Air Canada 2010 Annual Report Download - page 118
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2010 Air Canada Annual Report
118
9. OTHER LONG-TERM LIABILITIES
2010 2009
Unfavourable contract liability on aircraft leases (a) $ 25 $ 31
Proceeds from contractual commitments (b) 107 107
Aircraft rent in excess of lease payments Note 2W 32 41
Long-term employee liabilities (c) 25 33
Workplace safety and insurance board liabilities 42 40
Deferred gains on aircraft sale leasebacks 62 69
Collateral held in leasing arrangements and other deposits 46 33
Other (d) 143 101
$ 482 $ 455
(a) The unfavourable contract liability on aircraft leases represents the net present value of lease payments in excess of
estimated market rents related to lease arrangements that existed on fresh start reporting.
(b) Proceeds from contractual commitments represent non-refundable proceeds received, net of related costs and
deposits, in consideration of various contractual commitments and will be recognized as reductions in the cost of
those contractual commitments when incurred.
(c) The following table outlines the changes to labour related provisions which are included in long-term employee
liabilities:
2010 2009
Beginning of year $ 61 $ 54
Interest accretion 2 3
Charges (credits) recorded in wages, salaries and benefits (2) 30
Amounts disbursed (21) (26)
End of year 40 61
Current portion in Accounts payable and accrued liabilities (15) (28)
$ 25 $ 33
The Corporation offers certain severance programs to certain employees from time to time. The cost of these programs
is recorded within Operating expenses. As a result of a review of the outstanding provisions, it was determined that
a portion of the provision amounting to $3 was no longer required and was adjusted in 2010.
(d) “Other” includes asset retirement obligations of the Corporation. Under the terms of their respective land leases,
each Fuel Facility Corporation has an obligation to restore the land to vacant condition at the end of the lease and to
rectify any environmental damage for which it is responsible. If it were found that the Fuel Facility Corporations had
to contribute to any remediation costs, each contracting airline would share pro rata, based on system usage, in the
costs. For all asset retirement obligations including all Fuel Facility Corporations in Canada in which the Corporation
participates, the Corporation has recorded an obligation of $10 ($40 undiscounted) (2009 - $9 ($40 undiscounted))
representing the present value of the estimated decommissioning and remediation obligations at the end of the
lease using an 8% (2009 - 8%) discount rate, with lease term expiry dates ranging from 2032 to 2039. This estimate
is based on numerous assumptions including the overall cost of decommissioning and remediation and the selection
of alternative decommissioning and remediation approaches.