Air Canada 2007 Annual Report Download - page 130

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2007 Air Canada Annual Report
130
The following information summarizes the fi nancial statement impact of derivatives not designated under fuel hedge
accounting, but held as economic hedges, before the impact of tax:
■ The fair value of outstanding fuel derivatives not under hedge accounting at December 31, 2007 is $10 in favour of
the Corporation.
■ The Non-operating gain for the year ended December 31, 2007 is $26. The amount in Non-operating income (loss)
represents the change in fair value of these contracts (realized and unrealized) for the current year.
Concentration of Credit Risk
The Corporation does not believe it is subject to any signifi cant concentration of credit risk. Cash and short-term investments
are in place with major fi nancial institutions, Canadian governments and major corporations. Accounts receivable are
generally the result of sales of tickets to individuals, often through the use of major credit cards, through geographically
dispersed travel agents, corporate outlets, or other airlines, often through the use of major credit cards. Refer to Note 7 for
a description of ABCP held by the Corporation.
Financial Instrument Fair Values in the Statement of Consolidated Financial Position
The carrying amounts reported in the Consolidated statement of fi nancial position for short term fi nancial assets and
liabilities, which includes cash and short-term investments, accounts receivable and accounts payable approximate fair
values due to the immediate or short-term maturities of these fi nancial instruments. Cash equivalents and short-term
investments are classifi ed as held for trading and therefore are recorded at fair value.
The carrying amounts of foreign currency and interest rate swaps and fuel derivatives is equal to the fair value, which is
based on the amount at which they could be settled based on estimated current market rates.
The following is a comparison of fair value versus carrying value of the Corporation’s long-term debt and capital lease
obligations, as at December 31, 2007, which was estimated using valuation techniques based on current market rates of
interest for similar fi nancial liabilities:
Carrying
Value
Estimated
Fair Value
Direct Corporation debt $ 2,551 $ 2,611
Debt consolidated under AcG-15 896 933
Capital lease obligations 972 1,127
$ 4,419 $ 4,671