Air Canada 2009 Annual Report Download - page 38

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2009 Air Canada Annual Report
38
10.3 LIQUIDITY
At December 31, 2009, cash, cash equivalents and short-term investments amounted to $1,407 million, or 14% of 2009
operating revenues. Refer to section 13 of this MD&A for a discussion on Air Canada’s liquidity risks.
Working capital
The following table provides additional information on Air Canada’s working capital balances at December 31, 2009 as
compared to December 31, 2008.
(Canadian dollars in millions) December 31, 2009 December 31, 2008 Change $
Cash and short-term investments $ 1,407 $ 1,005 $ 402
Accounts receivable 701 702 (1)
Collateral deposits for fuel derivatives 43 328 (285)
Other current assets 500 368 132
Accounts payable and accrued liabilities (1,215) (1,262) 47
Fuel derivatives in current liabilities (31) (420) 389
Advance ticket sales (1,288) (1,333) 45
Current portion of long-term debt and capital leases (468) (663) 195
$ (351) $ (1,275) $ 924
The working capital defi ciency of $351 million has improved by $924 million from December 31, 2008, largely due to the
fi nancing activities undertaken by Air Canada, as described in section 6 of this MD&A and working capital generated from
operating activities which amounted to approximately $450 million. This was partly offset by pension funding payments of
$389 million and the impact of capital expenditures of $232 million in 2009.
Collateral deposits for fuel derivatives
The Corporation currently holds, within its derivative portfolio, swaps and put option contracts which could expose the
Corporation to the potential of posting cash collateral deposits. Once the fair value in favour of the counterparties of
certain fuel derivatives exceeds certain agreed credit thresholds with those counterparties, the Corporation is responsible
for extending collateral to the counterparties to cover their exposure.
As at January 31, 2010, the total cash collateral deposits held by counterparties amounted to $55 million ($43 million
at December 31, 2009 and $328 million at December 31, 2008). If oil prices remain at their current levels for 2010, the
collateral extended would cover the expected losses on existing fuel hedging contracts maturing in 2010 and would not
generate additional cash outfl ows to the Corporation. Refer to section 13 of this MD&A for a discussion on fuel price risk.
At December 31, 2009, Air Canada’s sensitivity on cash collateral deposits was approximately US$2.5 million for every US$1
change in commodity prices (with increases to commodity prices benefi ting the Corporation by lowering cash collateral
deposit requirements and decreases having the reverse impact).