Air Canada 2008 Annual Report Download - page 44

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2008 Air Canada Annual Report
44
9.4 CONSOLIDATED CASH FLOW MOVEMENTS
The following table provides the reader with the cash flow movements for the Corporation for the periods indicated:
(Canadian dollars in millions)
Fourth Quarter Full Year
2008 2007 $ Change 2008 2007 (2) $ Change
Net cash provided by (used for) operating activities $ (91) $ 80 $ (171) $ 103 $ 553 $ (450)
Fuel hedge collateral deposits, net of receipts (322) - (322) (322) - (322)
Changes in non-cash working capital 135 (30) 165 117 (83) 200
Cash flows from (used for) operating activities (278) 50 (328) (102) 470 (572)
Additions to capital assets (150) (942) 792 (883) (2,703) 1,820
Freecashow(1) (428) (892) 464 (985) (2,233) 1,248
Proceeds from sale and leaseback transactions - _ - 708 - 708
Short-term investments 111 (2) 113 206 86 120
Other 48 (13) 61 159 (32 ) 191
Cashowsfrom(usedfor)nancingactivities
(excluding additions to capital assets)
159
(15) 174 1,073 54 1,019
Borrowings 558 821 (263) 871 1,914 (1,043)
Reduction of long-term debt and capital leases (284) (199) (85) (992) (504) (488)
Other (3) 20 (23) 5 (16) 21
Cashowsfrom(usedfor)nancingactivities 271 642 (371) (116) 1,394 (1,510)
Net increase (decrease) in cash and cash equivalents 2 (265) 267 (28) (785) 757
Net increase (decrease) in short term investments (111) 2 (113) (206) (86) (120)
Net decrease in cash, cash equivalents and
short term investments
$ (109)
$ (263) $ 154 $ (234) $ (871) $ 637
(1) Free cash flow is a non-GAAP measure used by the Corporation and is not likely to be comparable to measures presented by other public companies. Air Canada
considers free cash flow to be an indicator of the financial strength and performance of its business because it shows how much cash is available to repay debt, meet
ongoing financial obligations and reinvest in the Corporation.
(2) Reflects the results of Air Canada for 2008 and the results of the Air Canada Services segment, which excluded the consolidation of Jazz, for 2007.
Air Canada’s free cash flow for the fourth quarter of 2008 improved $464 million from the fourth quarter of 2007 and
$1,248 million in 2008 versus the same period in 2007. The improvement in free cash flow was related to a reduction in
capital expenditures, due to fewer aircraft deliveries in 2008, largely offset by an unfavourable change in operating cash
flows. The decrease in operating cash flows versus the same periods in 2007 was primarily driven by the requirement to
fund the fuel hedge collateral deposits and, to a lesser extent, a deterioration in Air Canada’s operating results and the
impact of higher past service cost contributions under the Corporation’s pension plans. Operating cash flows also included
the impact of fuel derivatives which matured during the period, including a payment of $160 million in the fourth quarter
of 2008 relating to terminated derivative contracts as described in section 12 of this MD&A. This loss on fuel derivatives
was largely offset by realized gains on foreign exchange derivatives of $157 million.