Air Canada 2007 Annual Report Download - page 55

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Management’s Discussion and Analysis of Results and Financial Condition
55
The Relationship between Air Canada and ACE
Certain cash payments and notes received from ACE on the transfer of Air Canada’s investments in Aeroplan, Jazz and ACTS
LP to ACE have been included in Air Canada’s consolidated fi nancial statements as a contribution from ACE to Shareholders’
Equity.
Share purchase rights sold by Air Canada to ACE
During 2007, Air Canada entered into an aircraft transaction with an unrelated third party whereby partial consideration
was paid to Air Canada in the form of a right to acquire shares of the unrelated third party. The transaction related to the
sale by Air Canada of two Airbus A319 aircraft and the sublease by Air Canada of an additional two Airbus A319 aircraft, all
of which was completed in 2007 with the exception of one of the owned A319 aircraft, which was completed in January
2008. Air Canada sold the right to acquire shares received from the unrelated third party to ACE, at fair value, for proceeds
of $1 million.
Warrants purchased from ACE
On November 26, 2007, Air Canada purchased certain share warrants held by ACE for consideration of $4 million. These
warrants are for the purchase of shares of an unrelated third party from which Air Canada purchases services.
Purchase of Air Canada Vacations
In 2007, Air Canada purchased from ACE its 49% interest in Air Canada Vacations causing Air Canada Vacations to be 100%
owned by Air Canada. Consideration for the units was $10. The consideration is accounted for on Air Canada’s statement of
fi nancial position in contributed surplus. Air Canada Vacations remains consolidated within the results of the Corporation.
ACE Master Services Agreement (ACE MSA)
Air Canada provides certain administrative services to ACE in return for a fee. Such services relate to fi nance and accounting,
information technology, human resources and other administrative services.
The related party balances resulting from the payment obligations in respect of the application of the commercial agreements
described above were as follows:
($ millions)
December 31,
2007
December 31,
2006
Accounts receivable
ACE $ 9 $ -
Aeroplan 20 6
ACTS 75 97
Jazz 85 -
$ 189 $ 103
Prepaid Maintenance
ACTS $ 24 $ -
$ 24 $ -
Accounts payable and accrued liabilities
ACE $ - $ 12
ACTS 88 111
Jazz 71 -
$ 159 $ 123