Air Canada 2006 Annual Report Download - page 39

Projected Cash Payments for Committed Aircraft Deliveries
The following table provides Air Canada Services' cash principal payments for the future firm aircraft deliveries
for the years 2007 through to 2011. Jazz has no projected principal repayments relating to new deliveries in
these years.
The projected principal repayments disclosed below are based on the assumption that all aircraft acquisitions
will be financed under debt. Air Canada has not yet decided whether certain aircraft acquisitions will be financed
under debt or operating lease arrangements.
($ millions)
2007
2008
2009
2010
2011
Principal repayment on aircraft-related long-term debt(1)(2) 25 94 132 156 201
(1) US dollar amounts are converted using the December 31, 2006 noon day rate of $1.1653. Final aircraft delivery
prices include estimated escalation and, where applicable, deferred price delivery payment interest calculated
based on the 90-day USD LIBOR rate at December 31, 2006.
(2) The projected principal repayment amounts reflect certain loan commitments received and Management's best
estimate as to market terms available.
9.7 Pension Plan Cash Funding Obligations
As at December 31, 2006 and based on the January 1, 2006 solvency valuations, the table below provides
projections for the Corporation’s cash pension plan funding obligations for the years 2007 through to 2011. The
final funding obligation for 2007 will be determined based on the January 1, 2007 valuation.
($ millions)
2007
2008
2009
2010
2011
Past service costs for domestic registered plans 248 242 245 246 246
Current service costs for domestic registered plans 155 160 165 170 175
Other pension arrangements
(1) 86 86 65 69 74
Air Canada Services
489 488 475 485 495
Jazz
9 9 9 9 7
Consolidated total 498 497 484 494 502
(1) Includes retirement compensation arrangements, supplemental plans and international plans.
The above pension funding requirements are in respect of all the Corporation’s pension arrangements. The
most recent actuarial valuation is as at January 1, 2006 and the effective date of the next required actuarial
valuation is January 1, 2007. For domestic registered pension plans, the funding requirements are based on
the minimum past service contributions disclosed in the January 1, 2006 valuations plus a projection of the
current service contributions based upon the January 1, 2006 actuarial valuation. The required contributions
disclosed above do not reflect actual experience of 2006 and assume no future gains or losses on plan assets
and liabilities over the projection period. The changes in the economic conditions, mainly the return on assets
generated by the fund and the change in interest rates, will impact projected required contributions.
The Corporation maintains several benefit and defined contribution plans providing pension, other retirement
and post-employee benefits to its employees, including those employees of the Corporation who are
contractually assigned to ACTS and Aeroplan. Air Canada’s combined consolidated financial statements
include all of the assets and liabilities of all the Corporation sponsored plans. Employee benefits expense
reflects a cost recovery which is charged to the related parties for those employees currently performing work
for their benefit.
The deficit, on an accounting basis, at December 31, 2006 for pension benefits was $1.4 billion compared to
$2.5 billion at December 31, 2005. The decrease in the accounting deficit was mainly the result of a return on
plan assets of approximately 13.8 percent during 2006 and funding of past service contributions of $261 million.
The solvency deficit on the registered pension plans at January 1, 2007 is also expected to decrease
significantly compared to January 1, 2006 and, as a result, employer contributions determined in accordance
with regulations are expected to decline by $90 million in 2007 and $120 million each year thereafter.
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Management's Discussion and Analysis of Results and Financial Condition