Air Canada 2007 Annual Report Download - page 84

2007 Air Canada Annual Report
84
For the Years Ended December 31, 2007 and 2006 (Currencies in millions – Canadian dollars)
1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS
The accompanying consolidated fi nancial statements are of Air Canada (the “Corporation”), a majority-owned subsidiary of
ACE Aviation Holdings Inc. (“ACE”). The term “Corporation” refers to, as the context may require, Air Canada and / or one or
more of Air Canada’s subsidiaries.
A) INITIAL PUBLIC OFFERING
In November 2006 Air Canada completed an initial public offering (the “Air Canada IPO”) of an aggregate of 9,523,810 variable
voting shares and voting shares for gross proceeds of $200 ($187 net of offering costs of $13) and a secondary offering by ACE
of an aggregate of 15,476,190 variable voting shares and voting shares for gross proceeds of $325 ($304 net of offering costs
of $21). Refer to Note 3 for additional information.
B) BASIS OF PRESENTATION
These consolidated fi nancial statements include the fi nancial position, results of operations and cash fl ows of:
■ Air Canada, which provides transportation services;
■ AC Cargo Limited Partnership (“Air Canada Cargo”), a wholly owned subsidiary of Air Canada, which, along with
Air Canada, provides cargo services;
■ 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 (“Air Canada Vacations”), which provides tour operator services and leisure vacation
packages. The Corporation purchased from ACE its 49% interest in Air Canada Vacations causing Air Canada Vacations
to be wholly owned by the Corporation. Consideration for the interest was $10 and was accounted for within
contributed surplus. Refer to Note 19;
■ Air Canada Capital Ltd., a wholly owned subsidiary of Air Canada, which owns and leases certain aircraft which are
leased or subleased to Air Canada, Jazz and unrelated third parties;
■ Simco Leasing Ltd., a wholly owned subsidiary of Air Canada, which owns certain fl ight equipment which is leased to
Air Canada;
■ Jazz Air LP (“Jazz”) for the period up to May 24, 2007. Jazz provides both domestic and transborder services for
Air Canada under a capacity purchase agreement, which is consolidated within Air Canada for the period up to
May 24, 2007. (refer below for additional information on the accounting for Jazz); and
■ 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 benefi ciary.
The activities of these operations are described further below in part C) Nature of Operations. These consolidated fi nancial
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.
Prior to the deconsolidation of Jazz, as described below, Air Canada had two business segments: Air Canada Services and Jazz.
Subsequent to the deconsolidation of Jazz, Air Canada has one reportable segment. Air Canada Services is now referred to
as Air Canada or the Air Canada Segment.
These consolidated fi nancial statements are expressed in millions of Canadian dollars and are prepared in accordance with
generally accepted accounting principles (“GAAP”) in Canada.