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Rotable spare parts, furniture and equipment, net | 12 Months Ended
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Dec. 31, 2019
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 and impairment |  | Net carrying value
|  | At December |  | At December |  | At December |  | At December |  | At December |  | At December |  | At December |  | At December |  | At December
|  | 31, 2019 |  | 31, 2018 |  | 31, 2017 |  | 31, 2019 |  | 31, 2018 |  | 31, 2017 |  | 31, 2019 |  | 31, 2018 |  | 31, 2017
Leasehold improvements to flight equipment |  | Ps. | 4,220,672 |  | Ps. | 3,424,778 |  | Ps. | 2,575,495 |  | Ps. | (2,679,884) |  | Ps. | (2,210,189) |  | Ps. | (1,882,996) |  | Ps. | 1,540,788 |  | Ps. | 1,214,589 |  | Ps. | 692,499
Pre-delivery payments |  |  | 4,507,770 |  |  | 3,672,090 |  |  | 2,783,303 |  |  | — |  |  | — |  |  | — |  |  | 4,507,770 |  |  | 3,672,090 |  |  | 2,783,303
Flight equipment |  |  | 1,287,102 |  |  | 932,642 |  |  | 830,145 |  |  | (553,852) |  |  | (268,320) |  |  | (199,223) |  |  | 733,250 |  |  | 664,322 |  |  | 630,922
Construction and improvements in process |  |  | 474,240 |  |  | 142,738 |  |  | 193,607 |  |  | — |  |  | — |  |  | — |  |  | 474,240 |  |  | 142,738 |  |  | 193,607
Constructions and improvements |  |  | 172,460 |  |  | 132,446 |  |  | 131,503 |  |  | (131,510) |  |  | (117,211) |  |  | (106,335) |  |  | 40,950 |  |  | 15,235 |  |  | 25,168
Computer equipment |  |  | 47,566 |  |  | 44,563 |  |  | 30,113 |  |  | (34,495) |  |  | (28,016) |  |  | (20,790) |  |  | 13,071 |  |  | 16,547 |  |  | 9,323
Workshop tools |  |  | 26,875 |  |  | 23,454 |  |  | 20,500 |  |  | (22,023) |  |  | (20,085) |  |  | (18,229) |  |  | 4,852 |  |  | 3,369 |  |  | 2,271
Electric power equipment |  |  | 20,412 |  |  | 15,438 |  |  | 15,439 |  |  | (11,400) |  |  | (10,316) |  |  | (9,185) |  |  | 9,012 |  |  | 5,122 |  |  | 6,254
Communications equipment |  |  | 14,099 |  |  | 12,305 |  |  | 11,229 |  |  | (8,322) |  |  | (7,394) |  |  | (6,502) |  |  | 5,777 |  |  | 4,911 |  |  | 4,727
Workshop machinery and equipment |  |  | 16,301 |  |  | 9,530 |  |  | 8,405 |  |  | (6,092) |  |  | (5,049) |  |  | (4,345) |  |  | 10,209 |  |  | 4,481 |  |  | 4,060
Motorized transport equipment platform |  |  | 15,026 |  |  | 5,496 |  |  | 5,587 |  |  | (5,392) |  |  | (5,050) |  |  | (4,701) |  |  | 9,634 |  |  | 446 |  |  | 886
Service carts on board |  |  | 7,675 |  |  | 5,403 |  |  | 5,403 |  |  | (5,554) |  |  | (5,277) |  |  | (5,021) |  |  | 2,121 |  |  | 126 |  |  | 382
Office furniture and equipment |  |  | 70,709 |  |  | 66,546 |  |  | 44,749 |  |  | (34,049) |  |  | (28,240) |  |  | (22,454) |  |  | 36,660 |  |  | 38,306 |  |  | 22,295
Allowance for obsolescence |  |  | (3,000) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,000) |  |  | — |  |  | —
Total |  | Ps. | 10,877,907 |  | Ps. | 8,487,429 |  | Ps. | 6,655,478 |  | Ps. | (3,492,573) |  | Ps. | (2,705,147) |  | Ps. | (2,279,781) |  | Ps. | 7,385,334 |  | Ps. | 5,782,282 |  | Ps. | 4,375,697
* During the years ended December 31, 2019, 2018 and 2017, the Company capitalized borrowing costs of Ps.456,313, Ps.357,920 and Ps.193,389, respectively. The amount of this line is net of disposals of capitalized borrowing costs related to sale and leaseback transactions of Ps.328,571, Ps.242,678 and Ps.110,274, respectively.
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Motorized |  |  |  |  | Workshop |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  | Constructions |  |  |  |  |  |  |  |  |  |  |  | transport |  |  |  |  | machinery |  | Service |  |  |  |  |  |  | Construction and |  | Leasehold |  |  |
|  | Flight |  | and |  | Computer |  | Office furniture |  | Electric power |  | Workshop |  | equipment |  | Communications |  | and |  | carts on |  | Allowance for |  | Pre-delivery |  | improvements |  | improvements to |  |  |
|  | equipment |  | improvements |  | equipment |  | and equipment |  | equipment |  | Tools |  | platform |  | equipment |  | equipment |  | board |  | obsolescence |  | payments |  | in process |  | flight equipment |  | Total
Net book amount as of December 31, 2016 |  | Ps. | 577,498 |  | Ps. | 35,013 |  | Ps. | 7,200 |  | Ps. | 17,657 |  | Ps. | 6,928 |  | Ps. | 4,585 |  | Ps. | 1,357 |  | Ps. | 3,555 |  | Ps. | 3,618 |  | Ps. | 758 |  | Ps. | — |  | Ps. | 1,206,330 |  | Ps. | 255,374 |  | Ps. | 405,135 |  | Ps. | 2,525,008
Additions |  |  | 115,558 |  |  | — |  |  | 1,845 |  |  | 6,805 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 123 |  |  | — |  |  | — |  |  | 1,707,805 |  |  | 206,932 |  |  | 545,164 |  |  | 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 |  |  | (61,204) |  |  | (20,216) |  |  | (3,809) |  |  | (3,801) |  |  | (1,294) |  |  | (2,314) |  |  | (471) |  |  | (796) |  |  | (722) |  |  | (376) |  |  | — |  |  | — |  |  | — |  |  | (401,288) |  |  | (496,291)
As of December 31, 2017 |  |  | 630,922 |  |  | 25,168 |  |  | 9,323 |  |  | 22,295 |  |  | 6,254 |  |  | 2,271 |  |  | 886 |  |  | 4,727 |  |  | 4,060 |  |  | 382 |  |  | — |  |  | 2,783,303 |  |  | 193,607 |  |  | 692,499 |  |  | 4,375,697
Cost |  |  | 830,145 |  |  | 131,503 |  |  | 30,113 |  |  | 44,749 |  |  | 15,439 |  |  | 20,500 |  |  | 5,587 |  |  | 11,229 |  |  | 8,405 |  |  | 5,403 |  |  | — |  |  | 2,783,303 |  |  | 193,607 |  |  | 2,575,495 |  |  | 6,655,478
Accumulated depreciation |  |  | (199,223) |  |  | (106,335) |  |  | (20,790) |  |  | (22,454) |  |  | (9,185) |  |  | (18,229) |  |  | (4,701) |  |  | (6,502) |  |  | (4,345) |  |  | (5,021) |  |  | — |  |  | — |  |  | — |  |  | (1,882,996) |  |  | (2,279,781)
Net book amount as of December 31, 2017 |  |  | 630,922 |  |  | 25,168 |  |  | 9,323 |  |  | 22,295 |  |  | 6,254 |  |  | 2,271 |  |  | 886 |  |  | 4,727 |  |  | 4,060 |  |  | 382 |  |  | — |  |  | 2,783,303 |  |  | 193,607 |  |  | 692,499 |  |  | 4,375,697
Additions |  |  | 366,371 |  |  | 689 |  |  | 5,316 |  |  | 652 |  |  | — |  |  | 2,673 |  |  | — |  |  | 1,050 |  |  | 1,040 |  |  | — |  |  | — |  |  | 1,485,643 |  |  | 142,703 |  |  | 687,260 |  |  | 2,693,397
Disposals and transfers |  |  | (261,866) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (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 |  |  | (71,105) |  |  | (10,689) |  |  | (7,215) |  |  | (6,209) |  |  | (1,132) |  |  | (1,856) |  |  | (482) |  |  | (892) |  |  | (727) |  |  | (256) |  |  | — |  |  | — |  |  | — |  |  | (327,193) |  |  | (427,756)
As of December 31, 2018 |  |  | 664,322 |  |  | 15,235 |  |  | 16,547 |  |  | 38,306 |  |  | 5,122 |  |  | 3,369 |  |  | 446 |  |  | 4,911 |  |  | 4,481 |  |  | 126 |  |  | — |  |  | 3,672,090 |  |  | 142,738 |  |  | 1,214,589 |  |  | 5,782,282
Cost |  |  | 932,642 |  |  | 132,446 |  |  | 44,563 |  |  | 66,546 |  |  | 15,438 |  |  | 23,454 |  |  | 5,496 |  |  | 12,305 |  |  | 9,530 |  |  | 5,403 |  |  | — |  |  | 3,672,090 |  |  | 142,738 |  |  | 3,424,778 |  |  | 8,487,429
Accumulated depreciation |  |  | (268,320) |  |  | (117,211) |  |  | (28,016) |  |  | (28,240) |  |  | (10,316) |  |  | (20,085) |  |  | (5,050) |  |  | (7,394) |  |  | (5,049) |  |  | (5,277) |  |  | — |  |  | — |  |  | — |  |  | (2,210,189) |  |  | (2,705,147)
Net book amount as of December 31, 2018 |  |  | 664,322 |  |  | 15,235 |  |  | 16,547 |  |  | 38,306 |  |  | 5,122 |  |  | 3,369 |  |  | 446 |  |  | 4,911 |  |  | 4,481 |  |  | 126 |  |  | — |  |  | 3,672,090 |  |  | 142,738 |  |  | 1,214,589 |  |  | 5,782,282
Additions |  |  | 692,186 |  |  | 5,596 |  |  | 1,730 |  |  | 1,461 |  |  | 2,487 |  |  | 3,137 |  |  | — |  |  | 355 |  |  | 4,278 |  |  | 2,273 |  |  | (3,000) |  |  | 1,412,790 |  |  | 525,556 |  |  | 661,954 |  |  | 3,310,803
Disposals and transfers |  |  | (538,370) |  |  | — |  |  | (131) |  |  | (10) |  |  | — |  |  | — |  |  | — |  |  | (2) |  |  | (35) |  |  | — |  |  | — |  |  | (704,852) |  |  | (3,957) |  |  | — |  |  | (1,247,357)
Borrowing costs, net* |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 127,742 |  |  | — |  |  | — |  |  | 127,742
Other movements |  |  | — |  |  | 34,840 |  |  | 1,999 |  |  | 2,757 |  |  | 2,487 |  |  | 284 |  |  | 9,529 |  |  | 1,446 |  |  | 2,529 |  |  | — |  |  | — |  |  | — |  |  | (190,097) |  |  | 133,939 |  |  | (287)
Depreciation |  |  | (84,888) |  |  | (14,721) |  |  | (7,074) |  |  | (5,854) |  |  | (1,084) |  |  | (1,938) |  |  | (341) |  |  | (933) |  |  | (1,044) |  |  | (278) |  |  | — |  |  | — |  |  | — |  |  | (469,694) |  |  | (587,849)
As of December 31, 2019 |  |  | 733,250 |  |  | 40,950 |  |  | 13,071 |  |  | 36,660 |  |  | 9,012 |  |  | 4,852 |  |  | 9,634 |  |  | 5,777 |  |  | 10,209 |  |  | 2,121 |  |  | (3,000) |  |  | 4,507,770 |  |  | 474,240 |  |  | 1,540,788 |  |  | 7,385,334
Cost |  |  | 1,287,102 |  |  | 172,460 |  |  | 47,566 |  |  | 70,709 |  |  | 20,412 |  |  | 26,875 |  |  | 15,026 |  |  | 14,099 |  |  | 16,301 |  |  | 7,675 |  |  | (3,000) |  |  | 4,507,770 |  |  | 474,240 |  |  | 4,220,672 |  |  | 10,877,907
Accumulated depreciation |  |  | (553,852) |  |  | (131,510) |  |  | (34,495) |  |  | (34,049) |  |  | (11,400) |  |  | (22,023) |  |  | (5,392) |  |  | (8,322) |  |  | (6,092) |  |  | (5,554) |  |  | — |  |  | — |  |  | — |  |  | (2,679,884) |  |  | (3,492,573)
Net book amount as of December 31, 2019 |  | Ps. | 733,250 |  | Ps. | 40,950 |  | Ps. | 13,071 |  | Ps. | 36,660 |  | Ps. | 9,012 |  | Ps. | 4,852 |  | Ps. | 9,634 |  | Ps. | 5,777 |  | Ps. | 10,209 |  | Ps. | 2,121 |  | Ps. | (3,000) |  | Ps. | 4,507,770 |  | Ps. | 474,240 |  | Ps. | 1,540,788 |  | Ps. | 7,385,334
a) Depreciation expense for the years ended December 31, 2019, 2018 and 2017, was Ps.587,849, Ps.427,756 and Ps.496,291, 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 ("Current Engine Option Aircraft") and 30 A320NEO. 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. Also, in this amendment Volaris used its rights on the Airbus Purchase Agreement to convert six A320NEO into A321NEO. 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 2022. 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 2022. 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. During the years ended December 31, 2019, 2018 and 2017, the amounts paid for aircraft and spare engine pre-delivery payments were of Ps.1,412,790 (US$75.0 million), Ps.1,485,643 (US$77.1 million) and Ps.1,707,805 (US$90.0 million), respectively. The current purchase agreement with Airbus requires the Company to accept delivery of 103 Airbus A320 family aircraft during the following six years (from January 2020 to November 2026). The agreement provides for the addition of 103 Aircraft to its fleet as follows: 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, 2019, 2018 and 2017 the Company entered into aircraft and spare engines sale and leaseback transactions, resulting in a gain of Ps.284,759, Ps.609,168 and Ps.65,886, respectively, that was recorded under the caption other income in the consolidated statement of operations , only the amount of gains that relates to the rights transferred to the buyer-lessor. The rest of the gains are amortized under the lease term (Note 20). c) During December 2017, the Company entered into an updated 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 this 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, 2019,and 2018, the Company amortized a corresponding benefit from these credit notes of Ps.5,230 and Ps.7,191, respectively, recognized as an offset to maintenance expenses in the consolidated statements of operations. d) On September 5, 2019, the Company acquired one previously leased A319 aircraft from the lessor, which was accounted for a cost for a total amount of Ps.392,076 (US$19,600). This transaction did not generate any gain or loses in our consolidated statements of operations. The Company identified the major components as separate parts at their respective cost. These major components of the aircraft are presented as part of the aircraft and depreciated over their useful life. During the month of December, the Company sold the recently acquire aircraft engines in by a sale and lease back transaction. As of December 31, 2019, the carry amount of the remaining owned aircraft and the depreciation was Ps.54,771 and Ps.1,787, respectively.

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