| (5) | Segment information |
The Company reports information by segments as established in IFRS 8 “Operating segments”. For management purposes, the Company has two reportable segments, as follows:
| • | Fair transportation: Corresponds to passenger and cargo operating revenues on scheduled flights and freight transport, respectively, including flights operated by other airlines under code-sharing agreements. |
| • | Loyalty: Corresponds to the coalition loyalty program, the frequent flyer program for the airline subsidiaries of Avianca Holdings S.A. |
Starting July 31, 2015, the Board of Directors has monitored the operating results of the Company’s business units separately for the purpose of making decisions about resource allocation and performance assessment.
The Company’s revenues by business segment for the years ended December 31, 2017 are as follows:
| For the year ended December 31, 2017 | ||||||||||||||||
| Air transportation |
Loyalty | Eliminations | Consolidated | |||||||||||||
| Revenue (1) | ||||||||||||||||
| External customers | $ | 4,167,658 | $ | 274,026 | $ | — | $ | 4,441,684 | ||||||||
| Inter-segment | 112,037 | 4,366 | (116,403 | ) | — | |||||||||||
| Total revenue | 4,279,695 | 278,392 | (116,403 | ) | 4,441,684 | |||||||||||
| Cost of loyalty rewards | 55,604 | 126,505 | (105,967 | ) | 76,142 | |||||||||||
| Operating expenses | 3,741,852 | 30,122 | (13,489 | ) | 3,758,485 | |||||||||||
| Depreciation and amortization | 313,314 | 12,876 | (12,777 | ) | 313,413 | |||||||||||
| Interest expense | 174,657 | 8,675 | — | 183,332 | ||||||||||||
| Interest income | (12,978 | ) | (1,550 | ) | — | (14,528 | ) | |||||||||
| Derivative instruments | 2,536 | — | — | 2,536 | ||||||||||||
| Foreign exchange | 20,161 | 2 | — | 20,163 | ||||||||||||
| Income tax expense | 19,457 | 652 | — | 20,109 | ||||||||||||
| Net (loss) profit for the period | $ | (34,908 | ) | $ | 101,110 | $ | 15,830 | $ | 82,032 | |||||||
| Total Assets | $ | 6,796,848 | $ | 248,919 | $ | (184,371 | ) | $ | 6,861,396 | |||||||
| Total Liabilities | $ | 5,082,763 | $ | 545,951 | $ | (107,018 | ) | $ | 5,521,696 | |||||||
The Company’s revenues by business segment for the years ended December 31, 2016 are as follows:
| For the year ended December 31, 2016 | ||||||||||||||||
| Air transportation |
Loyalty | Eliminations | Consolidated | |||||||||||||
| Revenue (1) | ||||||||||||||||
| External customers | $ | 3,898,271 | $ | 240,067 | $ | — | $ | 4,138,338 | ||||||||
| Inter-segment | 89,071 | 3,834 | (92,905 | ) | — | |||||||||||
| Total revenue | 3,987,342 | 243,901 | (92,905 | ) | 4,138,338 | |||||||||||
| Cost of loyalty rewards | 53,901 | 120,589 | (78,785 | ) | 95,705 | |||||||||||
| Operating expenses | 3,509,122 | 19,617 | (14,122 | ) | 3,514,617 | |||||||||||
| Depreciation and, amortization | 269,534 | 12,789 | (12,777 | ) | 269,546 | |||||||||||
| Interest expense | 172,381 | 249 | — | 172,630 | ||||||||||||
| Interest income | (13,960 | ) | 906 | — | (13,054 | ) | ||||||||||
| Derivative instruments | (3,321 | ) | — | — | (3,321 | ) | ||||||||||
| Foreign exchange | 23,952 | (13 | ) | — | 23,939 | |||||||||||
| Income tax expense | 32,384 | 1,706 | — | 34,090 | ||||||||||||
|
Net (loss) profit for the period |
$ | (56,651 | ) | $ | 88,058 | $ | 12,779 | $ | 44,186 | |||||||
| Total Assets | $ | 6,328,740 | $ | 227,382 | $ | (204,787 | ) | $ | 6,351,335 | |||||||
| Total Liabilities | $ | 4,842,190 | $ | 203,542 | $ | (114,658 | ) | $ | 4,931,074 | |||||||
| (1) | Loyalty revenue for miles redeemed is allocated to passenger revenue and, other loyalty revenue is recorded in other revenue. |
The results, assets and liabilities allocated to the loyalty segment reportable correspond to those attributable directly to the subsidiary LifeMiles Corp., and exclude assets, liabilities, income and expenses of the loyalty program recognized by the Company’s Subsidiaries.
Inter-segment revenues are eliminated upon consolidation and reflected in the “Eliminations” column.
The Company’s revenues
by geographic area for the years ended December 31, 2017, 2016 and 2015 are as follows:
| For the year ended December 31, | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| North America | $ | 565,910 | $ | 539,365 | $ | 653,452 | ||||||
| Central America and the Caribbean | 539,682 | 442,841 | 592,947 | |||||||||
| Colombia | 1,961,600 | 1,831,218 | 1,840,597 | |||||||||
| South America (ex–Colombia) | 933,569 | 840,934 | 918,956 | |||||||||
| Other | 440,923 | 483,980 | 355,389 | |||||||||
| Total operating revenue | $ | 4,441,684 | $ | 4,138,338 | $ | 4,361,341 | ||||||
The Company allocates revenues by geographic area based on the point of origin of the flight. Non-current assets are composed primarily of aircraft and aeronautical equipment, which are used throughout different countries and are therefore not assignable to any particular geographic area.