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Rotable spare parts, furniture and equipment, net | 12 Months Ended
--- | ---
Dec. 31, 2018
Rotable spare parts, furniture and equipment, net |
Rotable spare parts, furniture and equipment, net | 12. Rotable spare parts, furniture and equipment, net
|  | Gross value |  | Accumulated depreciation |  | Net carrying value
|  | At December |  | At December |  | At December |  | At December |  | At December |  | At December |  | At December |  | At December |  | At December
|  | 31, 2018 |  | 31, 2017 |  | 31, 2016 |  | 31, 2018 |  | 31, 2017 |  | 31, 2016 |  | 31, 2018 |  | 31, 2017 |  | 31, 2016
Leasehold improvements to flight equipment |  | Ps. | 3,221,167 |  | Ps. | 2,382,687 |  | Ps. | 1,709,868 |  | Ps. | (2,083,053) |  | Ps. | (1,769,589) |  | Ps. | (1,386,844) |  | Ps. | 1,138,114 |  | Ps. | 613,098 |  | Ps. | 323,024
Pre-delivery payments |  |  | 3,672,090 |  |  | 2,783,303 |  |  | 1,206,330 |  |  | — |  |  | — |  |  | — |  |  | 3,672,090 |  |  | 2,783,303 |  |  | 1,206,330
Aircraft parts and rotable spare parts |  |  | 609,232 |  |  | 506,735 |  |  | 393,522 |  |  | (233,403) |  |  | (181,091) |  |  | (137,712) |  |  | 375,829 |  |  | 325,644 |  |  | 255,810
Aircraft spare engines |  |  | 323,410 |  |  | 323,410 |  |  | 323,025 |  |  | (34,917) |  |  | (18,132) |  |  | (1,337) |  |  | 288,493 |  |  | 305,278 |  |  | 321,688
Construction and improvements in process |  |  | 142,738 |  |  | 193,607 |  |  | 255,374 |  |  | — |  |  | — |  |  | — |  |  | 142,738 |  |  | 193,607 |  |  | 255,374
Standardization |  |  | 203,611 |  |  | 192,808 |  |  | 176,975 |  |  | (127,136) |  |  | (113,407) |  |  | (94,864) |  |  | 76,475 |  |  | 79,401 |  |  | 82,111
Constructions and improvements |  |  | 132,446 |  |  | 131,503 |  |  | 120,886 |  |  | (117,211) |  |  | (106,335) |  |  | (85,873) |  |  | 15,235 |  |  | 25,168 |  |  | 35,013
Computer equipment |  |  | 44,563 |  |  | 30,113 |  |  | 24,172 |  |  | (28,016) |  |  | (20,790) |  |  | (16,972) |  |  | 16,547 |  |  | 9,323 |  |  | 7,200
Workshop tools |  |  | 23,454 |  |  | 20,500 |  |  | 20,500 |  |  | (20,085) |  |  | (18,229) |  |  | (15,915) |  |  | 3,369 |  |  | 2,271 |  |  | 4,585
Electric power equipment |  |  | 15,438 |  |  | 15,439 |  |  | 14,818 |  |  | (10,316) |  |  | (9,185) |  |  | (7,890) |  |  | 5,122 |  |  | 6,254 |  |  | 6,928
Communications equipment |  |  | 12,305 |  |  | 11,229 |  |  | 9,261 |  |  | (7,394) |  |  | (6,502) |  |  | (5,706) |  |  | 4,911 |  |  | 4,727 |  |  | 3,555
Workshop machinery and equipment |  |  | 9,530 |  |  | 8,405 |  |  | 7,240 |  |  | (5,049) |  |  | (4,345) |  |  | (3,622) |  |  | 4,481 |  |  | 4,060 |  |  | 3,618
Motorized transport equipment platform |  |  | 5,496 |  |  | 5,587 |  |  | 5,703 |  |  | (5,050) |  |  | (4,701) |  |  | (4,346) |  |  | 446 |  |  | 886 |  |  | 1,357
Service carts on board |  |  | 5,403 |  |  | 5,403 |  |  | 5,403 |  |  | (5,277) |  |  | (5,021) |  |  | (4,645) |  |  | 126 |  |  | 382 |  |  | 758
Office furniture and equipment |  |  | 66,546 |  |  | 44,749 |  |  | 36,310 |  |  | (28,240) |  |  | (22,454) |  |  | (18,653) |  |  | 38,306 |  |  | 22,295 |  |  | 17,657
Total |  | Ps. | 8,487,429 |  | Ps. | 6,655,478 |  | Ps. | 4,309,387 |  | Ps. | (2,705,147) |  | Ps. | (2,279,781) |  | Ps. | (1,784,379) |  | Ps. | 5,782,282 |  | Ps. | 4,375,697 |  | Ps. | 2,525,008
*During the years ended December 31, 2018, 2017 and 2016, the Company capitalized borrowing costs of Ps.357,920, Ps.193,389 and Ps.95,445, respectively. The amount of this line is net of disposals of capitalized borrowing costs related to sale and leaseback transactions of Ps.242,678, Ps.110,274 and Ps.84,936, respectively.
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Motorized |  |  |  |  | Workshop |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Aircraft parts |  |  |  | Constructions |  |  |  |  |  |  |  |  |  |  |  |  |  |  | transport |  |  |  |  | machinery |  | Service |  |  |  | Construction and |  | Leasehold |  |  |
|  | and rotable spare |  | Aircraft spare |  | and |  |  |  |  | Computer |  | Office furniture |  | Electric power |  | Workshop |  | equipment |  | Communications |  | and |  | carts on |  | Pre-delivery |  | improvements |  | improvements to |  |  |
|  | parts |  | Engines |  | improvements |  | Standardization |  | equipment |  | and equipment |  | equipment |  | Tools |  | platform |  | equipment |  | equipment |  | board |  | payments |  | in process |  | flight equipment |  | Total
Net book amount as of December 31, 2015 |  | Ps. | 179,947 |  | Ps. | — |  | Ps. | 18,202 |  | Ps. | 83,886 |  | Ps. | 4,195 |  | Ps. | 12,932 |  | Ps. | 9,033 |  | Ps. | 4,815 |  | Ps. | 1,326 |  | Ps. | 3,764 |  | Ps. | 4,179 |  | Ps. | 1,453 |  | Ps. | 1,583,835 |  | Ps. | 140,926 |  | Ps. | 501,157 |  | Ps. | 2,549,650
Additions |  |  | 110,592 |  |  | 323,025 |  |  | 2,218 |  |  | 21,953 |  |  | 740 |  |  | 517 |  |  | 1,467 |  |  | 4,217 |  |  | 505 |  |  | 129 |  |  | 131 |  |  | 36 |  |  | 1,345,081 |  |  | 161,560 |  |  | 226,526 |  |  | 2,198,697
Disposals and transfers |  |  | (1,299) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (110) |  |  | (1,626) |  |  | — |  |  | (49) |  |  | — |  |  | — |  |  | — |  |  | (1,733,093) |  |  | (2,132) |  |  | — |  |  | (1,738,309)
Borrowing costs, net* |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,507 |  |  | — |  |  | — |  |  | 10,507
Other movements |  |  | — |  |  | — |  |  | 32,441 |  |  | — |  |  | 4,814 |  |  | 7,877 |  |  | — |  |  | 25 |  |  | 46 |  |  | 493 |  |  | — |  |  | — |  |  | — |  |  | (44,980) |  |  | — |  |  | 716
Depreciation |  |  | (33,430) |  |  | (1,337) |  |  | (17,848) |  |  | (23,728) |  |  | (2,549) |  |  | (3,559) |  |  | (1,946) |  |  | (4,472) |  |  | (471) |  |  | (831) |  |  | (692) |  |  | (731) |  |  | — |  |  | — |  |  | (404,659) |  |  | (496,253)
As of December 31, 2016 |  |  | 255,810 |  |  | 321,688 |  |  | 35,013 |  |  | 82,111 |  |  | 7,200 |  |  | 17,657 |  |  | 6,928 |  |  | 4,585 |  |  | 1,357 |  |  | 3,555 |  |  | 3,618 |  |  | 758 |  |  | 1,206,330 |  |  | 255,374 |  |  | 323,024 |  |  | 2,525,008
Cost |  |  | 393,522 |  |  | 323,025 |  |  | 120,886 |  |  | 176,975 |  |  | 24,172 |  |  | 36,310 |  |  | 14,818 |  |  | 20,500 |  |  | 5,703 |  |  | 9,261 |  |  | 7,240 |  |  | 5,403 |  |  | 1,206,330 |  |  | 255,374 |  |  | 1,709,868 |  |  | 4,309,387
Accumulated depreciation |  |  | (137,712) |  |  | (1,337) |  |  | (85,873) |  |  | (94,864) |  |  | (16,972) |  |  | (18,653) |  |  | (7,890) |  |  | (15,915) |  |  | (4,346) |  |  | (5,706) |  |  | (3,622) |  |  | (4,645) |  |  | — |  |  | — |  |  | (1,386,844) |  |  | (1,784,379)
Net book amount as of December 31, 2016 |  | Ps. | 255,810 |  | Ps. | 321,688 |  | Ps. | 35,013 |  | Ps. | 82,111 |  | Ps. | 7,200 |  | Ps. | 17,657 |  | Ps. | 6,928 |  | Ps. | 4,585 |  | Ps. | 1,357 |  | Ps. | 3,555 |  | Ps. | 3,618 |  | Ps. | 758 |  | Ps. | 1,206,330 |  | Ps. | 255,374 |  | Ps. | 323,024 |  | Ps. | 2,525,008
Additions |  |  | 115,173 |  |  | 385 |  |  | — |  |  | 15,833 |  |  | 1,845 |  |  | 6,805 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 123 |  |  | — |  |  | 1,707,805 |  |  | 206,932 |  |  | 529,331 |  |  | 2,584,232
Disposals and transfers |  |  | (930) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (15) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (213,947) |  |  | (3,555) |  |  | (101,224) |  |  | (319,671)
Borrowing costs, net* |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 83,115 |  |  | — |  |  | — |  |  | 83,115
Other movements |  |  | — |  |  | — |  |  | 10,371 |  |  | — |  |  | 4,087 |  |  | 1,649 |  |  | 620 |  |  | — |  |  | — |  |  | 1,968 |  |  | 1,041 |  |  | — |  |  | — |  |  | (265,144) |  |  | 244,712 |  |  | (696)
Depreciation |  |  | (44,409) |  |  | (16,795) |  |  | (20,216) |  |  | (18,543) |  |  | (3,809) |  |  | (3,801) |  |  | (1,294) |  |  | (2,314) |  |  | (471) |  |  | (796) |  |  | (722) |  |  | (376) |  |  | — |  |  | — |  |  | (382,745) |  |  | (496,291)
As of December 31, 2017 |  |  | 325,644 |  |  | 305,278 |  |  | 25,168 |  |  | 79,401 |  |  | 9,323 |  |  | 22,295 |  |  | 6,254 |  |  | 2,271 |  |  | 886 |  |  | 4,727 |  |  | 4,060 |  |  | 382 |  |  | 2,783,303 |  |  | 193,607 |  |  | 613,098 |  |  | 4,375,697
Cost |  |  | 506,735 |  |  | 323,410 |  |  | 131,503 |  |  | 192,808 |  |  | 30,113 |  |  | 44,749 |  |  | 15,439 |  |  | 20,500 |  |  | 5,587 |  |  | 11,229 |  |  | 8,405 |  |  | 5,403 |  |  | 2,783,303 |  |  | 193,607 |  |  | 2,382,687 |  |  | 6,655,478
Accumulated depreciation |  |  | (181,091) |  |  | (18,132) |  |  | (106,335) |  |  | (113,407) |  |  | (20,790) |  |  | (22,454) |  |  | (9,185) |  |  | (18,229) |  |  | (4,701) |  |  | (6,502) |  |  | (4,345) |  |  | (5,021) |  |  | — |  |  | — |  |  | (1,769,589) |  |  | (2,279,781)
Net book amount as of December 31, 2017 |  | Ps. | 325,644 |  | Ps. | 305,278 |  | Ps. | 25,168 |  | Ps. | 79,401 |  | Ps. | 9,323 |  | Ps. | 22,295 |  | Ps. | 6,254 |  | Ps. | 2,271 |  | Ps. | 886 |  | Ps. | 4,727 |  | Ps. | 4,060 |  | Ps. | 382 |  | Ps. | 2,783,303 |  | Ps. | 193,607 |  | Ps. | 613,098 |  | Ps. | 4,375,697
Additions |  |  | 106,240 |  |  | 260,131 |  |  | 689 |  |  | 10,803 |  |  | 5,316 |  |  | 652 |  |  | — |  |  | 2,673 |  |  | — |  |  | 1,050 |  |  | 1,040 |  |  | — |  |  | 1,485,643 |  |  | 142,703 |  |  | 676,457 |  |  | 2,693,397
Disposals and transfers |  |  | (1,735) |  |  | (260,131) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2) |  |  | — |  |  | (712,098) |  |  | (89) |  |  | — |  |  | (974,055)
Borrowing costs, net* |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 115,242 |  |  | — |  |  | — |  |  | 115,242
Other movements |  |  | — |  |  | — |  |  | 67 |  |  | — |  |  | 9,123 |  |  | 21,568 |  |  | — |  |  | 281 |  |  | 42 |  |  | 26 |  |  | 110 |  |  | — |  |  | — |  |  | (193,483) |  |  | 162,023 |  |  | (243)
Depreciation |  |  | (54,320) |  |  | (16,785) |  |  | (10,689) |  |  | (13,729) |  |  | (7,215) |  |  | (6,209) |  |  | (1,132) |  |  | (1,856) |  |  | (482) |  |  | (892) |  |  | (727) |  |  | (256) |  |  | — |  |  | — |  |  | (313,464) |  |  | (427,756)
As of December 31, 2018 |  |  | 375,829 |  |  | 288,493 |  |  | 15,235 |  |  | 76,475 |  |  | 16,547 |  |  | 38,306 |  |  | 5,122 |  |  | 3,369 |  |  | 446 |  |  | 4,911 |  |  | 4,481 |  |  | 126 |  |  | 3,672,090 |  |  | 142,738 |  |  | 1,138,114 |  |  | 5,782,282
Cost |  |  | 609,232 |  |  | 323,410 |  |  | 132,446 |  |  | 203,611 |  |  | 44,563 |  |  | 66,546 |  |  | 15,438 |  |  | 23,454 |  |  | 5,496 |  |  | 12,305 |  |  | 9,530 |  |  | 5,403 |  |  | 3,672,090 |  |  | 142,738 |  |  | 3,221,167 |  |  | 8,487,429
Accumulated depreciation |  |  | (233,403) |  |  | (34,917) |  |  | (117,211) |  |  | (127,136) |  |  | (28,016) |  |  | (28,240) |  |  | (10,316) |  |  | (20,085) |  |  | (5,050) |  |  | (7,394) |  |  | (5,049) |  |  | (5,277) |  |  | — |  |  | — |  |  | (2,083,053) |  |  | (2,705,147)
Net book amount as of December 31, 2018 |  | Ps. | 375,829 |  | Ps. | 288,493 |  | Ps. | 15,235 |  | Ps. | 76,475 |  | Ps. | 16,547 |  | Ps. | 38,306 |  | Ps. | 5,122 |  | Ps. | 3,369 |  | Ps. | 446 |  | Ps. | 4,911 |  | Ps. | 4,481 |  | Ps. | 126 |  | Ps. | 3,672,090 |  | Ps. | 142,738 |  | Ps. | 1,138,114 |  | Ps. | 5,782,282
a) Depreciation expense for the years ended December 31, 2018, 2017 and 2016, was Ps.427,756, Ps.496,291 and Ps.496,253, respectively. Depreciation charges for the year are recognized as a component of operating expenses in the consolidated statements of operations. b) In October 2005 and December 2006, the Company entered into purchase agreements with Airbus and International Aero Engines AG (“IAE”) for the purchase of aircraft and engines, respectively. Under such agreements and prior to the delivery of each aircraft and engine, the Company agreed to make pre-delivery payments, which were calculated based on the reference price of each aircraft and engine, and following a formula established for such purpose in the agreements. In 2011, the Company amended the agreement with Airbus for the purchase of 44 A320 family aircraft to be delivered from 2015 to 2020. The new order includes 14 A320CEO and 30 A320NEO. On August 16, 2013, the Company entered into certain agreements with IAE and United Technologies Corporation Pratt & Whitney Division (“P&W”), which included the purchase of the engines for 14 A320CEO and 30 A320NEO respectively, to be delivered between 2014 and 2020. This agreement also included the purchase of one spare engine for the A320CEO fleet (which was received during the fourth quarter of 2016) and six spare engines for the A320NEO fleet to be received from 2017 to 2020. In November 2015, the Company amended the agreement with the engine supplier to provide major maintenance services for the engines of sixteen aircrafts (10 A320NEO and 6 A321NEO). This agreement also includes the purchase of three spare engines, two of them for the A320NEO fleet, and one for the A321NEO fleet. The Company received credit notes from P&W in December 2017 of Ps.58,530 (US$3.06 million), which are being amortized on a straight-line basis, prospectively during the term of the agreement. As of December 31, 2018, and 2017, the Company amortized a corresponding benefit from these credit notes of Ps.4,878 and Ps.1,219, respectively, which is recognized as an offset to maintenance expenses in the consolidated statements of operations. Additionally, during December 2017, the Company amended the agreement with Airbus for the purchase of 80 A320 family aircraft to be delivered from 2022 to 2026. The new order includes 46 A320NEO and 34 A321NEO. Under such agreement and prior to the delivery of each aircraft, the Company agreed to make pre-delivery payments, which shall be calculated based on the reference price of each aircraft, and following a formula established for such purpose in the agreement. In November 2018, the Company amended the agreement with Airbus to reschedule the remaining 26 fleet deliveries between 2019 and 2022. During the years ended December 31, 2018, 2017 and 2016, the amounts paid for aircraft and spare engine pre-delivery payments were of Ps.1,485,643 (US$77.1 million), Ps.1,707,805 (US$90.0 million) and Ps.1,345,081 (US$82.7 million), respectively. The current purchase agreement with Airbus requires the Company to accept delivery of 106 Airbus A320 family aircraft during the following nine years (from January 2019 to November 2026). The agreement provides for the addition of 106 Aircraft to its fleet as follows: three in 2019, eight in 2020, thirteen in 2021, thirteen in 2022, sixteen in 2023, thirteen in 2024, fifteen in 2025 and twenty-five in 2026 Commitments to acquisitions of property and equipment are disclosed in Note 23. During the years ended December 31, 2018, 2017 and 2016 the Company entered into aircraft and spare engines sale and leaseback transactions, resulting in a gain of Ps.609,168, Ps.65,886 and Ps.484,827, respectively, that was recorded under the caption other income in the consolidated statement of operations (Note 20). During the year ended December 31, 2011, the Company entered into aircraft and spare engines sale and leaseback transactions, which resulted in a loss of Ps.30,706. This loss was deferred on the consolidated statements of financial position and is being amortized over the contractual lease term. As of December 31, 2018, 2017 and 2016, the current portion of the loss on sale amounts to Ps.3,047, Ps.3,047 and Ps.3,047, respectively recorded in the consolidated statement of operations as additional aircraft rental expense, that is recorded in the caption of prepaid expenses and other current assets (Note 10), and the non-current portion amounts to Ps.8,366, Ps.11,413 and Ps.14,460, respectively, which is recorded in the caption of other assets in the consolidated statements of financial position. c) On August 27, 2012, the Company entered into a total support agreement with Lufthansa Technik AG (“LHT”) for a five-year term. This agreement includes a total component support agreement (power-by-the hour) and guarantees the availability of aircraft components for the Company’s fleet when they are required. The cost of the total component support agreement is recognized as maintenance expenses in the consolidated statement of operations. As part of the original total support agreement with LHT, the Company received credit notes of Ps.46,461 (US$3.5 million), which were amortized on a straight-line basis, during the term of the agreement. As of December 31, 2018, 2017 and 2016, the Company amortized a corresponding benefit from these credit notes of Ps.0, Ps.6,580 and Ps.9,292, respectively, which was recognized as an offset to maintenance expenses in the consolidated statements of operations. During December 2017, the Company entered into a new total support agreement with Lufthansa for 66 months, with an effective date on July 1, 2018. This agreement includes similar terms and conditions as the original agreement. As part of the new agreement, the Company received credit notes of Ps.28,110 (US$1.5 million), which are being amortized on a straight-line basis, prospectively during the term of the agreement. As of December 31, 2018, the Company amortized a corresponding benefit from these credit notes of Ps.7,191, recognized as an offset to maintenance expenses in the consolidated statements of operations. d) On October 12, 2016 and December 12, 2016, the Company acquired two aircraft spare engines, which were accounted for at cost for a total amount of Ps.323,025. The assets contain two major components which are assumed to have different useful lives, the limited life parts (LLPs) have an estimated useful life of 12 years, and the rest of the aircraft engine has an estimated useful life of 25 years. The Company identified the major components as separate parts at their respective cost. These major components of the spare engines are presented as part of the aircraft spare engines and depreciated over their useful life.

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