Air New Zealand 2008 Annual Report Download - page 43

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AIR NEW ZEALAND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 30 JUNE 2008
24. CONTINGENT LIABILITIES (CONTINUED)
The Group has a partnership agreement with Pratt and Whitney in relation to the CEC in which it holds a 49 percent interest (note 12). By the nature of
the agreement, joint and several liability exists between the two parties. Total liabilities of the CEC is $39 million (30 June 2007: $36 million).
The Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group. Air New Zealand treats the
guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.
25. RETIREMENT BENEFIT OBLIGATIONS
Defined benefit plans
The Group operates a number of defined benefit plans for qualifying employees both in New Zealand and overseas. Most of these plans are now closed
to new members. The plans provide a benefit on retirement or resignation based upon the employee’s length of membership and final average salary.
Each year an actuarial calculation is undertaken using the Projected Unit Credit Method to calculate the present value of the defined benefit obligation
and the related current service cost. The most recent actuarial valuation of the plan was carried out as at 31 March 2008.
GROUP AND COMPANY
2008
$M
2007
$M
Amounts recognised in the Statement of Financial Position:
Present value of funded obligations (95) (90)
Fair value of plan assets 94 94
(1) 4
Unrecognised actuarial losses/(gains) 2 (3)
Included in the Statement of Financial Position 1 1
Expense recognised in the Statement of Financial Performance:
Current service cost (2) (2)
Interest cost (5) (5)
Expected return on plan assets 5 4
Total included in "Labour" (2) (3)
Actual return on plan assets (1) 6
Changes in the present value of the defined benefit obligation:
Defined benefit obligation at the beginning of the year (90) (90)
Current service cost (2) (2)
Interest cost (5) (5)
Contributions by plan participants (2) (2)
Actuarial gains 1 1
Benefits paid 4 6
Foreign exchange differences on overseas plans (1) 2
Defined benefit obligation at the end of the year (95) (90)
Changes in the fair value of plan assets are as follows:
Fair value of plan assets at the beginning of the year 94 91
Expected return on plan assets 5 4
Contributions by employer 3 2
Contributions by participants 2 2
Actuarial (losses)/gains (6) 2
Benefits paid (4) (6)
Foreign exchange differences on overseas plans - (1)
Fair value of plan assets at the end of the year 94 94
The Group expects to contribute approximately $3 million to its defined benefit plans in 2009.
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