Air Canada 2007 Annual Report Download - page 134

2007 Air Canada Annual Report
134
Revenues and expenses with related parties are summarized as follows:
2007* 2006
Revenues
Passenger revenues from Aeroplan related to Aeroplan rewards, net of purchase of Aeroplan miles $ 154 $ 115
Property rental revenues from related parties 46 46
Revenues from information technology services to related parties 28 27
Revenues from corporate services and other 25 14
Aircraft sublease revenues from Jazz 14 -
Air Canada Ground Handling revenues from related parties 33 -
Cargo revenues from related parties 3 4
$ 303 $ 206
Expenses
Maintenance expense for services from ACTS / ACTS Aero $ 631 $ 614
Expense from CPA with Jazz 537 -
Pass through fuel expense from Jazz 197 -
Pass through airport expense from Jazz 120 -
Pass through other expense from Jazz 17 -
Other expenses 12 49
Recovery of wages, salary and benefi t expense for employees assigned to related parties (412 ) (413 )
$ 1,102 $ 250
Net interest expense (income) from related parties $ (1 ) $ 6
* Effective May 24, 2007, the results and fi nancial position of Jazz are not consolidated within Air Canada (Note 1).
In addition to the above revenues and expenses with Jazz, the Corporation transfers fuel inventory and sub leases certain
aircraft to Jazz on a fl ow through basis, which are reported net on the statement of operations.
The Corporation held certain investments in Aeroplan, Jazz and ACTS. As described in Note 3, certain cash payments and
notes received from ACE on transfer of these investments to ACE have been included in these consolidated fi nancial
statements as a contribution from ACE to Shareholders’ Equity.
Summary of signifi cant related party agreements
The Relationship between the Corporation and Aeroplan
ACE has reported holding a 20.1% ownership interest in Aeroplan Income Fund at December 31, 2007. Aeroplan
operates a loyalty program which provides loyalty marketing services to its customers. The transactions between the
Corporation and Aeroplan described below are recorded at the exchange amount and are settled by netting amounts
payable against amounts receivable in accordance with the inter-company agreements with any outstanding balance
paid in the subsequent period. Accordingly, at December 31, 2007 and December 31, 2006, the amounts have been
presented on a net basis as the parties intend to settle on a net basis.
Aeroplan Commercial Participation and Services Agreement (Aeroplan CPSA)
Air Canada and Aeroplan are parties to the Aeroplan CPSA dated June 9, 2004. Pursuant to the Aeroplan CPSA, the
Corporation allocates 8% of the seat capacity to Aeroplan on the fl ights operated by Air Canada and Jazz and certain
other air carriers under the Air Canada code (collectively, the “AC Flights”) at a fi xed redemption cost. In 2007, the
rates charged for such seat capacity were renegotiated in accordance with the Aeroplan CPSA for the period January
1, 2008 through to December 31, 2010. Aeroplan may also purchase an unlimited number of available seats based
on published fares with a variable discount depending on the fare product. Any adjustment to this variable discount
is based on an identifi ed set of parameters. The Aeroplan CPSA also provides that Aeroplan will be charged the lowest
fares charged to any other loyalty program taking into account Aeroplan’s volume purchase of the Corporation’s seat
inventory. The Aeroplan CPSA expires June 29, 2020 with four automatic renewals of fi ve year each, unless either
party provides notice of its intention not to renew at least twelve months prior to the expiry of the applicable term.