Derivative Agreements

Interest related to derivative agreements made to hedge against foreign exchange and interest rate risks was entered on an accrual basis as either interest income or expenses. Exchange rate differences related to hedging of business operations are included in the operating profit. However, exchange rate differences on separate derivative financial instruments that provided hedging for specific off-balance sheet items and operational business operations were deferred until recognition of the underlying item.

Hedging of Fuel Price Risk

The results of using the various hedging instruments related to hedging against a rise in the price of jet fuel were entered on an accrual basis as an adjustment to the flight operation fuel costs which were the subject of the hedging.

Fixed Assets and Depreciation

The balance sheet values for fixed assets are based on original acquisition costs less planned depreciation.

Planned depreciation is based on the economic service life of the asset and on the book acquisition cost.