Air Canada 2009 Annual Report Download - page 39

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2009 Management’s Discussion and Analysis
39
Consolidated cash fl ow movements
The following table provides the cash fl ow movements for Air Canada for the periods indicated:
(Canadian dollars in millions)
Fourth Quarter Full Year
2009 2008 Change $ 2009 2008 Change $
Net cash from operating activities $ 43 $ 25 $ 18 $ 188 $ 559 $ (371)
Fuel hedge collateral deposits, net 62 (322) 384 268 (322) 590
Pension funding (60) (116) 56 (389) (456) 67
Changes in non-cash working capital (55) 135 (190) (234) 117 (351)
Cash fl ows used for operating activities (10) (278) 268 (167) (102) (65)
Additions to capital assets (42) (150) 108 (232) (883) 651
Free cash fl ow (1) (52) (428) 376 (399) (985) 586
Proceeds from contractual commitment - - - 230 - 230
Proceeds from sale of assets 7 11 (4) 103 38 65
Proceeds from sale and leaseback transactions 380 - 380 552 708 (156)
Funding of Aveos letter of credit - 40 (40) - 59 (59)
Short-term investments (125) 111 (236) 214 206 8
Other (8) (3) (5) (29) 62 (91)
Cash fl ows from investing activities
(excluding additions to capital assets)
254
159 95 1,070 1,073 (3)
Borrowings 3 558 (555) 926 871 55
Issue of common shares & warrants 249 - 249 256 - 256
Reduction of long-term debt and capital
lease obligations (381) (284) (97) (1,237) (992) (245)
Other - (3) 3 - 5 (5)
Cash fl ows from (used for) fi nancing activities (129) 271 (400) (55) (116) 61
Net increase (decrease) in cash and cash equivalents 73 2 71 616 (28) 644
Net increase (decrease) in short-term investments 125 (111) 236 (214) (206) (8)
Net increase (decrease) in cash, cash equivalents
and short-term investments
$ 198
$ (109) $ 307 $ 402 $ (234) $ 636
(1) Free cash fl ow is a non-GAAP measure used by the Corporation and may not be comparable to measures presented by other public companies. Air Canada considers free
cash fl ow to be an indicator of the fi nancial strength and performance of its business because it shows how much cash is available to repay debt, meet ongoing fi nancial
obligations and reinvest in the Corporation.
Air Canada’s free cash fl ow improved $376 million from the fourth quarter of 2008 and $586 million when compared to the
full year 2008. The improvement in free cash fl ow was mainly due to the impact of reduced capital expenditures, a reduction
in fuel hedge collateral deposits requirements, improved cash operating results and the impact of lower past service cost
contributions as a result of the adoption of new pension funding regulations in July 2009. Partly offsetting these favourable
changes was unfavourable changes in non-cash working capital balances. Working capital in 2009 was negatively impacted
by the decrease in advance ticket sales and passenger revenues; however this trend improved during the fourth quarter of
2009. Also negatively impacting working capital in 2009 was the expiry of the Aeroplan accelerated payment agreement,
reached in 2008.