncertainties
WAA faces certain risks beyond its control which may or
may not have a signifi cant impact on its fi nancial condition.
Airport revenues are largely a function of aircraft size
and frequency which are driven by overall demand.
Over the past few years several signifi cant events have
demonstrated the volatile nature of air travel demand.
In addition, economic conditions, global health epidemics,
political unrest, government regulations, the price
of oil and consequently airfares, all contribute to traffi c
patterns.
The ongoing fi nancial instability of the airline industry
globally has an impact on WAA’s ability to generate
revenue. However, the risk to WAA is mitigated by the
85% origin and destination characteristics of WAA’s
passenger traffi c plus 12% which connect to the north
through Winnipeg.
Another potential impact to the stability of WAA’s
earnings is the trend to use smaller gauge aircraft to
shorter routes. Such changes in the mix of aircraft
impact WAA’s ability to project aircraft landing fees and
to plan for adequate capacity on the airfi eld and in the
terminal. Aeronautical revenue may therefore be lower
than expected if passenger or aircraft activity volumes
are not realized.
Large scale construction projects such as the Airport Site
Redevelopment program are subject to cost escalation
risks. However, as 90% of the total project cost is already
incurred or under contract, limited escalation risk remains.
The availability of adequate insurance coverage is subject
to the conditions of the overall insurance market and
WAA’s claims and performance record. WAA participates
with an insurance buying group that also includes
airports in Halifax, Montreal, Ottawa, Calgary, Edmonton
and Vancouver. This group has been successful in placing
all of its insurance needs. The Government of Canada has
issued an Order in Council to provide indemnity for
“war risk and allied perils” up to April 25, 2007, which is
renewable for further periods of 120 days at the option
of the Minister of Transport, until December 31, 2007.
Financial Outlook for 2007
WAA has expectations of continued consumer demand
for air travel. The forecast for 2007 incorporates an
increase in passenger traffi c of 3.3%. Based on this
expected traffi c increase, coupled with an expected
increase in cargo activity, revenues from aeronautical
fees are planned to increase. Concession and parking
revenues are linked to the increase in passenger traffi c.
The consolidated revenues for 2007 are therefore
planned to be $63 million.
Based on this projected revenue, and continued efforts
to control operating expenses, the planned EBITDA is
$29 million, an increase over 2006 of 8%.
Capital spending on Airport Site Redevelopment program
is estimated to be $179 million with an additional
$6 million on other improvements.
Caution Regarding Forward-Looking Statements
This Management’s Discussion and Analysis (“MD&A”)
contains certain statements about WAA and its future
expectations. By their nature, forward-looking statements
require WAA to make assumptions and are subject to
inherent risks and uncertainties. There is signifi cant risk
that predictions, forecasts, conclusions and projections
will not prove to be accurate, that WAA’s assumptions
may be not correct and that actual results may differ
materially from such predictions, forecasts, conclusions
and projections. WAA cautions readers of this MD&A
not to place undue reliance on the forward-looking
statements as a number of factors could cause actual
results, conditions, actions or events to differ materially
from the targets, expectations, estimates or intentions
expressed in the forward-looking statements.
Words such as “believe”, “expect”, “plan”, “intend”,
“estimate”, “anticipate” and similar expressions,
as well as future or conditional verbs such as
“will”, “should”, “would” and “could” often identify
forward-looking statements. Specifi c forward-looking
statements in this MD&A include, among others,
statements regard: future demand for air travel, budgets
and expenditures relating to capital programs; insurance;
liquidity; and annual debt requirements.
These forward-looking statements are based on a variety
of factors and assumptions including but, not limited
to: long-term growth in population; employment and
personal income as the basis for increased aviation
demand; the Canadian and U.S. economies growth
expectation in the near term; the growth and sustain-
ability of low fare and other air carriers contribution
to aviation demand; continued transborder and
international travel growth; the cost of enhancing
aviation security will not overly burden air carriers or
WAA; the commercial aviation industry will not be
directly affected by terrorism; and no signifi cant event
will occur which impacts the ordinary course of
business such as a natural disaster or other calamity.
These assumptions are based on information currently
available to WAA, including information obtained by
WAA from third party experts and analysts.
Factors that could cause actual results or outcomes
to differ materially from the results expressed or
implied by forward-looking statements include, among
other things; levels of aviation activity; air carrier
instability; aviation liability insurance; construction
risk; geographical unrest; terrorist attacks; war; health
epidemics; labour disruptions; capital market and
economic conditions; changes in laws; adverse regulatory
developments or proceedings; lawsuits; and other risks
from time to time.
The forward-looking statements contained in this
MD&A represent WAA’s expectations as of the date of
this report and are subject to change. Except as required
by applicable law, the WAA disclaims any intention or
obligation to update or revise any forward-looking
statements included in this MD&A whether as a result of
new information, future events, or for any other reason.
9
10
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Financial and operating highlights
(In thousands) 2002 2003 2004 2005 2006
Revenue $ 42,425 $ 46,083 $ 49,014 $ 56,707 $ 60, 364Operating expenses (other than ground lease) 22,469 24,434 24,451 26,586 27,908Ground lease 3,625 3,755 2,905 3,911 3,941Earnings before interest & depreciation 16, 331 17,894 21,658 26, 210 28,515Capital expenditures 4, 304 16, 371 18,098 32,753 98,854
Total passengers 2,675 2,812 3,031 3, 227 3, 387Itinerant Aircraft movements 155. 3 151. 7 138.9 136.9 144. 6Major Revenue movements1 - - 37. 7 42. 0 42. 7Cargo Handled (tonnes) 100.8 113. 5 141. 5 149. 5 154. 71 Major Revenue movements were not tracked prior to 2004.
Summary of Five Year Forecast
(In thousands) 2007 2008 2009 2010 2011
Revenue $ 62,853 $ 69,438 $ 73,175 $ 77,000 $ 79, 309
Lease rent 3,997 4,088 4, 264 4,960 5,145
Other operating expenses 29,832 30,457 31,189 33, 237 34,060
Revenue over expenses before undernoted 29,024 34,893 37,722 38,803 40,105
Amortization 7,500 7,846 8,554 19,528 19,538
Interest 1 ,589 128 - 29, 327 28,531
Revenue over expenses 19,936 26,919 29,168 (10,052) ( 7,964)
A summary of Winnipeg Airport Authority’s Business Plan can be found at www.waa.ca
Auditors’ ReportTo the Directors of Winnipeg Airports Authority Inc.
We have audited the consolidated balance sheet of Winnipeg Airports Authority Inc. as at December 31,
2006 and the consolidated statements of operations and net assets and cash fl ows for the year
then ended. These fi nancial statements are the responsibility of the Authority’s management. Our
responsibility is to express an opinion on these fi nancial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the
fi nancial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes
assessing the accounting principles used and signifi cant estimates made by management, as well as
evaluating the overall fi nancial statement presentation.
In our opinion, these consolidated fi nancial statements present fairly, in all material respects, the
fi nancial position of the Authority as at December 31, 2006 and the results of its operations and its
cash fl ows for the year then ended in accordance with Canadian generally accepted accounting
principles. In accordance with the Canada Corporations Act, we report that, in our opinion, these
principles have been applied, after giving retroactive effect to the correction in accounting for certain
post-employment benefi ts as explained in note 2 to the fi nancial statements, on a basis consistent with
that of the preceding year.
Chartered Accountants
Winnipeg, CanadaFebruary 16, 2007
11
12
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Consolidated Balance Sheet(In thousands of dollars) December 31, 2006 December 31, 2005
(Restated)AssetsCurrent assets: Cash $ 5,170 $ 692 Cash held in trust 97 97 Accounts receivable 4,078 5,648 Income taxes recoverable 11 25 Prepaid expenses 400 440 Inventory 394 376 10,150 7, 278
Capital assets (note 3) 183,129 90,434Investments (note 4) 195, 318 263,673Future income taxes 1 – Accrued pension asset (note 11) 5,072 2,704Deferred fi nancing costs (note 7) 10,444 10,734Organizational costs – 294
$ 404,114 $ 375,117
Liabilities and Net AssetsCurrent liabilities: Bank indebtedness (note 6) $ 26 $ 2,815 Accounts payable and accrued liabilities 19,505 7,861 Security deposits 97 97 Deferred revenue 264 209 19,892 10,982
Long-term liabilities: Long-term employee benefi ts 3,156 2,497 Deferred lease payments (note 9) 686 762 Future income taxes – 8 Long-term swap contracts (note 8) 1 ,173 1,173 Revenue bonds series A (note 7) 250,000 250,000 255,015 254,440
Net assets 129, 207 109,695
Commitments (note 10) $ 404,114 $ 375,117
See accompanying notes to consolidated fi nancial statements.
On behalf of the Board:
Director Director
Consolidated Statement of Operations and Net Assets(In thousands of dollars) Year ended Year ended December 31, 2006 December 31, 2005
(Restated)Revenue: Aircraft landing fees $ 11 , 207 $ 10, 378 General terminal fees 5,890 5,677 Concessions 5,464 5,178 Parking 5,806 5,500 Space rental 2,731 2,667 Land rental 1 ,858 1,648 Passenger security fees 4,189 4, 266 Other revenue 2,542 1,758 Airport improvement fees (note 5) 20,677 19,635 60, 364 56,707
Operating expenses: Salaries, wages and benefi ts 14,999 13,548 Materials, supplies and services 11 , 217 10,830 Property taxes 1 ,692 2, 208 Ground lease (note 10) 3,941 3,911 31,849 30,497
Revenue over expenses before the undernoted 28,515 26, 210
Amortization 6,026 3,515Interest expense [note 7(c)] 2,989 1,187Revenue over expenses before income taxes 19,500 21,508
Income taxes of subsidiaries: Current (recovery) (3) 27 Future (recovery) (9) (4) (12) 23
Revenue over expenses 19,512 21,485
Net assets, beginning of year, as previously reported 109,695 89,551Prior period correction (note 2) – (1 , 341)Net assets, beginning of year, as restated 109,695 88, 210
Net assets, end of year $ 129, 207 $ 109,695
13
14
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Consolidated Statement of Cash F lows(In thousands of dollars) Year ended Year ended December 31, 2006 December 31, 2005
(Restated)Cash provided by (used in):
Operations: Revenue over expenses $ 19,512 $ 21,485 Adjustments for: Amortization: Capital assets 5,732 3, 221 Organizational costs 294 294 Deferred fi nancing costs 309 77 Future income taxes (9) (4) Loss (gain) on sale of capital assets (31) 19 Long-term swap contracts – 1,173 Increase in long-term employee benefi ts 659 465 Increase (decrease) in deferred lease payments ( 76) 193 Increase in accrued pension asset (2, 368) (1 ,620) Change in non-cash operating working capital 13, 305 (1,821) 37, 327 23,482
Financing: Increase (decrease) in bank indebtedness (2,789) 2,815 Proceeds on revenue bonds series A – 250,000 Deferred fi nancing costs (19) (10,811) Contribution for capital assets 418 3,844 (2, 390) 245,848
Investing: Net decrease (increase) in investments 68, 355 (237,555) Additions to capital assets (98,854) (32,753) Proceeds on disposal of capital assets 40 68 (30,459) (270, 240)
Increase (decrease) in cash 4,478 (910)
Cash, beginning of year 692 1,602
Cash, end of year $ 5,170 $ 692
Supplementary cash fl ow information: Income taxes paid (received) $ (17) $ 56 Interest expense paid 13, 301 220 Interest income received 9, 285 2,477
See accompanying notes to consolidated fi nancial statements.
Notes to Consolidated F inancial StatementsYear ended December 31, 2006
15
General:
Winnipeg Airports Authority Inc. (the Authority)
is incorporated under Part II of the Canada Corporations
Act as a corporation without share capital. The Authority
operates the Winnipeg James Armstrong Richardson
International Airport (the “Airport”) under a long-term
lease with the Government of Canada for the benefi t of
the community. Revenue in excess of expenses is used to
fund airport capital improvements.
The Authority is governed by a fi fteen member Board of
Directors of whom eleven members are nominated by
the City of Winnipeg, the Rural Municipality of Rosser,
Destination Winnipeg, the Winnipeg Chamber of
Commerce, The Assiniboia Chamber of Commerce
and the Federal and Provincial governments, with the
remaining members appointed by the Board from the
community at large.
1. Signifi cant accounting policies:
(a) Presentation and basis of accounting:
The Authority’s fi nancial statements are prepared
on a consolidated basis in accordance with Cana-
dian generally accepted accounting principles and
include the accounts of its subsidiaries, Winnipeg
Airport Services Corporation, Avion Services Corp. and
5388946 Manitoba Ltd. All inter-company balances
and transactions have been eliminated.
(b) Cash held in trust:
Cash held in trust is restricted to be available
to repay security deposits.
(c) Inventory:
Inventory is valued at the lower of cost and
replacement cost.
(d) Investments:
Investments are carried at the lower of cost
and market value. If the market value of the
investments becomes lower than the cost and this
decline is considered to be other than temporary,
the investments are written-down to market value.
(e) Capital assets:
Capital assets are recorded at cost and amortized on
a straight line basis as follows:
Assets Rate
Airfi eld Infrastructure 10 to 40 years
Buildings and other structures 5 to 40 years
Leasehold improvements 3 to 40 years
Vehicles, machinery and equipment 5 to 20 years
Computer equipment 3 years
Construction in progress is transferred to the
appropriate capital asset category when the capital
project is completed and the asset is placed in service.
Interest incurred during the construction of a capital
project is included in the cost of the asset.
Capital assets are reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
No assets have been deemed to be impaired.
(f) Organizational costs:
Organizational costs represent due diligence,
planning and start-up expenditures incurred by
the Authority in preparation for the transfer of the
airport operations to the Authority and have been
amortized on a straight-line basis over ten years.
16
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
(g) Revenue recognition:
Landing fees, general terminal fees, parking revenue,
passenger security fees and airport improvement
fees are recognized as the airport facilities are
utilized. Concession revenues are recognized on the
accrual basis and calculated using agreed percentages
of reported concessionaire sales, with specifi ed
minimum guarantees where applicable. Rental
revenues are recognized over the term of respective
leases, licenses and permits.
Deferred revenue consists primarily of concession
revenue for minimum guarantees and rental
revenue received in advance.
(h) Employee future benefi ts:
The Authority sponsors a defi ned benefi t pension
plan covering some of its employees. The benefi ts
are based on years of service and the employee’s
compensation during the member’s fi ve best
consecutive years’ earnings.
The Authority accrues its obligation under the
employee defi ned benefi t plan as the employees
render the services necessary to earn the pension
and other employee future benefi ts.
The cost of pensions and other post-employment
benefi ts (which includes separation, health care and
insurance benefi ts) earned by employees is actuarially
determined using the projected benefi t method pro-
rated on service and management’s best estimate
of expected plan investment performance, salary
escalation, retirement ages and expected health care
costs. The cost of providing other post-employment
benefi ts is accrued as long-term employee benefi ts
and charged to expense based on yearly service
entitlements.
For the purpose of calculating expected return on
plan assets, those assets are valued at fair value.
The net actuarial gain or loss in excess of 10 percent
of the greater of, the benefi t obligation and the
market value of plan assets, is amortized over the
average remaining service period of active employees.
The transitional asset arising from adopting the new
accounting standard on the pension plan is being
amortized on a straight-line basis over 13 years.
(i) Deferred fi nancing costs:
Costs relating to the issue of revenue bonds series A,
including underwriting fees, professional fees, and
termination of swap agreements, are deferred and
amortized on a straight line basis over the term of
the debt.
(j) Government assistance:
The Authority periodically applies for fi nancial
assistance under available government incentive
programs. Government assistance relating to capital
expenditures is refl ected as a reduction of the cost
of such assets. Government assistance relating
to operating expenses is recorded as revenue to
offset current year expenses when the related
expenditures are incurred.
(k) Financial instruments:
The Authority uses certain derivative fi nancial
instruments to fi x interest rates on its revenue
bonds. The Authority does not engage in the trading
of derivative fi nancial instruments for profi t.
The Authority applies hedge accounting for these
fi nancial instruments whereby payments and re-
ceipts designated as effective hedges are recognized
as adjustments to interest expense in the same
period that the underlying hedged transactions are
recognized. The Authority formally documents the
relationship between the hedging instrument and
the hedged item, as well as the nature of the specifi c
risk exposure being hedged and the intended term
of the hedging relationship. The effectiveness of the
hedge is assessed at inception and throughout the
term of the hedge. Any hedging transactions that
do not qualify for hedge accounting are marked-to-
market at each period end with any resulting gains
or losses recorded in income.
17
(l) Income taxes:
The Authority is exempt from income taxes
under Government of Canada legislation. The
subsidiaries are taxable corporations and follow the
asset and liability method of accounting for income
taxes. Under this method, future tax assets and
liabilities are recognized based on expected future
tax consequences of differences between the carrying
amount of the balance sheet items and their corre-
sponding tax basis, using the substantively enacted
income tax rates for the years in which the differ-
ences are expected to reverse. The effect on future
tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes
the date of enactment or substantive enactment.
(m) Use of estimates:
The preparation of fi nancial statements requires
management to make estimates and assumptions
that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and
liabilities at the date of the fi nancial statements and
the reported amounts of revenues and expenses during
the year. Signifi cant areas requiring the use of
management estimates relate to the determination
of net recoverable value of capital assets, useful lives
for amortization, provision for contingencies and
actuarial assumptions. Actual results could differ
from those estimates.
2. Prior period correction:
The Authority has an obligation to provide certain
health and insurance benefi ts to retired employees.
In previous years, the costs for these benefi ts were
recorded as an expense when paid rather than on
an accrual basis. In 2006, the Authority corrected its
basis of accounting to accrue these costs over the
period in which employees render services in return
for these benefi ts. This correction has been applied
retroactively and has resulted in an increase
in salaries and benefi ts expense, a decrease in
excess of revenue over expenses, a decrease in net
assets and a corresponding increase in long-term
employee benefi ts of $389,000 for the year ended
December 31, 2005. The cumulative effect of the
correction on periods prior to 2005 is a decrease in
net assets of $1,341,000.
3. Capital assets: 2006 2005 Accumulated Net book Net book(In thousands of dollars) Cost amortization value value
Airfi eld Infrastructure $ 40,166 $ 5,786 $ 34, 380 $ 32,457Buildings and other structures 43,235 1,078 42,157 5,488Leasehold improvements 20,788 7,909 12,879 14,621Vehicles, machinery and equipment 8,717 3,168 5,549 5,643Computer equipment 2,902 2, 240 662 785Construction in progress 87,502 – 87,502 31,440
$ 203, 310 $ 20,181 $ 183,129 $ 90,434
18
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
7. Revenue bonds series A:
(a) Bond issue:
(In thousands of dollars) 2006 2005
5.205% revenue bonds series A, due September 28, 2040, interest payable semi annually on March 28 and September 28 of each year until maturity, semi-annual installments of principal payable of $2,595 on each interest payment date commencing September 28, 2010 $ 250,000 $ 250,000
4. Investments
(In thousands of dollars) 2006 2005
Revenue bond proceeds $ 188,812 $ 236, 241Airport Improvement Fees – 20,926Debt service reserve, held in trust (note 7(a)) 6,506 6,506
$ 195, 318 $ 263,673
Investments are held in short term notes and other debt
instruments with a maturity of less than one year, with
interest rates ranging from 3.9% to 4.4% (2005 - 3.0% to
3.7%) with a total market value of $195 million (2005
- $269 million).
5. Airport improvement fees:
The Authority charges airport improvement fees
(“AIF”) on the basis of $15 per local boarded
passenger through an agreement with the Air
Transport Association of Canada and major air
carriers serving the Airport. AIF revenue is collected
by the airlines for the benefi t of the Authority and
is recorded net of a 6% handling fee. AIF revenues
can only be used to pay for airport infrastructure
development and related fi nancing costs as jointly
agreed with air carriers operating at the airport.
6. Credit facilities:
The Authority has authorized credit facilities with
three Canadian banks. Under these credit facilities
the Authority is provided with a revolving operating
facility in the amount of $20.5 million plus a
revolving term credit facility in the amount of
$200 million for the fi nancing of construction costs
related to the Authority’s capital investment plan.
These facilities are secured under the Master Trust
Indenture [note 7(a)] and will be reduced with any
new debt issuance. They are available by way of
overdraft, prime rate loans, or bankers’ acceptances.
At December 31, 2006, the Authority has not drawn
on any of these facilities.
Interest of $1.0 million has been capitalized with
respect to capital assets in 2006 (2005 - $ nil). In 2006
government assistance for the purchase of equipment
of $0.4 million (2005 - $3.8 million) was recorded as a
reduction of the cost of leasehold improvements related
to security enhancements.
The revenue bonds are direct obligations of the
Authority ranking pari passu with all other indebt-
edness issued under a Master Trust Indenture. All
indebtedness, including indebtedness under bank
credit facilities are secured under the Master Trust
Indenture by assignment of revenue and related
accounts receivable, a security interest in money in
the investment of debt service reserve and certain
accounts of the Authority, and an unregistered
mortgage of the Authority’s leasehold interest in
the Airport.
Pursuant to the terms of the Master Trust
Indenture, the Authority is required to establish and
maintain with a trustee a debt service reserve with
a balance at least equal to 50 percent of annual
debt service costs. At December 31, 2006 the debt
service reserve included $6.5 million in interest
bearing deposits held in trust (note 4). These trust
funds are held for the benefi t of the bond holders
for use and application in accordance with the
terms of the Master Trust Indenture. In addition the
Authority is required to maintain an operating and
maintenance reserve of approximately $5.8 million.
The operating and maintenance reserve may be
satisfi ed by cash, letter of credit or the availability
under a committed credit facility.
(b) The future annual principal payments commencing
in 2010 required to retire the revenue bonds are as
follows:
(In thousands of dollars)
2010 $ 2,595 2011 5, 327
Total thereaft er 242,078
(c) Interest expense (income):
(In thousands of dollars) 2006 2005
Bond interest $ 13,013 $ 3, 387 Other interest and fi nancing costs 288 277 Interest income (9, 285) (2,477)
4,016 1,187
Less capitalized interest (note 3) 1 ,027 –
$ 2,989 $ 1,187
19
(d) Deferred fi nancing costs:
(In thousands of dollars) 2006 2005
Deferred fi nancing costs $ 10,830 $ 10,811 Less accumulated amortization 386 77
$ 10,444 $ 10,734
20
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
8. Long-term swap contracts:
The Authority uses certain derivative fi nancial in-
struments to fi x interest rates on its revenue bonds.
In June and July 2005, the Authority entered into
two sets of derivative contracts to fi x the benchmark
interest rate on planned bond issues. On August 10,
2005, the Authority achieved the appropriate hedge
accounting documentation and effectiveness testing.
(a) Revenue bonds series A
The Authority entered into bond forward
derivative contracts in the notional amount
of $182 million with expiry dates in September
2005 to fi x the effective interest rate at 5.75
percent on the revenue bonds series A issued
on September 28, 2005. The loss incurred on
the settlement of the 2005 contracts is being
deferred and amortized over the life on the
revenue bonds issued.
(b) Future bond issues
The Authority entered into forward swap
derivative contracts in the notional amount of
$200 million, with expiry dates in January 2040,
to fi x the benchmark interest rate on
2009 planned bond issues.
The loss incurred, to the date of application of
hedge accounting on August 10, 2005, on these
contracts was $1,173,378 and has been recorded
as a liability until the planned bonds are issued,
at which time it will be amortized over the life
of those bonds.
9. Deferred lease payments:
In accordance with an amendment to the Ground
Lease Agreement (note 10), the Government of
Canada has deferred lease payments of $762,000.
These deferred lease payments are repayable with-
out interest on a straight line basis over a ten year
period commencing January 1, 2006.
10. Commitments:
(a) Ground Lease Agreement:
Effective December 31, 1996 the Authority
signed the Ground Lease Agreement (the
Agreement) with the Government of Canada
(the Landlord) which provides that the Authority
will lease the Airport facilities for an initial term
of 60 years. A 20 year renewal option may be
exercised. At the end of the renewal term, unless
otherwise extended, the Authority is obligated
to return control of the Airport to the Landlord.
The operating lease for the Airport requires
the Authority to calculate rent payable to the
Landlord utilizing a formula refl ecting annual
airport revenues.
The estimated lease obligations for the next fi ve
years are approximately as follows:
(In thousands of dollars) 2007 $ 3,997 2008 4,088 2009 4,264 2010 4,960 2011 5,145
21
(b) Airport site redevelopment:
At December 31, 2006, the Authority had
outstanding contractual construction
commitments amounting to approximately
$39.8 million (2005 - $53.7 million).
Subsequent to year end the Authority
has entered into additional contractual
construction commitments in the amount
of approximately $310 million.
(c) Letter of credit:
At December 31, 2006, a subsidiary of the
Authority has a letter of credit outstanding
in the amount of $60,400 in connection with
a service agreement.
11. Employee future benefi ts:
(a) Pension plan:
Information for the defi ned benefi t pension plan, based on the latest actuarial reports, measured as of
December 31 is as follows:
(In thousands of dollars) 2006 2005
Fair value of plan assets $ 28,925 $ 23,526 Accrued benefi t obligation 32,866 26,537 Funded status - plan defi cit (3,941) (3,011)
Unamortized net actuarial loss 8,924 5,786 Unamortized transitional obligation (asset) 89 ( 71)
Accrued pension asset $ 5,072 $ 2,704
The signifi cant weighted average assumptions used are as follows:
2006 2005
Accrued benefi t obligation: Discount rate 5. 25% 5. 25% Long-term average rate of compensation increase 3. 5% 3. 5% Benefi t costs: Discount rate 5. 25% 6. 25% Expected long-term rate of return on plan assets 7. 0% 7. 0% Long-term average rate of compensation increase 3. 5% 4. 5%
22
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Other information about the Authority’s defi ned benefi t plan is as follows:
(In thousands of dollars) 2006 2005
Employer contributions $ 3,456 $ 2,620 Employee contributions 279 221 Benefi ts paid 712 644 Pension expense 1 ,040 1,000
The plan assets consist of the following asset mix: 2006 2005
Money market funds 4% 3% Equity funds 54% 56% Debt and mortgage funds 32% 31% Real estate funds 10% 10%
The effective date of the most recent actuarial valuation for funding purposes was December 31, 2005 and
the next required valuation will be as of December 31, 2006.
(b) Post employment benefi ts: Information for the post employment benefi ts (health care and insurance benefi ts), based on the latest
actuarial reports, measured as of December 31 is as follows:
(In thousands of dollars) 2006 2005
Accrued benefi t obligation $ 4, 227 $ 3,873 Unamortized net actuarial loss (1 ,427) (1 ,531) Unamortized transition asset (524) (612)
Accrued benefi t liability $ 2, 276 $ 1,730
Other information about the Authority’s post employment benefi ts (health care and insurance benefi ts)
is as follows:
(In thousands of dollars) 2006 2005
Benefi ts expense $ 570 $ 409 Payments made (24) (20)
23
The signifi cant weighted average assumptions used are as follows:
2006 2005
Accrued benefi t obligation: Discount rate 5. 25% 5. 25% Long-term average rate of benefi t cost increases Initial rate 16. 0% 16. 0% Annual decrease 1. 0% 1. 0% Ultimate trend rate 3. 0% 3. 0% Year of ultimate 2018 2014
Benefi t costs: Discount rate 5. 25% 6. 25%
12. Financial instruments:
Fair value
The fair value of cash, cash held in trust,
accounts receivable, bank indebtedness,
accounts payable and accrued liabilities and
security deposits approximates their carrying value
due to their relatively short term to maturity.
The fair value of the revenue bonds series A is
$253.9 million (2005 - $254.2 million). The fair value
of investments is disclosed in note 4. The fair value
of revenue bond series A and the investments is
determined by reference to external market sources
Credit Risk
The Authority is subject to credit risk through its
accounts receivable and investments. The Authority
performs ongoing credit valuations of these
balances and maintains valuation allowances for
potential credit loss. The investments are limited
to short term debt instruments with high quality
credit ratings in order to minimize credit exposure.
The Authority derives a substantial portion of
its revenues from air carriers through landing
fees and terminal charges and through the
airlines’ collection of airport improvement fees
on its behalf. Passenger activity at the airport is
approximately 85% origin and destination traffi c,
and although there is concentration of service with
three air carriers, the Authority believes that any
change in the airline industry will not have a
signifi cant impact on revenues or operations.
13. Policing contribution agreement:
In 2002, the Authority entered into a policing
contribution agreement with the Canadian Air
Transport Security Authority (CATSA), an agent
of the Government of Canada, for the purposes
of contributions by CATSA to the costs of policing
incurred by the Authority in carrying out its
responsibilities. Contributions are determined
annually by CATSA up to a maximum amount
not to exceed the actual allowable costs incurred
by the Authority in providing these services. This
agreement is to be extended annually as required.
In connection with this agreement, the Authority
has recorded this government assistance of
$999,000 (2005 - $999,000) as a reduction of
the related expenses.
14. Comparative fi gures:
Certain comparative fi gures have been reclassifi ed
to conform with the fi nancial statement presentation
adopted in the current year.
24
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
2007 Annual General Meeting
Winnipeg Airports Authority’s Annual General Meeting
will be held at 1:30 pm on Wednesday, May 2, 2007 at
The Fairmont Winnipeg, Winnipeg, Manitoba.
We invite the community to attend and meet the
Offi cers and Directors of the company.
Disclosure of Corporate Governance Systems
Governance Principles
The Board recognizes that it has stewardship
responsibility of a valuable community resource.
This has resulted in a governance system that
rests on the following four principles:
1. Accountability
2. Clear delineation of responsibilities between
the Board and Management
3. The full Board, not Board committees, are
involved in decision making
4. Transparency
Board Committees
The Board has organized its affairs around three standing
committees – Governance, Audit and AIRplan. They are
complemented by the use of Task Forces on an as required
basis to deal with particular matters. The full Board
meets on a regular basis (at least six meetings annually).
The mandate of the Governance Committee is to assist
the Board in effectively meeting its responsibilities.
The Audit Committee attends to matters that are
fi nancial and/or risk related. The purpose of the AIRplan
Committee is to provide guidance on the Airport
Infrastructure Redevelopment Plan (AIRplan) on behalf
of the Board. Board members are rotated through the
standing committees and/or may serve on one or more
Task Forces. All Task Forces have a sunset provision.
Public Accountability Principles
Incorporated into the By-laws of Winnipeg Airports
Authority is a set of accountability principles that were
accepted by the Board as part of the airport transfer
conditions. Following is a summary of these principles.
Board Composition and Director Requirements
The Board shall be comprised of 15 members of which
11 shall be nominated by seven different public and
private sector agencies:
City of Winnipeg (3)
The Assiniboia Chamber of Commerce (1)
Province of Manitoba (1)
R.M. of Rosser (1)
Government of Canada (2)
Destination Winnipeg (1)
Winnipeg Chamber of Commerce (2)
A maximum of four members may be nominated by the
Board of Directors.
The Board cannot consist of fewer than seven or more
than 15 members at any time.
The qualifi cation and eligibility requirements of Board
members prescribe that a Director may serve for a
term not exceeding three years and that no more than
three terms (or nine years) may be served. Directors
can be neither elected to nor employed by any level
of government. The Chairperson cannot be an elected
offi cial or government employee at any time during
the two years prior to the appointment as Chairperson.
Winnipeg Airports Authority has met all of the above
principles.
Community Consultative Committee
The Ground Lease requires that Winnipeg Airports
Authority establish a community consultative committee
(CCC) to provide for effective dialogue and dissemination
of information on various matters, including airport
planning, operational aspects of the airport and
municipal concerns. The CCC shall meet not less
than twice each Lease Year, and shall be comprised
of members who are generally representative of the
community, including persons representing the interests
of consumers, the traveling public and organized labour,
aviation industry representatives and appropriate
provincial and municipal government representatives.
Winnipeg Airports Authority has fully met this require-
ment, with the establishment of a Board-appointed CCC
in January 1998, which meets quarterly.
25
Corporate Reporting & Disclosure Requirements
• Winnipeg Airports Authority must disclose any
non-arm’s length transactions.
• Any nominating entity may cause a meeting to be held
on matters of public interest concerning the business
of Winnipeg Airports Authority.
• Directors must make a general report annually to
their respective Nominator and the Board should
report collectively to all Nominators.
• As a general practice, Winnipeg Airports Authority must
optimize the use of Canadian resources and supplies
and employ a competitive public tendering
process for contracts in excess of $75,000 (1996 dollars).
• In the event Winnipeg Airports Authority should
increase airport user charges it shall provide 60 days
advance public notice.
• Full audits in accordance with generally accepted
auditing standards shall be conducted and Transport
Canada has the right at any time to cause a complete
audit to be conducted.
• Winnipeg Airports Authority will publish its Annual Re-
port and shall include specifi c performance comparisons
and disclose the remuneration paid to Board members
and to its senior offi cers. The Annual Report shall be
distributed in advance of the Annual General Meeting
to all Nominators and the Minister of Transportation.
• At least once every fi ve years Winnipeg Airports
Authority shall cause a comprehensive independent
review of Winnipeg Airports Authority’s management
operation and fi nancial performance to be conducted
by a qualifi ed independent person. The report shall
be distributed on a timely basis to the Minister of
Transportation and to each Nominator and shall be
available to the public on request.
• Winnipeg Airports Authority shall provide for public
access: its Airport Master Plan, its fi ve-year business
plan, its past fi ve-year annual fi nancial statements and
business plans, its incorporation documents, and all
signed airport transfer agreements.
Winnipeg Airports Authority has met all of the
applicable principles.
Specifi c TSX Corporate Governance Criteria Disclosure
Winnipeg Airports Authority Governance Systems
are fully aligned with the TSX Corporate Governance
Guidelines. The full Disclosure of Corporate Governance
Systems document is available in hard copy upon
request at the corporate offi ces or on the Winnipeg
Airports Authority Web site at www.waa.ca.
Winnipeg Airport Authority Inc.Board of Directors 2006
Appointed by the City of WinnipegArthur Mauro, Chair
Dr. Glenn Feltham, Dean, I.H. Asper School of Business
Otto Lang, Senior Counsel, Fleischman-Hilard
Appointed by Th e Assiniboia Chamber of CommerceWarren Thompson, President, Prairie Edge Management
Appointed by Destination WinnipegDoug Harvey, Vice Chair, President and GM, Maxim Transportation Services
Appointed by the Government of CanadaGeoffrey Elliott, Vice President, Corporate Affairs, CanWest Global Communications Corp.
André Thibeault, Armand Communications Corp. (term ended December 31, 2006)
Appointed by the Province of ManitobaElaine Cowan, Sales and Leasing Executive, Commercial Real Estate, Coldwell Bankers National Preferred
Appointed by the R.M. of RosserCarl Havixbeck, Farmer
Appointed by the Winnipeg Chamber of CommerceDoneta Brotchie, President, FUNdamentals Creative Ventures
Tom Bryk, FCA, President and CEO, Cambrian Credit Union
Appointed by the Winnipeg Airports Authority BoardJim Carr, President and CEO, Business Council of Manitoba
David Friesen, President and CEO, Friesens Corporation
Garth Smorang, Lawyer, Myers Weinberg
Bill Watchorn, FCA, President and CEO, Ensis Corporation Inc. (term ended September 23, 2006)
26
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
2006 Board Committees (as of December 31, 2006)
AuditTom Bryk (Chair)
Doneta Brotchie
Glenn Feltham
Garth Smorang
André Thibeault
Warren Thompson
GovernanceGeoffrey Elliott (Chair)
Jim Carr
Elaine Cowan
David Friesen
Warren Thompson
AIRplanDoug Harvey (Chair)
Geoffrey Elliott
David Friesen
Carl Havixbeck
Otto Lang
Lloyd McGinnis (Advisor)
Board of Directors Compensation for 2006
Lawrie Cherniak $ 783
Otto Lang 33,100
Bill Watchorn 14,233
Walter Hill 833
Arthur Mauro 41,533
Doug Harvey 22,767
Jim Carr 16,000
Elaine Cowan 14,900
Carl Havixbeck 17,900
Irene Merie 583
Warren Thompson 18,700
Tom Bryk 21,933
André Thibeault 15,900
Doneta Brotchie 13,500
Garth Smorang 15,317
Glenn Feltham 14,717
Geoffrey Elliott 4,300
Total $ 266,999
Executive Offi cers 2006
Barry Rempel, President and CEO
Catherine Kloepfer, Senior VP Administration and CFO
R. (Bob) Edgar, Senior VP Airport Redevelopment
Michael Rodyniuk, Senior VP Marketing and Operations
Executive Offi cers 2006 – Salaries
The salary range for the President of the Authority is
$180,000 to $200,000.
The salary range for each of the Senior Vice Presidents is
$120,000 to $160,000.
Public Competitive Tendering
Winnipeg Airports Authority Inc., under the terms of
its lease agreement with the Government of Canada,
reports all contracts in excess of $90,000 ($75,000 in
1992 dollars) entered into during the year that were not
awarded on the basis of a public, competitive, tendering
process. In 2006, Winnipeg Airports Authority Inc.
entered into fi ve contracts as described for the reasons
indicated in the following table.
27
Sole Source Contracts over $90,000
Vendor Name Description Value Basis for Selection
Airport Technologies Inc. Re-Life Runway Sweeper $135,000 C
ADT Security RAIC Deployment & Mantrap Implementation $195,000 B
Dillon Consulting Ltd. Update fi nal design services and related work
for Proposed Calm Air Hangar $91,000 A
Manitoba Hydro Relocate Manitoba Hydro electric feeders $111,000 B
Pivotal Research Inc. Passenger Route Tracking Program $95,000 C
Basis for SelectionA – Cost and/or time effectiveness benefi ts resulting from previous company or industry experience
B – Only supplier able to meet specifi c requirements
C – Extension of previously tendered contract or service
Community Consultative Committee and their Affi liations
Joseph D. Barnsley, Acting Chair
Nominated by The Winnipeg Chamber of Commerce
Mr. Dave BoldtNominated by the Government of Canada –
Western Economic Diversifi cation
Ms. Ainley BridgemanNominated by Winnipeg Airports Authority’s
Univeral Design Advisory Committee
Mr. Tim FeduniwNominated by Destination Winnipeg
Ms. Roxanne GeorgisonNominated by the R.M. of Rosser
Mr. Vic GerdenNominated by the Manitoba Aerospace Association
Mr. Daniel HaugheyNominated by Winnipeg Airports Authority’s
Environmental Advisory Committee
Ms. Debbie O’BrayRepresentative from the traveling public
Ms. Judy SaxbyNominated by the Manitoba Aviation Council
Mr. Peter ThomsonRepresentative from the traveling public
Mr. Gordon TuftsNominated by the Province of Manitoba –
Transportation and Government Services
Ms. Jacqueline WasneyNominated by the Consumers Association of Canada
Col. Tom WhitburnRepresentative from 17 Wing
Mr. Kerry Williams
Nominated by the Manitoba Federation of Labour
Corporate Information
Auditors: KPMG LLP
Lead Bank: Canadian Imperial Bank of Commerce
Legal Counsel: Aikins, MacAulay & Thorvaldson and
Duboff Edwards Haight & Schachter
28
Winnipeg Airports Authority Inc. Annual Report 2006 Consolidated Financial Statements
Winnipeg James Armstrong Richardson International Airport Services
Passenger Carriers (serving Main Terminal Building)
Aeromexico (operated by Sunwing Vacations)
Air Canada
Air Transat
Bearskin Airlines
Calm Air
Delta Air Lines (operated by Delta Connection
carrier SkyWest Airlines)
First Air
Jazz Airlines
Northwest Airlines
Northwest Airlink (operated by Pinnacle Airlines)
Skyservice Airlines
United Express (operated by Air Wisconsin Airlines
and SkyWest Airlines)
WestJet Airlines
Zoom Airlines
Passenger Carriers (other)
Air Nunavut
Canadian North
Execaire
Fast Air
Keystone Air Service
Kivalliq Air (a division of Keewatin Air)
Missinippi Airways
Nolinor
North American Charters 2000
Northway Aviation
Perimeter Aviation
Thunder Airlines
Voyageur Airways
Wasaya Airways
West Wind Aviation
Air Cargo CarriersCargojet
DHL
FedEx
Kelowna Flightcraft
Morningstar Air Express
Purolator
Transwest Air
UPS
Restaurants/BarsThe Exchange Brew Works & Eatery
Express Deli
Four Points Sheraton Hotel: Restaurant and Local Heroes
Sports Bar
Harvey’s Serving Swiss Chalet Chicken
Second Cup
Tim Hortons
Toast! Café and Bar
Retailers$15 Boutique
Aer Rianta North America (Duty Free)
Bentley
DeLaga
Inter-City Leisure
Relay (Newsstand)/Canadian Scene
Showcase Manitoba
The UPS Store
Travelex Canada
Virgin Books and Music
HotelFour Points Sheraton
Car RentalsAvis Rent A Car
Budget Rent A Car
Dollar Thrifty Car Rental
Enterprise Rent-A-Car
Hertz Rent A Car
National Car Rental
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