Air Canada 2010 Annual Report Download - page 141

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Consolidated Financial Statements and Notes
141
As a result of the above agreements, Air Canada’s equity investment in Aveos was recorded at $49, based upon its estimated
fair value. The Term Note of $22 was recorded at its estimated fair value of $11, based on the present value of expected
cash flows on a discounted basis. Other trade receivables from Aveos of $4 were settled. For accounting purposes, $34 for
consideration of agreement amendments is deferred and will be amortized over the terms of the amended agreements with
Aveos of four years, on average. This accounting treatment recorded in the first quarter of 2010 is summarized as follows:
Share consideration received $ 49
Allocated to:
Term Note 11
Trade receivables settled 4
Agreements and contract amendments 34
$ 49
The investment in Aveos common shares is recorded in Deposits and other assets and is carried at cost. The Term Note is
also recorded in Deposits and other assets and is carried at amortized cost.
Aveos Certification Order
On January 31, 2011, the Canada Industrial Relations Board issued an order determining that the sale of Air Canada’s former
aircraft, engine and component maintenance and repair business had occurred within the meaning of the Canada Labour
Code, and establishing Aveos as a distinct employer, bound by separate collective agreements. The issuance of this order
triggers the commencement of the process by which certain employees will transition from Air Canada to employment
with Aveos.
Pursuant to this order and a related separation program, Air Canada may be required to provide up to a maximum of 1,500
separation packages to IAMAW-represented Aveos employees employed as of the date of the order (with each package
including up to a maximum of 52 weeks of pay), in the event that such employees are permanently laid off or terminated
as a direct result of Aveos ceasing to be the exclusive provider of airframe maintenance services to Air Canada prior to
June 30, 2015. These packages will also be made available at any time up to June 30, 2013, in the event of an insolvency,
liquidation or bankruptcy involving Aveos resulting in the cancellation of Air Canada-Aveos contracts and in the termination
or permanent layoff of IAMAW-represented employees. The current expiry date of the airframe maintenance services
agreement is June 30, 2013. The accounting for the separation program will be determined in the first quarter of 2011.