Air Canada 2008 Annual Report Download - page 97

Consolidated Financial Statements and Notes
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The cash flow impact during 2007 of the Corporation’s deconsolidation of Jazz of $138 reflects the Jazz cash being removed
from the Consolidated Statement of Financial Position of the Corporation and classified as a cash outflow from investing
activities.
The following table outlines CPA and pass through costs with Jazz for the year:
2008 2007
Expenses from CPA with Jazz $ 948 $ 923
Pass through fuel expense from Jazz 427 320
Pass through airport expense from Jazz 201 201
Pass through other expense from Jazz) 38 36
$ 1,614 $ 1,480
CPA expenses with Jazz total $537 for the year ended December 31, 2007 post-deconsolidation on May 24, 2007.
Notwithstanding that the Corporation is no longer the primary beneficiary of Jazz effective May 24, 2007; Air Canada continues
to hold a significant variable interest in Jazz through the contractual arrangements with Jazz as described in Note 14.
E) AEROPLAN LOYALTY PROGRAM
Air Canada is an Aeroplan partner providing certain of Air Canada’s customers with Aeroplan Miles, which can be redeemed
by customers for air travel or other rewards acquired by Aeroplan.
Under the CPSA between the Corporation and Aeroplan, Aeroplan purchases passenger tickets from Air Canada to meet its
obligation for the redemption of Aeroplan Miles for air travel. The proceeds from the sale of passenger tickets to Aeroplan
are included in Advance ticket sales. Revenue related to these passenger tickets is recorded in passenger revenues when
transportation is provided.
For Aeroplan Miles earned by Air Canada customers, Air Canada purchases Miles from Aeroplan in accordance with the terms
of the CPSA. The cost of purchasing Aeroplan Miles from Aeroplan is accounted for as a sales incentive and charged against
passenger revenues when the points are issued, which is upon the qualifying air travel being provided to the customer.
In November 2008 the Corporation reached agreement with Aeroplan to have the loyalty management company accelerate
payment terms on Air Canada redemption tickets issued through to May 29, 2009, in exchange for future credits to be
settled in 2009, resulting in the substantial elimination of the trade receivable from Aeroplan relating to the sale of passenger
tickets through to May 2009. As a result of this agreement, cash flows from operations have been favourably impacted by
$63 as at December 31, 2008. This impact will reverse in 2009 upon expiry of this agreement.
F) OTHER REVENUES
Other revenue includes revenues from the sale of the ground portion of vacation packages, ground handling services and
other airline related services. Vacation package revenue is recognized as services are provided over the period of the vacation.
Other airline related service revenues are recognized as the products are sold to passengers or the services are provided.
Other revenue also includes revenue related to the lease or sublease of aircraft to third parties. Lease or sublease revenues
are recognized on a straight line basis over the term of the lease or sublease. Rental revenue from operating leases
amounted to $113 in 2008 (2007 - $52).
In certain subleases of aircraft to Jazz, the Corporation reports the sublease revenues net against aircraft rent expense as
the terms of the sublease match the terms of the Corporation’s lease. The Corporation acts as lessee and sublessor in these
matters. Refer to Note 14 for the lease commitments under these arrangements.
The Corporation provides certain services to related parties, ACE and Aveos, and former related parties, Aeroplan and
Jazz, consisting principally of administrative services in relation to information technology, human resources, finance and