Air Canada 2006 Annual Report Download - page 35

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Cash Flows from Operating Activities
For 2006, cash flows from operations for the Air Canada Services segment were $211 million, an increase of
$15 million over 2005, primarily due to improved operating results partly offset by increased pension plan
funding. Pension funding amounted to $447 million in 2006 versus $278 million in 2005.
The Jazz segment delivered positive cash flows from operations of $182 million in 2006, which was generated
in large part by Jazz's positive operating results under the Jazz CPA with Air Canada offset by cash costs
incurred.
Cash Flows from Financing Activities
Cash flows from financing activities included net proceeds of $187 million related to the issue of Air Canada
shares, a transfer of Air Canada’s investments to ACE of $1,156 million ($673 million related to the transfer of
ACTS to ACE, $483 million related to the transfer of Air Canada’s investment in Jazz) and a settlement of notes
payable to ACE of $140 million.
Aircraft-related borrowings for the Air Canada Services segment amounted to $397 million in 2006 and related
mainly to the delivery of 16 Embraer aircraft in 2006. Scheduled and other debt and capital lease payments in
2006 amounted to $264 million.
Cash used for financing activities for the Jazz segment amounted to $193 million in 2006. Net proceeds to Jazz
from the issuance of Jazz units were $218 million. Also in connection with the offering, Jazz arranged for senior
secured syndicated credit facility in the amount of $150 million. Jazz received proceeds of $115 million ($113
million, net of fees of $2 million), representing the drawing under this new credit facility. In connection with the
initial public offering, Jazz Air Limited Partnership transferred substantially all of its assets and liabilities to the
new Jazz Air LP that was wholly-owned by ACE. In consideration, ACE received 99,365,143 units of the
partnership and an acquisition promissory note of $424 million. The acquisition promissory note was repaid to
ACE from proceeds received from the offering, from the new term credit facility and from working capital.
Other cash used for financing activities for the Jazz segment mainly related to distributions paid to non-
controlling interests which amounted to $86 million in 2006.
Cash Flows used for Investing Activities
For 2006, Air Canada Services additions to capital assets totaled $863 million. These additions included $481
million related to 16 Embraer aircraft and $148 million related to the aircraft interior refurbishment program and
to the installation of an in-flight entertainment system on Jazz Bombardier CRJ-705 aircraft. In addition, pre-
delivery payments made on Boeing aircraft amounted to $44 million. Other additions to capital assets related to
inventory and spare engines, systems development projects as well as ground equipment and facilities. In
addition, Air Canada Services received $186 million from ACE related to the settlement of notes receivable in
connection with the Air Canada IPO.
In 2006, additions to capital assets for the Jazz segment amounted to $25 million and were primarily related to
aircraft improvements and to the purchase of two Dash 8-300 aircraft.
35
Management's Discussion and Analysis of Results and Financial Condition