Air Canada 2008 Annual Report Download - page 120

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2008 Air Canada Annual Report
120
9. OTHER LONG-TERM LIABILITIES
2008 2007
Aeroplan Miles obligations (a) $ - $ 29
Unfavourable contract liability on aircraft leases (b) 37 54
Aircraft rent in excess of lease payments Note 2w 56 54
Long-term employee liabilities (c) 35 47
Workplace safety and insurance board liabilities 37 45
Deferred gains on aircraft sale leasebacks 76 -
Other (d) 129 107
$ 370 $ 336
(a) Air Canada has a liability related to Aeroplan Miles which were issued by Air Canada prior to January 1, 2002. As of
December 31, 2008 a liability for approximately $35, remains in Air Canada, all of which is included in Advanced ticket
sales (2007 - $84).
(b) The unfavourable contract liability on aircraft leases represents the net present value of lease payments in excess of
estimated market rents related to lease arrangements that existed on fresh start reporting.
(c) The following table outlines the changes to labour related provisions which are included in long-term employee
liabilities:
2008 2007
Beginning of year $ 66 $ 106
Interest accretion 4 5
Charges recorded in Wages, salaries and benefits 21 14
Amounts disbursed (37) (55)
Deconsolidation of Jazz Note 2d - (4)
End of year 54 66
Current portion in Accounts payable and accrued liabilities (19) (19)
$ 35 $ 47
The Corporation offers certain severance programs to certain employees from time to time. The cost of these
programs is recorded within Operating expenses.
In response to record high fuel prices, on June 17, 2008, Air Canada announced a reduction in capacity which had
an impact on fleet and staffing levels effective with the implementation of its fall and winter schedule. During 2008,
Air Canada recorded an expense of $8 in Wages, salaries and benefits expense related to the reduction of employees
under this plan. These costs will be disbursed within a year.
(d) “Other” includes asset retirement obligations of the Corporation. Under the terms of their respective land leases, each
Fuel Facility Corporation has an obligation to restore the land to vacant condition at the end of the lease and to rectify
any environmental damage for which it is responsible. If it were found that the Fuel Facility Corporations had to
contribute to any remediation costs, each contracting airline would share pro rata, based on system usage, in the
costs. For all Fuel Facility Corporations in Canada in which the Corporation participates, the Corporation has recorded
an obligation of $8 ($50 undiscounted) (2007 - $7 ($44 undiscounted)) representing the present value of the estimated
decommissioning and remediation obligations at the end of the lease using an 8% (2007 - 8%) discount rate, with
lease term expiry dates ranging from 2032 to 2039. This estimate is based on numerous assumptions including
the overall cost of decommissioning and remediation and the selection of alternative decommissioning and remediation
approaches.