Air Canada 2006 Annual Report Download - page 76

B) BASIS OF PRESENTATION
These combined consolidated financial statements include the financial position, results of operations and cash
flows of:
§ Air Canada, which provides transportation services;
§ Air Canada Capital Ltd., a wholly owned subsidiary of Air Canada, which owns and leases certain
aircraft which are subleased to Air Canada, Jazz and unrelated third parties;
§ 1209265 Alberta Ltd., a wholly owned subsidiary of Air Canada, which holds and manages cash and
investments of Air Canada;
§ Simco Leasing Ltd., a wholly owned subsidiary of Air Canada, which owns certain flight equipment
which is leased to Air Canada;
§ ACGHS Limited Partnership ("Air Canada Ground Handling Services" or "ACGHS"), a wholly owned
subsidiary of Air Canada, which provides ground handling services;
§ Touram Limited Partnership for the periods subsequent to January 30, 2005 and Touram Inc. for
periods prior to January 31, 2005 (“Touram" or "Air Canada Vacations"), which provides tour operator
services and leisure vacation packages and in which Air Canada has a 51% ownership interest;
§ AC Cargo Limited Partnership ("Air Canada Cargo"), a wholly owned subsidiary of Air Canada, which,
along with Air Canada, provides cargo services;
§ Jazz Air LP (“Jazz” or “Jazz LP”), which provides both domestic and transborder services for Air
Canada under a capacity purchase agreement (ACE holds a 79.7% interest in the general partner of
Jazz and 79.7% of the limited partnership units of Jazz Air LP; Air Canada does not hold any of the
limited partners' units of Jazz), and has been consolidated under AcG-15 as Air Canada has been
determined to be the primary beneficiary of Jazz;
§ Maple Leaf Holdings USA Inc., which holds certain cost based investments in other enterprises;
§ Certain aircraft and engine leasing entities and fuel facility corporations, which are consolidated under
Accounting Guideline of the CICA Handbook, Consolidation of Variable Interest Entities (“AcG-15”), as
Air Canada has been determined to be the primary beneficiary; and
§ Destina eCommerce Group LP (‘‘Destina’’), which provided web based travel services and an online
travel site that offered customers both air and non-air products. During 2006, a substantial portion of
the assets of Destina were transferred to Air Canada (Note 18).
The activities of these operations are described further below in part C) Nature of Operations. These combined
consolidated financial statements also include certain limited partnerships that are holding companies of the
limited partnerships and the general partners of the limited partnerships described above; these entities do not
carry on any active business.
Air Canada has two business segments: Air Canada Services and Jazz. Air Canada Services is the passenger
and cargo transportation services business operated by Air Canada and related ancillary services. Jazz
operates under the capacity purchase agreement with Air Canada that came into effect September 30, 2004
(the “initial Jazz CPA”), which was amended and restated effective January 1, 2006 (the “Jazz CPA”).
These combined consolidated financial statements are expressed in millions of Canadian dollars and are
prepared in accordance with generally accepted accounting principles ("GAAP") in Canada.
The Corporation has historically experienced considerably greater demand for its services in the second and
third quarters of the calendar year and significantly lower demand in the first and fourth quarters of the calendar
year. This demand pattern is principally a result of the high number of leisure travelers and their preference for
travel during the spring and summer months. The cost structure of the Corporation is such that its fixed costs do
not fluctuate proportionately with passenger demand in the short-term.
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