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WestJet 2009 Annual Report 31
sheet date. We carefully monitor this risk by closely considering
the size, credit rating and diversifi cation of the counterparty. As
at December 31, 2009, fuel derivatives of $0.1 million and foreign
exchange derivatives of $0.2 million outstanding with one of our
counterparties were in an asset position. We do not expect this
counterparty to fail to meet its obligations.
We are not exposed to counterparty credit risk on our deposits
that relate to purchased aircraft, as the funds are held in a
security trust separate from the assets of the fi nancial institution.
While we are exposed to counterparty credit risk on our deposit
relating to airport operations, we consider this risk as remote
due to the nature of the deposit and the credit risk rating of the
counterparty.
Liquidity risk
Liquidity risk is the risk that we will encounter difficulty in
meeting obligations associated with fi nancial liabilities. We
maintain a strong liquidity position and sufficient financial
resources to meet our obligations as they fall due.
The table below presents a maturity analysis of our undiscounted
contractual cash fl ows for our non-derivative and derivative
fi nancial liabilities as at December 31, 2009. The analysis, based
on foreign exchange and interest rates in effect at the balance
sheet date, includes both principal and interest cash fl ows for
long-term debt and obligations under capital leases.
31, 2009, we had cash on hand of 3.51 (2008 – 3.26) times the
advance ticket sales balance. We aim to maintain a current ratio
of at least 1.00. As at December 31, 2009, our current ratio was
1.48 (2008 – 1.24). As at December 31, 2009, we have not been
required to post collateral with respect to any of our outstanding
derivative contracts.
limiting the total exposure to any one individual counterparty. As
at December 31, 2009, we had a total principal amount invested of
$813.2 million (2008 – $692.2 million) in Canadian-dollar short-
term investments with terms ranging between fi ve and 365 days,
and a total of US $nil (2008 – US $23.8 million) invested in US-
dollar short-term investments. We perform an ongoing review
to evaluate our risk associated with cash and cash equivalent
counterparties. As at December 31, 2009, we do not expect any
counterparties to fail to meet their obligations.
Generally, our accounts receivable are the result of tickets sold
to individual guests through the use of travel agents and other
airlines. Purchase limits are established for each agent and,
in some cases, when deemed necessary, a letter of credit is
obtained. As at December 31, 2009, $10.4 million (2008 – $7.4
million) is receivable from travel agents and other airlines. These
receivables are short-term in nature, generally being settled
within four weeks from the date of booking. As at December 31,
2009, $0.6 million (2008 – $0.7 million) of the balance receivable
is covered by letters of credit. As at December 31, 2009, we
determined that $2.4 million of our accounts receivable relating
to our cargo operations was doubtful, as amounts receivable are
in dispute with the counterparty. Accordingly, we have recorded
a bad debt provision for the amount.
We recognize that we are subject to credit risk arising from
derivative transactions that are in an asset position at the balance
A portion of our cash and cash equivalents balance relates to
cash collected with respect to advance ticket sales, for which
the balance at December 31, 2009, was $286.4 million (2008 –
$251.4 million). Typically, we have cash and cash equivalents
on hand to have suffi cient liquidity to meet our liabilities when
due, under both normal and stressed conditions. As at December
($ in thousands) Carrying
Amount
Within 1 year 1 – 3 years 4 – 5 years Over 5 years
Accounts payable and accrued liabilities(1) $ (221,208) $ (221,208) $ — $ — $ —
Foreign exchange derivatives (1,430) (1,430) — — —
Fuel derivatives (8,763) (8,763) — — —
Long-term debt (1,466,636) (232,461) (447,906) (397,540) (388,729)
Obligations under capital leases (6,822) (943) (527) (490) (4,862)
Total $ (1,704,859) $ (464,805) $ (448,433) $ (398,030) $ (393,591)
(1) Excludes fuel-derivative liabilities of $8,763 and foreign exchange derivative liabilities of $1,430.