ACCELERATING by chenmeixiu


									                                                   Edmonton Airports
                                                  Annual Report 2009

Edmonton Airports Annual Report 2009

       To be the North’s
       preferred gateway to
       the World, and the
       World’s preferred
       gateway to the North.

       We manage commercially
       focused airports and
       facilities, striving to
       exceed customer and
       community expectations.
We ensure that the safety and security of our customers,
staff, facilities and environment is a primary concern in all
aspects of doing business.

We are motivated by customer expectations in providing
quality facilities and services in a customer-sensitive and
service-driven manner.

We are accountable for all our actions including financial
management and act honestly and respectfully in our
business relations, usage of our resources, treatment
of our customers and each other, and in the general
conduct of our business.

People are our most important resource; we work
together to foster an open and cooperative environment
that encourages teamwork, communication and mutual

We champion innovation and drive efficiencies to create
new value for our stakeholders.

We are committed to responsibly managing all of
our assets to advance our region’s environmental
stewardship, social well-being and economic prosperity.

                                            2009 Annual Report   1
                        By the end of 2013, Edmonton Airports will be recognized as a Top 100
                        Employer in Canada.

                        EFFICIENT GROWTH
                        By 2014, increase per enplaned passenger non-aeronautical revenue by
                        exceeding the five-year average Alberta CPI. Achieve EBITDA (Earnings
                        Before Interest Taxes Depreciation and Amortization) of not less than
                        55 per cent of revenue.

                        Be in the top three with other Canadian airport peers as measured by the
                        expense revenue ratio.

                        CARGO AND LAND
                        By end of 2012, complete phased land and aviation infrastructure
                        development planning and financing, as well as the construction of at least
                        three cargo-related facilities, to initiate the development of a large scale,
                        integrated cargo village, on AirLINKS West lands in support of Port Alberta.

                        AIRLINE RELATIONSHIPS
                        By 2012, Edmonton Airports will be recognized for superior partnerships
                        with airline customers by receiving the International Air Transport Association
                        (IATA) Eagle award.

                        CUSTOMER EXPERIENCE
                        Improve customer experience, resulting in a top 10 per cent placing for
                        overall customer satisfaction in the ASQ survey by 2012, evaluated for
                        airports with 5-15 million passengers.

                        TERMINAL EFFICIENCY
                        Achieve an annual commercial passenger terminal capacity of nine million
                        passengers by 2013 that is 100 per cent common use.

2   Edmonton Airports
Table of Contents
Message from Chair, Edmonton Airports Board of
Directors and President and CEO, Edmonton Airports                          4

Edmonton Airports Board of Directors                                        7
Membership                                                                  7
Board Changes in 2009                                                       8
Disclosure of Corporate Governance Practices                                9
Board Mandate                                                              12

Terminal Velocity                                                          14
Expansion 2012                                                             16
Forward Thinking – Expanding Horizons                                      19
Terminal Express                                                           23

Catalyst for Change                                                        24
Financial Sustainability                                                   26
Forward Thinking – Industry Leadership                                     27
Forward Thinking – Wildlife Management                                     28
Environmental Sustainability                                               29
Social Sustainability                                                      31

Creating a Chain Reaction                                                  32
Welcoming Continental and Houston to EIA                                   34
Stemming Market Leakage                                                    35
Opening the Skies                                                          35
Increasing Non-aeronautical Revenue                                        36
Port Alberta                                                               38
General Aviation                                                           39
Forward Thinking – The Language of Speed                                   41

Generating Positive Energy                                                 42
Creating an Exceptional Passenger Experience                               44
Forward Thinking – Community Investment                                    45
Forward Thinking – Art in the Airport                                      47

Moving at the Speed of Life                                                48
Safety and Security                                                        50
Forward Thinking – Airside Efficiency                                       51

Defying Gravity                                                            54
Mediacorp Canada Inc. Top 50 Employer                                      56
Peggy Hereford Award                                                       56
A Year of Moving Experiences                                               56

2009 Annual Report Financials                                              57
Management Discussion and Analysis                                         58
2009 Financial Performance                                                 60

Financial Statements                                                       69

                                                     2009 Annual Re port   3
                                 Message from
Chair, Edmonton Airports Board of Directors

                                AND REG MILLEY
                                President and CEO, Edmonton Airports

                                               A mere three years ago, Alberta was sailing
                                               with the winds of unprecedented economic
                                               optimism and plenty at its back. Every sector
                                               of the economy was experiencing growth and
                                               Edmonton International Airport (EIA) was no
                                               exception. As Canada’s fastest-growing major
                                               airport, we were enjoying strong passenger
                                               growth and looking forward to Expansion 2012,
                                               the most significant airport development
                                               program in EIA’s history.

                                               Then, as we all know, the economy’s sunny skies
                                               began to darken in 2008 and, in 2009, the storm
                                               clouds of recession took hold across the globe.
                                               Almost overnight, the confidence generated by
                                               the boom was replaced by caution in response to
                                               the recession. Although the strength of Alberta’s
                                               economy shielded the province from the worst
                                               effects of the economic downturn, it did not
                                               protect us completely. In the energy sector, large
                                               projects were put on hold or shelved entirely.

                                               It was no different in the aviation industry, and
                                               EIA was not immune to the effects. Our airline
                                               partners re-assessed routes and service, and our
                                               domestic passenger traffic fell off by eight per
                                               cent. Mexicana Airlines was unable to continue
                                               its non-stop service between Edmonton and
                                               Mexico City. The global economy, coupled with
                                               travel restrictions imposed on Mexican nationals,
                         Gordon Clanachan                                   ute
                                               forced the carrier to make route changes. As well,
    Reg Milley                                                              west
                                               the merger of Delta and Northwest Airlines, and

4    Edmonton Airports
                                    etwork                        in
their subsequent restructuring and network optimization, resulted i changes across their
                                                         consecutive years of solid
system, some of which affected Edmonton. And, after four cons
                                                        decline, a trend seen at major
passenger growth, EIA saw its domestic passenger traffic de
airports across the country.

Despite these realities, we are pleased to report that Edmonton Airports enjoyed a year
                                             toward the future we have imagined for our
of great successes and, indeed, acceleration tow
region and our airport. We also reaffirmed ou commitment to General Aviation as one
of our core businesses by investing both in Villeneuve Airport and moving forward with
more robust General Aviation service and infrastructure at EIA.

EIA is undergoing an evolution to improve and surpass itself. The first terminal
development project, which was completed in 2005, was an investment in future
passenger growth and a response to the region’s desire for more air service. In 2008,
with the terminal’s capacity beyond its limit and the airport leading the country in
passenger growth, the Board approved a $1-billion airport development program —
Expansion 2012.

Edmonton Airports has two core responsibilities. On the one hand, our role is to ensure
our airports facilitate regional and economic growth; on the other hand, we must be a
prudent and responsible steward of significant regional assets. Given the realities of the
economy, we re-examined Expansion 2012 at EIA and re-assessed the risks of moving
forward with the project.

One of the factors we considered was that, in addition to creating risk, the downturn
in the economy created significant opportunities. For example, the slowdown in the
construction sector gave us access to top notch project expertise that was difficult to
acquire during the boom. Thanks to the foresight and leadership of EIA’s Expansion 2012
project team, we were also able to lock in lower prices for materials and commodities.
We expect this strategy, coupled with excellent project management, will shave

Yet another consideration was passenger traffic. The drop in our domestic passenger
traffic was offset to some extent by continued significant growth in US passenger traffic,
which increased 6.3 per cent over 2008. This number bucked a North America-wide trend
that saw deep airline capacity reductions, particularly in the US. Supporting that growth
was an increase in the number of seats available from Edmonton to the US of more than
13 per cent since 2008. Moreover, the loss of seats on some routes was balanced by the
addition of seats on others, resulting in the maintenance of our overall seat capacity.

In 2009, we welcomed Continental Airlines’ non-stop service to Houston, which provides
an excellent alternative for passengers who previously used Mexico City as a gateway
to Central and South American destinations. Having a major US carrier establish a new
base during an economic downturn is a clear demonstration of its faith in Edmonton and

                                                                         2009 Annual Report   5
                        understanding of our resilient economy. EIA was able to make a solid business case
                        that Edmonton is a good investment for Continenta

                        Given these considerations, and after assessing the business case for continuation,
                        the Board endorsed management’s plan to continu with Expansion 2012.

                        As one of the region’s key economic enablers, EIA mirrors the aspirations and goals of
                        the region it serves. Consequently, slowing EIA’s growth would have had a significant
                          pact                                 an
                        impact on the region’s ability to grow and develop. With our terminal already
                        operating well over capacity, and no new capacity available until 2012, it was clear to
                        us the status quo was unacceptab Expansion 2012 had to move forward to ensure
                        we are ready when passenger traffic rebounds. It was a bold decision in a depressed
                        economy; it was the right decision for our region, our passengers and the airport;
                        and, in fact, staying the course on the expansion may be one of the most important
                        decisions we have ever made.

                        How does a company create such success and continue its forward momentum in an
                        economical tumultuous year? People. The right people doing the right things for
                        the right reasons. We are fortunate to have a visionary, experienced, diverse Board.
                        We offer our sincere thanks and appreciation to each Director for their wisdom,
                        expertise and guidance as we navigated through a challenging year. In particular, we
                        offer our thanks to John Friesen, who retired in 2009, for his contributions the Board.
                        His perspective will be missed. We also want to welcome Gail Stepanik-Keber, who
                        joined the Board in 2010.

                        We are privileged to be supported by an Executive Management Team whose
                        innovation, commitment to excellence and entrepreneurial spirit fuel our progress.
                        And, of course, it is all of Edmonton Airports’ employees who embody our vision and
                        our values. Their can-do attitude and passion for creating exceptional experiences for
                        our customers and passengers are truly inspiring.

                        We chose Accelerating Forward as the theme for this year’s annual report because
                        we felt it captured the spirit of Edmonton Airports. “Forward” is the foundation upon
                        which the organization operates and the perspective embraced by its employees.
                        We are here to enable our region to realize its ambition to become a leader in the
                        global marketplace and a destination for business and tourism. To do that, we must
                        continue to build partnerships with airlines; participate in and listen to the community;
                        and focus on enhancing our fiscal, social and environmental sustainability. With every
                        decision, every action, every day, we must keep our region and our airport moving —
                        ever forward.

                        Gordon Clanachan                            Reg Milley
                        Chair, Edmonton Airports                    President and CEO,
                        Board of Directors                          Edmonton Airports

6   Edmonton Airports

                  BOARD OF
    Edmonton Airports’ (EA) Board of Directors is made up of business and community
    leaders who, collectively, have experience in air transportation, industry, commerce,
    finance, administration, law, engineering, human resources and consumer interests.
    Their experience, insight and guidance are an invaluable contribution to fulfilling
    EA’s mandate.

    The Board consists of a maximum of 15 members, 13 of which are appointed by seven
    governmental bodies. The Board has two at-large appointments, which are used to fill
    any gaps in skill sets or competencies on the Board. Board appointments are as follows:
    The City of Edmonton (6), Leduc County (1), City of Leduc (1), Strathcona County (1),
    Sturgeon County (1), Parkland County (1), Government of Canada (2), Board (2).
    One at-large board position is currently vacant.

    Over the past three years, the Board has worked with EA’s appointers to enhance
    the director appointment process. The Board is committed to seeking continuous
    improvement in high standards of Board governance and has taken steps to implement
    a governance and accountability framework that will provide for a director appointment
    process that ensures that the skills, experience and background necessary to act in the
    interests of EA and its stakeholders are maintained.

                                                                            2009 Annual Report   7
                            BOARD OF DIRECTORS

Gordon           David              Tom           Gail                   Bob         Anne             Leonard
Clanachan,       Margolus,          Redl          Stepanik-Keber         Carwell     McLellan         Blumenthal
Chair            Vice Chair

                           BOARD CHANGES IN 2009
                           John Friesen (Parkland County) retired     Maureen McCaw (City of Edmonton) was
                           from the Board on December 31, 2009.       re-appointed to the Board effective
                                                                      January 1, 2010.
                           Gail Stepanik-Keber (Parkland County)
                           was appointed to the Board effective
                           January 1, 2010 (replaced John Friesen).

   8   Edmonton Airports
James   Evan             Al            Shelley         Rolly              Maureen          Bryan
Funk    Cameron          Thompson      Miller          Owens              McCaw            Bailey

           Under National Policy 58-201 Corporate      that apply to public companies, EA is
           Governance Guidelines and the               committed to implementing corporate
           accompanying National Instrument            governance practices that are in alignment
           58-101 Disclosure of Corporate              with practices required of public
           Governance Practices, published by          companies, adapting them to EA’s status
           the Canadian Securities Administrators,     as a non-share corporation. The following
           public companies are required to disclose   is EA’s disclosure of its Corporate
           their corporate governance practices.       Governance Practices.
           Although not subject to governance rules

                                                                                2009 Annual Report   9

                         Composition of the Board                          Orientation and
                         Independence of Directors                         Continuing Education
                         All EA Directors are independent.                 New Director Orientation
                                                                           The Director Development Program sets out a
                         Independence of Board Chair                       three-phase program for director development,
                         The Board Chair is an independent director.       including an orientation program for new
                         The Board Chair’s role and responsibilities       directors that includes orientation sessions with
                         are described in the Board Chair’s Position       the Board Chair and Vice Chair, the President
                         Description.                                      and CEO and Corporate Secretary, and
                                                                           management, and tours of the facilities.

                         Director Independence                             Director Continuing Education
                         In camera Meetings                                The Policy for Director Development provides
                         In camera sessions are scheduled on the           for director development funding for each
                         agenda for every Board and Board Committee        director. The Director Development Program
                         meeting in accordance with the Board and          sets out a program for Continuing Education to
                         Board Committee Mandates.                         expand a director’s knowledge of the aviation
                                                                           industry, government policy, business risk,
                                                                           competition and governance best practices.
                         Board Mandate
                         Board Mandate                                     Code of Business Conduct
                         The text of the Board Mandate follows on          and Ethics
                         page 12.
                                                                           Written Code of Business Conduct
                                                                           and Ethics
                         Position Descriptions                             The Board has adopted a written Ethics Code
                                                                           applicable to EA’s Directors, Officers and
                         Position Descriptions
                                                                           Employees. The Board monitors compliance of
                         There are written position descriptions for the
                                                                           Directors by requiring directors to sign annually
                         Board Chair, the Vice Chair, Board Committee
                                                                           the Director’s Confirmation, Acknowledgement
                         Chairs, the President and CEO, the Corporate
                                                                           and Declaration.
                         Secretary and the Board Secretary.

                                                                           Conflict of Interest Rules
                              Attendance Record for Board                  The Conflict of Interest Rules that form part
                                                                           of the Ethics Code requires completion of a
                              and Committee Meetings of
                                                                           Personal Information Form and disclosure of all
                              each Director for 2009
                                                                           interests, activities, investments, memberships
                                                             TOTAL         and appointments that Directors, Officers and
                                                                           Employees have become involved with that
                              Gordon Clanachan               18/18         may materially or detrimentally conflict with
                              Bryan Bailey                   10/10         the interests of EA or any interests that may
                              Leonard Blumenthal             9/9           reasonably be perceived as giving rise to an
                              Evan Cameron                   9/9           appearance of a conflict of interest. The Board
                                                                           implements appropriate processes to manage
                              Bob Carwell                    10/10
                                                                           disclosed interests, such as requiring Directors
                              John Friesen                   9/9
                                                                           who have a material interest in a transaction to
                              Jim Funk                       7/10          recuse themselves from discussions concerning
                              David Margolus                 9/9           those transactions.
                              Maureen McCaw                  7/9
                              Anne McLellan                  6/9
                              Shelley Miller                 10/10
                              Rolly Owens                    9/9
                              Tom Redl                       9/9
                              Al Thompson                    9/9

10   Edmonton Airports
Nomination of Directors                           Compensation
Nomination and Appointment                        Compensation Committee
of Directors                                      The Governance and Compensation
The Director Selection Process, which is a        Committee has responsibilities with respect to
component of the Director Development             compensation.
Program, provides for a strategic, disciplined
and transparent process to bring the skill sets   Compensation Committee
and competencies required on the Board. The       Responsibilities, Powers and Operation
process consists of:                              The Governance and Compensation
                                                  Committee Mandate includes responsibility
1. Gap analysis conducted by the Governance       for reviewing and recommending for Board
   and Compensation Committee to identify         approval the CEO evaluation process and
   anticipated gaps in skill sets;                compensation, EA’s Compensation Philosophy
2. Communication of selection criteria to         and Director compensation.
   the Appointer to consider in designating
   candidates, and where appropriate
   encourage the Appointer to utilize a search    Other Board Committees
   firm to assist in identifying candidates;       Other Standing Committees
3. Meeting of the Governance and                  The Board has no standing committees
   Compensation Committee Chair and other         other than the Audit and Governance and
   directors and the candidate to communicate     Compensation Committees. The Board
   the skill set and competencies required and    appoints Special Committees with Board
   expectations of time commitment, and to        approved mandates as required.
   determine if there is a cultural fit; and
4. Communication with the Appointer as to
                                                  Board Assessments
   the suitability of candidates interviewed.
                                                  Assessments of the Board, Board
Nominating Committee                              Committees and Individual Directors
The Governance and Compensation                   Evaluations of the Board, Board Committees,
Committee Mandate includes responsibility for     the Board Chair and individual Directors are
reviewing the size and makeup of the Board        conducted annually. External consultants
and filling Board vacancies.                       are retained periodically to conduct Board
Nominating Committee Responsibilities,
Powers and Operation
The Governance and Compensation
Committee’s annual Workplan includes
reviewing director skill sets and identifying
gaps, reviewing size and makeup of board, and
recommending competencies and skill sets to
Appointers for Board vacancies.

                                                                             2009 Annual Report   11

                         1.0 Vision Statement                                (d) satisfying itself that executive management
                                                                                 has identified the principal risks of the
                         To maintain and seek continuous improvement             business and implemented appropriate
                         in high standards of Board governance.                  systems to manage these risks;
                                                                             (e) satisfying itself that executive management
                                                                                 has succession plans in place for
                         1.1 Governance Principles                               management;
                             and Guidelines
                                                                             (f) satisfying itself that executive management
                         The Board will perform its overall stewardship          has adopted a communication policy for the
                         responsibilities as a governance board rather           stakeholders and community, which policy
                         than a management board and will have                   shall ensure effective measures for receiving
                         regard to:                                              feedback from the stakeholders and the
                         (a) Edmonton Airports’ guiding principles of            community; and
                             vision, mission and core values;                (g) satisfying itself that executive management
                         (b) accountability to stakeholders and the              is monitoring internal controls and
                             community through appropriate transparent           management information systems.
                             processes, disclosure practices and effective
                             communication, including feedback
                             mechanisms;                                     1.3 Board Responsibilities
                         (c) national and international airport best         Only the Board will:
                             practices; and                                  (a) appoint or remove at-large directors;
                         (d) Corporate Governance Guidelines as              (b) appoint or remove officers;
                             recommended by the Canadian Securities
                             Administrators and the Canadian Coalition       (c) appoint or remove the auditor;
                             for Good Governance.                            (d) approve the responsibilities and
                                                                                 compensation of the Board, Board Chair,
                                                                                 Vice Chair and Board Committees;
                         1.2 Board Stewardship                               (e) review environmental, safety and security
                         The Board is responsible for the stewardship,           programs established by management,
                         strategic direction and supervision of the              including standards, insurance coverage,
                         business and affairs of Edmonton Airports,              and regulatory compliance;
                         including:                                          (f) authorize the issuing of securities;
                         (a) satisfying itself that executive management     (g) authorize the raising of money by Edmonton
                             of Edmonton Airports practice and create            Airports;
                             a culture throughout the organization that
                                                                             (h) approve the giving of financial assistance,
                             includes the core values approved by the
                                                                                 directly or indirectly, by means of a loan,
                             Board and articulated in the strategic plan;
                                                                                 guarantee or otherwise;
                         (b) adopting and monitoring compliance
                                                                             (i) approve annual audited financial statements;
                             with the Board approved Ethics Code and
                             satisfying itself that executive management     (j) approve corporate goals and objectives and
                             of Edmonton Airports practice and create            assess corporate performance;
                             an ethical corporate culture;                   (k) select, evaluate and compensate the
                         (c) following a strategic planning process which        President and CEO;
                             takes into account among other things,          (l) plan President and CEO succession;
                             the opportunities and risks of the business
                             through the adoption and monitoring of the      (m) approve Special Resolution matters,
                             strategic plan and annual business plan;            including;

12   Edmonton Airports
(i)     amendment of Articles,                        1.5 Board Effectiveness
(ii)    sale, lease or exchange of all or             Consistent with the Board Vision Statement
        substantially all of the assets of Edmonton   the Board, with support from committees as
        Airports,                                     required, will:
(iii)   the appointment of a Director as a director   (a) meet at least four times per year;
        or officer of an Affiliate,
                                                      (b) review appropriate and timely management
(iv)    the appointment of a Subsidiary director          reports;
        as a director or officer of an Affiliate,
                                                      (c) appoint an Audit Committee and a
(v)     requests of the Board to the reviewer             Governance and Compensation Committee
        appointed under section 29 of the Act,            with Board approved mandates;
(vi)    amendment, replacement or repeal of           (d) appoint a Special Committee with a Board
        Bylaws,                                           approved mandate for a capital project
(vii) entering into an agreement to manage                or series of capital projects that could
      and operate an airport not previously               materially affect the credit or reputation of
      managed and operated by Edmonton                    Edmonton Airports, as determined by the
      Airports,                                           Board;
(viii) participation with Affiliates, and              (e) conduct periodic evaluation of the Board,
                                                          Board Committees, Board Chair, Vice Chair,
(ix)    any material change to any Airport Master
                                                          Board Committee Chairs and individual
                                                      (f) annually review the Board Mandate and
1.4 Board Authorizations                                  Workplan, Board Committee Mandates and
                                                          Workplans, Director Terms of Reference for
The Board authorizes:
                                                          a Director and positions descriptions for the
(a) the Audit Committee to approve quarterly              Board Chair, Vice Chair, Board Committee
    unaudited financial statements and the                 Chairs, President and CEO, Corporate
    annual audit plan;                                    Secretary, and Board Secretary to ensure
(b) the President and CEO to manage all                   clear delineation of responsibilities and
    aspects of Edmonton Airports, consistent              expectations;
    with all Board approved plans which               (g) establish a comprehensive director
    authority includes the right of the President         development program for directors
    and CEO to delegate authority to other                consisting of director selection, orientation
    employees;                                            and continuing education;
(c) the Board Chair to appoint ad hoc                 (h) review size and makeup of the Board and
    Committees to act on matters between                  participate in filling Board vacancies;
    Board meetings; and
                                                      (i) directly engage advisors as required;
(d) the Governance and Compensation
                                                      (j) meet “in camera” at every meeting to
    Committee to make determinations
                                                          ensure independence from management;
    respecting disclosures made pursuant
    to the Conflict of Interest Rules that the
    disclosed interest would not materially or        (k) require directors to annually sign a
    detrimentally conflict with the interests              Directors’ Confirmation, Acknowledgement
    of Edmonton Airports or give rise to an               and Declaration.
    appearance of a conflict of interest, or give
    direction respecting actions or processes to
    manage the disclosed interest.

                                                                                   2009 Annual Report   13

14   Edmonton Airports













                         2009 Annual Report   15
Conceptual drawing of terminal
expansion exterior.

                                 EXPANSION 2012
Our region serves                Regional economics and EIA
as a vital supplier
                                 EIA belongs to the region it serves. The airport currently contributes $1.6
for northern resource            billion in economic value to the Edmonton region each year and, with
development and                  more than 4,000 employees, is one of the region’s largest employment
                                 generators. With direction set by the Board of Directors, we manage
EIA is committed
                                 this valuable asset on behalf of the region, which means ensuring we’re
to supporting                    meeting the region’s demands for air service, enabling the region’s
our northern                     economic growth and diversity while at the same time making prudent
business partners                decisions with respect to terminal growth.

and community                    Air service is a key economic driver and a factor business examines closely
stakeholders.                    when considering relocation to the region. The airport must facilitate the
                                 region’s growth, not impede it. Consequently, we are continually working
                                 to grow the air service needed for our region to flourish and be a magnet
                                 for business opportunities.

                                 To that end, we have made significant strides in developing air service to
                                 and from the region and now offer non-stop flights to over 50 Canadian,

16    Edmonton Airports
                                             US and other international destinations. We
                                             also serve as the preferred gateway to Canada’s
                                             Northwest, the epicentre of Canada’s energy
                                             industry. Alberta has the world’s second-largest
                                             oil reserves (both conventional oil and oil sands)
                                             and the Northwest Territories is the world’s
                                             third-largest supplier of diamonds. Our region
                                             serves as a vital supplier for northern resource
                                             development and EIA is committed to supporting
                                             our northern business partners and community

                                             Because both Canada and, in particular, Alberta
                                             have been somewhat sheltered from the worst
                                             effects of the economic downturn, our region
                                             remains a magnet for people, goods and services —
                                             and a great place for investment. The region’s ability
                                             to capitalize on these opportunities and ensure its
                                             long-term economic stability depends on access to
                                             world-class air and cargo service.

                                             Simply put, EIA needs to keep pace.

EIA Team member from
Runway Duty Free.
                       The expansion imperative
                       From 2006 to 2008, EIA was Canada’s fastest-growing major airport.
                       The terminal building, which was substantially renovated in 2005, was
                       designed to accommodate up to 5.5 million passengers annually. In 2008,
                       our passenger traffic reached a record breaking 6.4 million. In 2009, nearly
                       6.1 million passengers came through the airport. While that is a decline
                       over the previous year, domestic passenger numbers will rebound as
                       the economy recovers. In the meantime, US-bound passenger traffic has
                       continued to grow.

                       Passenger traffic, however, is only one area in which EIA is over capacity.
                       Given our current number of aircraft bridges, we are stretching the limits
                       of how much air service we can handle at peak times. This is particularly
                       true for early morning flights. Not having boarding gates to support more
                       air service at the times the market demands results in additional real
                       and indirect costs for our airline partners and lowers customer service
                       satisfaction. If EIA is to continue being attractive to airlines, we must be
                       able to welcome additional aircraft at any time.

                       The current terminal is also constrained in terms of passenger check-
                       in processing and queuing, baggage handling, security screening and
                       departure lounge capacity. With little developable space for revenue
                       generating shops and services, EIA’s ability to develop non-aeronautical
                       revenue is similarly limited within the current terminal footprint.

                                                                                  2009 Annual Report   17
                                   Even with the expansion project already in progress, it will not deliver
                                   any new capacity until mid-2012. So, rather than delay the project until
                                   the economy recovers, it was critical to use this economic “cooling off”
                                   period to push forward with this major airport development program so
                                   EIA is ready when passenger traffic increases once again and can attract
                                   more air service to the region with a strengthened business case.

A team approach to                 Opportune timing. Strategic buying.
Our relationships with our         Though the economic downturn of 2009 created unquestionable hardship
stakeholders help move our         for many individuals and businesses across North America, the relative
business planning and decision     protection experienced in Alberta generated some opportunities with
making forward. We regularly
                                   respect to Expansion 2012. One of these opportunities was the ability to
consult with passengers and
airport tenants to get their       purchase materials in quantities and at costs simply not available to us
input and ideas about what we      even 18 months ago. This turnaround allowed us to realize considerable
need to create a world-class       savings in construction pricing not only for the expansion project, but for
“future airport.” We also work
                                   ongoing maintenance projects as well.
closely with airlines, as well
as other experts, to add their     This more attractive pricing in the marketplace was the driver behind the
insights into areas such as
                                   development of EIA’s procurement strategy, which was structured to take
passenger processing, border
agencies, airport security and     full advantage of the opportunities created by the economic downturn.
airfield efficiency.                 For example, by locking in pricing on materials and supplies, we are
                                   protected from inflation on those same materials when the economy
                                   rebounds. As well, though each of the expansion projects was awarded
                                   to a different general contractor, they work together when it comes to
                                   procurement. Because bulk buying produces savings, the procurement
                                   strategy saw smaller procurement packages combined with larger
                                   packages to create significant efficiencies and economies of scale.

                                   The economic boom of the last few years also spread the workforce
                                   thinly throughout the province — highly skilled labour and “A-list”
                                   project teams were difficult to acquire. In addition, leading construction
                                   companies turned their focus to large scale “mega-projects.” As a result,
                                   the workforce was diluted and it was difficult for us to get access to the
                                   best project management and construction people. With such large scale
On September 1, 2009, the AIF
was increased by five dollars, to   projects on hold, we were able to access some of the finest construction
$20 per ticket. Although the       and project management consultants for Expansion 2012. Higher
industry standard is to increase   productivity resulting from an undiluted workforce will also contribute
an AIF with each new major
                                   to significant cost savings on the project.
capital project, from 2002 to
2008, EIA invested $332.1          Expansion 2012 is funded by the Airport Improvement Fee (AIF), which
million in the airport without
                                   is collected with airline tickets for departing passengers, and financed
an AIF increase.
                                   through the Alberta Capital Finance Authority, allowing Edmonton
                                   Airports to leverage the Province’s excellent credit rating. Edmonton
                                   Airports draws funds only as required, rather than taking out one large
                                   loan at the start of the project. This keeps interest costs down and allows
                                   flexibility in financial planning.

   18   Edmonton Airports

PAUL GARBIAR         In what ways did EIA move forward in 2009?
                     In terms of the global economy and H1N1, 2009 threw everything it could at us.
Vice President,      We moved forward as an organization by proving we could make plans for and

Infrastructure and   execute large-scale projects. We proved to lenders and project partners that we’re
                     flexible, collaborative and forward thinking. That will serve us well as we move
Technology           forward with Expansion 2012 and future projects.

                     The expansion is a four-year project. When you’re working in a high-growth
                     period, it’s always “just in time.” Given the rate of passenger growth we’ve seen
                     over the last few years, the expansion project would come on stream just in time
                     to meet passenger traffic targets for 2012. The slowdown means we’ll unveil the
                     expansion with some breathing room and have the opportunity to chart our next
                     steps. Our mindset is to look forward and plan ahead. We’re not just looking
                     towards 2012; we’re looking well beyond.

                     What does the future hold for EIA?
                     I think EIA’s future is in growth and diversification. As EIA evolves, I see us
                     really aligning with the European airport model — where the airport is a pleasant
                     and interesting place to be. I also see our land development taking off because
                     we’ve worked hard to develop a business case that gives investors confidence in us
                     and in what we’re offering them in terms of infrastructure and opportunity.

                                                                                    2009 Annual Report   19
                            Four major projects. One iconic airport.
                            Expansion 2012 consists of four major individual projects:

Iconic architecture,        Apron expansion
art, themed areas that      More than 190,000 square metres (more than two million square feet) —
                            or the equivalent of 32 Canadian football fields — of new apron space is
showcase our region
                            being built at EIA to accommodate new south terminal development. The
as well as a range of       majority of the apron expansion will be complete in 2010.
amenities and services
will all come together      Terminal expansion
to create an enjoyable,     The terminal will expand southward to accommodate up to 13 more
                            aircraft bridges, boosting EIA’s bridge count from 17 to 30 and create
relaxing environment.
                            an enhanced, enlarged passenger boarding lounge. A new concourse
                            will link the existing south terminal to the new terminal. The expanded
                            terminal will also feature a wider variety of food and retail outlets.

                            Continued implementation of “future airport” technologies, such as
                            common-use self serve check-in kiosks, and innovations like our US Quick
                            Connect program will continue to facilitate seamless connections to the
                            United States.

                            We’re also paying a great deal of attention to the look and feel of the
                            terminal building. Iconic architecture, art, themed areas that showcase our
                            region as well as a range of amenities and services will all come together
                            to create an enjoyable, relaxing environment.

                            All of these enhancements will create greater flexibility within the
                            terminal, mean greater convenience and ease of use for our passengers,
                            and deliver significant efficiencies for our airline partners.

                            The entire development project is scheduled for completion in 2012 and
                            is expected to be approximately 25 per cent under the $1-billion budget.

                            EIA Team member from Starbucks Coffee in the US departures lounge.

   20   Edmonton Airports
                                                 Conceptual drawing
                                              of the iconic combined
                                             control and office tower.

Artist’s rendering of the Expansion 2012 terminal.

                                                                        2009 Annual Report   21
                                     Control and office tower
                                     The new combined control and office tower is needed to optimize our
                                     airfield infrastructure. The new NAV CANADA control tower will be
Expansion 2012                       equipped with the latest technology, improving airfield airline operations
Partners                             and capacity. One of the key new features in the tower portion of
Overall project management           the airport will be an integrated baggage system for domestic and
EIA has partnered with               international flights. This system sees all bags process centrally with
MMM Group to manage the              multiple drop-off points, thus reducing the amount of handling required
overall expansion project.
                                     and the time it takes for baggage to be delivered to passengers. The
Apron expansion                      system also features redundancies that will enhance the reliability and
The prime consultant for this
                                     efficiency of the baggage system.
project is EBA Engineering
Consulting. Dufferin Construction    The tower will also house EIA’s administrative offices and represents a
is managing construction of
                                     1,500 square metre (16,000 square feet) expansion of the retail and
EIA’s new apron.
                                     concession space in what is now Central Hall. This phase of the expansion
Terminal expansion
                                     will be completed in 2011.
Stantec Consulting is the prime
consultant for EIA’s terminal
expansion. PCL Construction          Central utilities plant
is managing construction of
EIA’s new terminal space.            A new central utilities plant is required to supply our larger building
                                     with heating, ventilation, air conditioning and other critical services. It is
Control and office tower
Cohos Evamy is the prime
             y                       scheduled for completion in 2011.
consultant for EIA’s combined
control and office tower.
EllisDon Corporation is
managing construction of
this building.

 EIA Team member from Hudson News.                      Conceptual drawing of Terminal Express exterior.

  22   Edmonton Airports
                         TERMINAL EXPRESS
                         With the airport already well over capacity, the prospect of temporarily
                         losing aircraft gates to accommodate expansion construction was a
                         non-starter. So, in April 2009, construction began on an innovative interim
                         solution called Terminal Express.

                         Terminal Express is a prefabricated modular terminal extension with
                         six passenger loading bridges. Along with ensuring convenience and
                         ease for our passengers, Terminal Express allows us to keep all of our
                         aircraft gates open during the construction period. This, in turn, sends
                         a clear message to airlines that EIA is open for business as we continue
Everything from          to expand our air service options for passengers. Once the terminal
                         expansion is complete, portions of Terminal Express will be dismantled
boarding processes,
                         and saved for re-use in future expansions as needed. Other parts of
directional signage,     Terminal Express are permanent and will become part of the
arrival procedures,      expansion infrastructure.

security, customs        Terminal Express was opened to flights and passengers in October
controls and the         2009, but not before it went through rigorous and transparent testing. In
                         September, we put Terminal Express through a battery of live tests with
Terminal Express
                         the help of volunteer passengers, airlines and airport management...all
structure itself         witnessed by members of the media! The goal of the trial was to identify
was tested.              and correct any operational or customer service gaps that might occur
                         in the course of a regular day at the airport and when things don’t go
                         as planned.

                                       Sixty-five “passengers” — each equipped with mock
                                       boarding passes and a unique scenario — worked with
                                       airlines and EIA staff to simulate peak hour operations in
                                       Terminal Express. Scenarios ranged from common passenger
                                       needs to customer service “nightmares.” The goal wasn’t to
                                       make it easy on ourselves. In fact, we searched for problems!
                                       Everything from boarding processes, directional signage,
                                       arrival procedures, security, customs controls and the
                                       Terminal Express structure itself was tested.

                                       The trial and training of staff took a full month and was
                                       built into the overall construction timeline. That diligence
                                       resulted in the seamless integration of Terminal Express into
                                       the airport’s operation, and maintenance of the excellent
                                       customer service passengers expect from us — and we
                                       expect from ourselves.

                                       The results and learnings from Terminal Express will also
                                       allow us to address issues and make improvements to the

image is too small / lo-res            expanded terminal and permanent aircraft gates when they
                                       open in 2012.

                                                                                   2009 Annual Report   23

24   Edmonton Airports











                       2009 Annual Report   25
                            English poet John Donne wrote that “No man is an island entire of itself;
                            every man is a piece of the continent, a part of the main....” In 2008, the
                            Edmonton Airports Board of Directors echoed the sentiment of that
                            famous quote when it added sustainability to Edmonton Airports’
                            Core Values.

                            Our commitment to sustainability stands on three pillars: financial,
                            environmental and social. We serve our region, but we are also of our
                            region. As an organization, we stand with our community, not apart from
                            it. So, we do more than support the region’s economy; we also commit
                            to business, financial and procurement practices to ensure EIA is viable
                            and continues to flourish. We support community initiatives and activities,
                            and support the people who make up our community. We also commit to
                            ensuring that, as we strive to make this airport a gateway and world-class
                            hub, we make as small an environmental footprint as we possibly can.

                            At its core, financial sustainability is about prudent financial practices
                            that look beyond any one fiscal year. Financial sustainability takes the
                            long-term view. It looks up from the ledgers and examines the entire
                            organization, how it operates and how it can thrive well into the future.
                            Financial sustainability is not just about counting beans, it’s about planting
                            them and watching them grow.
Continuing to diversify
our non-aeronautical        An essential component of our financial sustainability lies in our ability to
                            grow our non-aeronautical revenue. For the last several years, we have
revenue streams
                            held the line on the fees we charge airlines, making EIA more attractive
will help us to bring       for them. Continuing to diversify our non-aeronautical revenue streams
additional routes and       will help us to bring additional routes and service into the airport and

service into the airport    improve the financial sustainability of our region.

and improve the             When we look at Expansion 2012, we have leveraged Alberta’s excellent

financial sustainability     credit rating to enable us to borrow money as we need it, when we
                            need it. We are also locking in construction material costs while prices
of our region.              are low. By August 2010, approximately 90 per cent of our material and
                            commodity costs for the expansion project will be fixed, thus protecting
                            us from inflated material prices once the economy rebounds.

                            The notion of sustainability became more firmly rooted in EIA’s
                            organizational culture and operational practices in 2009. In the area of
                            procurement, for example, we began to pay more attention to lifecycle
                            costs over initial capital costs. In other words, it’s sometimes better
                            practice to pay more initially for equipment that will operate more
                            efficiently over the long term. Where possible, we’re also reassessing
                            wholesale replacement of infrastructure in favour of component renewal.

   26   Edmonton Airports

RALPH             In terms of financial practice, how has EIA
                  moved forward?
PETERSON          Working closely with our six partner airport authorities in the Canadian Airports
                  Risk Managers Group, we helped implement the Canadian Airports Reciprocal
Vice President,   Insurance Exchange (CARIE) three years ago to underwrite property insurance.
Finance and       Almost 50 Canadian universities and colleges have been following a similar
Chief Financial   model for the past two decades with great success.

Officer            Currently, CARIE underwrites property insurance for its seven Tier 1 airport
                  members. Although being a subscriber to CARIE benefits EIA, the real benefit
                  is to the industry as a whole. In the three years that CARIE has operated, its
                  members have collectively reduced their overall cost of risk by about $3 million
                  when compared to the purchase of conventional property insurance. These
                  savings are expected to grow over time, providing a cost reduction benefit to the
                  industry in the years ahead.

                  What does this mean for passengers?
                  Many costs in the aviation business have the domino effect. Increased costs in one
                  area result in increased costs somewhere else. The same applies when it comes to
                  saving money. When airports fully leverage their exemplary risk control to their
                  advantage — as the CARIE members have done — they can materially reduce
                  their risk financing costs and pass those savings on to airlines, which can then
                  pass those savings on to the public. We’re proud to say that, although the idea
                  for the creation of CARIE began with Edmonton Airports in 2003, the greatest
                  satisfaction comes from moving our industry forward.

                                                                                2009 Annual Report   27

JUL                        While all airports in Canada are mandated to have a wildlife management
                           program in place, EIA is one of the few airports in the country to have a Wildlife
WOJNOWSKI                  Biologist on staff to help assess risks and develop innovative, effective wildlife
                           management strategies and interventions.
Wildlife Biologist
                           Why is it important to manage wildlife around
                           the airport?
                           Managing wildlife is about protecting people. The reality is that bird strikes are
                           a threat to our passengers, employees and our neighbours in the area. We sit on
                           more than 2,800 hectares of land, so there’s a lot to consider in terms of wildlife.
                           We have to balance safety with sustainability. We know it’s far more desirable to
                           make the area around the airport less attractive for birds. We don’t wait to react
                           when the birds are onsite. Instead, we’re constantly working to make the area
                           around the airport unattractive to them.

                           Birds settle in an area because they have access to food, water and shelter. Our job,
                           then, is to remove access to those three things as much as we can. For example,
                           part of our wildlife management strategy is to co-ordinate the management of
                           storm water with our wildlife control activities. So, we try to remove any standing
                           water on the airfield to avoid attracting birds and other wildlife.

                           We also use pyrotechnics and other hazing methods to scare birds away from the
                           area. Birds of prey are a little more difficult to scare away, so we have a trap and
                           release system. If we catch a hawk or an owl, we’ll drive it at least 50 kilometres
                           away and release it. Sometimes we trap injured birds and are able to take them to
                           a wildlife rehabilitation facility.

  28   Edmonton Airports
                         Airports are resource-heavy operations. Supplies, equipment, vehicles,
                         plant operations and maintenance require the use of any combination
                         of fuel, chemicals, electricity and water to ensure the airport remains
                         safe and secure. As we move toward building a “future airport,” we
                         recognize that managing EIA’s environmental footprint is essential to
                         the sustainability of our region and the airport itself. In 2009, we took
                         additional steps toward reducing the size of that footprint.

                         The opportunity to LEED
                         Nothing speaks louder about our commitment to environmental
                         sustainability than our clear goal to have our expanded terminal building
                         and combined control and office tower meet LEED (Leadership in Energy
                         and Environmental Design) certification standards. EIA approached the
                         expansion project with the priority of ensuring it met all modern design
                         standards and specifications. In applying LEED standards, the business
                         case for each additional feature was assessed and incorporated where it
                         was appropriate and would have the desired impact.
Managing EIA’s
                         LEED is an internationally recognized green building certification system
environmental            developed by the US Green Building Council (USGBC). It provides
footprint is essential   third-party verification that a building or community was designed and
to the sustainability    built using methods that improve performance in energy savings, water
                         efficiency, CO2 emissions reduction, improved indoor environmental
of our region and the
                         quality, stewardship of resources and sensitivity to their impacts.
airport itself.
                         To become LEED certified, buildings must adhere to a specific framework
                         consisting of nine measures:

                         • Sustainable Sites                    • Locations and Linkages

                         • Water Efficiency                      • Awareness and

                         • Energy and Atmosphere                   Education

                         • Materials and Resources              • Innovation in Design

                         • Indoor Environmental Quality         • Regional Priority

                         Some of the features of the new building include the collection of
                         external water run-off from the roof for use as grey (non-potable) water
                         within the building. The building will also feature displacement system
                         heating, which comes in from floor vents rather than ceiling vents.
                         The result is that less energy is needed because heat is distributed to
                         occupied areas rather than having to be pushed down to floor level.
                         Lighting will be optimized through a lighting management system. As
                         well, the iconic combined control and office tower uses its exterior design

                                                                                    2009 Annual Report   29
                         features to harness sunlight in the winter when the sun is lower in the sky,
                         and reduce sunlight entering the building during the summer when the
                         sun is higher. Many other innovative sustainability solutions are being
                         incorporated into the building to make EIA greener.

                         Thinking green. Acting green.
                         As environmental sustainability becomes embedded in our corporate
                         culture, it becomes the lens through which we look at all of our business
                         practices. In 2009, for example, we developed plans to take control of
                         buying our own janitorial supplies and green cleaning products. The
                         transition will occur in 2010. In terms of our purchasing contracts, we ask
                         potential suppliers to inform us of their environmental practices, which
                         is now a factor in awarding contracts. Even the move to a pay-on-foot
                         system of parking has benefits by reducing the number of idling cars
                         waiting to pay at a cashier. As well, our future expansion and runway
                         configuration has been designed to minimize the amount of aircraft
                         taxiing, which has a substantial environmental impact.

                         Conceptual drawing of new departure lounge.

30   Edmonton Airports
                                            As an airport, part of our role is to bring people to our community. We
                                            also play a role in bringing the community to the airport.

Part of our role is to                      In 2009, for example, art by students from Edmonton Public Schools was
bring people to our                         displayed in our busy US departures lounge. Students benefitted from
                                            an art project that saw their work displayed in public and we were able to
community. We also
                                            enhance the airport’s ambience for our passengers with bright, colourful
play a role in bringing                     student art.
the community to
                                            A choir of more than 160 students and staff from Tipaskan School in
the airport.                                Edmonton served as excellent ambassadors for their school and our
                                            region by bringing holiday cheer to the airport in December and smiles to
                                            the faces of our passengers.

                                            Our goal is to ensure we’re part of and supporting our community.
                                            For that reason, EIA is involved in more than 40 different community
                                            partnerships and participates in the region’s priority initiatives. For
                                            example, we sit as committee members supporting Edmonton’s bid to
                                            host EXPO 2017.

                                                                We also helped promote Tim Hortons’ Roar of the
                                                                Rings Canadian Curling Trials in 2009, a sporting event
                                                                with significant national and international profile, by
                                                                having an interactive curling table set up in the airport.
                                                                Passengers, some of whom knew little about curling,
                                                                were encouraged to throw a rock and find out more
                                                                about a sport that saw Canada win gold and silver
                                                                medals at the 2010 Olympics in Vancouver.

                                                                Participating in and profiling initiatives such as these
                                                                helps support the individual events and also supports
                                                                the region by promoting tourism and fostering
                                                                economic growth and diversity.

                                                                We also pride ourselves in helping those in need
                                                                locally — and in the global community. When a group
                                                                of EIA employees rallied their colleagues to support
                                                                Haiti, EIA matched, dollar for dollar, every donation
                                                                our employees made to the Haiti Earthquake Relief
                                                                Fund. EIA also matched all employee contributions to
                                                                the 2009 Capital Region United Way Campaign.

A young passenger enjoys student artwork.

                                                                                                       2009 Annual Report   31

32   Edmonton Airports




                               2009 Annual Report   33
Continental Airlines staff checking
in passengers for their non-stop
flight to Houston.

                                      AND HOUSTON
                                      TO EIA
                                      The aviation industry was extremely hard hit by the economic downturn
                                      that began in 2008. Airlines were assessing the viability of their existing
                                      routes, making severe capacity reductions and eliminating air service that
                                      was not profitable. Given that environment, Continental Airlines’ decision
                                      in 2009 to re-launch service from EIA to Houston is a testament to the
                                      strength of our local economy and our market.

                                      Over the last several years, our community has seen significant
                                      advancements with respect to air service thanks to the strength and
                                      increasing diversity of the regional economy and resource development
                                      in Northern Alberta, among several other factors. Additional airport
                                      capacity resulting from the terminal expansion strengthens our region’s
                                      competitive advantage over the long term as well as our business case to
                                      airline partners.

34    Edmonton Airports
                                                                EIA is continually working to bring additional
                                                                air service to the region. This involves regularly
                                                                meeting with and making presentations to
                                                                airlines, including Air Canada, WestJet as well as
                                                                US and international carriers.

                                                                One of the issues that has challenged Edmonton’s
                                                                ability to demonstrate its market strength is
                                                                leakage of Edmonton region passengers who
                                                                book flights out of Calgary rather than through
                                                                EIA to one of our non-stop destinations. As many
                                                                as 750,000 people drive to Calgary annually to
                                                                catch a flight. The result is lost economic activity
                                                                for the region and less ability for EIA to grow its
EIA Activists support flying EIA first.                           air service.

                                        In 2009, we became more aggressive about educating regional
                                        stakeholders about the consequences of this market leakage. We talked

As many as 750,000                      to our Business Advisory Committee and held a special luncheon with key
                                        business leaders in November to provide them with information about this
people drive to
                                        issue and to gather their ideas about how it might be addressed. Their
Calgary annually                        feedback helped support the development of an innovative marketing
to catch a flight.                       campaign called Stop the Habit, which launched in March 2010.

The result is lost
economic activity for
the region and less
ability for EIA to
                                        OPENING THE SKIES
grow its air service.                   New international air service agreements have significantly increased
                                        the ability of airlines to provide flights across the country. In December
                                        2009, the signing of the Canada-EU Open Skies agreement gave foreign
                                        airlines greater access and flexibility to operate in Canadian airspace.
                                        Over the next decade, this agreement will encourage tourism to the
                                        Edmonton region, make it easier for the energy sector to bring in foreign
                                        workers, and generate more non-stop air service options for passengers
                                        flying from EIA.

                                                                                                  2009 Annual Report   35
                           One of the keys to EIA’s long-term financial sustainability and our ability to
                           attract new air service to the region is the extent to which we can reduce
                           our dependence on aeronautical revenue — the fees paid by airlines
                           to airports. By bolstering our non-aeronautical revenue, we can better
                           control landing fee rates and other facility charges, thus making EIA
                           more attractive to airlines. There are a number of ways we’re working to
                           increase non-aeronautical revenue at EIA.

                           Concession development
By bolstering our
non-aeronautical           Not only do in-terminal concessions give more choice to passengers
                           and improve customer experience, they also provide non-aeronautical
revenue, we can control    revenue. In 2009, EIA added a number of new food, beverage and retail
our aeronautical fees      services to passengers, including:
and make EIA more
                           Domestic/international terminal
attractive to airlines.
                           • Chili’s

                           • Wok Box

                           • Flight of Wine & Spirits

                           • Runway Duty Free kiosk in north departures lounge

                           US departures lounge
                           • Runway Duty Free (relocated to inside departures lounge)

                           • Indigo Books (second location)

                           • Molson Pub

                           Land development
                           Our growth and overall financial sustainability depends on our ability to
                           diversify over the long term. As we look forward, we are examining our
                           business model and looking to diversify our core business into other
                           areas, such as land development.

                           EIA is unique among Canadian airports because it sits on more than
                           2,800 hectares of land. Given the area and its convenient access to
                           main highways, the land around the airport has tremendous potential
                           for developing our non-aeronautical revenue and making the airport
                           financially sustainable long into the future.

  36   Edmonton Airports
US-bound passengers enjoying a
beverage at the new Molson Pub.

                                  Movement in parking
                                  Last year brought a number of additions to our range of parking products
                                  at the airport to better meet the needs of our customers. Among these
                                  changes was the introduction of Priority Valet and Concierge services
                                  to our valet parking. When leaving their vehicle at the valet office,
                                  passengers can request additional services, such as auto detailing, fuel fill
                                  up and oil change. They can even leave us their grocery list!

When leaving their                We also introduced a two-tiered rate structure in August to increase use
                                  of the self service or “pay-on-foot” payment kiosks found in the terminal
vehicle at the valet              building, parkade or convenient credit card express exits at the exit
office, passengers can             plaza. Customers save money on parking when they use Pay & Go self
request additional                service — an incentive that has increased the percentage of self service
                                  parking transactions from the low teens at the beginning of the year to
services, such as auto
                                  more than half of all the parking transactions by the end of 2009. Not
detailing, fuel fill up            only has this system created significant labour cost savings for EIA, it has
and oil change.                   also increased customer satisfaction scores and reduced the number of
                                  vehicles idling while waiting to pay at the cashier.

                                  We revisited all the contracts associated with our parking, shuttle,
                                  valet and ground transportation operations with an eye on improving
                                  customer service. We also made changes with respect to what customers
                                  experience when they got to the curb to take a taxi or a shuttle.

                                                                                           2009 Annual Report   37
 Priority Valet and Concierge
 Service on the Departures Level.

                                    For example, in 2009, we stationed personnel at curbside to keep the
                                    area clean, open car doors for customers, help them with luggage and
                                    provide information to visitors to the city. We also enhanced the range
                                    of parking options for customers and will continue this process
                                    throughout 2010.

                                    PORT ALBERTA
Port Alberta is
                                    Port Alberta is an initiative to establish a more integrated, efficient and
an initiative to
                                    competitive transportation and logistics system for the Edmonton region.
establish a more                    In 2009, the Port Alberta Steering Committee, consisting of regional and
integrated, efficient                community stakeholders, retained a team of world-leading economic and

and competitive                     transportation consultants to further explore the viability of Port Alberta.

transportation and                  Their research, which involved business leaders, transportation providers

logistics system for                and government officials, identified opportunities that include northern
                                    transportation partnerships, a logistic service center and development of
the Edmonton region.                the region into an energy super hub. EIA has a key role in the facilitation
                                    of air transportation service growth as part of the broader Port Alberta
                                    potential. EIA also continues to champion activities that support the
                                    engagement of both the public and private sectors and the marshalling
                                    of resources and expertise needed to move Port Alberta forward.

  38   Edmonton Airports
The Antonov An—225, the world’s largest aircraft, takes on cargo at EIA.

                                             GENERAL AVIATION
                                             City Centre Airport
                                             In 2009, Edmonton City Council conducted a year-long review of
                                             Edmonton City Centre Airport to determine the best use of the airport
                                             land. As a result of this review, Council passed a motion to shut one of the
                                             airport’s two runways in 2010 as part of a phased closure of the Edmonton
                                             City Centre Airport. Timing of full implementation of that motion has yet
                                             to be determined.

                                             Cooking Lake Airport
                                             Cooking Lake is the only airport in the region that handles both float
                                             planes and wheeled aircraft. Work continued to discuss different
                                             ownership models for Cooking Lake Airport (CLA) with the CLA
                                             Condominium Association.

                                             Villeneuve Airport
                                             Villeneuve is the region’s principal flight-training facility. In previous years,
                                             Edmonton Airports invested in significant runway rehabilitation projects

                                                                                                         2009 Annual Report   39
                         to upgrade the aviation infrastructure of this airport. In 2009, the first
                         phase of land development at Villeneuve got underway with the launch
                         of 22 lots available for leasing. Four tenants have already been secured,
                         leaving 18 lots remaining for lease. Land servicing will start in spring 2010,
                         allowing for occupancy by September 2010. Edmonton Airports also
                         hosted the Villeneuve Airport Open House/Fly-In event, which was the
                         most successful to date, with 1,000 people in attendance.

                         Edmonton International Airport
                         EIA continues to play a growing role in regional general aviation as
                         northwestern Canada’s global gateway to the North for passenger,
                         cargo and corporate aviation. In 2009, almost one quarter of 126,763
                         aircraft movements at EIA related to general aviation, cargo or commuter
                         (carriers that transport goods or passengers, but do not require use of
                         the terminal for their activities). EIA and its fixed based operators offer full
                         services including:

                         • 24 hour fuel services

                         • 24 hour Airfield Operations coverage during winter season, and
                            standby for summer (7 days per week daily coverage)

                         • 24 hour, 7 day a week NAV CANADA coverage

                         • Instrument Landing System (ILS) on three runways

                         • Weather services on site

                         • Aircraft maintenance

                         • Public transportation such as taxi services and car rentals

                         • Emergency Response services on site

                         Looking ahead in 2010, Edmonton Airports will invest approximately
                         $22 million to further develop General Aviation and airport support at
                         EIA. This development includes new lots that are currently available for
                         pre-lease and will be serviced with road access and utilities.

                         General Aviation Sponsorship
                         and Support
                         General Aviation is one of Edmonton Airports’ core businesses.
                         Throughout 2009, we continued to raise awareness of the importance of
                         General Aviation through sponsorship of Airfest, support for celebrating
                         the 100th anniversary of powered flight, Canadian Women in Aviation,
                         and other groups. We also made investments in infrastructure and will
                         continue investing in 2010.

40   Edmonton Airports

GILLIAN     What’s different about EIA’s 2009 Language of
            Speed marketing campaign?
ADAMS       The Language of Speed campaign is all about what it means to be an airport. An
            airport is about its destinations and how many it has. We wanted to show people
Manager,    that speed was what you gained by having non-stop air service.
            Traditionally, we’ve done individual campaigns of relatively short duration.
Services    We wanted this campaign to look forward. We wanted the messages to have
            longevity. This campaign allowed us to do that. It also allowed us to respond
            quickly when a new destination came online. For example, we were able to get
            our Texfast announcement up as soon as the Houston route was announced and
            we were able to create a very successful route launch. So our marketing cycles are
            now looking a year down the track rather than the next quarter.

            What do you personally want the people of the
            region to know about EIA?
            I want them to know we’re working really hard to make this a better airport in
            every way...for them. We want to give them the best air service and customer
            service and make being here a great experience because we want EIA to be
            something they’re proud of.

            EIA is a special place with good people who really feel a strong sense of
            community. As EIA employees, we’re connected by all we’re striving to be as
            an airport. We’re marketing something, in our hearts, we believe in. This is our
            airport. It’s here for all of us.

                                                                          2009 Annual Report   41

42   Edmonton Airports




                            2009 Annual Report   43
                             AN EXCEPTIONAL
                             Creating a taste for success
                             One of the factors that defines a vibrant, evolving airport is the
                             experience it provides passengers as they wait for their flight to depart.
Our goal at EIA is to        Our goal at EIA is to make that experience easy, personal, relaxing and
                             enjoyable by providing passengers with a variety of ways to spend their
make that experience
                             time while in the airport.
easy, personal, relaxing
                             In 2009, EIA saw significant growth in the range and number of food and
and enjoyable by
                             beverage options for passengers with the addition of Chili’s and Wok
providing passengers         Box. The expanded US passenger lounge not only provided more room
with a variety of ways       for passengers travelling to the United States, but also gave them new
to spend their time          food, beverage and retail options with the addition of Molson Pub and
                             Indigo Books.
while in the airport.
                             Expansion 2012 will see EIA’s concession and retail space grow by 66 per
                             cent, from nearly 38,000 square feet to more than 63,000 square feet.
                             This will include new full-service restaurants, more takeaway food and
                             beverage options, new retail shops, duty free stores and other amenities
                             today’s travellers expect from major airports.

                             Exceptional customer service
                             EIA considers the improvement of passenger experience one of its core
                             businesses. We focus our efforts on determining what our passengers want
                             from the airport and finding ways to deliver the experience they expect.

                             EIA participates in Airport Council International’s Airport Service Quality
                             (ASQ) program to measure and monitor passenger satisfaction with the
                             EIA experience and compare our performance to 140 airports around the
                             world. The introduction of our we’ll move you brand in 2008 has served
                             as a rallying cry for both EIA employees and members of the entire EIA
                             airport team to improve customer service in both highly visible and small,
                             but meaningful ways.

                             There is no doubt that the entire EIA Team has made customer service
                             a priority. At the end of 2009, EIA made significant strides in improving
                             customer experience, resulting in a year-end overall ASQ satisfaction

    44   Edmonton Airports

BARBARA             What do you think EIA’s community partnerships
                    tell people about the airport?
MCGEE               Our partnerships tell people that we care about our community, that we’re part
                    of our community and we’ll do our part to help the community be successful.
Community           Often, community organizations don’t have a lot of money for promoting their
and Corporate       event, so we’ll work with them to find non-monetary ways to promote their
Relations Advisor   event or organization and, at the same time, improve the airport experience
                    for our passengers. For instance, we developed a wonderful partnership with
                    Chrysalis, a non-profit organization that provides personalized services to assist
                    people with disabilities in achieving their employment, volunteer and recreation
                    goals. Participants in the Chrysalis art therapy program provided us with some
                    of the artwork that we display in the terminal. It’s one way we support our
                    community and give profile to an organization that’s providing a valuable service
                    to Edmontonians with disabilities. We benefit because the artwork helps improve
                    the ambience of the airport, which in turn positively affects passenger experience.
                    This is exactly the kind of win-win opportunity we look for.

                    How do you see EIA’s social sustainability growing?
                    We’ll continue to build partnerships...and through them make a difference to our
                    region. We want to welcome the world to northern Alberta, and we believe in
                    doing our part to help the community bring big events to the region.

                    I’m so proud of how EIA has grown as a company and community leader.
                    We sincerely care about our passengers, our community, our tenants and our
                    employees. We support our community and our region wholeheartedly because
                    we’re their airport.

                                                                                   2009 Annual Report   45
                           score of 4.11 out of 5, up significantly from the 2008 year-end score of
                           4.02. This result placed EIA 12th out of 50 airports that serve between five
                           and 15 million passengers per year. This performance also placed EIA in
                           the top 24 per cent in that size category for overall customer satisfaction
                           in the ASQ survey, rising six per cent from our 2008 placement.

                           Art and ambience
                           The kind of atmosphere and environment (collectively called ambience)
                           an airport creates for passengers is a significant factor in how they
The introduction of        perceive their experience at the airport. Ambience helps passengers

our we’ll move you         feel comfortable and relaxed in the airport, but also provides a venue
                           for profiling the diversity, creativity and history of our region. In 2009,
brand in 2008 has          EIA officially launched the Ambience at EIA program to highlight
served as a rallying       our commitment to art, ambience and culture. Ambience at EIA is a
cry for both EIA           component of the airport’s Community Investment Program, which
                           continues to strengthen ties with and support community organizations
employees and
                           that enhance the region’s quality of life. Key partnerships in 2009 included
members of the entire      work with the 2009 Tim Hortons Roar of the Rings, TELUS World of
EIA airport team to        Science, Edmonton Public Schools, Chrysalis and the Government of the
improve customer           Northwest Territories.

service in both highly
visible and small ways.

  46   Edmonton Airports

ELIZABETH       Why is having artwork in the airport so important
                to EIA?
DWERNYCHUK      We know from research that passengers like airports that have taken the time to
                create a warm and interesting environment. Let’s face it, air travel can be stressful.
Brand Advisor   Passengers are eager to check in, find their gate and get where they’re going.
                Touches like art help create a sense of place and comfort for passengers.

                Artwork is also important because it gives us an opportunity to profile the
                uniqueness of our region. The airport is the first impression visitors to the region
                get when they arrive at EIA. Whether we feature local artists or local landmarks,
                art is a way for us to show visitors a little of the Capital Region’s character and
                personality. We think it’s a wonderful place, and we want everyone to know it!
                Our Ambience at EIA program also gives us the opportunity to support our region
                by supporting its arts community.

                What do you think is EIA’s greatest strength?
                Oh, that’s easy — it’s the people! I l love coming to work every day because the
                EIA Team is so committed to making this airport better for everyone. Everyone
                is working together to make a difference...a big difference. That’s pretty inspiring
                to me.

                                                                                 2009 Annual Report   47
           MOVING AT

48   Edmonton Airports


      LIGHT IS A CONSTANT 300,000

















                             2009 Annual Report   49
                                  Nothing is more important to us than the safety and security of our
                                  passengers, airport tenants, employees and neighbours in the region.
                                  Airport safety and security adheres to federal legislation and regulations
                                  set out by Transport Canada, the Canadian Air Transportation Security
                                  Authority, Canada Border Services Agency and United States Customs
                                  and Border Protection. EIA works closely with these partners not only
                                  to ensure we’re compliant with regulations, but also to ensure we’re
                                  facilitating their processes. Security screening is a given at any airport,
                                  but with our partners we strive to move passengers through customs and
                                  security screening as efficiently and quickly as possible.

                                  In addition to being proactive with respect to safety and security, we are
                                  also well prepared to respond quickly and effectively to any emergency
                                  that affects the airport and the airport community.

                                  AND SECURITY
Discovery Channel                 Preparing for emergencies
features EIA
“Snow Fighters”                   In September 2009, STARS (Shock Trauma Air Rescue Society), emergency
In April, EIA worked with a       response services personnel, police, government agencies, 140
UK-based television production    volunteers and community organizations were brought together for an
company on a segment for the
                                  emergency training exercise at EIA.
popular Discovery Channel
program How Do They Do            Simulating an airliner crash, the exercise was part of Edmonton Airports’
It? The show explained how
                                  regulatory requirements to maintain an effective emergency response
EIA’s airport operations
team (which the producers         plan for the airport, airlines and regional response agencies. The half-
called “snow fighters”) keep       day exercise was the largest emergency response training event ever
airplanes and runways safe for    conducted at EIA.
passengers during the winter at
Canada’s most northerly major     A review of the exercise outcomes is used to enhance our emergency
international airport. For two    response and ensure communication among all emergency response
days, camera crews followed
                                  partners is effective.
the snow fighters around the
airfield as we demonstrated
everything from runway
friction testing and aircraft
de-icing to runway sweeping
                                  Mobile Aircraft Fire Trainer
and snow blowing. The
segment featuring EIA first        The emergency training exercise in September also put our brand new
aired on October 6, 2009.         Mobile Aircraft Fire Trainer (MAFT) through its paces. Acquired in 2009,
How Do They Do It? airs           the fully self-contained system provides training in the control and
internationally across the
                                  extinguish of aviation fuel spill fires and aircraft incident fire emergencies.
Discovery Channel networks.
                                  From a computerized control centre, an operator can trigger spills and
                                  various types of fires, including external spill fires and engine/wheel/other

50   Edmonton Airports

STEVE                What is one of the key advancements EIA made
                     in 2009 with respect to airside operations?
MAYBEE               EIA’s infrastructure has doubled in size over the last few years, but we haven’t
                     doubled our staff. Instead, we’ve found ways to be more efficient. We have to
Director,            closely manage cost increases because they get passed on to airlines and can
Airside Operations   impede our ability to attract air service. So, we’ve added new technology to help
                     us make better, more efficient decisions.

                     In 2009, we added the Runway Weather Information System (RWIS), which
                     features sensors embedded in the runways. RWIS measures ground temperature,
                     air temperature, humidity, etc. Each runway has three sensors that feed data to us.
                     The data tells us when weather is going to create ice on the runway and when we
                     have to put chemical down to increase runway friction.

                     Chemical application costs up to $36,000 every time it’s done. In the past, our
                     judgment was based on air temperature and, of course, we always erred on the
                     side of caution. Now we know empirically when and if a runway needs chemical.
                     Not only does that save the airport money, it reduces any impact the chemical
                     may have on the environment.

                     What about your team makes you most proud?
                     I feel a lot of pride in the fact that our airport runways seldom close due to winter
                     snow conditions. That’s because our crews take painstaking care of the runways to
                     ensure they’re clear and safe.

                                                                                     2009 Annual Report   51
First responders assist a "survivor"
of EIA's full-scale emergency
exercise in September.
                                       aircraft fires, and cabin fires. Inside the fuselage, a variety of highly realistic
                                       effects can be triggered, including flames, smoke and noise. Unlike fixed
                                       facilities, the MAFT can be configured to locations that are applicable to the
                                       airport environment: aircraft aprons, taxiways or docked at loading bridges.
                                       The unit is designed to introduce scenario-based training objectives
                                       that test both firefighter competency and the overall effectiveness of our
                                       emergency response plans.

                                       One of the other benefits of the MAFT is that the fire simulations burn
                                       propane rather than other fuels, making it a more environmentally friendly
                                       training tool, which upholds EIA’s core value of sustainability.

                                       The MAFT unit is mobile and can be moved to other locations. Going
                                       forward, EIA’s emergency response services team will use its expertise
                                       with the unit to provide emergency response training at other airports.

                                       Squad 5 Structural Pump
                                       EIA and Leduc County work in partnership to provide emergency/medical
                                       response services on airport property and in the County. For almost a
                                       decade, the EIA fire hall used a 1978 structural pump vehicle provided

52    Edmonton Airports
                                                      by the County as per the partnership agreement. In
                                                      2009, the unit reached the end of its lifespan. At the
                                                      same time, EIA had to replace its medical/rescue unit.
                                                      So, the partners decided to consolidate the functions
                                                      of two vehicles into one and cost share. In 2008, EIA
                                                      and the County worked together to develop the
                                                      specifications to replace the aging vehicle with a new
                                                      one that would be more technologically advanced
                                                      and safer for the team. In September 2009, the new
                                                      $500,000 Pierce structural pump was delivered to the
                                                      EIA fire hall and was fully operational in November.
                                                      The structural pump, designated Squad 5, now
                                                      responds to 95 per cent of the roughly 1,000 calls
                                                      received at the EIA fire hall each year.

                                                      Response to H1N1 pandemic
                                                      As the H1N1 pandemic ramped up in 2009, EIA
                                                      worked closely with health care partners at all levels of
                                                      governments on mitigation efforts. EIA took direction
                                                      from appropriate experts and provided a forum for
                                                      communication with passengers and the general
                                                      public. EIA implemented an awareness campaign
Two of the “snow fighters”
featured on Discovery Channel’s                       to encourage proper hygiene and supported that
How Do They Do It?                                    campaign by installing hand sanitizer dispensers
                                                      throughout the airport.

                                  Response to December 25 attempted
In order to help                  terrorist attack
ease congestion and
                                  The attempted terrorist attack that took place on December 25, 2009
support passengers                resulted in immediate changes to security regulations for passengers
in adjusting to                   entering the United States. Passengers travelling after this incident
the new security                  had significantly longer waits to go through US Customs and security
                                  screening at international airports, including EIA.
regulations, many
EIA staff cancelled               In order to help ease congestion and support passengers in adjusting to
                                  the new security regulations, many EIA staff cancelled their holiday plans
their holiday plans
                                  to assist passengers at the airport.
to assist passengers
                                  Wait times in the pre-board screening in the US departures area of the
at the airport.
                                  airport continue to be a customer service quality issue. We continue to
                                  work with all our partner agencies to implement changes to reduce the
                                  time it takes for a passenger to move through screening.

                                                                                            2009 Annual Report   53

54   Edmonton Airports

















we’ll move you.

                  2009 Annual Report   55
                          EIA strives for excellence in everything we do, and last year the industry
                          told us we’re doing things right. While it’s gratifying to get awards for our
                          work, what makes us most proud are how our employees and their efforts
                          make a difference for our passengers and our community.

                          CANADA INC.
EIA strives for           TOP 50 EMPLOYER
excellence in             Our company received recognition in 2009 as one of Alberta’s Top 50
everything we do,         Employers. We were specifically recognized for Health, Financial and
                          Family Benefits and Training and Skills Development. Looking forward,
and last year the
                          we are now focused on becoming one of Canada’s Top 100 Employers.
industry told us
we’re doing
things right.
                          PEGGY HEREFORD
                          For the second year in a row, EIA was the recipient of one of the airport
                          industry’s most prestigious awards: Airports Council International-
                          North America’s Peggy Hereford Award for overall Marketing and
                          Communications Excellence. In addition to the Hereford award, EIA took
                          honours in seven award categories, with four first place finishes including
                          a big win for our Language of Speed destination marketing campaign.

                          A YEAR OF MOVING
                          In the opening sentence of Charles Dickens’ A Tale of Two Cities, he
                          writes, “It was the best of times, it was the worst of times.” It is an oft used
                          quotation, but entirely fitting as a coda to 2009. To a person, everyone at
                          EIA pulled together this year to turn challenges into opportunities. Each
                          employee puts our passengers first in their thoughts, first in their actions
                          and first in their hearts.

                          We strive to be better, seek new opportunities, and will not yield to
                          adversity. We do so not simply because it’s “our job,” but because this
                          airport is a mosaic of the ambitions, expectations and dreams of our
                          region. Each day, we re-commit ourselves to the region we love and to
                          the people we serve. And it is perhaps a quote from Scottish explorer
                          David Livingstone that best summarizes the spirit of EIA:

                          I will go anywhere, provided it be forward.

 56   Edmonton Airports

       2009 Annual Report   57
                         DISCUSSION AND ANALYSIS
                         The following comments should be read in conjunction with the financial statements included
                         in this report which have been prepared in accordance with Canadian generally accepted
                         accounting principles.

                         Edmonton Regional Airports Authority (Edmonton           As an airport authority, the level of aviation activity at
                         Airports) operates the Edmonton International Airport    our airports is the primary driver of our revenue. In
                         (EIA), Edmonton City Centre Airport (ECCA), Cooking      particular, activity at EIA has a large impact on the
                         Lake Airport (CLA) and Villeneuve Airport (VA).          financial performance of Edmonton Airports. Seating
                                                                                  capacity held flat at EIA in 2009 while many other
                         Edmonton Airports’ intended purposes, as defined          airports saw decreases in air service. Edmonton
                         in the Regional Airport Authorities Act (Alberta), are   continues to experience the best air service in the
                         to manage the airports for which it is responsible, in   region’s history with EIA providing service to
                         a safe, secure and efficient manner, and to advance       52 non-stop destinations. This included scheduled
                         economic and community development by promoting          service to 11 US cities and two key international hubs
                         improved airline and transportation service and an       (London Heathrow and Mexico City). In January 2010,
                         expanded aviation industry. As a no-share, not-for-      Mexicana suspended its service from Mexico City
                         profit entity, the net earnings generated by Edmonton     until the economy improves sufficiently to support the
                         Airports must be applied toward these intended           reinstatement of the service.
                                                                                  Continental Airlines rejoined the family of airlines
                         Edmonton Airports has continued to make significant       servicing EIA with daily non-stop service to Houston
                         progress towards completing its expansion and            (IAH) which commenced on November 1, 2009.
                         development program. The cornerstone of the              To date, this service has been well received with
                         development program is Expansion 2012, featuring         passenger volumes exceeding expectations.
                         an expanded passenger terminal, a new combined
                         office/control tower, apron expansion and upgrades        Edmonton Airports continues to recognize the difficult
                         to the central utilities plant. The first phase of the    financial environment facing airlines and has held
                         expansion was completed in October with the opening      aeronautical charges flat for the fifth consecutive year.
                         of “Terminal Express,” a temporary gate structure in     Edmonton Airports’ focus remains on increasing
                         the transborder hold room. Terminal Express allows for   non-aeronautical revenue sources and controlling
                         continued passenger operations while the new terminal    expenses with the goal of providing the airlines the
                         expansion is being constructed.                          lowest possible airport costs. Aircraft landing fees,
                                                                                  aircraft loading bridge fees, common use counter fees,
                         While we work to build EIA’s airport of the future, we   aircraft terminal fees and aircraft parking fees will remain
                         are also equally focused on our customers’ present and   at 2005 levels for airlines using EIA in 2010.
                         future needs. EIA will continue to offer new speed-
                         enhancing technologies during construction: the online   EIA experienced a passenger traffic decline of
                         web check-in portal at, hotel web check-in     5.4 percent in 2009 to 6.1 million passengers.
                         areas, more check-in kiosks at more locations, and       Transborder traffic continued to perform well, growing
                         our north terminal flow-through check-in desks, which     6.3 percent and reaching the one million mark for the
                         greatly speed up passenger flow.                          first time in the history of the airport.

58   Edmonton Airports
Edmonton International Airport Passenger Statistics 2007 – 2009
                                         2007               2008         % change               2009        % change

Domestic                           4,936,592          5,106,860               3.4         4,704,189               (7.9)

Transborder                          810,318             943,911             16.5         1,003,437                6.3

International                        317,700             386,563             21.7           382,587               (1.0)

Total                              6,064,610          6,437,334               6.1         6,090,213               (5.4)

As a northern gateway, EIA serves 12 northern                EIA continued to expand, and improve upon, passenger
communities, and is growing as a regional hub.               facilities and concessions in 2009. In August 2009 a
Scheduled seat capacity for northern air service             new Priority Valet parking service was introduced. In
reached 1.2 million in 2009, an increase of 33 percent       December 2009, EIA welcomed Hudson Group as
since 2004. General aviation activity servicing the          the operator of nine retail outlets. Construction of a
North continued to perform well with seating capacity        new, discount parking lot is almost completed that will
for oil sands crew changes increasing 342 percent            provide EIA with ample parking capacity to meet peak
since 2006.                                                  demand periods throughout the year.

US Quick Connect, which opened in December of                In 2009, total reported cargo volumes at EIA decreased
2008, has continued to help support connecting               by approximately 11.8 percent from 2008. In terms of
passenger traffic growth at EIA. When connecting              demand, 2009 was one of the worst years the global
in Edmonton to one of our 11 non¬stop US                     air cargo industry has experienced. The global air cargo
destinations, EIA’s US Quick Connect offers easy,            industry reported approximately 9.3 billion FTKs (Flown
convenient connections. Connecting passengers can            Ton Kilometres) at its lowest point in 2009, a measure
proceed from their arriving domestic flight straight          not seen since mid-2003. Edmonton cargo struggled
to US Preclearance, without having to collect, and           against hubs such as Chicago, Houston, and Toronto
then re-check luggage. It also allows connecting             where freight was being consolidated with extremely
passengers to enjoy the wide range of amenities in           low margins. Current carriers struggled with the leak of
the domestic passenger lounge.                               cargo to larger hubs over the last year.

                                                                                             2009 Annual Report     59
                         2009 FINANCIAL
                         In 2009, Edmonton Airports had net earnings of $7.0 million compared to net earnings of
                         $19.9 million in 2008, a decrease of $12.9 million (-64.8%). Positive operating cash flows were
                         maintained and all debt covenants were achieved, in spite of the 5.4 percent decline in overall
                         passenger traffic.

                         Edmonton Airports’ revenue decreased by $0.4 million        Edmonton Airports also earns revenue from commercial
                         (-0.3%) for the year to $126.9 million.                     operations that include parking, concession, ground
                                                                                     transportation, and real estate activities. Growth in
                         The Airport Improvement Fee (AIF) is the primary            these areas generates additional revenue which may
                         source of funding used to pay interest and principal        be used to lower the operating cost environment for
                         on the revenue bond and debentures issued for the           airlines. Concession revenue at $38.1 million was $0.9
                         redevelopment and expansion of EIA airport facilities.      million (-2.3%) lower than 2008. The largest component
                         This source of revenue is derived from a fee levied on      of this decline was in car parking and car rental
                         passengers departing EIA. AIF revenue increased by          concession fees ($1.1 million). This decrease results
                         $2.6 million (6.4%) over 2008 to $43.1 million. The         from the decrease in passenger volumes. This decline
                         increase resulted from a change in the AIF rate on          was partially offset by higher ground transportation
                         September 1, 2009 to $20 from $15 per eligible AIF          revenues ($0.2 million) which resulted from a rate
                         passenger. The full impact of the rate increase was         increase of 32.0% effective January 15, 2009. Real
                         partially offset by the decline in passenger traffic         estate revenue at $3.9 million was $0.2 million (5.4%)
                         during 2009.                                                higher than 2008. This change results from negotiated
                                                                                     increases in land lease rates and the full year impact of
                         Revenue from airline activity (airside and general
                                                                                     leases concluded in 2008.
                         terminal revenue) decreased by $2.5 million (6.7%) from
                         2008. The decrease results from the elimination of the      Edmonton Airports recovers certain police and security
                         landed seat fee at EIA for general aviation aircraft and    expenses through a per passenger charge to airlines.
                         the full year’s impact of the reduction in the same fee     Police and security fee revenue increased by $0.2
                         at ECCA from $15 to $12. The elimination of the fee         million (3.5%) to $5.9 million in 2009. This increase
                         at EIA was done to become competitive with other            represents the recovery of increased costs to provide
                         Canadian airports.                                          the service.

                         Edmonton Airports incurred expenses of $116.5 million,      as a result of staffing shortages, providing extended
                         an increase of $9.2 million (8.6%) from 2008.               coverage for operational requirements and to address
                                                                                     emergency repairs to the sanitary sewer and water
                         On-going capital investment increased amortization          lines. Employee benefit costs were lower than 2008
                         costs for 2009 by $4.5 million (17.4%) to $30.4 million.    as a result of the elimination of Alberta health care
                         This increase reflects the full-year impact of additional    premiums and lower employee defined benefit costs.
                         capital assets placed into service during 2008, and the
                         partial-year impacts of new assets placed into service      In 2009, interest expense was $22.9 million, an
                         during 2009.                                                increase of $3.9 million (20.5%) from 2008. Edmonton
                                                                                     Airports’ interest costs represent the interest on the
                         Salaries and employee benefits increased in 2009 by          outstanding balances of the $250 million revenue bond
                         $1.5 million (6.8%) over 2008. This increase is primarily   issued in October 2000 and the $230 million in fixed
                         the result of the wage escalations contained in the         rate debentures issued to the Alberta Capital Finance
                         collective agreements of the General Bargaining Unit        Authority (ACFA) since 2006 offset by any interest
                         and Fire-fighters of 4% and 5.5% respectively and            earned on cash balances and any capitalized interest
                         3% for non-unionized staff. The increase also reflects       associated with construction in progress. The increase in
                         higher overtime for the fire-fighters and infrastructure      2009 results from additional interest paid on new ACFA
                         maintenance personnel. The fire-fighter overtime              borrowings in 2009, and decrease in interest income from
                         occurred as a result of being short staffed due to sick     lower cash balances and interest rates are partially offset
                         leave. Infrastructure maintenance overtime occurred         by an increase in the amount of interest capitalized.

60   Edmonton Airports
Services, maintenance, supplies and administration          to expense on a straight line basis, consistent
expenses for 2009 totalled $19.5 million, a decrease        with the accounting requirements for an operating
of $1.0 million (-4.9%) from 2008. Contracted labour        lease. Therefore, Canada Lease Rent expense was
costs were $0.5 million lower than 2008 as a result         unchanged from 2006. Actual Canada Lease Rent
of manpower efficiencies in the parking and security         paid during 2009 was $5.0 million (2008 -$4.9 million).
operations. Material and supply costs and repair and        Effective 2010, Canada Lease Rent will be based on
maintenance costs combined were $0.4 million lower          a percentage of gross revenues at EIA, including AIF
than in 2008, primarily due to not renewing external        revenues, on a progressive scale as follows:
contracts and completing these tasks with internal
resources. Professional fees were $0.4 million higher in    Gross Revenues                                   Rent Paid
2009 due to increased costs related to the conversion
                                                            On the first $5 million                                0%
to IFRS, one-time project costs for the review,
documentation and assessment of the adequacy of             On the next $5 million                                1%
internal controls over financial reporting, and costs for
the completion of an economic impact study. These           On the next $15 million                               5%
were partially offset by lower legal fees. Bad debts were   On the next $75 million                               8%
$1.3 million higher than 2008 as 2008 included the
recovery of amounts previously written off resulting in a   On the next $150 million                              10%
lower than normal bad debt amount. In 2009, advertising
                                                            On any amount over $250 million                       12%
and promotion costs were $1.2 million lower than 2008
as 2008 included a one-time contribution to a tenant’s
capital costs for construction of new aviation related
                                                            Canada Lease Rent for 2010 is forecasted to be
facilities and non-recurring costs to develop and launch
                                                            approximately $10.7 million.
the new EIA brand. Travel and training costs were
$0.2 million lower than 2008 as discretionary activity      AIF collection costs for 2009 totalled $2.7 million, an
was eliminated or deferred in response to the lower         increase of $0.2 million (8.0%) over 2008. This expense
passenger traffic and its impact on revenues in 2009.        category includes the fees paid to the airlines for
                                                            collecting the AIF on Edmonton Airports’ behalf. The
Utilities, property taxes and insurance expenses for
                                                            increase in collection costs results from the increase in
2009 totalled $7.3 million, an increase of $0.1 million
                                                            the AIF revenue but is partially offset by the effects of
(1.4%) over 2008. Utility costs were $0.3 million lower
                                                            lower passenger traffic in 2009.
in 2009 due to lower natural gas unit rates in 2009. The
increase in property taxes of $0.4 million resulted from    In 2009, there was a non-cash loss of $3.1 million as a
an increase in the market value assessment of the EIA.      consequence of the demolition of capital assets related
                                                            to the Expansion 2012 construction project. Assets
Police and security expenses for 2009 totalled $5.6
                                                            demolished included apron, terminal building curtain
million, an increase of $0.1 million (1.8%). The change
                                                            wall, loading bridges and loading bridge piers. There
was the result of a planned increase in contract labour
                                                            was also an exchange loss of $0.2 million related to the
                                                            US dollar bank account. This account is used to pay
The previous Canada Lease for EIA required Edmonton         US dollar purchases and to hold US dollar remittances
Airports to calculate and pay rent utilizing formulas       from aeronautical and AIF fees received from several
which took into account annual airport revenues and         US air carriers.
operating costs and an estimate of passenger traffic.
In December 2005, Edmonton Airports finalized
amendments to its ground lease with the Government
of Canada. The amended Canada Lease required
Edmonton Airports to pay predetermined escalating
Canada Lease Rent amounts during the transition
period 2006 through 2009. Since these amounts
were known for the transition period, the aggregate
of the payments for the transition period are allocated

                                                                                             2009 Annual Report    61
                         Edmonton City Centre Airport
                         On July 10, 2009, Edmonton City Council passed               revenue was unchanged from 2008 and real estate
                         a resolution in respect of the phased closure of the         revenue increased as a result of full year impact of new
                         Edmonton City Centre Airport to be completed by a            leases with two tenants in 2008 and increased licensing
                         future date yet to be determined. In order to facilitate     fees for the 2009 Edmonton Grand Prix.
                         the phased closure, Edmonton Airports has entered
                         into discussions to amend the current ground lease           The increase in expenses in 2009 of $0.1 million
                         with the City of Edmonton. Edmonton Airports has             resulted partially from increased amortization, salary
                         not made any additional adjustments to the financial          and benefits and bad debt costs, partially offset by
                         statements in 2009 as the future financial and annual         lower interest costs. Salaries and benefits were higher
                         operational impacts, if any, are currently unknown.          as 2009 includes the increases contained in the union
                                                                                      agreement. Bad debt expense was higher as the 2008
                         Included in the revenue and expenses reviewed above          amount was reduced by the recovery of accounts
                         are revenues of $3.9 million (2008 -$4.5 million) and        previously written off resulting in a lower than normal
                         expenses of $3.6 million (2008 -$3.5 million) for ECCA.      bad debt amount. The decrease in interest expense
                                                                                      results from cash payments made to reduce the
                         Total revenue was down $0.6 million when compared to         long-term debt balance during the year. The increase
                         2008 levels. Aeronautical revenue was down $0.7 million.     in amortization expense reflects the full-year impact
                         Landing fee revenue was lower due to a decrease in           of additional capital assets placed into service during
                         activity as several of the scheduled service operators did   2008, and the partial-year impacts of new assets
                         not operate for the full year. In addition there was lower   placed into service during 2009.
                         charter activity to support the energy sector. Concession

                         Capital Asset Management
                         In 2009, Edmonton Airports invested $117.8 million           During 2009 work progressed on Expansion 2012 and
                         in capital assets, including software, (2008 - $91.7         approximately $94.6 million was expended during the
                         million), of which $116.9 million applies to EIA.            year. The first phase on the expansion was completed
                                                                                      in October with the opening of “Terminal Express,” a
                                                                                      temporary gate structure in the transborder hold room.
                         Expansion Capital Plan (ECP)                                 Terminal Express allows for continued passenger
                                                                                      operations while the new terminal expansion is
                         On September 27, 2007, Edmonton Airports Board
                                                                                      constructed. Overall project construction is on
                         of Directors approved, as part of the 2008 - 2012
                                                                                      schedule and costs have declined significantly from the
                         Strategic Plan, a significantly expanded capital program
                                                                                      original $1.0 billion forecast as a consequence of the
                         the major component of which was subsequently called
                                                                                      current economic environment and innovative project
                         “Expansion 2012.”
                                                                                      management techniques. When combined with the
                         Expansion 2012 consists of four major projects: an           parkade expansion completed in 2007, Expansion
                         Apron Expansion to be completed in 2010 which                2012 will result in an investment of approximately $0.8
                         consists of approximately 190,000 square metres of           billion at the International Airport.
                         aircraft parking and loading space, including de-icing
                                                                                      Included in ECP are other projects of an expansion
                         areas adjacent to the terminal; Terminal Expansion to
                                                                                      nature that are outside the scope of the Expansion
                         be completed in 2012 which through the delivery of
                                                                                      2012 project. These include such projects as park
                         efficient common use platforms and new technologies
                                                                                      and ride lot development, north terminal systems
                         will accommodate 13 new aircraft gates, allow for new
                                                                                      replacement, land development, and a mobile aircraft
                         food and beverage retail outlets, and enable efficient
                                                                                      fire trainer. Expenditures on these projects were $10.0
                         airline operations and growth; a new Office and Control
                                                                                      million in 2009.
                         Tower complex that will also include expanded retail
                         and office space, a new NavCanada control tower               During 2009 $104.6 million (2008 -$79.7) was invested
                         and an integrated baggage facility to allow baggage          in the construction of projects in the ECP.
                         drop-off at any designated location in the terminal; and
                         finally a Central Utilities Plant Expansion to provide for
                         the additional heating and cooling required for the new
                         terminal and office control tower developments.

62   Edmonton Airports
Sustaining Capital Program (SCP)
In addition to the investment in the ECP in 2009, a         AIF Reconciliation –
further $13.2 million (2008 – $11.6 million) was invested   As at December 31, 2009
in ongoing capital expenditures at EIA and VA airports.
                                                                                                     (in thousands of $)
The most significant projects included various paving
and existing apron and runway rehabilitation projects       AIF revenue (net):
for $3.4 million, computer equipment for $1.0 million,         AIF revenue                                    329,119
terminal and building systems rehabilitation for $1.4          AIF collection costs                           (21,586)
million, vehicle and maintenance equipment purchases
for $3.0 million, general construction overhead and
insurance of $3.2 million and various other smaller
                                                              Qualifying capital expenditures                (562,320)
projects totalling $1.2 million.
                                                              Related financing costs                         (161,240)
Edmonton Airports’ credit ratings of A1 (Moody’s), A+                                                        (723,560)
(Standard & Poor’s) and A High (Dominion Bond Rating
Service) were affirmed in 2009.                              Excess of expenditures over AIF
                                                            revenue (net)                                   (416,027)
Principal and interest on the revenue bond and ACFA
debentures are paid through revenues from the AIF
                                                            The AIF fees will contine to be collected until the deficit
that was implemented on April 12, 1997. To December
                                                            is repaid.
31, 2009, Edmonton Airports has incurred capital
expenditures and related financing costs of $723.6
million (2008 -$594.7 million) compared to AIF revenue
of $307.5 million (2008 -$267.1 million) as shown in the
table following.

                                                                                              2009 Annual Report     63
                         2009 was a year of extreme economic volatility. The global recession played havoc with global
                         markets and commodity prices, with oil plunging from its record highs in 2008. Signs of global
                         recovery began to emerge in the latter stages of the year but, the economy is still vulnerable
                         and the near term outlook remains uncertain. The global airline industry struggled in 2009 with
                         capacity reductions and bankruptcies and mergers. The industry is expected to experience
                         losses again in 2010 although, anticipated to be less than those experienced in 2009.

                         The Alberta and Edmonton economies were not                   but are expected to decrease back toward the 5 to
                         immune to the effects of the recession. Lower oil prices      6 percent range in the coming five years. An ageing
                         led to the deferral of several large oil sands projects       population combined with renewed economic growth
                         and a sharp decrease in the price of natural gas led          will make attracting and retaining quality employees a
                         to a decline in drilling activity. The region’s runaway       challenge again in the coming years.
                         economy came to a grinding halt with economic
                         growth contracting in 2009. However, the economies            The current economic conditions may also have an
                         are starting to look better for the coming year. Several      impact on the pension plan of Edmonton Airports.
                         of the deferred oil sands projects have recently been         Given current market conditions there can be no
                         announced to start later in 2010 and into 2011, and the       assurance that the pension plan will be able to earn
                         overall economy is expected to return to growth. The          the assumed rate of returns on the plan’s assets.
                         slowdown was not all bad news, construction inflation          These conditions may also result in changes in the
                         moderated from the double digit increases in past years       discount rates and other variables which may require
                         resulting in significant cost savings for Expansion 2012.      Edmonton Airports to make cash contributions in the
                         Expectations are for moderate inflation over the coming        future that differ from those currently being made. The
                         five years with the economy growing at a steady and            current conditions could also result in changes to the
                         manageable pace. Unemployment levels have risen               assumptions used in the actuarial valuation process.
                         from the extremely low levels seen in 2007 and 2008

                         Passenger Trends
                         The air transport industry has seen significant                is increasing its Boeing 737 fleet with between 28 and
                         challenges over the last year. However, the industry is       31 new aircraft for a total fleet of 114 to 117 in 2014.
                         very resilient to economic cycles and has recovered
                         from past downturns. Over time, the air transport             Growth in the resource sector will continue to drive
                         industry has become a critical part of society, with          new passenger demand into northern Alberta. WestJet
                         increasing dependence on air transport.                       and Air Canada have had good success in Grande
                                                                                       Prairie and Fort McMurray. Air Canada and WestJet
                         The global economy is diversifying, with developing           have added new flights from both these communities
                         regions and new business sectors bringing more                to Edmonton and Calgary over the past few years
                         balance to the world. In the near future, it is anticipated   driving growth in connecting passengers through
                         that many markets will receive a strong boost as              Edmonton International. While we see a connection
                         governments ease regulations that have previously             market continuing with these northern Alberta
                         restricted market access. New Open Skies agreements           communities, the success of the non-stop service
                         between the European Union and the United States              between Fort McMurray and Toronto may bode well for
                         and Canada further improve the market conditions.             a similar transcontinental flight being added to Grande
                         Further liberalization is expected in Asian and North         Prairie, which can limit connection growth from these
                         African markets, with a continuing long-term trend            communities through Edmonton International.
                         toward opening up markets worldwide.
                                                                                       2009 was a challenging year for the aviation industry
                         In Canada, both WestJet and Air Canada have been              with the International Air Transport Association (IATA)
                         experiencing record load factors over the last few years,     forecasting that the industry will continue to see losses
                         although these have moderated somewhat this past              into 2010 of $3.8 billion. Looking ahead, IATA sees
                         year. They have both responded by adding additional           improvement continuing into 2011 with the industry
                         aircraft and updating their fleet, with both having            showing a profit. The industry is seeing improved traffic
                         additional aircraft to be delivered over the coming           volumes but continues to be impacted by weak yields,
                         years. Air Canada has 37 wide body Boeing 787 on              which contributes to the losses. Fuel prices will continue
                         order for delivery starting in 2012 to replace the existing   to be a concern for the industry with expected fuel prices
                         wide body Boeing 767 fleet and add capacity. WestJet           rising into 2010, impacting the industry cash flow.

64   Edmonton Airports
On a global perspective, air cargo currently accounts        main-deck (dedicated) freight capacity other than some
for 40% of the total value of global trade, but less than    foreign-based carriers operating under limited access
3% of the total volume of global trade. Independent          agreements. The bulk of air freight in Canada remains
forecasts prepared by the major aircraft manufacturers       relegated to markets that have wide-body passenger
(Airbus and Boeing) indicated long-term growth rates         scheduled services, utilizing belly-hold capacity. The
of 5.4% per year for the cargo industry, based primarily     remainder of air freight is limited to narrow-body trans-
on anticipated underlying worldwide economic growth.         Canada freighter service or express carrier operators.
Each of these forecasts also calls for an expansion
in the use of freighter activity through their forecast      Cargo shipment leakage to other gateways remains
period. With the most significant increases attributed        a challenge for Edmonton International with many
to Asian carriers to accommodate both cargo activity         air cargo shipments transported via scheduled road
and freighter aircraft operation increases, airport cargo    feeder service. These services to other gateways
facilities will require proper development plans and         include Calgary, Vancouver, Toronto and the United
timing of execution.                                         States where freight is transferred to capacity available
                                                             on passenger and dedicated freighter services. One
In Canada, the air freight market remains weak. Efforts      limitation to altering these existing patterns of air freight
to increase trade liberalization through enhanced or         flow is the lack of existing facilities, infrastructure and
more open air access policies have been limited to           services. Long-term economic strength in this region
smaller, selective markets. An exception is the recent       based on the energy sector in Alberta provides the
Canada-European Union agreement that includes                opportunity to capitalize on Edmonton International
additional access capabilities for air cargo. Despite        development potential and establish appropriate
these changes, Canada still does not have effective          facilities to allow the air freight sector to grow.

Aircraft Movements
Aircraft movements at EIA are dependent on the aircraft      to a wide variety of activity including: non-scheduled
size serving the passenger market. As passenger              commercial activity (charters), corporate aviation,
service develops at EIA and carriers match capacity          government activity, surveying, flight training, personal
to demand, the passenger will typically be absorbed          business flying, recreational activity and medevac.
through increased load factors resulting in commercial
passenger movements growing at lower rates than              All aircraft activity at Villeneuve and Cooking Lake
passengers. Aircraft movements at EIA were down 4.9          is general aviation with the significant portion at
percent from 133,245 in 2008 to 126,763 in 2009.             Villeneuve, 70-80 percent, consisting of local
                                                             movements related primarily to flight training activity.
Aircraft movements at ECCA were down 13.1 percent
from 82,454 in 2008 to 71,617 in 2009.The majority
of movements at ECCA are general aviation related

Aircraft Movement Statistics 2008-2009
Airport                                                                2008*                  2009              % Change

EIA                                                                  133,245               126,763                    (4.9)

ECCA                                                                  82,454                 71,617                  (13.1)

VA                                                                    65,557                 64,734                   (1.3)
Total                                                                281,256               263,114                    (6.5)
*2008 has been restated to reflect more current information

                                                                                                2009 Annual Report      65
                         Five-Year Financial Information
                         The following five-year outlook is based on realistic but            assumptions relate to passenger volumes, passenger
                         current conservative assumptions that are considered                utilization of parking, concession and retail services,
                         most likely given the economic climate expected to                  new revenues from land leases and capital investment.
                         occur over the forecast period. Critical supporting

                         (in thousands of dollars)                                     2010            2011         2012          2013         2014

                         Airport Improvement Fee (net of collection costs)            49,320         52,457       68,054        71,457       75,683
                         Airside and General Terminal                                 35,597         36,542       37,718        40,220       41,370
                         Concessions and Other                                        54,313         60,614       68,423        77,215       81,462
                         Total Revenue                                               139,230        149,613      174,195       188,892      198,515

                         Operating Expenses                                           64,482         65,304       69,386        75,724       76,751
                         Canada Lease Rent                                            10,709         11,680       14,210        15,675       16,561
                         Total Expenses                                               75,191         76,984       83,596        91,399       93,312

                         Earning Before Interest and Amortization            A       64,039          72,629       90,599        97,493      105,203
                         Interest (net)                                      B       25,917          32,058       45,153        51,350       52,833
                         Available Cash Flow (A-B)                                   38,122          40,571       45,446        46,143       52,370
                         Amortization                                                33,100          36,229       41,369        52,609       54,879

                         Net Earnings                                                 5,022           4,342        4,077        (6,466)      (2,509)
                         Maintenance Capital Expenditures                    C       13,528          13,683       12,698        12,613       12,134

                         Debt Service Amount:
                         Principle Payments                                          13,044          17,810       20,544        22,169       23,629
                         Interest Payments                                           26,055          32,187       45,252        51,416       53,080
                         Debt Service Amount                                 D       39,099          49,997       65,796        73,585       76,709

                         Debt Service Coverage Ratio (A/D) Required >1.00              1.64             1.45         1.38          1.32         1.37
                         Interest Coverage Ratio ((A-C)/B) Required > 1.25             1.95             1.84         1.73          1.65         1.76

                         Capital Expenditures
                         ECP projects related to Expansion 2012 have been                    The following table summarizes the projected
                         identified to meet our future capacity requirements.                 expansionary infrastructure investment that is required
                                                                                             for the next five years at EIA.

                         (in millions of $)                           2010            2011              2012          2013          2014       Total

                         Estimated aggregate capital                 217.2           274.5            112.0          29.0           0.0        632.7

                         The following table summarizes the projected
                         sustaining infrastructure investment that is required for
                         the next five years at EIA.

                         (in millions of $)                           2010            2011              2012          2013          2014       Total

                         Estimated aggregate capital                  13.5            13.7              12.7         12.6          12.1         64.6

66   Edmonton Airports
Public Competitive Tendering
Edmonton Airports, in accordance with its lease with                  contract, and the reasons for not awarding the contract
the Government of Canada, is required to report on                    on the basis of a public competitive tendering process.
all contracts in excess of $111,202 ($75,000 in 1992                  Edmonton Airports entered into 13 contracts in excess
dollars) that were entered into during the year and                   of $111,202 ($75,000 in 1992 dollars) that, for the
were not awarded on the basis of a public competitive                 reasons outlined below, were not awarded on the basis
tendering process. Such reporting shall identify the                  of a public competitive tendering process.
parties, amount and nature and circumstances of the

2009 Sole Source Contracts Over $111,202 (based on 2009 CPI Index)
Supplier                                       Project                                     Value                   Code

Chubb Security Systems                         Supply and Installation of Access           $142,988                 A, B, E
                                               Control system

DELL Computer Corporation                      Workstation Computer Purchases              $770,000                 A, D, F

Donovan Creative Communications                Advertising Services                        $1,510,000               F
G4S Security Services (Canada) Ltd.            Parking and Ground Transportation           $1,671,546               C, D
Garda Canada Security Corporation              Security Services at ECCA                   $188,000                 C, D
Garda Canada Security Corporation              Security Services at EIA                    $600,546                 C, D
ICF Consulting Canada, Inc (SH&E)              Concessions Planning Consulting             $365,000                 F
Kinetic Technical Services                     EIA Fire Pump Replacement                   $160,000                 C
PricewaterhouseCoopers LLP                     IFRS Conversion/Implementation              $125,000                 D
PricewaterhouseCoopers LLP                     Internal Control Evaluation and             $235,000                 D
SKIDATA Inc.                                   Parking Equipment Purchase for              $1,500,000               A, B, F
                                               Park & Ride Lot
SKIDATA Inc.                                   Purchase of Pay on Foot Machines            $500,000                 A, B, F
Telus                                          Landline Phone Services                     $330,000                 A, B

Justification Code   Justification Description

           A        The purchase is in compliance with a product or equipment standardization program, or
                    introduction of the product or equipment of another supplier would cause operational impacts
                    or incur additional maintenance costs.

           B        The goods or services to be purchased are proprietary to the supplier or the supplier has
                    exclusive distribution rights in the area.

           C        The urgency of a safety, security or critical operating need in which delay would be injurious to
                    Edmonton Airports.

           D        The supplier has been awarded a contract for the goods or services as a result of a
                    competitive process within the last 5 years and there have been no performance issues.

           E        There is only one qualified supplier available when all factors are considered.

           F        A strategic alliance or partnership can be formed with one supplier in order to take advantage
                    of standardized technology and/or expertise.

                                                                                                      2009 Annual Report      67
                         International Financial Reporting Standards (IFRS)
                         On February 13, 2008, the Canadian Accounting                Edmonton Airports continued its IFRS conversion
                         Standards Board (AcSB) published a press release             work in 2009. All component evaluations have been
                         confirming the mandatory transition date to IFRS which        completed. An evaluation and recommendation of the
                         will replace Canadian Generally Accepted Accounting          different IFRS accounting policy options and first time
                         Principles for Publically Accountable Enterprises. The       IFRS adoption choices were also completed. These are
                         current definition of publically accountable enterprises      to be reviewed and approved at a future meeting of the
                         include those that issue debt or equity instruments in       Audit Committee. Once adopted, the preparation of
                         a public market or those that hold assets in a fiduciary      the IFRS adjustments to the 2010 financial statement
                         capacity for a broad group of stakeholders. Edmonton         comparative information for the 2011 financial
                         Airports has considered the nature of its operations         statements can proceed along with all remaining
                         along with the fact that it has obtained access to public    conversion activities. The conversion program is
                         funds for infrastructure development and that it holds       currently on time and on budget.
                         assets in a fiduciary capacity for a broad spectrum of
                         stakeholders in the community. Edmonton Airports has
                         concluded that it does have public accountability and
                         will therefore be adopting IFRS.

                         Edmonton Airports’ public accountability requirements with respect to planning, reporting, conduct and operational
                         effectiveness are documented in its leases with the Government of Canada and the City of Edmonton, and the
                         appropriate Provincial Legislation, including the Regional Airports Authorities Act. These agreements and legislation
                         set out specific requirements with respect to such matters as business ethics, conflict of interest, audit, periodic
                         performance reviews and disclosure. In addition to information included in the 2009 Management Discussion and
                         Analysis above, the following items require disclosure.

                         Business and Strategic Plans
                         The Executive Summary of Edmonton Airports’ 2010 Business Plan and 2010-2014 Strategic Plan are available at

                         Conflict of Interest
                         In accordance with the lease agreement with the Government of Canada and the Regional Airport Authorities Act,
                         Edmonton Airports confirms that it has an appropriate Conflict of Interest Policy and that it is in compliance with that

                         Edmonton Airports confirms its compliance, in all material respects, with the public accountability requirements
                         documented in airport leases with the Government of Canada and the City of Edmonton as well as with Provincial
                         Legislation, including the Regional Airports Authorities Act

68   Edmonton Airports
Edmonton Regional Airports Authority

               December 31, 2009 and 2008

                                            2009 Annual Report   69
                         REPORT OF
                         The financial statements of the Edmonton Regional Airports Authority (“Edmonton Airports”) are the responsibility
                         of management and have been approved by the Board of Directors. These financial statements have been
                         prepared by management in accordance with Canadian generally accepted accounting principles, and include
                         disclosures otherwise required by laws, regulations and agreements to which Edmonton Airports is subject. These
                         financial statements also include amounts that are based on estimates and judgments, which reflect currently
                         available information. Edmonton Airports has developed and maintains accounting procedures and related systems
                         of internal controls that are designed to provide reasonable assurance that its assets are safeguarded and that its
                         financial records are reliable.

                         PricewaterhouseCoopers LLP, an independent firm of chartered accountants, has been appointed by the Board of
                         Directors as external auditors of Edmonton Airports. The Auditors’ Report to the Board of Directors, which describes
                         the scope of their examination and expresses their opinion, is presented herein. The Board of Directors has
                         appointed an Audit Committee, whose members are not employees of Edmonton Airports.

                         The Audit Committee meets with management and external auditors at least four times a year to review any
                         significant accounting, internal control and auditing matters. They also review and recommend the annual financial
                         statements of Edmonton Airports to the Board of Directors for approval.

                         Reg Milley                                                Ralph W. Peterson, CA
                         President and Chief Executive Officer                      Vice President, Finance, Chief Financial Officer

                         Edmonton, Canada
                         March 25, 2010

70   Edmonton Airports

To the Board of Directors of Edmonton Regional Airports Authority

We have audited the statement of financial position of Edmonton Regional Airports Authority as at December 31,
2009 and the statements of operations, other comprehensive income and equity in property, plant and equipment,
and cash flows for the year then ended. These financial statements are the responsibility of the Authority’s
management. 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 plan and perform an audit to obtain reasonable assurance whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Authority
as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance
with Canadian generally accepted accounting principles.

Chartered Accountants
March 12, 2010

                                                                                                  2009 Annual Report    71
                         Edmonton Regional Airports Authority

                         Statements of Financial Position
                         As at December 31, 2009 and 2008

                         (in thousand of dollars)                                                           2009      2008
                                                                                                               $         $
                         Current assets
                         Cash in interest bearing accounts                                                 30,016    20,832
                         Short-term investments                                                            50,084   102,163
                         Accounts receivable (note 5)                                                      12,374    14,148
                         Prepaid expenses and other                                                         2,556     3,726
                                                                                                           95,030   140,869

                         Interest bearing deposits (note 8(a))                                             12,556    11,747
                         Deferred pension asset (note 9)                                                    8,104     5,597
                         Lessee receivable                                                                    240       368
                         Property, plant and equipment (note 6)                                           522,144   438,210
                         Intangible assets (note 7)                                                           789       412
                                                                                                          638,863   597,203

                         Current liabilities
                         Accounts payable and accrued liabilities (note 6(b))                              34,065    29,834
                         Current portion of capital lease obligation                                           18         -
                         Current portion of long-term debt                                                 10,196     8,837
                         Current portion of deferred revenue                                                1,224     1,248
                                                                                                           45,503    39,919

                         Tenants’ security deposits                                                           914       998
                         Deferred revenue (note 11(a))                                                     12,075    13,183
                         Obligation under capital lease                                                        93         -
                         Long-term benefits payable (note 9)                                                 3,219     2,896
                         Long-term debt (note 8)                                                          447,932   418,128
                                                                                                          509,736   475,124
                         Contingencies (note 12)
                         Commitments (note 13)

                         Net Assets
                         Contributed capital (note 3(b))                                                    3,805     3,805
                         Equity in property, plant and equipment                                          125,322   118,274
                                                                                                          129,127   122,079
                                                                                                          638,863   597,203

                         See accompanying notes to financial statements.

                         Approved by the Board of Directors

                         Chair                                                  Chair – Audit Committee

72   Edmonton Airports
Edmonton Regional Airports Authority

Statements of Operations, Other
Comprehensive Income and Equity in Property,
Plant and Equipment
For the years ended December 31, 2009 and 2008

(in thousand of dollars)                                        2009                          2008
                                                                   $                             $
Airport improvement fee (note 10)                              43,071                    40,457
Concessions and parking                                        38,086                    38,981
Airside and general terminal                                   34,764                    37,331
Police and security                                             5,858                     5,714
Real estate leases                                              3,939                     3,655
Other revenue (note 11(b))                                      1,147                     1,137
                                                              126,865                   127,275

Amortization (note 6(c), 7(b))                                 30,350                    25,931
Salaries and employee benefits                                  23,407                    21,864
Interest (note 8(d))                                           22,850                    18,988
Service, maintenance, supplies and administration              19,471                    20,461
Utilities, insurance and property taxes                         7,304                     7,224
Police and security                                             5,579                     5,453
Canada Lease Rent (note 3(a)(iii))                              4,903                     4,903
Airport improvement fee collection costs (note 10)              2,653                     2,481
                                                              116,517                   107,305

Earnings before the undernoted                                 10,348                     19,970

(Expense) other income
(Loss) gain on foreign exchange                                  (171)                         138
Gain on disposal of property, plant and equipment                  35                           23
Retirement of property, plant and equipment (note 6(e))        (3,164)                        (272)
                                                               (3,300)                        (111)

Net earnings and other comprehensive income for the year        7,048                    19,859
Equity in property, plant and equipment – Beginning of year   118,274                    98,415
Equity in property, plant and equipment – End of year         125,322                   118,274

See accompanying notes to financial statements.

                                                                         2009 Annual Report     73
                         Edmonton Regional Airports Authority

                         Statements of Cash Flows
                         For the years ended December 31, 2009 and 2008

                         (in thousand of dollars)                                    2009          2008
                                                                                        $             $
                         Cash provided by (used in)

                         Operating activities
                         Cash receipts from customers                             128,651       124,234
                         Cash paid to employees and suppliers                     (57,590)      (55,593)
                         Cash paid to the landlord                                  (5,035)       (4,770)
                         Interest received                                           1,119         3,300
                         Interest paid                                            (23,969)      (22,288)
                                                                                   43,176        44,883

                         Financing activities
                         Pension contributions                                     (2,507)       (1,401)
                         Capital contributions                                             -        194
                         (Decrease) Increase in tenants’ security deposits             (84)            2
                         Capital lease obligation                                     115               -
                         Principal payment under capital lease obligation                (4)         (25)
                         Repayment of long-term debt                               (8,837)       (5,143)
                         Proceeds from long-term debt                              40,000       120,000
                                                                                   28,683       113,627

                         Investing activities
                         Net purchase (redemptions) of short-term investments       52,079       (68,045)
                         Net purchase of interest bearing deposits                    (809)         (330)
                         Lessee loan repayments                                        128           122
                         Purchase of intangible assets                                (627)             -
                         Purchase of property, plant and equipment               (113,481)       (86,718)
                         Proceeds on sale of property, plant and equipment              35            38
                                                                                   (62,675)    (154,933)

                         Increase in cash                                           9,184         3,577
                         Cash in interest bearing accounts – Beginning of year     20,832        17,255
                         Cash in interest bearing accounts – End of year           30,016        20,832

                         See accompanying notes to financial statements.

74   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

1 Nature of operations
The Edmonton Regional Airports Authority (“Edmonton Airports”) was incorporated on July 26, 1990 under the
provisions of the Regional Airports Authorities Act (Alberta) (the “Act”) for the purposes of managing the airports
for which it is responsible 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. In
accordance with the provisions of the Act, all of Edmonton Airports’ surpluses are applied towards promoting its
purposes and no dividends are paid out of the surpluses. Surpluses in these financial statements are described as
equity in property, plant and equipment.

Edmonton Airports’ earnings are generated from airport-related operations and are exempt from income taxes.

Six Edmonton area municipalities are appointers for Edmonton Airports. These appointers have the right to
appoint 11 of Edmonton Airports’ 15 directors. Pursuant to the Amended Canada Lease described in note 3(a)(i),
the Government of Canada (the “Landlord”) has the right to appoint two of the directors. In addition, the
Board of Directors has the right to appoint two directors.

Edmonton Airports operates the Edmonton International Airport (“International Airport”), Edmonton City Centre
Airport (“City Centre Airport”), Cooking Lake Airport and Villeneuve Airport.

2 Significant accounting policies
These financial statements have been prepared by management in accordance with accounting principles generally
accepted in Canada for commercial enterprises. Edmonton Airports is a going concern which assumes that it will be
able to continue operation into the foreseeable future and will be able to realize its assets and discharge its liabilities
in the normal course of business. The preparation of financial statements for a period necessarily includes the use of
estimates and approximations which have been made using careful judgment. Actual results could differ materially
from those estimates. Material estimates in the financial statements include deferred pension asset, amortization
and long-term benefits payable. These financial statements have, in management’s opinion, been properly prepared
within reasonable limits of materiality and within the framework of the accounting policies summarized below.

a)   Short-term investments
     Short-term investments comprised of pooled money-market funds are recorded at fair value.

b)   Lease of airport facilities
     The lease of the International Airport facilities from the Government of Canada (the “Landlord”) and the lease of
     the City Centre Airport facilities from the City of Edmonton (the “City”) are accounted for as operating leases.

c)   Property, plant and equipment
     Property, plant and equipment are recorded at cost and include only the amounts expended by Edmonton
     Airports. Property, plant and equipment do not include the cost of the facilities which are leased from the
     landlords. Incremental interest incurred during the construction of property, plant and equipment is included in
     cost. Amortization is provided using the straight-line method at the following annual rates:

                                                                                                  2009 Annual Report    75
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                              Terminal and facilities (excluding leased facilities)
                              Terminal building                                                        2.5 – 10.0%
                              Parking facilities and roadways systems                                  5.0 – 6.67%
                              Runway and apron surfaces                                               6.67 – 20.0%
                              Other terminal and facilities                                                  6.67%

                              Machinery and equipment
                              Vehicles and maintenance equipment                                     12.5 – 20.0%
                              Furniture and equipment                                                       20.0%
                              Computer hardware                                                      25.0 – 50.0%
                              Shop tools and equipment                                                      20.0%
                              Office equipment under capital lease                        Over the term of the lease

                         d)   Intangible assets
                              Acquired intangible assets are recorded at cost. Costs incurred to increase the future benefit of intangible
                              assets are capitalized. Intangible assets with finite lives are amortized over their estimated lives at the following
                              annual rates:

                              Software and licenses                                                  10.0 – 100.0%

                         e)   Impairment of long-lived assets
                              Edmonton Airports reviews the valuation of long-lived assets subject to amortization when events or changes in
                              circumstances may indicate or cause its carrying value to exceed the total undiscounted cash flows expected
                              from its use and eventual disposition. An impairment loss, if any, is recorded as the excess of the carrying value
                              of the asset over its fair value, measured by either market value, if available, or estimated by calculating the
                              present value of expected future cash flows related to the asset.

                         f)   Revenue recognition
                              Edmonton Airports recognizes revenues when received or receivable if the amount to be received can be
                              reasonably estimated and if collection is reasonably assured. Edmonton Airports records all funds received from
                              government capital assistance as deferred revenue and amortizes that amount over the expected life of the
                              underlying asset for which the contribution was received.

                              Revenue is recognized when the services are performed, except as follows:

                              — Airport improvement fee (“AIF”) revenue is recognized based upon monthly remittances from air carriers.
                              — Concession revenue is recognized based upon the greater of agreed percentages of reported concession
                                sales and specified minimum rentals over the terms of the respective leases.
                              — Real estate revenue net of incentives is recognized on a straight-line basis over the terms of the respective

                         g)   Employee future benefits
                              Edmonton Airports, which accrues its obligations under employee benefit plans as the employees render the
                              services necessary to earn the pension and other employee benefits, has adopted the following policies:

                              i)     The cost of pensions and other retirement benefits earned by employees is determined by accredited
                                     actuaries using the projected benefit method pro-rated on service and management’s best estimate of
                                     expected plan investment performance, salary adjustments and retirement ages.

76   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

     ii)    For the purpose of calculating expected return on plan assets, those assets are valued at fair value as
            reported by the Pension Plan trustee.
     iii)   Transitional surplus is amortized on a straight-line basis over the average remaining service period of
     iv)    The excess of the net actuarial gain/loss over 10% of the greater of the benefit obligation and the fair value
            of plan assets is amortized over the average remaining service period of active employees which is 9 years
            (2008 – 11 years).

h)   Financial instruments
     All financial instruments are classified into one of the following categories: held-for-trading, held-to maturity
     investments, loans and receivables, available-for-sale financial assets or other financial liabilities.

     Financial instruments classified as held-for-trading are measured at fair value with changes in fair value
     recognized in earnings.

     Financial instruments classified as available-for-sale are measured at fair value using quoted prices in an active
     market. Changes in fair value are recognized in other comprehensive income until the item is derecognized or
     determined to be impaired, at which time the cumulative gain or loss previously reported in other comprehensive
     income is recognized in earnings. When actively quoted prices are not available, fair value is determined using
     other valuation techniques. If fair value cannot be reliably estimated, the item is carried at cost.

     Financial instruments classified as held-to-maturity investments, loans and receivable or other liabilities are
     measured at fair value upon initial recognition and subsequently measured at their amortized cost using the
     effective interest method.

     Transaction costs on financial instruments are expensed when incurred. Purchases and sales of financial assets
     are accounted for at trade dates.

i) Accounting changes
     i)     Intangible assets
            On January 1, 2009, Edmonton Airports adopted CICA Handbook Section 3064 - “Goodwill and
            intangible assets”. This section establishes standards for the recognition, measurement, presentation
            and disclosure of goodwill and intangible assets. As a result of this new standard, certain software
            costs previously recorded as property, plant and equipment are now recorded as intangible assets.
            These costs are subject to amortization consistent with the policy disclosed in note 2(d) above.
            Upon adoption of this section retrospectively, Edmonton Airports reclassified $412 of certain software
            assets from property, plant and equipment to intangible assets in both the current and comparative
            periods. The retrospective adoption of this section had no impact on the equity in property, plant
            and equipment.
     ii)    Financial instrument disclosure
            The CICA’s Accounting Standards Board amended the CICA Handbook Section 3862 “Financial
            Instruments – Disclosures” to enhance the disclosure requirements regarding fair value measurements
            and the liquidity risk of financial instruments. These amendments require enhanced disclosures about
            inputs to fair value measurement, including their classification within a hierarchy that prioritizes the
            inputs to fair value measurement. The three levels of the fair value hierarchy are:
            Level 1- Unadjusted quoted prices in active markets for identical assets or liabilities;
            Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or
            indirectly; and

                                                                                                    2009 Annual Report    77
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                          (in thousands of dollars, unless otherwise noted)

                               Level 3 – Inputs that are not based on observable market data.

                               The amendments are effective for the fiscal year ended December 31, 2009. See note 14 for related disclosure.

                         j)    Recent accounting pronouncements issued but not adopted
                               i)     International financial reporting standards
                                      In February 2008, the Canadian Accounting Standards Board (AcSB) confirmed that Canadian publicly
                                      accountable enterprises will be required to adopt International Financial Reporting Standards (IFRS)
                                      effective for years beginning on or after January 1, 2011. At the end of the year Edmonton Airports has
                                      completed a majority of the component evaluations. A new standard was issued for Financial Instruments
                                      in late 2009 and therefore an evaluation on the Financial Instruments standard was not completed by
                                      December 31, 2009.
                                      Edmonton Airports has made the policy decisions and elections for adopting IFRS and is completing
                                      the changes necessary to make the financial statements IFRS compliant prior to January 1, 2011. The
                                      IFRS policy decisions and elections are to be reviewed and approved at a future meeting of the Audit
                                      Committee. For the quarter ended March 31, 2011 Edmonton Airports expects to issue its financial results
                                      prepared on an IFRS basis with comparative data on an IFRS basis. The impact on Edmonton Airports’
                                      financial statements is not known at this time.

                         3 Lease agreements

                         a)    International Airport
                               i)     Amended Canada Lease
                                      On May 9, 2005, the Landlord announced the adoption of a new rent policy for the years 2006 and
                                      beyond that resulted in a reduction of rent that would have otherwise been payable under the previous
                                      ground lease agreement. In December 2005, Edmonton Airports finalized the amendments to its
                                      ground lease with the Landlord (“Amended Canada Lease”). The new rent agreement has been
                                      phased in over four years beginning in 2006.
                               ii)    Lease term
                                      The Amended Canada Lease provides that Edmonton Airports will lease the International Airport for
                                      an initial term of sixty years ending in 2052. A twenty year renewal option may be exercised by
                                      Edmonton Airports. At the end of the term, unless otherwise extended, Edmonton Airports is obligated to
                                      return control of the International Airport to the Landlord.
                               iii)   Payment of rent
                                      The Amended Canada Lease requires Edmonton Airports to pay predetermined escalating Canada
                                      Lease Rent amounts during a four-year transition period beginning in 2006. Effective January 1,
                                      2010, Canada Lease Rent will be based on a percentage of gross revenues on a progressive scale
                                      (note13 (b)).

                         b)    City Centre Airport
                               Edmonton Airports signed a lease agreement (the “City Lease”) with the City of Edmonton (the “City”),
                               which provides that Edmonton Airports has leased the City Centre Airport facilities for a term of fifty-six
                               years commencing April 1, 1996. At the end of the term in 2052, unless otherwise extended, Edmonton
                               Airports is obligated to return control of the City Centre Airport to the City.

                               Pursuant to the City Lease, Edmonton Airports also received an “airport reserve fund” of $3,805 from the
                               City that was used to fund capital expenditures at the City Centre Airport. The receipt of these funds was
                               recorded as contributed capital.

78   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

     On July 10, 2009, Edmonton City Council passed a resolution in respect of the phased closure of the
     Edmonton City Centre Airport to be completed by a future date yet to be determined. In order to facilitate
     the phased closure, Edmonton Airports has entered into discussions to amend the current ground lease
     with the City. Edmonton Airports has not made any additional adjustments to these financial statements as
     the future financial and annual operational impacts, if any, are unknown at this time.

4 Capital management
     Edmonton Airports is incorporated without share capital under provisions of the Regional Airports Authority
     Act (Alberta) and, as such, all earnings are retained and reinvested in airport operations and development.
     Edmonton Airports manages contributed capital and equity in property, plant and equipment as capital.
     Edmonton Airports’ objective when managing capital is to safeguard the entity’s ability to operate and manage
     its airports in a safe and secure fashion.

     Edmonton Airports sets the amount of capital in proportion to risk and its ability to operate the airports in
     conjunction with its stated purpose. Edmonton Airports manages the capital structure and makes adjustments
     to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order
     to maintain or adjust the capital structure, Edmonton Airports may adjust rates and fees related to airport
     operations or the airport improvement fee or by adjusting its capital project plans.

     Edmonton Airports’ strategy, which is unchanged from 2008, is to comply with the covenants for Debt Service
     Coverage Ratio, Gross Debt Service Coverage Ratio and Interest Coverage Ratio (notes 8 (a) and (b)).
     Edmonton Airports maintains its credit rating in order to secure access to financing at a reasonable cost.

     As at December 31, 2009, Edmonton Airports was in compliance with the restrictions imposed on capital.

5 Accounts receivable
                                                                                     2009                             2008
                                                                                        $                                $

     Airlines                                                                       7,911                          8,856
     Concession operators                                                              41                            186
     General aviation operators                                                       890                          1,352
     Real estate tenants                                                              844                            754
     Canadian Air Transportation Security Authority (“CATSA”)                         843                            780
     Other trade receivables and accrued receivables                                2,497                          2,363
                                                                                   13,026                         14,291
     Less: Allowance for doubtful accounts                                            652                            143
                                                                                   12,374                         14,148

     Dominant customer risk
     Edmonton Airports derives approximately 67% (2008 – 67%) of its airside and general terminal and AIF
     revenue from two airlines.

                                                                                                 2009 Annual Report    79
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                         6 Property, plant and equipment
                                                                               Cost     amortization      Net
                                                                                  $                $        $

                              Terminal and facilities
                              Terminal building                              327,522         76,607    250,915
                              Parking facilities and roadway systems         123,872         33,897     89,975
                              Runway and apron surfaces                      150,408         32,416    117,992
                              Other terminal and facilities                   66,798         23,970     42,828
                                                                             668,600        166,890    501,710

                              Machinery and equipment
                              Vehicles and maintenance equipment              15,659         11,553      4,106
                              Furniture and equipment                          2,191            786      1,405
                              Computer hardware                                7,072          2,405      4,667
                              Shop tools and equipment                        13,956          3,813     10,143
                                                                              38,878         18,557     20,321

                              Office equipment under capital lease                115              2        113
                                                                             707,593        185,449    522,144

                                                                               Cost     amortization      Net
                                                                                  $                $        $

                              Terminal and facilities
                              Terminal building                              264,894         68,178    196,716
                              Parking facilities and roadway systems         117,211         27,169     90,042
                              Runway and apron surfaces                      128,070         25,948    102,122
                              Other terminal and facilities                   58,903         20,510     38,393
                                                                             569,078        141,805    427,273

                              Machinery and equipment
                              Vehicles and maintenance equipment              14,617         10,625      3,992
                              Furniture and equipment                            915            737        178
                              Computer hardware as restated (note 2(i)(i))     3,997          2,565      1,432
                              Shop tools and equipment                         8,439          3,104      5,335
                                                                              27,968         17,031     10,937

                              Office equipment under capital lease                535            535          -
                                                                             597,581        159,371    438,210

80   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

a)   At December 31, 2009, $89,723 (2008 – $16,231) of property, plant and equipment were under
     construction of which $79,995 (2008 – $16,231) was for terminal and facilities not yet subject to

b)   Included in accounts payable and accrued liabilities at December 31, 2009 is $18,634 (2008 – $14,915)
     relating to unpaid capital expenditures.

c)   During the year ended December 31, 2009, $29,908 (2008 – $25,706) of property, plant and equipment
     amortization was included in the statements of operations, other comprehensive income and equity in
     property, plant and equipment.

d)   Property, plant and equipment includes $2,228 (2008 – $963) in interest capitalized during the year.

e)   Facilities with a net book value of $3,164 (2008 - $272) were retired, for nil proceeds, as a result of
     expansion construction activity.

7 Intangible assets
                                                                                      2009                            2008
                                                                                         $                               $

     Cost                                                                            1,563                             937
     Accumulated amortization                                                         (774)                           (525)
                                                                                       789                             412

a)   Intangible assets are purchased software and software licenses.

b)   During the year ended December 31, 2009, $442 (2008 – $225) of intangible asset amortization was
     charged to the statement of operations and equity in property, plant and equipment

                                                                                                 2009 Annual Report     81
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                         8 Long-term debt
                                                                                                              2009                          2008
                                                                                                                 $                             $

                              Revenue Bond, Series A Bonds payable in semi-annual
                              instalments with interest payable on May 1 and November 1 in
                              2001 and semi-annual payments of principal and interest at preset
                              varying amounts each year commencing May 1, 2002 until
                              November 1, 2030:

                                       Interest               Semi-annual               Maturity
                                          Rate                   Amount                      Date
                                         7.21%                     Varying       November 1, 2030          238,416                       241,097

                              Fixed Rate Debentures, Series C Bonds payable in semi-annual instalments of principal and interest:

                                         4.37%                           $755   December 15, 2026           17,983                        18,685
                                         4.50%                         $1,145       March 15, 2027          27,541                        28,557
                                         5.00%                           $398        June 15, 2027           9,220                         9,544
                                         4.89%                           $395   September 17, 2027           9,377                         9,696
                                         4.68%                         $1,552        June 16, 2028          38,114                        39,386
                                         4.55%                         $3,068   September 17, 2028          77,477                        80,000
                                         4.67%                         $1,245   December 15, 2039           40,000                             -
                                                                                                           458,128                       426,965

                              Less: Current Portion                                                         10,196                         8,837
                                                                                                           447,932                       418,128

                         a)   Series A and B Bonds and revolving credit facility
                              In October of 2000, Edmonton Airports completed a $250 million Revenue Bond issue to fund the requirements
                              of the Air Terminal Redevelopment project. Net proceeds of the issue were used to retire an existing credit
                              facility, fund a Debt Service Reserve Fund and complete construction.

                              Pursuant to the terms of the Indenture, Edmonton Airports is required to maintain a Debt Service Reserve Fund
                              equal to one-half of its annual debt service costs and an Operating and Maintenance Contingency Fund equal
                              to one quarter of its annual operating and maintenance expenses. At December 31, 2009, Interest Bearing
                              Deposits of $12,556 (2008 – $11,747) are restricted as a requirement of the Debt Service Reserve Fund.
                              These deposits earned daily interest of between 0.3% and 1.4% (2008 – 2% and 3%). The Operating and
                              Maintenance Contingency Fund can be satisfied by cash, Letter of Credit or undrawn availability of the Royal
                              Bank credit facilities described below.

                              Throughout the term when the bonds are outstanding, Edmonton Airports is required to maintain a Debt
                              Service Coverage Ratio on a rolling 12 months basis of 1.00:1 and a Gross Debt Service Coverage Ratio
                              of not less than 1.25:1. All covenants have been met.

                              In addition to the Revenue Bond issuance, Edmonton Airports maintains, with the Royal Bank of Canada,
                              a three-year term, $5 million revolving credit facility to support operations, and a $40 million term revolving loan
                              (“Series B Bonds”) for general corporate purposes and to assist in the interim financing of construction projects.
                              The credit facility was renewed in 2009 for another three-year term and no draw downs on the credit facility
                              were made in 2009 (2008 – $nil). As at December 31, 2009, $13,749 (2008 – $13,552) of the term revolving
                              loan had been set aside for the Operating and Maintenance Contingency Fund.

82   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

     Pledged as collateral to the bonds are a first leasehold mortgage on the International Airport and related
     Amended Canada Lease; a security interest over all of the present and future personal property of Edmonton
     Airports including without limitation, all book debts, and all sources of revenue and all assets and any reserve
     funds, and a floating charge over all of the other present and future property and assets of Edmonton Airports.

b)   Series C Bond
     Under its existing capital markets platform Edmonton Airports entered into a Credit Agreement (“Agreement”)
     with the Alberta Capital Finance Authority (“ACFA”) on December 6, 2006. On March 19, 2008 the Credit
     Agreement was amended (“Amended Agreement”) in order for Edmonton Airports to finance the capital
     expansion program at the International Airport. The Amended Agreement contains two Credit Facilities. In
     2008 Credit Facility 1 increased by $800 million to $1.0 billion, by way of Fixed Rate Loans, and is to be used
     solely for the purposes of Airport Infrastructure Expenditures at the International Airport. Credit Facility 2, for
     $300 million, by way of Fixed Rate Loans, is to be used firstly for the purposes of redeeming (or purchasing
     for cancellation pursuant to section 3.23 of the Indenture) the Series A Bonds and the Series B Bonds. The
     Amended Agreement restricts any drawdown of the final $50 million of Credit Facility 2 until all the Series B
     Bonds are redeemed. Once Series A and Series B Bonds are fully redeemed any residual balance in Credit
     Facility 2 can be used for the same purposes as Credit Facility 1.

     Throughout the period when debentures are outstanding, Edmonton Airports 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.

     The collateral pledged under the Agreement ranks equally with the Series A and Series B Bonds.

c)   The future annual principal and interest payments required to retire the Long-term Debt are as follows:

                                                                Principal                Interest                     Total
                                                                       $                        $                        $

     2010                                                         10,196                  27,187                  37,383
     2011                                                         11,002                  26,624                  37,626
     2012                                                         11,861                  26,011                  37,872
     2013                                                         12,778                  25,344                  38,122
     2014                                                         13,754                  24,619                  38,373
     Thereafter                                                  398,537                 235,476                 634,013
                                                                 458,128                 365,261                 823,389

d)   Interest expense (income)

                                                                                      2009                            2008
                                                                                         $                               $

     Bond interest                                                                  17,313                        17,489
     Debenture interest                                                              8,496                         5,192
     Other interest and financing costs                                                 226                           234
     Interest income and other                                                        (957)                       (2,964)
                                                                                    25,078                        19,951
     Capitalized interest (note 6 (d))                                              (2,228)                         (963)
                                                                                    22,850                        18,988

                                                                                                 2009 Annual Report     83
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                         9 Employee future benefits

                         a)   Plans overview
                              Edmonton Airports has a defined benefit pension plan (“Pension Plan”) covering all of its eligible employees.
                              The benefits are based on years of service and the employees’ highest three years’ earnings. The most recent
                              funding recommendation for the Pension Plan was completed as at December 31, 2008 and contained in
                              an actuarial report dated June 17, 2009. The next required actuarial valuation for funding purposes must be
                              effective no later than December 31, 2009. The financial statements were prepared using the actuarial valuation
                              completed as at December 31, 2008 with an extrapolation to December 31, 2009.

                              Edmonton Airports also has a defined Supplementary Executive Retirement Plan (“SERP”) with one member
                              which became effective February 1, 2005. The benefits provided under the SERP constitute a non-funded
                              liability of Edmonton Airports. All payments made to the member of the SERP will be made from general
                              revenues of Edmonton Airports. The financial statements were prepared using an independent actuarial
                              valuation completed at December 31, 2009.

                              Edmonton Airports also has a severance entitlement plan (“long-term benefit plan”) for eligible employees under
                              the terms of the labour agreement. The plan provides a severance payment upon retirement, termination or
                              death to eligible employees or their beneficiaries, under certain conditions. Edmonton Airports records the cost
                              of this obligation based on an independent actuarial valuation. The financial statements were prepared using an
                              independent actuarial valuation completed at December 31, 2009.

                                                                                 Pension plan           SERP     benefit plan            Total
                                                                                            $              $               $               $

                              Accrued benefit obligation
                              Balance – Beginning of year                              17,013             598           1,193         18,804
                              Current service cost                                      1,168             153             225          1,546
                              Interest cost                                             1,338              56             102          1,496
                              Benefits paid                                               (824)              -            (120)          (944)
                              Employees’ contributions                                     70               -                -            70
                              Actuarial gain                                            5,239             178              50          5,467
                              Balance – End of year                                    24,004             985           1,450         26,439

                              Plan assets
                              Fair value – Beginning of year                           19,642                -              -         19,642
                              Annual return of plan assets                              3,121                -              -          3,121
                              Employers’ contributions                                  3,629                -              -          3,629
                              Employees’ contributions                                     70                -              -             70
                              Benefits paid                                               (824)               -              -           (824)
                              Fair value – End of year                                 25,638                -              -         25,638
                              Funded status – (surplus) deficit                         (1,634)            985           1,450            801
                              Unamortized net actuarial gain (loss)                    (6,974)            (56)            840          6,190
                              Unamortized transitional surplus                            504                -              -            504
                              Accrued benefit (asset) liability 2009                    (8,104)            929           2,290         (4,885)
                              Accrued benefit (asset) liability 2008                    (5,597)            736           2,160         (2,701)

84   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

The significant actuarial assumptions adopted in measuring Edmonton Airports accrued benefit obligations
are as follows (weighted-average assumptions as of December 31, 2009):

                                                        Pension plan                    SERP            benefit plan
                                                                  %                        %                     %

     Discount rate – Beginning of period                         7.50                    7.50                      7.50
     Discount rate – End of period                               6.40                    6.40                      6.40
     Expected long-term rate of return on plan assets            6.50                       -                         -
     Rate of compensation increase – Beginning of period         3.75                    3.75                      3.75
     Rate of compensation increase – End of period               3.75                    3.75                      3.75
     Inflation rate – Beginning of period                         2.75                    2.75                      2.75
     Inflation rate – End of period                               2.75                    2.75                      2.75
     Average remaining service period (years)                       9                       4                         9

b)   Edmonton Airports net benefit plan expense is as follows:
                                                        Pension plan          SERP       benefit plan              Total
                                                                   $             $                 $                 $

     Current service cost                                      1,168             153             225           1,546
     Interest cost                                             1,338              56             102           1,496
     Expected return on plan assets                           (1,370)               -               -         (1,370)
     Amortization of transitional surplus                       (166)               -               -           (166)
     Amortization of net actuarial (gain) loss                   152             (16)            (77)             59
     Net benefit plan expense included in salaries
     and employee benefits expense 2009                         1,122             193             250              1,565
     Net benefit plan expense included in salaries and
     employee benefits expense 2008                             1,488             277             343              2,108

c)   The distribution of the total fair value of assets of the Pension Plan by major asset category is as follows:

                                                                                 2009                             2008
                                                                                   %                                %

     Equities                                                                     57.3                             57.6
     Debt securities                                                              37.2                             37.2
     Cash and other                                                                5.5                              5.2
                                                                                 100.0                            100.0

                                                                                             2009 Annual Report     85
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                         10 Airport improvement fee
                              Effective April 12, 1997, Edmonton Airports implemented an Airport Improvement Fee (“AIF”) to fund capital
                              expenditures and the related financing costs, including the planned redevelopment and expansion of airport
                              and terminal facilities (see note 13(a)) at the International Airport.

                                                                                                               2009                          2008
                                                                                                                  $                             $

                              Cumulative revenues (net of collection costs) to December 31                 307,533                       267,115
                              Less: Cumulative expenditures to December 31                                  723,560                       594,711
                                                                                                          (416,027)                     (327,596)

                         11 Deferred revenue

                         a)   Deferred revenue

                                                                                                               2009                          2008
                                                                                                                  $                             $

                              Prepaid lease rent                                                              1,500                         1,500
                              Deferred capital contributions                                                 13,782                        16,190
                                                                                                             15,282                        17,690
                              Less: Amortization to earnings                                                  1,983                         3,259
                                                                                                             13,299                        14,431
                              Less: Current portion                                                           1,224                         1,248
                                                                                                             12,075                        13,183

                              Deferred revenue consists of a prepayment of rent for a long-term lease at the City Centre Airport which is
                              amortized to earnings using the straight-line method over the tenant’s lease term of 52 years. Government
                              contributions for certain capital expenditures at the International Airport, City Centre and Villeneuve Airports will
                              be amortized to earnings using the straight-line method over the useful lives of the underlying assets as follows:

                                                                                      Useful Life                  2009                     2008
                                                                                         (Years)            Contribution             Contribution
                                                                                                $                      $                        $

                              Airfield lighting system                                           15                        -                    167
                              Baggage conveyor systems                                          15                        -                     27
                                                                                                                          -                    194

86   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

b)   Other revenue

                                                                                     2009                             2008
                                                                                        $                                $

     Amortization of capital contributions                                           1,079                            1,079
     International Airport fire training services                                        32                               17
     Villeneuve Airport maintenance and deficit reduction charge                         36                               39
     Other                                                                               -                                2
                                                                                     1,147                            1,137

12 Contingencies
     Edmonton Airports has been named as a defendant in certain lawsuits. The outcome of these actions is
     currently not determinable. In Edmonton Airports’ opinion, these actions will not result in any significant
     expense to Edmonton Airports. The cost of settlement, if any, will be accounted for in the period of settlement.

13 Commitments

a)   Capital commitments

     On September 27, 2007, Edmonton Airports Board of Directors approved, as part of the 2008 - 2012 Strategic
     Plan, a significantly expanded capital program, the major component of which was subsequently called
     “Expansion 2012”. Expansion 2012, when combined with the recently completed parkade expansion, will result
     in the investment of approximately $0.8 billion at the International Airport.

     At December 31, 2009, Edmonton Airports had outstanding commitments in the amount of $239,864 (2008
     – $132,007) related to the expanded capital program, the major components of which are for pre-construction
     design consulting, project management services, apron construction, building construction, and construction
     management services.

     Edmonton Airports also has outstanding commitments for its sustaining capital program of $3,335 (2008 –
     $4,378) primarily related to civil, mechanical, and electrical engineering consulting and design for future capital
     projects, computer software and hardware upgrades and replacement, mechanical systems replacement, and
     airside pavement rehabilitation.

b)   Operating commitments

     Edmonton Airports has operating contracts for the provision of management, security, marketing, janitorial
     services and electricity. These contracts have annual commitments as follows:


     2010                                                                          16,227
     2011                                                                          12,360
     2012                                                                           8,887
     2013                                                                           1,001
     2014                                                                              15
     Thereafter                                                                         -

                                                                                                 2009 Annual Report     87
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                              Effective 2010, the Amended Canada Lease will be based upon a percentage of estimated gross revenues,
                              including AIF revenues, at the International Airport on a progressive scale.

                              The future lease payments for the next five years are estimated to be as follows:

                                                                                                Lease Payment

                              2010                                                                        10,709
                              2011                                                                        11,680
                              2012                                                                        14,210
                              2013                                                                        15,675
                              2014                                                                        16,561

                         14 Financial instruments and risk management
                              Edmonton Airports has determined the estimated fair values of its financial instruments based on appropriate
                              valuation methodologies. Held-for-trading financial assets have been classified as level 1 of the fair value
                              hierarchy. The fair value of these assets has been calculated using the unadjusted quoted prices. The fair value
                              of the long-term debt classified as level 2 of the fair value hierarchy has been calculated using the future cash
                              flows (principal and interest) of the outstanding debt instruments, discounted at current market rates available
                              to Edmonton Airports for the same or similar instruments.

                                                                                                  2009                                   2008
                                                                             Book value      Fair value            Book value       Fair value
                                                                                      $               $                     $                $

                              Financial assets
                                 Cash in interest bearing accounts               30,016         30,016                 20,832          20,832
                                 Short-term investments                          50,084         50,084                102,163         102,163
                                 Interest bearing deposits                       12,556         12,556                 11,747          11,747
                              Loans and receivables
                                 Accounts receivable                             12,374         12,374                  14,148         14,148
                                 Lessee receivable                                  240            240                     368            368

                              Financial liabilities
                              Other financial liabilities
                                 Accounts payable and accrued liabilities        34,065         34,065                  29,834         29,834
                                 Tenants’ security deposits                         914            914                     998            998
                                 Obligation under capital lease
                                 including current portion                         111             111                      -               -
                                 Long-term debt including current portion      458,128         478,575                426,965         448,058

88   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

     Risk management

     Edmonton Airports’ Board of Directors (“Board”) is responsible for understanding the principal risks of the
     business in which Edmonton Airports is engaged, achieving a proper balance between risks incurred and
     the purpose of Edmonton Airports, and confirming that there are systems in place to effectively monitor and
     manage those risks with a view to the long-term viability of Edmonton Airports. The Board has established the
     Audit Committee, which reviews significant financial risks associated with future performance, growth and lost
     opportunities identified by management that could materially affect Edmonton Airports’ ability to achieve its
     strategic or operational targets. The Board is responsible for confirming that management has procedures in
     place to mitigate identified risks.

     Credit risk
     For cash in interest bearing accounts, short-term investments and accounts receivable, credit risk represents
     the carrying amount on the balance sheet. Cash and short-term investments credit risk is reduced by investing
     in instruments issued by credit worthy financial institutions and in federal and provincial government issued
     shortterm instruments. Accounts receivable credit risk is reduced by the requirement for letters of credit and
     customer credit evaluations.

     The maximum exposure to credit risk is the carrying value of loans and receivables on the balance sheet.
     Edmonton Airports has a concentration of credit risk with two airlines.

     Edmonton Airports mitigates credit risk by endeavouring to obtain security deposits, letters of credit and other
     credit enhancement methods.

     Accounts receivable are non-interest bearing and are generally due in 30 to 90 days. At December 31, 2009,
     the provision for impairment of accounts receivable was $0.6 million (2008 – $0.1 million); this provision has
     increased by $0.5 million from December 31, 2008. Edmonton Airports wrote off $0.6 million (2008 - $0.5
     million) of accounts receivable during the year.

     At December 31, 2009, the aging analysis of trade receivables that are past due, but not impaired, is as follows:

                                                                                    2009                            2008
                                                                                       $                               $

     30 to 90 days                                                                 2,071                            5,742
     Greater than 90 days                                                             60                            1,841
                                                                                   2,131                            7,583

     No other impairments have been identified within accounts receivable.

     Liquidity risk
     Liquidity risk arises through excess obligations over available financial assets due at any point in time.
     Edmonton Airports’ objective in managing liquidity risk is to maintain sufficient readily available reserves in
     order to meet its liquidity requirements at any point in time. Edmonton Airports achieves this through funds
     generated by operations and externally through bank borrowings and debenture issuances. Bank loans and
     debenture issuances are used under available credit lines to provide flexibility in the timing and amounts of
     long-term financing. Edmonton Airports has a policy to invest its cash balances in short-term pooled money
     market funds whose underlying investment policy restricts these investments to federal and provincial
     government issues and in issues of large highly-rated Canadian financial institutions.

                                                                                               2009 Annual Report     89
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                              Market risk
                              Market risk is the risk that changes in market prices, such as foreign currency exchange rates and interest
                              rates, will affect Edmonton Airports’ income or the value of the financial instruments held.

                              a)     Foreign currency risk

                                     Edmonton Airports’ functional currency is the Canadian dollar and major purchases are transacted in
                                     Canadian dollars. Management believes that the foreign exchange risk from currency conversions is

                              b)     Interest rate risk
                                     Interest rate risk arises because of the fluctuations in the interest rates. Edmonton Airports is exposed to
                                     interest rate risk on its cash in interest bearing accounts, short-term investments, interest bearing deposits,
                                     long-term benefits payable and long-term debt.

                                     Edmonton Airports enters into fixed rate debentures and debt securities with the intention of holding to
                                     maturity. Fluctuations in interest rates will have an impact on the fair value of the long-term debt. The fair
                                     value of the long-term debt would increase by $44.7 million if interest rates decreased by 1 percent and
                                     decrease by $39.2million if interest rates increased by 1 percent.

                                     Edmonton Airports’ cash in interest bearing accounts, short-term investments and interest bearing
                                     deposits are invested at floating rates of interest, in order to maintain liquidity.

                         15 Directors’ and officers’ remuneration and expenses
                              This information is provided pursuant to the Regulations of the Act

                         a)   Directors’ compensation


                              Annual retainer
                              Chair (does not collect meeting fees)                                                 60
                              Vice-chair                                                                            15
                              Committee chairs (do not collect director retainer)                                   15
                              Directors                                                                             11

90   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

     Meeting fees
     Board and Board Committee meeting fees ranged from $200 to $700 dollars per meeting depending on
     meeting duration.

     Total compensation paid and expenses reimbursed to each Director in 2009 was:

                                                           Compensation                   Expenses                         Total
                                                                      $                          $                            $

     Bryan Bailey                                                         18                        1                        19
     Leonard Blumenthal                                                   16                        2                        18
     Gordon Clanachan (Chair)                                             60                        6                        66
     Evan Cameron                                                         18                        1                        19
     Robert Carwell (Committee chair)                                     22                        -                        22
     Dennis Foley*                                                         3                        -                         3
     John Friesen                                                         18                        -                        18
     James Funk                                                           15                        -                        15
     David Margolus (Vice chair & Committee chair)                        26                        -                        26
     Maureen McCaw                                                        17                        -                        17
     Shelley Miller                                                       18                        -                        18
     Anne McLellan                                                        15                        -                        15
     Rolly Owens                                                          17                        -                        17
     Tom Redl                                                             18                        -                        18
     Al Thompson (Committee chair)                                        26                        5                        31

     *Term was completed in December 2008. Remuneration paid in 2009 is for meetings attended in the last quarter of 2008.

     Changes to Edmonton Airports’ Board of Directors were as follows:

     Term Completed                                                            December 2009                   John Friesen
     New Board Member                                                            January 2009            Leonard Blumenthal

                                                                                                      2009 Annual Report     91
                         Edmonton Regional Airports Authority

                         Notes to Financial Statements
                         December 31, 2009 and 2008

                         (in thousands of dollars, unless otherwise noted)

                         b)   Officers’ compensation
                              Total compensation for each officer in 2009 was as follows:

                                                                                            Other cash   non-cash             2009           2008
                                                                             Base salary1     benefits2    benefits3            Total          Total
                                                                                        $            $           $               $              $

                              President and CEO                                      350          131           217             698            844
                              VP Airport Operations and Services                     216           56            23             295            304
                              VP Finance, Chief Financial Officer                     216           48            23             287            301
                              VP Marketing                                           184           47            21             252            270
                              General Counsel and Corporate Secretary                170           34            18             222            238
                                                                                   1,136          316           302           1,754          1,957

                                    Base salary includes base pay.

                                    Other cash benefits include incentive pay (per footnote 4) and management allowances.

                                    Other non-cash benefits include supplementary executive retirement plan (SERP) (per footnote 5) and
                                    Edmonton Airports’ share of all taxable employee benefits and contributions or payments made on behalf of
                                    employees including pension plan and group life insurance plan.

                                    All officers receive incentive pay that is tied to achieving Board established organizational goals and

                                    As indicated in note 9 to these financial statements the President & CEO is entitled to receive supplemental
                                    retirement payments. The retirement arrangement costs are not a cash payment in the period but are period
                                    expenses for the right to future compensation. The SERP provides future pension benefits based upon
                                    years of service and earnings. The cost of these benefits is actuarially determined using the projected benefit
                                    method pro-rated on service, a market interest rate, and management’s best estimate of expected cost and
                                    the period of benefit coverage. Net actuarial gains and losses of the benefit obligation are amortized over
                                    the average remaining service life of the member. Current service cost is the actuarial present value of the
                                    benefits earned in the current year. Other costs include the amortization of actuarial gains and losses and
                                    interest accruing on the actuarial liability.

92   Edmonton Airports
Edmonton Regional Airports Authority

Notes to Financial Statements
December 31, 2009 and 2008

(in thousands of dollars, unless otherwise noted)

c)   Total remuneration for officers and directors:
     During the year ended December 31, 2009, Edmonton Airports provided its officers and directors remuneration
     (base salary, incentives, and allowances) and reimbursement of expenses in the following amounts:

                                                                     Remuneration                     Expenses
                                                                                $                            $

     To directors                                                               307                           15
     To 5 officers who are not directors                                       1,754                           110
                                                                              2,061                           125

                                                                     Remuneration                     Expenses
                                                                                $                            $

     To directors                                                               300                           13
     To 5 officers who are not directors                                       1,957                           150
                                                                              2,257                           163

                                                                                         2009 Annual Report   93
                         Appointers                                                   Also invited to
                                                                                      Appointers Meetings
                         City of Edmonton
                         Stephen Mandel, Mayor                                        Alberta Transportation
                         Simon Farbrother, City Manager                               Rod Thompson, Executive Director,
                                                                                      Transportation Policy and Economic Analysis
                         City of Leduc                                                Sara Wong, Senior Policy Advisor,
                         Greg Krischke, Mayor                                         Passenger Transportation
                         Paul Benedetto, City Manager
                                                                                      Executive Management Team
                         Leduc County                                                 Reg Milley, President and CEO
                         Marvin Molzan, Mayor                                         Ralph Peterson, VP, Finance and CFO
                         Doug Wright, County Manager                                  Annie Yee, General Counsel
                                                                                      and Corporate Secretary
                         Parkland County
                                                                                      Diane Trenn, VP, Airport Operations
                         Rob Wiedeman, Mayor
                                                                                      Paul Garbiar, VP, Infrastructure
                         Pat Vincent, Chief Commissioner                              and Technology
                                                                                      Peter McCart, VP, Marketing
                         Strathcona County
                                                                                      and Business Development
                         Cathy Oleson, Mayor
                                                                                      Traci Bednard, VP, Communications
                         Robyn Singleton, Q.C., Chief Commissioner                    and Passenger Experience
                                                                                      Donna Poburan, Director, Human Resources
                         Transport Canada
                                                                                      and Organizational Effectiveness
                         Michele Taylor, Regional Director General,
                         Prairie and Northern Region
                         Harvey Nikkel, Regional Director Programs,
                         Prairie and Northern Region

                         Foward-Looking Information
                         This document may contain information that is considered forward-looking that inherently is subject to risk and
                         uncertainty. Various words are used to identify forward-looking information like “anticipate,” “believe,” “estimate,”
                         “expect,” “forecast,” “may,” “project,” “outlook,” and “should,” or similar words. Forward-looking information or
                         statements are intended to provide Edmonton Airports stakeholders with information regarding Edmonton Airports
                         and the airports that we operate, including future financial, operational plans, strategies, outlook, and goals for
                         growth and expansion. Forward-looking information may include, among others, statements regarding the anticipated
                         prospects and potential financial performance of Edmonton Airports. All forward-looking information and related
                         statements reflect Edmonton Airports assumptions and expectations based on information available at the time the
                         statements were made. Actual results, performance or events may differ from those anticipated in these forward-
                         looking statements.

94   Edmonton Airports
         EIA’s Non-stop Destinations

Edmonton Airports   t 780.890.8900
P.O. Box 9860       f 780.890.8329                            30%

Edmonton, Alberta                    Cert no. SW-COC-002959
Canada T5J 2T2

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