Air Canada 2008 Annual Report Download - page 36

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2008 Air Canada Annual Report
36
9. FINANCIAL AND CAPITAL MANAGEMENT
9.1 FINANCIAL POSITION
The following table provides the financial position of Air Canada as at December 31, 2008 and as at December 31, 2007.
Condensed Statement of Financial Position
(Canadian dollars in millions)
December31,
2008
December31,
2007
Assets
Cash, cash equivalents and short-term investments $ 1,005 $ 1,239
Other current assets 1,398 1,222
Current assets 2,403 2,461
Property and equipment 7,469 7,919
Intangible assets 997 952
Deposits and other assets 495 488
$ 11,364 $ 11,820
Liabilities
Current liabilities $ 3,856 $ 2,939
Long-term debt and capital leases 4,691 4,006
Pension and other benefits liabilities 1,407 1,824
Other long-term liabilities 458 424
10,412 9,193
Non-controlling interest 190 184
Shareholders’ equity 762 2,443
$ 11,364 $ 11,820
Net assets of the Corporation declined $1,681 million during the year reflecting the loss for the year of $1,025 million and
the loss in the fair value of the Corporation’s fuel derivatives recorded in other comprehensive income. The loss for the year
was significantly impacted by losses on the Corporation’s US denominated debt and the provision for cargo investigations
of $125 million. Movements in current assets and liabilities are described below under “Working Capital”.
Property and equipment amounted to $7,469 million at December 31, 2008, a reduction of $450 million from December
31, 2007, mainly due to the impact of depreciation expense of $646 million recorded during the year. In 2008, the impact
of additions to capital assets of $883 million was largely offset by the disposal of assets related to the sale and leaseback
of five Boeing 777 aircraft.
Long-term debt and capital leases, including the current portion, amounted to $5,354 million at December 31, 2008,
an increase of $935 million from December 31, 2007. The increase was mainly due to a substantial depreciation of the
Canadian dollar and the resulting impact on Air Canada’s US denominated debt, which amounted to approximately $985
million. In 2008, the impact of additional borrowings of $871 million, which included new financings raised during the
fourth quarter of 2008 amounting to $434 million, was more than offset by long-term debt and capital lease repayments
of $992 million.
The decline in pension and other benefits liabilities of $417 million from December 31, 2007 was due to pension funding of
$316 million in excess of pension expense and the reclassification of $132 million from pension and other benefits liabilities
to current liabilities. Refer to section 9.6 of this MD&A for a discussion of Air Canada’s pension funding obligations.