Air Canada 2006 Annual Report Download - page 85

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Under AcG-15, the Corporation is the primary beneficiary of three of the Fuel Facilities Corporations in Canada.
Five of the Fuel Facility Corporations in which Air Canada participates in Canada that have not been
consolidated have assets of approximately $128 and debt of approximately $108, which is the Corporation's
maximum exposure to loss without taking into consideration any cost sharing and asset retirement obligations
that would occur amongst the other contracting airlines. The Corporation considers this loss potential as remote.
Jazz
Air Canada entered into the Jazz CPA as described further under Note 14 — Segment information. Under the
Jazz CPA, Air Canada has provided a minimum daily utilization guarantee and a minimum capacity guarantee
to Jazz, pays certain variable costs of operating Jazz aircraft and is obligated to cover the costs of certain
aircraft return obligations related to Jazz aircraft covered under the Jazz CPA. Air Canada does not hold any
partners units of Jazz. Due to the terms of the Jazz CPA, Air Canada is deemed to have a variable interest in
Jazz, as defined under AcG-15. As a result, these combined financial statements consolidate the results of Jazz
as a business segment of Air Canada.
DD) FUTURE ACCOUNTING STANDARD CHANGES
The following is an overview of accounting standard changes that the Corporation will be required to adopt in
future years:
Financial Instruments and Hedges
The Accounting Standards Board has issued three new standards dealing with financial instruments: (i)
Financial Instruments — Recognition and Measurement (ii) Hedges and (iii) Comprehensive Income. The key
principles under these standards are that all financial instruments, including derivatives, are to be included on a
company's balance sheet and measured, either at their fair values or, in limited circumstances when fair value
may not be considered most relevant, at cost or amortized cost. Financial instruments intended to be held-to-
maturity should be measured at amortized cost. Existing requirements for hedge accounting are extended to
specify how hedge accounting should be performed. Also, a new location for recognizing certain unrealized
gains and losses — other comprehensive income — has been introduced. This provides the ability for certain
unrealized gains and losses arising from changes in fair value to be temporarily recorded outside the income
statement but in a transparent manner. The new standards are effective for the Corporation beginning January
1, 2007. The standards do not permit restatement of prior years' financial statements however the standards
have detailed transition provisions. The Corporation has evaluated the consequences of the new standards,
which may have a material impact on the Corporation's financial statements. See additional disclosure on the
impact of the new standards in Note 16.
EE) COMPARATIVES
Certain comparative figures have been reclassified to conform to the financial statement presentation adopted
in the current year.
85
Combined Consolidated Financial Statements 2006