Air Canada 2012 Annual Report Download - page 39

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2012 Management’s Discussion and Analysis
39
9. FINANCIAL AND CAPITAL MANAGEMENT
9.1. Liquidity
Air Canada manages its liquidity needs through a variety of strategies which include seeking to achieve positive cash from
operations, sourcing committed financing for new and existing aircraft, and through other financing activities.
Liquidity needs are primarily related to meeting obligations associated with financial liabilities, capital commitments, ongoing
operations, contractual and other obligations (including pension funding obligations), and covenants in credit card and other
agreements. Refer to sections 9.6, 9.7 and 9.8 of this MD&A for information on Air Canada’s capital commitments, pension
funding obligations and contractual obligations. Air Canada monitors and manages liquidity risk by preparing rolling cash flow
forecasts, monitoring the condition and value of assets available to be used as well as those assets being used as security in
financing arrangements, seeking flexibility in financing arrangements, and establishing programs to monitor and maintain
compliance with terms of financing agreements. Air Canada’s principal objective in managing liquidity risk is to maintain a
minimum unrestricted cash balance in excess of 15% of 12-month trailing operating revenues. At December 31, 2012, cash,
cash equivalents and short-term investments amounted to $2,026 million, or 17% of annual operating revenues
(December 31, 2011 – $2,099 million, or 18% of annual operating revenues).
9.2. Financial Position
The following table provides a condensed consolidated statement of financial position of Air Canada as at December 31, 2012
and as at December 31, 2011.
(Canadian dollars in millions) December 31, 2012 December 31, 2011 Change $
Assets
Cash, cash equivalents and short-term investments $ 2,026 $ 2,099 $ (73)
Other current assets 1,028 1,228 (200)
Current assets 3,054 3,327 (273)
Property and equipment 4,871 5,088 (217)
Intangible assets 314 312 2
Goodwill 311 311 -
Deposits and other assets 510 595 (85)
Total assets $ 9,060 $ 9,633 $ (573)
Liabilities
Current liabilities $ 3,266 $ 3,153 $ 113
Long-term debt and finance leases 3,449 3,906 (457)
Pension and other benefit liabilities 4,689 5,563 (874)
Maintenance provisions 571 548 23
Other long-term liabilities 427 469 (42)
Total liabilities 12,402 13,639 (1,237)
Total equity (3,342) (4,006) 664
Total liabilities and equity $ 9,060 $ 9,633 $ (573)
Movements in current assets and current liabilities are described in section 9.4 of this MD&A. Long-term debt and finance
leases are discussed in sections 9.3 and 9.5 of this MD&A.