DISCOVERFORT McMURRAY AIRPORT AUTHORITY ANNUAL REPORT 2014

DISCOVER WHAT’S INSIDE

TABLE OF CONTENTS

Message from the Board Chair and President & CEO...... 5

Passengers...... 11

Business...... 21

People...... 27

Community...... 31

Governance and Accountability & Board of Directors...... 38

Management Discussion & Analysis...... 41

Financial Statements...... 49 Mission We are responsible stewards of our airports, achieving superior performance in the conduct of safe, secure, effective and efficient operations. Our airport businesses contribute significantly to the economy of the Region, Alberta and Canada.

Corporate Values »» Excellence in Safety, Security and Environment Performance »» Commercially Focused, Fiscally Responsible We are Canada’s Business Sustainability Premier Regional »» Exemplary Customer Experience »» Leadership Airport »» Teamwork Key Success Drivers 1. To optimize the customer experience by leading a high performing airport team that provides superior facilities and services. 2. To be financially sustainable and environmentally responsible. 3. To foster effective stakeholder relations. YMM | ANNUAL REPORT 2014 5

MESSAGE FROM THE BOARD Joint Message from the Board Chair, Sheldon Schroeder; President and CEO, Scott Clements

2014: A year to discover Discover more space, more comfort and more destinations at the new Fort McMurray International Airport (YMM). Opened on June 9, 2014, the new YMM redefines and elevates the airport experience for passengers.

YMM in the new era The new YMM features a 15,000-square-metre (161,458-square-foot) air terminal that can serve up to 1.5 million passengers. Now passengers have more lounge space to relax in, and more dining and shopping choices to enjoy. The new terminal embodies YMM’s approach to serving the Wood Buffalo region. YMM has more businesses and employees trained to provide service that puts the customer front and centre. YMM has more space for larger aircraft, encouraging airlines to establish new flights to more destinations. The terminal’s striking, one-of-a-kind design and look reflects the Wood Buffalo region’s vast boreal forests and dynamic aura borealis that fill its nighttime skies. Also, its built-in energy-saving features underscore YMM’s commitment to sustainable practices financially, logistically and environmentally. As for the original terminal on the north side of the airfield, YMM renovated and reopened the facility to exclusively serve workforce charters, corporate fliers and air cargo.

Record numbers In 2014, YMM saw its total passenger count ascend to a new record: 1.3 million, a 9.5 per cent increase from 2013. YMM broke into the Top 15 busiest airports in Canada and continued to lead Canadian airports in annual passenger growth. These large passenger numbers reinforce how necessary it was to expand services with a new terminal facility.

Forging new air services Success is often driven by collaboration. YMM seeks out strategic relationships with airlines, business and municipal organizations and other stakeholders to establish new air services. These relationships with Air Canada and WestJet are strong, with Air Canada increasing the number of non-stop flights to established domestic destinations, including Edmonton, Calgary, Vancouver and Toronto. WestJet has added a second non-stop flight to Vancouver and a new non-stop to Kelowna. Sunwing has established a seasonal non-stop flight to Cancun. 6 MESSAGE | FROM THE BOARD CHAIR AND PRESIDENT & CEO

The Kelowna non-stop service was secured through collaboration with WestJet, Kelowna International Airport and the Greater Westside Board of Trade for the Thompson-Okanagan region in British Columbia. The collaborative work continues between all parties to advance economic and tourism partnership between Wood Buffalo and central B.C. Business relationships with local businesses and major companies are critical to YMM’s success. The larger terminal enables YMM to expand its concessions program to be one of the best in class. In fact, our concession program has won a prestigious award from Airports Council North America as the number one airport of our size in North America. In adding to bragging rights, this gives passengers more choice in shopping, dining and services, while increasing revenue for the airport. New revenue streams provide YMM opportunities to invest in further improvements beyond the new terminal —­ such as expanded air cargo services — without increasing airport fees.

Meeting new challenges With uncertain economic conditions, YMM will closely monitor fiscal performance and adjust its short- and medium-term planning accordingly. Presently, conservative forecasts show continued moderate passenger growth over the next four years. As many experts have acknowledged, we believe that the energy sector SHARING will continue to invest long-term in the oil sands. As such, with a brand new Master Plan in place, YMM’s long-term plan remains in lock-step with overall growth over with the the next 20 years. community Sharing success with the community YMM’s planning is important as new development coupled with record passenger growth expands the airport’s impact as an economic generator for the Wood Buffalo region. The most recent YMM Economic Impact Study shows that YMM generated $412 million in GDP for the region and generated $910 million in total economic output. The expanding airport generated 1,700 jobs, with 746 direct full- time positions, and $114 million in wages. The grand opening of the new YMM terminal facility in 2014 was done in appropriate style and class, leaving a material legacy for the Wood Buffalo region. During the Fort McMurray Air Show and the Grand Opening Gala in May, YMM was able to raise $150,000 in community funding on top of regular charitable contributions, with the extra funds donated to the Kids Forever Foundation and the Wood Buffalo Food Bank. Our Community Investment Program continues to grow with Fort McMurray. We are dedicated to provide funding for community-building programs in Wood Buffalo geared to youth, aviation history and education, and the Canadian Armed Forces. YMM employees are also a vital community resource, donating their time and skills to community programs through our volunteer matching program. YMM | ANNUAL REPORT 2014 7

The main terminal building is a public space for all Wood Buffalo residents to enjoy. The recently opened observation deck is a historical interpretative and education centre for the public to learn about Wood Buffalo’s rich aviation history. YMM’s arts program expanded to feature more new works from local artists and artists from across Canada. YMM has transformed into a family-oriented venue and intends to host many holiday family events in the new terminal. Halloween at YMM in October 2014 was a hit with local families. Plans are under way for more such events in 2015.

Plans for 2015 YMM has more infrastructure improvements on the agenda that will enhance the airport’s overall efficiency and capacity. A recent announcement by the Federal Government has created a new $75 million capital project that has several components to be built over the next few years: extending the main runway for larger aircraft, building an emergency crosswind runway, expanding the ramp on the North Terminal, extending the Main Terminal by two more bridges, and the building of two general aviation taxiways to open up the Golden Hawk Aviation Park. Further, YMM has over 512 hectares (1,267 acres) of land available for commercial development – divided among seven commercial business parks — for both aeronautical and non-aeronautical business and services. Through counsel from the business advisory committee, YMM is seeking new business partnerships to develop airport land with services that benefit the entire Wood Buffalo region. On the commercial passenger side of the business, YMM continues to work with Canadian, U.S. and international carriers to add new non-stop flight services for passengers to domestic and U.S. destinations. YMM is working with seasonal carriers like Sunwing and WestJet to add new vacation destinations. YMM has accomplished much since its inception five years ago. Even as we take pride in many accomplishments, we continue to strive for new ways to reach our ambitious Vision and full potential as “Canada’s Premier Regional Airport.”

Sheldon Schroeder Scott Clements Chair, FMAA Board of Directors President and CEO EXPERIENCES SUCCESS COMMUNITY OPPORTUNITIES DISCOVER HISTORY ADVENTURE FLIGHTS BUSINESS YMM | ANNUAL REPORT 2014 9

DISCOVER NEW EXPERIENCES

YMM passengers now enjoy a larger and more comfortable terminal, capable of serving up to 1.5 million passengers per year. Airlines offer more opportunities to fly to more destinations in Canada and beyond. Plus, passengers have more dining, shopping and service choices. YMM is your launching point to exciting adventures in Canada and around the world. 10 PASSENGERS | EXPECT MORE FROM YMM

YMM continues to serve over a million Quick Facts PASSENGER GROWTH passengers a year. YMM has one of the highest passenger growth rates among Canadian airports at 9.5 per cent (over the national average of 5.5 per cent). YMM moved from 16th to 15th busiest Canadian airport in 2014, overtaking Regina. Total passenger growth ballooned from 2006 to 2014, from 442,745 passengers to 1,308,416 — a whopping 195 per cent. YMM | ANNUAL REPORT 2014 11

EXPECT MORE FROM YMM In 2014, YMM served over 1.3 million passengers, a 9.5 per cent increase from 2013. With that performance, YMM remains the fastest-growing airport in Canada, and the 15th busiest airport in the country.

In total, 1,308,416 commercial and charter passengers travelled into and out of YMM, with July being the busiest month with 117,354 passengers. With larger numbers, YMM was able to expand air service in co-operation with its airline partners. WestJet added two new non-stop destinations from Fort McMurray to Kelowna and Vancouver while increasing the number of non-stop flights from Fort McMurray to Calgary. Air Canada also increased the number of non-stop flights to its existing destinations, including Edmonton, Calgary, Toronto and Vancouver. Seasonal service also returned with Sunwing launching a flight to Cancun, Mexico as a sun destination for the winter months.

Currently, YMM has six non-stop domestic destinations and one seasonal international destination: »» Calgary »» Toronto »» Edmonton »» Vancouver »» Fort Chipewyan »» Cancun (seasonal) »» Kelowna

YMM is forecasting growth for the next five years to be comparable with other Canadian airports. YMM is expecting moderate growth in 2015, taking into account recent economic uncertainty caused by volatile oil prices. However, oil companies tend to work on a 30-year horizon when planning major capital construction projects and are less concerned with short-term market Quick Facts fluctuations in the price of oil. This means passenger traffic — particularly for the AIRCRAFT AT YMM workforce air transportation demand to the oil sands — is expected to be constant for the next five years. The Bombardier Q400 Next Generation airliner is the most common aircraft seen Major Airlines Operating at YMM at YMM, flying passengers to Edmonton, Calgary, Kelowna and Vancouver. »» Air Canada »» Sunwing Airlines (seasonal) Seasonal fliers to Cancun use thelargest »» Air Canada Express »» WestJet aircraft at YMM, a 189-seat Boeing 737 »» McMurray Aviation »» WestJet Encore Next Generation 800 series airliner. »» Northwestern Air The smallest daily passenger aircraft at YMM is the Cessna 208 Caravan turboprop airplane, which flies three to four times daily to Fort Chipewyan. 12 PASSENGERS | EXPLORE THE WORLD OF YMM

EXPLORE THE WORLD WITH YMM Escape to the sun-drenched beaches of Cancun. Savour fine wine from a vineyard in Kelowna. See if it’s really possible to YLW ski and swim all in the same day in Vancouver. Whether it’s cheering on chuck wagon drivers at the Calgary Stampede, or looking over Toronto high above from the CN Tower, YMM is the connection to your next adventure.

Kelowna »» Explore Kelowna, named after the Interior Salish word “Grizzly Bear.” »» Bask in the 2,000 hours of sun Kelowna receives annually. »» Sample merlots and pinots from the 25 wineries in the Kelowna area. YVR »» Take advantage of the longest, driest golf season in Canada and tee off at 19 golf courses. Vancouver »» Ski, golf, bike, sail and kayak in Vancouver – all on the same day. »» Ride in the Sea to Sky Gondola in Squamish (one hour drive from downtown Vancouver) to a new skiing or hiking adventure 855 metres (2,805 feet) above sea level. »» Walk, run, cycle or rollerblade the nine-kilometre (5.5-mile) seawall around Stanley Park, a 405-hectare (1,001-acre) city park that is 10 per cent bigger than New York City’s Central Park. »» Visit the beluga whales and other sea creatures at the Vancouver Aquarium, ranked as one of the Top 5 aquariums in the world. YYC Calgary »» Cycle Calgary’s 550-kilometre (341-mile) bike trail network. »» Go fly-fishing in the Bow River, one of the top three trout streams in the world. »» Learn how to ride a bobsled or a luge at Canada Olympic Park. »» Cheer on bronco riders and chuck wagon drivers at the Calgary Stampede; the “Greatest Outdoor Show on Earth” draws over a million visitors each year. YMM | ANNUAL REPORT 2014 13

YEG

Edmonton »» Explore the largest urban parkland in North America – Edmonton’s North Saskatchewan River Valley, a traditional Aboriginal meeting place for nearly 2,000 years. »» Attend one (or all) of Edmonton’s 30 annual festivals, such as the Edmonton Fringe Theatre Festival — the second largest theatre festival in the world (after Edinburgh). »» Visit the Art Gallery of Alberta, the oldest cultural institution in Alberta (founded in 1924) that maintains a collection of over 6,000 objects. »» Cross the famous High Level Bridge, spanning 777 metres (2,549 feet) and watch it light up at night with 60,000 LED lights for holidays and special events. YYZ Toronto »» Dine at any of more than 8,000 restaurants in Toronto. »» Attend Caribana, the largest single day parade in North America and admire the dazzling, colourful costumes worn by 10,000 parade participants. »» Visit the Toronto Zoo — the largest in Canada, with over 16,000 animals representing 461 species. »» Stand on the deck of the CN Tower, which stands 553 metres (1,814 feet) and retains the title as world’s tallest tower and tallest structure in the Western Hemisphere. Cancun »» Sun tan on Cancun’s famous white beaches, where the sand stays cool because CUN it is made from crushed coral. »» Crash any of the approximately 46,000 weddings held in Cancun each year. »» Explore one of the three of the world’s largest underwater cave systems in the area, including the Ox Bel Ha which is 146.7 kilometres (91 miles) long. »» Scuba dive one of the world’s largest coral reefs — the Great Mayan Barrier Reef, second only to Australia’s Great Barrier Reef. »» Check out Mayan ruins right in the hotel resort district, including the El Ray ruins located near the Hilton Cancun Beach & Golf Resort. »» Tee off at one of 17 golf courses on the Yucatán peninsula. Fort Chipewyan »» Established by Peter Pond as a trading post in 1788, Fort Chipewyan is the oldest YPY permanent European settlement in Alberta. »» The hamlet hosts the entrance to Wood Buffalo National Park, the largest in Canada and the second largest in the world. At 44,807 square kilometres (27,842 square miles), the entire country of Switzerland could easily fit inside the park’s borders. »» The Royal Astronomical Society of Canada designated the park as the world’s largest Dark Sky preserve in 2013. »» The world’s largest beaver dam — about 850 metres (2,790 feet) in length — was discovered in the park using satellite imagery. The dam was usually spotted from the air or satellite, until an American amateur explorer hiked to the dam in 2014. 14 PASSENGERS | DISCOVER THE YMM WELCOME

DISCOVER THE “YMM WELCOME” YMM has a new way to welcome people, capturing the eyes of visitors the moment they turn off Highway 69 and drive toward the new terminal.

Welcoming visitors to Fort McMurray A trident of light towers greet passengers at the roundabout located on the Saline Creek Parkway. After sunset, these three towers glow with the colours of the aurora borealis that naturally blaze across the nighttime skies over the Wood Buffalo region. On Snowbird Way, a famous Canadian Forces Snowbirds aircraft is mounted over two nine-metre (30-foot) illuminated welcome signs, adding a unique depth of meaning to the signs welcoming visitors and serving as a landmark for the airport.

The new airport terminal: yours to explore Opening to great fanfare in June 2014, the new YMM airport terminal is a one-of- a-kind structure of long-span spaces and high windows and ceilings that allow for natural daylight to stream in. The simple shifting of levels appeal to the eyes and WELCOME help orient passengers. to your new YMM YMM’s unique look stems from the laminated pine wood beams used to support the roof, the largest wood-framed roof in North America. The exposed mass timber experience. structure complements the other refined yet durable materials in the terminal’s exterior, including triple-glazed windows, terrazzo flooring and acoustic wood panels. On the outside, the terminal is designed to withstand the harsh, northern winter climate, with robust exterior steel and pre-cast panelling. Sustainable features built into the airport design help reduce the building’s carbon footprint, with sophisticated heat recovery and passive ventilation systems, in-floor radiant heat, thick, airtight exterior insulation and extensive natural day lighting. The overall architecture — designed by mcfarlane biggar architects + designers inc (OMB), managed by Stantec and built by the Ledcor Group — received a 2013 Canadian Architect Award of Excellence for embodying qualities of innovation and overall design excellence. SNC-Lavalin managed the commercial programs, including retail, food and beverage and advertising. Quick Facts YMM TOWERS

Designer: F&D Scene Changes Ltd. Height: First: 5 metres, 15 cm (18 feet, 6 inches) Second: 6 metres, 7 cm (21 feet, 3 inches) Third: 7 metres (25 feet) Material: Steel and acrylic panels Lighting: Red, green, blue, white (RGBW), internal Concept: Lighting (aurora borealis) Structure (jet engines)

YMM has a new way to welcome its passengers

Quick Facts WELCOME SIGNS Designer: F&D Scene Changes Ltd. Length: 9 metres (30 feet) Material: Concrete, steel, aluminum Lighting: Waves of light through steel plates behind lettering Concept: Boreal forest, aviation history 16 PASSENGERS | DISCOVER THE YMM WELCOME

Enjoy new shopping and dining experiences YMM customers have many shopping and dining choices before and after security. Passengers needing some small travel gear they didn’t pack can buy it at Nicholby’s Convenience. A visitor outside of Wood Buffalo can get a gift pack for a local relative at Fort McMurray’s own Chocolates & Candlelight. Those on the go may only have time for a quick meal at Mary Brown’s, while a vacationing group may have time for a leisurely dinner at Famoso before their flight.

YMM Concessions »» Best Buy Express »F» amoso Neapolitan Pizzeria »B» urger King »J» ugo Juice »» Chocolates & Candlelight »M» ary Brown’s Famous Chicken »» Cloud Zero & Taters »» Earls Grab and Go »N» icholby’s Convenience (2 outlets) »» Earls Kitchen + Bar »» Starbucks »» Elements »» Subway »T» im Hortons (opening in 2015)

There are six major car rental brands as well as shuttle, taxi/limo services and public transit for getting passengers to and from the airport. Plans are underway to build and open a Quick Turnaround Facility for car rental operations near the main terminal building.

Car Rental Services »» Avis »» Enterprise »B» udget »H» ertz »» Driving Force »N» ational

For those seeking overnight stays near the airport, the Chateau Nova has first-class accommodations close to the terminal. There are also future plans to build a hotel that would connect directly with the main terminal.

“ We are pleased to see the excellence of Fort McMurray International Airport’s food and beverage program recognized by our peers,” said Scott Clements, President and CEO of the Fort McMurray Airport Authority. “We’re always striving to offer diverse, appealing dining options for our travellers to enjoy.” YMM | ANNUAL REPORT 2014 17

10,312 JUICY SMOOTHIES 4,901 SOLD BIG MARY SANDWICHES SOLD 25,000 NEAPOLITAN PIZZAS SOLD 5,473 MANGO PRAWN ROLLS SOLD 1ST PLACE BEST FOOD & BEVERAGE STATS PROGRAM 4,381 WHOPPERS 54,204 SOLD STARBUCKS ESPRESSO’S SOLD 15,863 BOTTLES OF 2,544 WATER SOLD BRONX BURGERS SOLD

All stats are from June 9, 2014 – Dec 31, 2014 18 PASSENGERS | DISCOVER THE YMM WELCOME

Discover new comforts YMM believes the airport experience should be relaxing and enjoyable. From the time they plan their trip from home to when they board their flight, YMM is focused on providing first-class service to passengers.

Passenger Services »C» ustomer Service and Visitor »L» ost and found services Information Centre »» Large south-facing courtyard »F» ree luggage carts providing outdoor landscaped »» Barrier-free access for persons area for passengers with disabilities

Digital Services »Y» MM website and social media »» Electrical and USB outlets »F» ree high-speed wireless Internet in every seat

Transit and Parking Services »P» arking shuttle »T» axi and limo services »T» ransit service »P» owered parking stalls

Family and Children’s Services »» Children’s play area »» Interactive airfield »F» amily washroom with infant observation area changing stations

Pet Services »P» et relief area

Passengers have the option to get fresh air before their flight. YMM has an outdoor, landscaped courtyard that faces south, providing passengers an outdoor meeting Quick Facts area away from regular activity inside the main terminal. WOOD BUFFALO REGION Passengers who have a travelling pet can give their animals a break too. The The Regional Municipality of Wood Buffalo is courtyard is designated as a travelling pet relief area, with plastic bag dispensaries the largest municipality in terms of area in and waste collection depots. The courtyard’s landscaping is designed to complement all of North America. the different seasons. Five rivers flow through Fort McMurray: Athabasca, Clearwater, Christina, Hangingstone Discover Wood Buffalo and Horse. YMM is often the first impression newcomers have of the region. A warm, friendly The original “runway” was not made of concrete welcome and helpful advice upfront makes for a more positive airport experience or gravel; it was a waterway called the Snye and creates a strong first and lasting impression of Fort McMurray and the entire used by float planes. Wood Buffalo region. Fort McMurray has Canada’s largest outdoor New visitors to YMM receive friendly service at the Customer Service and Visitor gym — 53 units of exercise equipment located Information Centre located in the arrivals hall. Provided in partnership with Fort on the Birchwood Trail system. McMurray Tourism and the Regional Municipality of Wood Buffalo, the centre MacDonald Island Park and Suncor Community helps visitors find accommodations, secure transportation, or plan their stay while Leisure Centre is Canada’s largest community, they are in Fort McMurray and the Wood Buffalo region. recreation, leisure and social centre. YMM’s Ride & Fly Shuttle offers passengers a lift in comfort and style.

Fort McMurray has five rivers flowing through it. 20 BUSINESS | DISCOVER NEW OPPORTUNITIES

YMM continually cultivates new business partnerships. Quick Facts CONCESSIONS YMM is the first airport in Canada to have concessions from Earls Kitchen + Bar, Famoso Neapolitan Pizzeria and Mary Brown’s Famous Chicken & Taters. YMM | ANNUAL REPORT 2014 21

DISCOVER NEW OPPORTUNITIES YMM’s new airport terminal and other facilities have opened up business partnerships and opportunities. These business partnerships include major airlines, workforce charter carriers, shopping and dining, air cargo, general and corporate aviation services and commercial development.

Discover new business partnerships YMM has cultivated many business partnerships to develop an expanded, fresh concession program for the new main terminal. The program contributes to a more enjoyable passenger experience at YMM and helps it realize its full revenue potential. Promoting concessions is a large part of YMM communications. Concessions promotions such as product or menu offerings, coupons and special deal promotions are featured on www.FlyYMM.com, YMM’s Facebook and Twitter accounts, and YMM’s newsletter Aurora InFlight.

Air Cargo YMM’s air cargo facilities provide crucial links in the supply chain and logistics for the oil and gas industry, as well as other economic activity in the region. Quick Facts Dedicated cargo flights handle over half the cargo at YMM, while Air Canada AIR CARGO and WestJet carry the remainder on scheduled passenger flights. In 2015, cargo operators are expected to begin air freight service at YMM. Expanded daily courier service is expected to handle 900 tonnes, The air cargo facility in the short-term will operate out of the original a 50 per cent increase from 600 tonnes airport terminal building on the north side of the main runway, now called recorded in 2012 (SNC-Lavalin, 2014). the North Terminal. Freight service is expected to handle A new third-party air cargo building with an expanded apron is planned for 1,500 tonnes, a 150 per cent increase the east of the North Terminal. The planned facility will concentrate cargo from 600 tonnes recorded in 2012 operations in one area and accommodate larger freight aircraft. (SNC-Lavalin, 2014). 22 BUSINESS | DISCOVER NEW OPPORTUNITIES

Workforce Charters The airport hosts over 25 workforce charter carriers, with several fixed-base operators for aircraft handling, refuelling and executive flight lounges.

Work Charter Carriers »» Air Georgian Limited »K» enn Borek Air »» Air North Charter »M» orningstar Partners »» Air Tindi »N» orth Cariboo Air »» Airco Aircraft Charters »N» orthern Air Charter »» Alberta Central Airways »P» entastar Air »» Alta Flights (Charters) »P» erimeter Aviation »» Arctic Sunwest Charters »R» egional 1 Airlines YMM HOSTS »» Bar Xh Air (Integra) »» Shell Canada 25+ workforce »» Bearskin Lake Air Services »S» kyservice Business Aviation charter carriers »C» anadian North »» Suncor »C» entral Mountain Air »S» unwest Aviation »F» lair Airlines »S» yncrude »J» azz Charter »W» est Wind Aviation Aviation Services There are 10 essential aviation services offered at YMM, including avionics, aircraft maintenance and air ambulance services.

Aviation Services »» Private and recreational flying »H» elicopter activity »F» light schools and training »C» orporate services »» Charter services »» Private charters »S» earch and rescue »» Aircraft maintenance »A» vionics »» Air ambulance services Quick Facts Over the next 10 years, YMM plans to concentrate general aviation WORK CHARTERS activities into three areas: »N» orth field area within Snow Eagle »S» outh field east area within Suncor and Syncrude handle a large portion of West Commercial Park Golden Hawk Aviation Park all work charter flights,with 54,277 passengers »S» outh field west area within Snowbird flown in and out in 2014. Commercial Park Other work and corporate charters combined totaled 178,457 in 2014. YMM has two fixed-base operators – Universal Aviation and Executive Flight Centre. YMM | ANNUAL REPORT 2014 23

Air Support Facilities

YMM has plans to upgrade its airport facilities including: »R» elocating the control tower from the »R» elocating the current airport North Terminal to a location south of maintenance compound to a shared the existing runway and east of the location with ARFF Main Terminal »A» dding a new fuelling station at »R» eplacing the existing Airport Rescue Golden Hawk Commercial Park and Fire Fighting (ARFF)service building with a larger facility

The Government of Canada — through the Infrastructure Canada New Building Fund — is funding one-third of a $75 million capital project for the airport. Over the next few years, the main runway will be extended from 2,287 metres to 2,743 metres (7,500 feet to 9,000 feet) in order to accommodate larger aircraft. As well, YMM will build an emergency crosswind runway, expand the ramp on the North Terminal, extend the Main Terminal by two more bridges, and build two general aviation taxiways to open up the Golden Hawk Commercial Park.

Commercial Land Airport land use has broadened in recent years, with many airports encouraging a wide range of business and services to operate alongside core aeronautical infrastructure and services. YMM has 1,267 acres (512 hectares) of land available for prime commercial development. This land is divided into seven commercial parks: »S» now Eagle Commercial Park West »S» nowbird Commercial Park »S» now Eagle Commercial Park East »» Golden Hawk Aviation Park »S» now Eagle Aviation Park »» Golden Hawk Commercial Park »S» nowbird Prestige Aviation Park

This helps provide more commercial land for growing businesses in the Wood Buffalo region, while creating new forms of revenue for YMM to use to offset operational costs instead of increasing user fees.

Some of the proposed uses for land include: Quick Facts »» Offices »R» etail sales COMMERCIAL SPACE »» Gas stations »» Distribution centres »C» ar washes »W» arehouses A total 1,267 acres (512 hectares) are available for development. »C» ar rental facilities »T» ransportation services »H» otels and facilities There are seven commercial parks set aside for development. »F» ood and beverage »» Public utilities »» Light manufacturing »A» partments »» Outdoor storage 24 BUSINESS | DISCOVER NEW OPPORTUNITIES

Business Advisory Committee YMM works closely with the Wood Buffalo business community through its Business Advisory Council. The council includes 22 local business leaders that provide YMM direction on air service and airport improvements that will benefit the region economically.

The North Terminal: Making the old new again The original YMM terminal on the north side of the airfield is now a repurposed facility exclusively for workforce charters, corporate fliers and cargo. The original building was built in 1985 and operated as the airport main terminal for 29 years before the opening of the new main terminal in 2014. YMM renovated the original building and reopened it as the North Terminal in October. The facility supports about 250,000 workers a year, or 20 per cent of all YMM passengers annually. It accommodates the fixed-base operations for charter carriers, including Enerjet, North Caribou, Canadian North and Flair Air. The terminal continues to provide retail, food and beverage and car rental services. It also supports air cargo operations such as a dedicated cargo depot, storage and sorting space, as a well as ramp space for cargo freighters.

Discover how YMM helps drive the Wood Buffalo Region YMM continues to be a major economic generator in the region. Positive benefits to the regional’s economy in 2013 exceeded every measurement compared to previous years. Highlights of the 2013 YMM Economic Impact Study are listed below.

2013 Summary of Economic Impacts ACTIVITY CATEGORY Direct Indirect TOTAL CHANGE*** Employment 746 954 1,700 19% Wages* $58.5 $55.5 $114 23% Output** $483.8 $426.2 $910 N/A GDP* $177.7 $234.3 $412 14%

(*millions) (**new metric) (***2011-2013) Quick Facts NORTH TERMINAL Originally open in 1986 Size of North Terminal: 3,000 square metres (32,293 square feet) Houses current control tower, commissioned in 1981

YMM – Making the old new again

Employment directly and indirectly increased 19 per cent with the opening of the new terminal. 26 PEOPLE | DISCOVER NEW FACES AT YMM

YMM is focused on a positive employment Quick Facts experience for its staff. YMM STAFF Total number of workers at the airport: 746 Total number of workers employed by companies associated with YMM: 954 Total number of people employed: 1,700 YMM | ANNUAL REPORT 2014 27

DISCOVER NEW FACES AT YMM The opening of the new terminal has changed the way YMM offers services. From security to concessions, a larger airport with more passengers demands a larger workforce.

YMM’s many partner organizations ramped up to meet the demands of a larger terminal and overall business growth across the airport. Partners include concessions, airlines, Canadian Air Transport Security Authority, Canada Border Services Agency, aviation services, air cargo, workforce charter and corporate carriers and non-aeronautical services. The airport authority’s goal is to be one of the top desired places to work. The commitment is to creating a safe, well-managed workplace that encourages innovation and creative customer service practices.

The plan to achieve this hinges on the following: »» Clear job descriptions and performance expectations »» Extensive employee training »» New leader recruitment and succession planning »» Widespread employee participation in organizational planning

An environmental health and safety strategy and wellness program ensures employee health and wellness needs are met in the following areas: »» Illness prevention »» Stress management »» Exercise and healthy living »» Overall well-being

The positive employment experience offers: »» Stimulating work »» Workplace rewards »» Training and development »» Corporate social responsibility and ethics »» Opportunities to advance Achieving airport service that exceeds customer expectations.

Team YMM delivers customer-centred service, every time. YMM | ANNUAL REPORT 2014 29

Discovering new ways to work together Team YMM is a customer service concept that brings together YMM employees and those employed with 40 other companies located on the airport campus that serve passengers on a regular basis. The concept’s main goal is to achieve airport service that exceeds customer expectations, by sharing resources, skills and expertise.

The objectives of YMM include: »» Maintaining customer-centred service with frontline staff trained to deliver consistent, high-level passenger service every time »» Maintaining 24/7 airport operations »» Providing superior customer service through the Customer Service and Visitor Information Centre

Meeting and exceeding standards set by: »» Transport Canada »» Airport Council International (ACI) Airport Service Quality Program (ASQ) »» Airport Authority Executive Team

YMM is offeringspecially-trained pet therapy dogs in the terminal in 2015. 30 COMMUNITY | DISCOVER YMM’S COMMITMENT TO HELPING THE COMMUNITY

YMM donated over $200,000 to the Quick Facts COMMUNITY INVESTMENT community in 2014. Some of the community groups YMM has supported include: »» Wood Buffalo Food Bank »» Royal Canadian Air Cadets »» YMCA of Wood Buffalo »» Royal Canadian Legion McMurray Branch No. 165 »» Kids Forever Foundation YMM | ANNUAL REPORT 2014 31

DISCOVER YMM’S COMMITMENT TO HELPING THE COMMUNITY YMM invests in local organizations that strengthen our community and enhance our region’s quality of life.

Celebrating a new beginning by giving The opening of the new airport terminal in June, 2014 provided the perfect venue for YMM to give back to the community. Funds were raised from both the Fort McMurray Air Show in May and the Grand Opening Gala in June, providing an additional $150,000 in community funding on top of regular charitable contributions. Organizations that benefited from this funding included the Wood Buffalo Food Bank and the Kids Forever Foundation. The Wood Buffalo Food Bank saw a 43 per cent increase in use in 2013 over the previous year, and stocks were depleting 30 per cent faster than anticipated. YMM’s donation allows for nearly a full year of base-cost funding for the food bank, including monthly $5,000 purchases for perishable food items. The Kids Forever Foundation saw 2014 as the last year of operations to help sick and disabled children in the Wood Buffalo region, but it wanted to go out with a bang by setting a goal to raise $1 million. Since 1998, the organization has helped over 200 families with medical care costs for their children. YMM was proud to support Kids Forever during its final year with a $50,000 donation, and is heartened that other organizations will continue to carry the torch of the foundation once its final fundraising goal is achieved. 32 COMMUNITY | INVESTING IN THE COMMUNITY, BUILDING A FUTURE

CELEBRATE INVESTING IN THE AT YMM COMMUNITY, BUILDING A FUTURE

Community Investment Program YMM’s Community Investment Program continues its mission to support organizations that build communities and help those in need. In 2014, the program received a $50,000 boost from the $150,000 total raised at the Grand Opening Gala and Fort McMurray Air Show. Information on the program with a corresponding downloadable application form is posted on www.FlyYMM.ca/about-ymm/community.

The Community Investment Program focuses on three core areas: »» Youth – programs that opens up new educational opportunities for youth »» Aviation Education and History – programs that preserve and educate the people of Fort McMurray on the region’s rich aviation history »» Canada’s Military – programs that support the men and women who serve in the Canadian Armed Forces YMM’s focus on youth includes the YMCA’s Youth Leadership program. YMCA of Wood Buffalo received $10,000 from the airport authority for its 10-week course, offered three times a year, that teaches youth ages 13-15 about volunteering in the community and developing leadership skills in a hands-on environment. YMM’s focus on the Canadian Armed Forced includes support for the 868 YMM Rotary Northstar Royal Canadian Air Cadet Squadron. Two annual $5,000-scholarships were awarded in February 2014 to cadet graduates entering post-secondary education. YMM also has a partnership with the Royal Canadian Legion – McMurray Branch No. 165.

Oils Sands Banquet YMM was honoured at the 2014 Oil Sands Banquet in October, a premier formal event to honour leaders in business, industry, government, education, community building and First Nations in the Wood Buffalo region, Alberta and around the world. Scott Clements, President and CEO of the Fort McMurray Airport Authority, was one of the keynote speakers along with Mayor Melissa Blake of the Regional Municipality of Wood Buffalo and Gregg Saretsky, President and CEO of WestJet. YMM | ANNUAL REPORT 2014 33

Family celebrations A larger main terminal allows YMM to welcome the community to the airport for celebrations. The main terminal hosted the first Halloween party for over 140 guests. Many attendees participated in a costume contest while others competed in a pumpkin- carving contest. Many businesses donated $50 gift certificates, gift baskets and candy bags as prizes for contest winners. With much of the Wood Buffalo demographic being young and starting families, holiday family events are a hit. YMM plans to hold more in 2015.

Western Canada Summer Games In August 2015, the Wood Buffalo region will host the 2015 Western Canada Summer Games. This multi-sport event gives amateur athletes opportunities to advance their skills in a competitive, but friendly environment. Over 14,000 athletes, their families, trainers, supporters and other guests are expected to attend the nine- day event. YMM has been involved with helping the Western Canada Summer Games Wood Buffalo organization prepare for the Games and will be the first to greet the athletes when they arrive this summer to the Wood Buffalo region.

Helping people beyond the work day YMM employees offer a helping hand to the community after their workday. Encouraged through the YMM employee volunteer matching program, many on staff provide their time and skills on a multitude of community projects. YMM staff and their partners through Team YMM are big supporters of the Wood Buffalo Food Bank, and have raised $13,610 at the 2014 Team YMM Christmas Party.

INVESTED IN The Western Canada Summer Games will bring in COMMUNITY over 2,500 athletes to compete in 18 sport categories. 34 COMMUNITY | DISCOVER WOOD BUFFALO’S HISTORY AND CHARACTER

DISCOVER WOOD BUFFALO’S HISTORY AND CHARACTER

Art in a public space gives people a strong sense of place. YMM’s iconic arts program shows the passion and energy of the Wood Buffalo region, thanks to works by artists in Fort McMurray and Western Canada.

At the opening of the new airport terminal in June 2014, four art pieces were unveiled: DISCOVER »» David Robinson, Vancouver – Daedalist our iconic »» Liz Ingram, Edmonton – Water Ways, Sensing Connection arts program »» Lucas Seaward, Fort McMurray – Sky Explorer »» Northern Lights Wall

Recently, YMM expanded the public arts program with new pieces in the terminal and in the new public observation area: »» Lucas Seaward, Fort McMurray – Lasting Impression »» Jane Ash Poitras, Fort Chipewyan – Utopia Series »» Amy Keller-Rempp, Fort McMurray – Sky Dance Series

In addition to the artwork, YMM developed the Aviation Heritage and Education program, revealing to visitors and residents of Wood Buffalo the rich history of aviation exploration and innovation in Northern Alberta. The interactive exhibits were developed by StudioOne Architecture and the historical artifacts on display are on loan from the Fort McMurray Historical Society, Canada’s Aviation Museum and the Alberta Aviation Museum.

Some of these features include: »» Wall of Fort McMurray Pilots – a mural of pioneer bush pilots in the Quick Facts Wood Buffalo region »» Historical Aviation Artifacts – rotating exhibits featuring equipment and HISTORICAL AVIATION heirlooms from Alberta’s aviation pioneers ARTIFACTS ON DISPLAY »» Aviation Education – interactive video screens that showcase Northern Alberta’s aviation history Canadian Pacific Airlines cap worn by Archibald “Archie” McMullen Trans-Canada (McKee) Trophy award to Wilfrid “Wop” May Model of a DeHavilland Canada DHC-2 Beaver bush plane YMM’s Observation Deck features an interactive aviation education. 36 COMMUNITY | DISCOVER WOOD BUFFALO’S HISTORY AND CHARACTER

A new way of seeing The newly outfitted observation area on the third floor of the new airport terminal building satisfies the ageless delight of watching aircraft take off and land. This captivating space, located on the top floor of the main airport terminal before security, provides a spectacular view of the runway and the airport campus.

To further enhance passengers’ travel experience, the observation deck is outfitted with videos displays, art pieces and historical artifact displays: »» Three state-of-the-art interactive video screens that educate visitors about YMM and its history »» New art pieces by Alberta artists Jane Ash Poitras and Amy Keller-Rempp »» Three display cases featuring historical aviation artifacts »» Telescopes and interpretive reader rails for visitors of all ages to learn YMM CONNECTS about aviation in the Wood Buffalo region online with passengers and Keep the conversation going online YMM launched www.FlyYMM.com in May with a new look and format that made the community it quicker and easier for passengers to navigate on mobile and tablet devices, while providing a fuller range of travel and airport service information. The new website promotes the concessions program, including posting store hours, advertising special offers and coupons, posting job openings and providing links to view a restaurant menu or see new product offerings. More and more people are talking to YMM through social media. Both the Fort McMurray International Airport – YMM Facebook page and Twitter account (@FlyYMM) have larger audiences in 2014, with 2,189 likes for the YMM Facebook page and 2,534 followers for @FlyYMM at the start of 2015. Much of YMM’s social media focuses on promoting the concession program through images and discussion of product offerings, coupons and special deal promotions, and reaching passengers who are engaging with concessionaires. While Twitter and Facebook both offer real-time updates, Twitter is particularly time-sensitive. Because of this, YMM is diligent in responding in a timely way to passengers’ comments, inquiries and other interactions. Quick Facts SOCIAL MEDIA 2014 HIGHLIGHTS Over 76,000 comments, shares, messages, likes, retweets Over 23 million website visits or ad views (direct or indirect) Over 1,300 new followers on Twitter Over 1,700 new fans on Facebook Quick Facts OBSERVATION DECK A total 72,224 aircraft moved through YMM in 2014. The wall of Fort McMurray Pilots tells the stories of 8 of our community’s pioneering Bush pilots. 3 state-of-the-art interactive video screens take visitors through the history of aviation in Northern Alberta.

Delight in watching aircraft take off and land.

FlyYMM.com launched in May 2014 with a new look and format that makes it easier for passengers to navigate on mobile and tablet devices. 38 GOVERNANCE & ACCOUNTABILITY

GOVERNANCE & ACCOUNTABILITY

REGIONAL FORT MCMURRAY OIL SANDS FORT McMURRAY MUNICIPALITY CHAMBER OF COMMUNITY AIRPORT CUPE, OF WOOD BUFFALO COMMERCE ALLIANCE AUTHORITY LOCAL 1505 3 Directors 2 Directors 2 Directors 2 Directors 1 Director

ACCOUNTABILITY FRAMEWORK FORT MCMURRAY AIRPORT STANDING COMMITTEES Airport Master Plan BOARD OF DIRECTORS Governance Strategic Plan Sheldon Schroeder, Chair Finance and Audit Risk Management Plan Cheryl Alexander Capital Project Five Year Reviews Ken Balkwill Financial Audit Allan Kallal Bond Rating Manuel Ortiz Variance Reports Trent Obrigewitsch CEO Performance Review Mildred Ralph Transport Canada Compliance Colin Solbak Appointer Meetings Bernd Wehmeyer Project Implementation Plan Roy Williams Airport Area Structure Plan

BOARD SECRETARY Lynn Berry PRESIDENT AND CEO BUSINESS ADVISORY COUNCIL Scott Clements Team YMM

LEGAL Ogilvie LLP

PROJECT MANAGER VP CORPORATE SERVICES/CFO VP OPERATIONS BUSINESS DEVELOPMENT Stantec Marlene Kowalski Bill Werny SNC-Lavalin YMM | ANNUAL REPORT 2014 39

BOARD OF DIRECTORS

BOARD OF DIRECTORS Top Row (from left to right): Mildred Ralph Appointed by: Fort McMurray Chamber of Commerce, Colin Solbak Appointed by: Fort McMurray Chamber of Commerce, Bernd Wehmeyer Appointed by: Regional Municipality of Wood Buffalo,Sheldon Schroeder (Board Chair) Appointed by: Canadian Association of Petroleum Producers, Allan Kallal Appointed by Regional Municipality of Wood Buffalo,Roy Williams Appointed by: Fort McMurray Airport Authority, Cheryl Alexander Appointed by: Fort McMurray Airport Authority Bottom Row (from left to right): Manuel Ortiz Appointed by: Canadian Association of Petroleum Producers, Ken Balkwill Appointed by: CUPE, Local 1505, Bill Werny Vice-President, Operations, Scott Clements Presidents and Chief Executive Officer,Marlene Kowalski Vice-President, Corporate Services and Chief Financial Officer, Trent Obrigewitsch Appointed by: Regional Municipality of Wood Buffalo

MANAGEMENT TEAM

Scott Clements Barry Hansen Mike MacNeil President and Chief Executive Officer Manager, North Terminal, Manager, Airfield Maintenance Bill Werny Airside Operations & Training Roxanne LeBlanc Vice-President, Operations Bruce Ehmann Financial Controller Marlene Kowalski Manager, Security and Terminal Operations Veronica Wakeham Vice-President, Corporate Services and CFO Lanner Khan Manager, Human Resources and Administration Jesse Meyer Manager, Facilities Natasha Robichaud Manager, Commercial Manager, Human Resources Fort McMurray Airport Authority is positioned to manage economic fluctuations and prepare for long-term growth. YMM | ANNUAL REPORT 2014 41

FORT McMURRAY AIRPORT AUTHORITY MANAGEMENT DISCUSSION & ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

Performance Highlights ...... 42

Financial Performance...... 43

Revenue...... 44

Operating Expenses...... 46

Capital Investment...... 47

Five-Year Performance Review ...... 47 42 FORT McMURRAY AIRPORT AUTHORITY | MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014

Performance Highlights

Passenger traffic activity YMM continued to lead the nation in terms of market growth in 2014, with 1.31 million passengers served. Achievements during the year included air service expansion, increased frequency of flights to the top four destinations (Calgary, Edmonton, Toronto and Vancouver), and the North Terminal was repurposed for workforce charters. Commercial passenger traffic increased by 12.5%; however, due to the impact of declining oil prices YMM saw a decrease of 2.8% in workforce charter passengers. The overall increase for the year was 9.5% compared to prior year, continuing to outpace other Canadian airports in terms of growth.

Passenger Traffic — Year Ended December 31 The following chart and graph illustrates the growth trend in enplaned and deplaned passengers for the year compared to prior years:

2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Passengers 443,687 595,671 735,987 704,362 714,659 763,708 958,072 1,195,437 1,308,416 Commercial 415,965 559,009 639,765 667,404 671,427 710,768 828,701 956,035 1,075,682 Workforce 28,722 36,662 42,222 36,958 43,232 52,940 129,371 239,402 232,734

Total Passengers Commercial Workforce 1400000

1200000

1000000

800000

600000

400000

200000

0 2006 2007 2008 2009 2010 2011 2012 2013 2014 YMM | ANNUAL REPORT 2014 43

Financial Performance The following table presents the revenue and expenditures for the Authority with comparison to prior year.

Statement of Operations – Year Ended December 31 ($000s)

2014 2013 Change % Change

Passengers 1,308,416 1,195,437 112,979 9.5% $ $ $ REVENUE Airport improvement fee 15,911 14,293 1,618 11.3% Airport improvement fee - equivalent 3,311 3,392 (81) -2.4% Other airfield 7,881 6,729 1,152 17.1% Terminal 4,179 2,650 1,529 57.7% Parking 4,108 3,659 449 12.3% Other 1,476 346 1,130 326.4% Ground transportation 2,739 2,393 346 14.5% Land lease 2,354 2,273 81 3.6% Concession 1,452 380 1,072 281.7% Interest 1,324 148 1,176 796.0% Special events 1,374 - 1,374 - 46,109 36,263 9,846 27.2% EXPENSES Salaries and wages 14,811 8,047 6,764 84.1% General and administrative 5,333 3,898 1,435 36.8% Operating 3,977 2,461 1,516 61.6% Airport improvement fee handling 1,125 1,012 113 11.1% Special events 1,687 - 1,687 - 26,933 15,418 11,515 74.7% Earnings before interest and amortization 19,176 20,845 (1,669) -8.0% Interest and Amortization Amortization Expense 14,284 11,078 3,206 Interest 5,209 - 5,209 19,493 11,078 8,415 76.0%

NET (LOSS) INCOME (317) 9,767 (10,084) -103.2% 44 FORT McMURRAY AIRPORT AUTHORITY | MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014

Revenue In 2014, revenue increased by $9.8 million to $46.1 million from $36.2 million in 2013. The Airport Improvement Fee (AIF), collected by the commercial air carriers, and the Airport Improvement Fee Equivalent (AIF-E) collected from charter aircraft, together are the largest component of revenue for the Airport Authority. The AIF and AIF-E are used to fund the costs of new airport infrastructure, major improvements to existing facilities at the Airport, as well as related financing costs, debt repayment and the collection fee retained by the airlines. With the expanded concession program in the new terminal, revenue has increased $1.1 million over the prior year. Also included in 2014, was one-time sponsorship and special events revenue of $1.4 million that was related to the airport terminal opening gala and airshow.

The following charts illustrate 2014 revenue compared to prior year ($000s).

$1,374 $380 $148 $1,324 $2,273 $1,452 Airport Improvement Fee $2,393 Airport Improvement Fee - Equivalent $346 $2,354 Other Airfield Revenue

$2,739 Terminal Revenue

$1,476 $15,911 $3,659 $14,293 Parking Revenue Other Revenue $4,108 $2,650 Ground Transportation Land Lease Revenue $4,179 $3,311 $6,726 Concession Revenue $7,881 $3,392 Interest Special Events Revenue (000s) Revenue (000s) 2014 Total: $46.1M 2013 Total: $36.3M YMM | ANNUAL REPORT 2014 45

YMM earns revenue from non-aeronautical commercial operations, such as parking, concessions, buildings and land leases. The following table shows the breakdown between aeronautical and non- aeronautical revenue. Non-Aeronautical does not include one-time special events revenue related to the new terminal opening.

Aeronautical vs. Non-Aeronautical Revenue ($000s) - Year Ended December 31, 2014

2014 2013 Change

AERONAUTICAL REVENUE $ $ Airport improvement fee 15,911 14,293 1,618 Airport improvement fee - equivalent 3,311 3,392 (81) Other airfield revenue 7,881 6,729 1,152 27,103 24,414 2,689 Airport improvement fee handling 1,125 1,012 113 Total aeronautical revenue - net fee handling 25,978 23,402 2,576

Aeronautical revenue % of total revenue 59.6% 66.4%

NON-AERONAUTICAL REVENUE Parking revenue 4,108 3,659 449 Ground transportation revenue 2,739 2,393 346 Land lease revenue 2,354 2,273 81 Terminal revenue 4,179 2,650 1,529 Concession revenue 1,451 381 1,070 Other revenue 2,800 494 2,306 Tota non-aeroncautical revenue 17,631 11,850 5,781

Non-aeronautical revenue % of total revenue 40.4% 33.6% 46 FORT McMURRAY AIRPORT AUTHORITY | MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2014

Operating Expenses Operating expenses increased by $11.5 million over the prior year for a total of $26.9 million before amortization and interest. The increase in expenses is attributed to the opening of the new main airport terminal building and the higher cost structure associated with operating a much larger facility. Included in 2014, was $1.7 million in costs associated with the gala and airshow celebration for the opening of the new terminal building. The majority of the costs were offset by sponsorship and revenue generated through the special events.

The following charts present the 2014 expenses compared to prior year ($000s):

$1,687 $1,012 $1,125

$2,461 $3,977 Salaries and Wages

$8,047 General and Administrative $14,811 Operating $5,333 $3,898 Airport Improvement Fee Handling Special Events

Operating Expenses (000s) Operating Expenses (000s) 2014: $26.9M 2013: $15.4M

Financing The Authority secured $198 million in long-term financing for the construction of the new airport terminal building, through the Alberta Capital Finance Authority (ACFA). The interest rate is fixed at 4.719% for thirty years. The Authority made interest only payments up to June 2014, with the first principal payment of $1.8 million made in September 2014. The Authority has met all the covenants under the terms of the ACFA credit facility.

Grants from RMWB The Authority has received $25 million in funding grants from the RMWB to be used for civil works to support the development of the new airport terminal and related projects. The final $6.2 million instalment of the grant was received in January 2014.

Capital Investment New Airport Terminal Building In the year, $38 million was spent towards the completion of the airport terminal building and related projects and $3.4 million in sustaining capital. Total funds invested to date total $228 million. Amortization of the new terminal building commenced as of June 9, 2014. The following table shows the breakdown of capital and sustaining maintenance capital invested for the year. YMM | ANNUAL REPORT 2014 47

Capital Investment $ CAPITAL New main airport terminal project 37,960,680 37,960,680

SUSTAINING MAINTENANCE CAPITAL Mobile Equipment 92,078 Light Vehicles 215,166 Airside 191,753 Building and Plant 1,505,254 Terminal Expansion Projects 12,232 Airfield Expansion Projects 1,232,461 Commercial Development 138,990 Sustaining Capital Investment 3,387,934

Total Capital Investment 41,348,614

Five-Year Performance Review The Regional Airports Authorities Act (the Act) and the Regional Airports Authorities Regulation (the Regulation) require that at least once every five years the Fort McMurray Airport Authority (FMAA) commission an independent review of the extent to which the FMAA operates a safe and efficient service to the public, and an efficiently run undertaking in accordance with its business plans. In 2014, Rideau Consultants Inc. was retained by the Authority to perform the five-year performance review. Rideau concluded that FMAA does operate a safe and secure aerodrome, run in accordance with its business plans.

Key Findings »» Concluded that the FMAA is in compliance with the Act and the Corporate Objects expressed in the FMAA Articles. »» That FMAA has demonstrated during the period of review its willingness to support the necessary enhanced safety and security requirements and responsibilities that come with local FMAA management. »» That FMAA has demonstrated, during the period of review, a commitment to regional economic development through its adoption of an active strategy to directly invest in the local economy. »» That FMAA has demonstrated an exemplary commitment to its management, during the period of review, of the airport environment. It consistently demonstrates its awareness and concern about its environmental responsibilities, and is open in conducting its environmental program. »» On a day-to-day operation basis, the FMAA operates effectively and efficiently, covering operating expenses with operating revenue. »» That the FMAA Board has developed and implemented governance policies and practices consistent with the good governance best practices used by other Canadian airport authorities. The Board uses these policies and practices effectively in offering guidance to FMAA management. »» That FMAA has continued to demonstrate its commitment to consistent, high- quality, strategic and business planning. It has evolved a structure that is well understood, well documented and effective in guiding the FMAA as an effective not-for-profit corporation, managed with due regard for its stakeholder communities. All earnings from operations are reinvested in YMM. YMM | ANNUAL REPORT 2014 49

FORT McMURRAY AIRPORT AUTHORITY FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014

TABLE OF CONTENTS

Statement of Management Accountability ...... 50

Independent Auditor’s Report...... 51

Statement of Financial Position...... 52

Statement of Operations and Net Assets...... 53

Statement of Cash Flows...... 54

Notes to the Financial Statements...... 55 50 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

STATEMENT OF MANAGEMENT ACCOUNTABILITY

Statement Of Management Accountability The audited financial statements of the Fort McMurray Airport Authority (“the Authority”) for the year ended December 31, 2014 have been prepared by and are the responsibility of the Authority’s management. The Authority’s financial statements include disclosures necessary for a fair presentation of the statements of financial position, results of operations and net assets and cash flows of the Authority and have been prepared in accordance with Canadian accounting standards for not for profit organizations (“ASNPO”), and disclosure otherwise required by the laws and regulations to which the Authority is subject. The Finance and Audit Committee of the Board of Directors meets periodically with management and independent auditors to review significant accounting, internal controls, and auditing matters. They also review and recommend the annual financial statements of the Authority to the Board of Directors.

Scott Clements Marlene Kowalski President and Vice-President Corporate Services Chief Executive Officer and Chief Financial Officer YMM | ANNUAL REPORT 2014 51

INDEPENDENT AUDITOR’S REPORT

Deloitte LLP Tel: 780-421-3611 2000 Manulife Place Fax: 780-421-3782 10180 - 101 Street www.deloitte.ca Edmonton AB T5J 4E4 Independent Auditor’s Report Canada

To the Board of Directors of Fort McMurray Airport Authority We have audited the accompanying financial statements of Fort McMurray Airport Authority, which comprise the statement of financial position as at December 31, 2014, and the statements of operations and net assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Fort McMurray Airport Authority as at December 31, 2014, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations.

Chartered Accountants April 28, 2015 52 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2014

2014 2013 $ $ ASSETS CURRENT Cash and cash equivalents 6,097,049 7,131,058 Accounts receivable 6,260,207 4,212,716 Inventory 178,498 278,753 Investments (note 3) - 146,668 Prepaid expenses 259,579 199,665 12,795,333 11,968,860 NON-CURRENT Tangible capital assets (note 4) 325,392,499 298,183,543 Intangible assets (note 5) 34,993 3,580 Investments and restricted cash (note 3) 52,412,807 82,307,451 390,635,632 392,463,434

LIABILITIES AND NET ASSETS CURRENT Accounts payable and accrued liabilities 9,522,671 15,873,810 Deferred revenue 1,695,461 1,253,516 Current portion of long-term debt (note 6) 3,835,384 1,851,642 15,053,516 18,978,968 NON-CURRENT Long-term debt (note 6) 192,312,974 196,148,358 Deferred capital contributions (note 7) 24,000,000 17,750,000 231,366,490 232,877,326 Contingencies (note 13)

NET ASSETS Unrestricted net assets 158,269,142 159,586,108 Internally restricted net assets (note 14) 1,000,000 - 159,269,142 159,586,108 390,635,632 392,463,434

See accompanying notes to financial statements.

APPROVED BY THE BOARD

Director

Director YMM | ANNUAL REPORT 2014 53

STATEMENT OF OPERATIONS & NET ASSETS YEAR ENDED DECEMBER 31, 2014

2014 2013 $ $ REVENUE Airport improvement fee (note 9) 15,911,040 14,292,880 Airport improvement fee - equivalent (note 10) 3,310,593 3,392,070 Other airfield 7,881,330 6,728,940 Terminal 4,179,482 2,650,007 Parking 4,107,888 3,658,798 Other 1,476,137 346,152 Ground transportation 2,739,329 2,392,500 Land lease 2,354,459 2,273,015 Concession 1,451,223 381,438 Interest 1,324,327 147,697 Special events 1,373,490 - 46,109,298 36,263,497

EXPENSES Salaries and wages 14,810,845 8,047,069 Amortization expense 14,283,521 11,077,667 General and administrative 5,332,841 3,897,767 Interest 5,209,492 - Operating 3,977,264 2,461,185 Airport improvement fee handling 1,125,205 1,012,497 Special events 1,687,096 - 46,426,264 26,496,185 NET (LOSS) INCOME (316,966) 9,767,312 NET ASSETS, BEGINNING OF YEAR 159,586,108 149,818,796 NET ASSETS, END OF YEAR 159,269,142 159,586,108

See accompanying notes to financial statements. 54 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2014

2014 2013 $ $ CASH PROVIDED BY (USED IN) OPERATIONS Net (loss) income (316,966) 9,767,312 Items not affecting cash Gain on disposal of tangible capital assets - (290,209) Amortization of tangible capital assets 14,267,404 11,038,630 Amortization of intangible assets 12,083 35,003 Amortization of non-current investment 4,034 4,034 Non-cash investment income - (2,735) 13,966,555 20,552,035 Change in non-cash working capital items Accounts receivable (2,047,491) (610,222) Inventory 100,255 (91,385) Prepaid expenses (59,914) (129,754) Account payable and accrued liabilities (6,351,139) (254,428) Deferred revenue (16,636) 21,167 5,591,630 19,487,413

INVESTING Net change in investments and restricted cash 30,037,278 37,465,555 Repayment of mortgage receivable - 548,115 Purchase of new airport terminal assets (34,479,416) (64,587,000) Purchase of tangible capital assets (6,996,944) (2,059,801) Purchase of intangible assets (43,496) (4,079) (11,482,578) (28,637,210) FINANCING Contribution from Regional Municipality of Wood Buffalo 6,250,000 6,250,000 Increase in deferred revenue - QTA 458,581 481,866 Repayment of long-term debt (1,851,642) - 4,856,939 6,731,866 Decrease in cash and cash equivalents (1,034,009) (2,417,931) Cash and cash equivalents, beginning of year 7,131,058 9,548,989 Cash and cash equivalents, end of year 6,097,049 7,131,058

See accompanying notes to financial statements. YMM | ANNUAL REPORT 2014 55

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

1. Nature of operations The Fort McMurray Airport Authority (The “Authority”) was incorporated in December 1, 2009 under the Regional Airports Authorities Act (Alberta) (the “Act”) as a non-share capital corporation. Under the provisions of the Act, the mandate of the Authority is to manage the Fort McMurray International Airport (the “Airport”) in a safe, secure and efficient manner, and to advance economic and community development by promoting improved airline and transportation service and an expanded aviation industry; for the general benefit of the public in the region. The Authority has operated the Airport since January 1, 2010 when the Regional Municipality of Wood Buffalo (“RMWB”) transferred the assets and operations of the Fort McMurray Regional Airport Commission (the “Commission”) to the Authority. The tangible capital assets of the Commission were transferred to the Authority and recorded at the carrying amount of the Commission. In accordance with the provisions of the Act, the Authority operates as a not-for-profit corporation, and as such earnings from operations are used towards promoting its purposes and reinvestment in airport development. Under section 149 of the Income Tax Act (Canada) the Authority is exempt from payment of income tax.

2. Significant accounting policies a) Basis of accounting The financial statements have been prepared in accordance with Canadian accounting standards for not-for- profit organizations (“ASNPO”) and reflect the following significant accounting policies: b) Controlled entities The Authority has elected not to consolidate controlled entities as allowed under ASNPO. The investment controlled by these entities is recorded at cost in the statement of financial position and prescribed disclosure is presented in the notes to the financial statements. The Authority has incorporated a wholly owned subsidiary, YMM Inc., which is currently dormant and had no activity in the year. c) Cash and cash equivalents Cash and cash equivalents include unrestricted cash on deposit with financial institutions and short-term investments with maturities of three months or less from the date of acquisition. Cash and cash equivalents also include bank indebtedness consisting of overdrawn bank accounts. Bank indebtedness is included in cash and cash equivalents as it regularly fluctuates from being positive to overdrawn. d) Accounts receivable Accounts receivable are stated after evaluation as to their collectability and an appropriate allowance for doubtful accounts where considered necessary. e) Inventory Inventory is valued at the lower of cost and the net realizable value with the cost being determined on a first in, first out basis. 56 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

f) Tangible capital assets Tangible capital assets exclude the cost of facilities constructed on airport lands which are owned by tenants. Tangible capital assets are recorded at cost less accumulated amortization and impairment losses. Interest directly attributable to the acquisition, construction or development of tangible capital assets is capitalized. Amortization is based on their estimated useful life at the following rates using the straight line method:

Asset Rate Buildings 15 - 40 years Apron expansion 11 years Maintenance equipment 10 years Roadways and airside/groundside paving structures 10 years Airside lighting structures 10 years Parking lots 6 - 20 years Fire trucks and equipment 5 - 10 years Light vehicle fleet 4 - 5 years Furniture, fixtures and equipment 5 years Computer hardware 3 years

g) Intangible assets Intangible assets with a finite life are accounted for at cost less accumulated amortization. Amortization is based on their estimated useful life using the straight-line method over two years.

h) Investments Investments are recorded at amortized cost. Earnings from these investments are recognized only to the extent received or receivable. The Authority recognizes an impairment loss in net earnings, if any, when it determines that a significant adverse change has occurred during the period in the expected timing or amount of future cash flows. When the extent of impairment of a previously written-down asset decreases and the decrease can be related to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be reversed in net earnings in the period the reversal occurs.

i) Impairment of long-lived assets When a long-lived asset no longer has any long-term service potential to the Authority, the excess of its net carrying amount over any residual value is recognized as an impairment loss and expensed in the statement of operations and net assets. No impairment loss was recorded for the year ended December 31, 2014. YMM | ANNUAL REPORT 2014 57

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

j) Revenue recognition The Authority recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the price to the user is fixed or determinable and collection is reasonably assured. Specifically, revenue generated from airport improvement fees, airfield revenues, fees charged for parking, car rental agencies, land lease, building lease and other revenues are recognized as the airport facilities are utilized. Concession revenues are charged on a monthly basis and are recognized on a percentage of sales or specified minimum rent basis. Other rentals are recognized over the term of the respective agreements. The Authority follows the deferral method of revenue recognition for externally restricted revenues. The Authority has retained substantially all of the benefits and risks of ownership of its rental assets; therefore, it accounts for leases as operating leases. Rental revenue from operating leases is recognized as income over the term of the lease as it becomes due. k) Use of estimates The preparation of financial statements in conformity with ASNPO requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Key components of the financial statements require management to make estimates that include the provision for doubtful accounts in respect of accounts receivables, the cost and net realizable value of inventory, the useful life of long-lived assets, the fair value of certain financial instruments, and liabilities under legal contingencies. Actual results could differ from these estimates. l) Financial instruments Financial assets and financial liabilities are initially recognized at fair value when the Authority becomes a party to the contractual provisions of the financial instrument. Subsequently, all financial instruments are measured at amortized cost except for the following instruments: Investments in unlisted shares are measured at cost less any reduction for impairment. Transaction costs related to financial instruments measured at fair value are expensed as incurred. Transaction costs related to the other financial instruments are added to the carrying value of the asset or netted against the carrying value of the liability and are then recognized over the expected life of the instrument using the straight-line method. Any premium or discount related to an instrument measured at amortized cost is amortized over the expected life of the item using the straight-line method and recognized in net earnings as interest income or expense. With respect to financial assets measured at cost or amortized cost, the Authority recognizes in operations an impairment loss, if any, when it determines that a significant adverse change has occurred during the period in the expected timing or amount of future cash flows. When the extent of impairment of a previously written-down asset decreases and the decrease can be related to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be reversed in operations in the period the reversal occurs. 58 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

3. Investments and restricted cash

2014 2013 CURRENT $ $ Bank GIC - 1.9% annual interest matured July 15, 2014 - 146,668

2014 2013 NON-CURRENT INVESTMENTS $ $ Bank GICs - 1.63% and 1.56% annual interest matured September 17, 2014 - 40,071,366 and October 3, 2014 High interest bank account - 1.23% annual interest 25,619,684 - Bank account - airport terminal building project - 938,709 Bank GIC - 1.75 % annual interest matures July 15, 2019 148,144 - Other investments 175,188 182,228 25,943,016 41,192,303

RESTRICTED CASH Bank GICs - 1.63% and 1.56% annual interest matured September 17, 2014 - 39,928,634 and October 3, 2014 High interest bank account - 1.23% annual interest (notes 7 & 14) 25,000,000 - Bank account - quick-turn-around (QTA) project 1,469,791 1,186,514 26,469,791 41,115,148

Non-current investments and restricted cash 52,412,807 82,307,451

The Authority received proceeds from term debt (note 6), as well as contributions from the RMWB (note 7) in advance for the new airport terminal building. In the prior year, the Authority invested excess cash received into GIC’s designated for use in the new airport terminal project and related capital projects. Upon maturity funds were reinvested in a high interest investment bank account. This amount qualifies as cash and cash equivalents but is classified as a non-current investment as it will be used for future infrastructure development.

Bank account – quick-turn-around project This cash is received from the car rental agencies (the “agencies”) operating from the Airport. The money is to be applied for the purposes of developing a quick turn-around facility (“QTA”) at the Airport which will include car wash and refueling station. As per the rental agreement between the Authority and agencies, the agencies are required to charge customers a customer facility charge which in turn is remitted to the Authority to finance the QTA project.

Other investments The Authority incurred costs associated with real estate development leases for hotels. The carrying costs will be amortized over the life of the lease. YMM | ANNUAL REPORT 2014 59

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

4. Tangible capital assets

2014 2013 Accumulated Net book Net book Cost amortization value value $ $ $ $ Land 25,037,536 - 25,037,536 24,690,500 Buildings 253,689,367 8,104,724 245,584,643 213,551,250 Maintenance equipment 5,944,141 3,185,239 2,758,902 3,158,374 Roadways and groundside paving structure 2,127,152 4,359 2,122,793 6,293 Airside paving structure 45,190,542 22,078,167 23,112,375 26,528,590 Airside lighting structures 2,412,939 1,176,420 1,236,519 1,467,842 Parking lots 2,580,216 1,783,517 796,699 1,226,735 Apron expansion 41,535,313 18,879,689 22,655,624 26,431,562 Light vehicle fleet 932,506 641,512 290,994 211,280 Fire trucks and equipment 1,396,462 717,831 678,631 822,197 Furniture, fixtures and equipment 409,138 165,499 243,639 68,224 Computer hardware 1,411,694 537,550 874,144 20,696 382,667,006 57,274,507 325,392,499 298,183,543

The new airport terminal building was substantially completed during the year and became operational on June 9, 2014 as such, there were no costs (2013 - $190,943,863) related to assets under construction. Amortization of the new building commenced as of the operational date whereas assets under construction are not subject to amortization. Net interest of $4,108,512 (2013 - $9,292,422) in respect of borrowings for the project under the long-term debt facility was also capitalized.

5. Intangible assets

2014 2013 Accumulated Net book Net book Cost amortization value value $ $ $ $ Computer software 172,387 137,394 34,993 3,580

Intangible assets with a finite life are accounted for at cost less accumulated amortization and impairment losses. Amortization is based on their estimated useful life using the straight-line method over two years. 60 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

6. Long term debt

Alberta Capital Finance Authority (“ACFA”) On March 7, 2011, the Authority secured $198,000,000 in long-term financing for construction of the new Airport Terminal Building that opened in June 2014, at a fixed rate of 4.719% for thirty years, due March 15, 2041. Interest only payments commenced September 2011 with principal and interest payments starting in September 2014 in the amount of $13,046,904 annually. The debenture is secured by a first charge on all Authority assets. A Letter of Guarantee for an amount of up to $10,000,000 in support of the debenture issued by the ACFA has been arranged by the RBC, pari passu with ACFA. Long term debt relating to the Authority at year-end is $192,645,974 (2013 - $196,148,358) and the current portion is $3,835,384 (2013 - $1,851,642). Under the terms of the ACFA facility, when debentures are outstanding, the Authority is required to maintain an Interest Coverage Ratio of not less than 1.25:1 and net cash flows greater than zero as of the end of any fiscal quarter on a rolling four fiscal quarter basis. All covenants have been met. Principal payments required in the next five years and thereafter are as follows:

$ 2015 3,835,384 2016 4,018,511 2017 4,210,382 2018 4,411,413 2019 4,622,044 Thereafter 175,050,624 196,148,358 YMM | ANNUAL REPORT 2014 61

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

7. Grants and deferred capital contributions

Regional Municipality of Wood Buffalo (RMWB) On May 24, 2011, the Council of the RMWB approved a matching funding grant of $25,000,000 to the Authority. $24,000,000 of the grant is to provide support for airport infrastructure development. The Authority received the final $6,250,000 instalment of the grant in 2014. Per the grant agreement $1,000,000 of the total funding is to be used at the discretion of the Authority for the purpose of providing customs and immigration facilities within the existing airport terminal. Due to the discretionary and unrestricted nature of this funding it was recorded as revenue in 2012. The remaining $24,000,000 received has been recorded in deferred capital contributions on the statement of financial position. The amount will be reclassed to unamortized deferred capital contributions when the funds have been utilized as intended. This balance will be amortized over the life of the assets to which it relates and will commence as and when the related assets are available for use. In 2010, the RMWB approved a bylaw which waives the RMWB portion of property taxes while leaving the Authority responsible for only that portion of the property taxes that are paid to the Provincial Government, as well as that portion of the property taxes used for senior citizen support. The RMWB is an appointee of three directors to the Board of Directors of the Authority.

8. Related party transactions

Staff housing The Authority owns seven staff housing units all of which are rented to current employees. The rental charge is based on the housing policy of the RMWB. The rents for 2014 totaled $148,312 (2013 - $148,120) and the direct expenses associated with these totaled $65,288 (2013 - $45,584). These transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

9. Airport improvement fee The Authority derives revenue from the Airport Improvement Fee (“AIF”), which is collected by air carriers pursuant to an agreement among various airports in Canada, the Air Transport Association of Canada and air carriers serving airports that are signatories to the agreement (the “AIF Agreement”). Pursuant to the AIF Agreement, signatory airlines receive a 7% collection fee. AIF revenue is used to fund the costs of new airport infrastructure, major improvements to existing facilities at the Airport, as well as related financing costs, debt repayment and the collection fee retained by the signatory airlines. The AIF as at December 31, 2014 was $30 (2013 - $30) for each originating passenger departing from the Airport.

10. Airport improvement fee – equivalent Effective March 1, 2011, the Authority derives revenue from the Airport Improvement Fee – Equivalent (“AIF-E”) for charter aircraft exceeding ten seats at the same rates as for the AIF. 62 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

11. Employee future benefits

Pension and retirement plans Employees of the Authority participate in the Local Authorities Pension Plan (“LAPP”), which is a multi- employer contributory defined pension plan covered by the Public Sector Pension Plans Act of Alberta. At December 31, 2013, the LAPP reported an actuarial deficiency of $4.86 billion (2012 - $4.98 billion deficiency). An actuarial valuation is carried out every year. Any differences between the actuarial valuation results and extrapolated results will next be reported as at December 31, 2014. Total service contributions by the Authority to the LAPP for 2014 were $733,143 (2013 - $465,585). The Authority had a defined contribution supplementary retirement plan for two senior executives in 2014 and three senior executives in 2013. The expense recorded in the statement of operations and net assets for 2014 totaled $45,178 (2013 - $61,310). The Authority requires members to contribute to the plan at a rate equal to that required by LAPP.

12. Financial instruments The financial assets of the Authority, which consist of cash and cash equivalents, accounts receivable, investments, and investments and restricted cash are measured at amortized cost. Accounts receivable presented in the statement of financial position is presented net of an allowance for doubtful accounts of $17,762 (2013 - $17,762).

a) Credit risk The Authority is exposed to credit risk as it provides credit to a large number of customers in the normal course of its operations. This risk is minimized through the Authority’s diverse customer base and assessment of potential customer’s financial condition prior to extending credit.

b) Interest rate risk Interest rate risk is the risk that the value of a financial instrument might be adversely affected by a change in the interest rates. Changes in market interest rates may have an effect on the cash flows associated with some financial assets and liabilities, known as cash flow risk. In seeking to minimize the risk from interest rate fluctuations, the Authority manages exposure through its normal operating and financing activities. The Authority is exposed to interest rate risk with respect to investments in guaranteed investment certificates, investments and restricted cash and term loans subject to refinancing. Changes in market interest rates could impact investments to the extent that the investments mature and are reinvested at current market interest rates. There is no impact on the ACFA project financing as the note bears interest at a fixed rate of 4.719% for the 30-year term.

c) Liquidity risk The Authority actively maintains its credit facilities to ensure it has sufficient available funds to meet current and foreseeable financial requirements at a reasonable cost. Management believes that cash flows from operations, along with available credit under existing banking facilities, will be adequate to support the payment of the Authority’s financial liabilities. Further, management also believes that the financing secured from ACFA for the new Airport Terminal project will be adequately serviced by the AIF paid by departing passengers. YMM | ANNUAL REPORT 2014 63

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

13. Contingencies In the normal course of operations, there may be claims against the Authority or assumed from the predecessor Commission. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. In the opinion of management, it is not possible to predict the ultimate outcome of these claims, if any, which may result. As part of the new terminal building development, the Authority requires supporting infrastructure such as water, sewer and upgraded road access which are offsite airport lands to be provided for the new airport terminal. The estimated total costs of such supporting infrastructure cannot be determined at this time. The costs that may be borne by the Authority will be based on construction undertaken and paid at that time.

14. Internally restricted net assets In 2014, the Authority restricted $1,000,000 of net assets for the purpose of infrastructure development related to the RMWB funding grant (note 7). The funds will be utilized for capital expenditures related to the construction or improvement of the airport infrastructure. Cash of $1,000,000 is similarly restricted to fund the internally restricted net assets (note 3).

15. Economic dependence Revenue generated from major airlines such as Air Canada/Air Canada Express and WestJet/Encore account for approximately one-half of total revenues on a recurring basis. In addition, passengers flying with these airlines generate a significant portion of remaining revenue amounts. The Authority’s ability to continue variable operations is dependent on Air Canada/Air Canada Express and WestJet/Encore continuing to fly to and from the Airport. As of the financial statement date, the Authority believes that their relationship with these airlines will continue into the foreseeable future. 64 FORT McMURRAY AIRPORT AUTHORITY | FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 2014

16. Directors’ and Officers’ remuneration This information is provided pursuant to The Regulations of the Not-for-profit Corporations Act (S.C. 2009, c. 23) and represents the total compensation paid and expenses reimbursed to each director for the year end December 31, 2014.

2014 2013 Training & Gross Pay Travel Development Total Total Director Remuneration and Expenses $ $ $ $ $ Alexander, Cheryl 17,184 657 - 17,841 18,122 Balkwill, Kenneth 21,083 4,992 - 26,075 17,978 Cox, Matthew 8,733 3,401 - 12,134 - Fitzner, Jeff 3,158 - - 3,158 17,467 Kallal, Allan 23,116 875 - 23,991 20,043 Kulas, Mario - - - - 1,542 Obrigewitsch, Trent 3,550 397 - 3,947 13,950 Ralph, Mildred 19,584 683 - 20,267 17,720 Schroeder, Sheldon 45,000 1,370 - 46,370 49,816 Sigler, Murray 17,400 5,586 - 22,986 16,987 Solbak, Colin 11,700 1,372 - 13,072 - Wehmeyer, Bernd 27,016 2,531 - 29,547 19,527 Williams, Roy 3,200 589 - 3,789 - Training & Gross Pay Travel Development Total Total Authority Officers’ Remuneration $ $ $ $ $ and Expenses President & CEO 338,447 46,526 - 384,973 375,687 VP Operations 272,953 42,839 - 315,792 269,625 VP Corporate Services & CFO (a) 249,833 14,588 3,694 268,115 320,462

Officer compensation includes base salary, bonus, pension, employer paid contributions and taxable benefits. (a) 2013 includes the retirement of the VP Corporate Services & CFO in December 2013 and their replacement started in August 2013

17. Comparative figures Certain December 31, 2013 figures have been reclassified to conform to the current year presentation.

300-100 Snowbird Way Fort McMurray, AB T9H 0G3

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