Air Canada 2011 Annual Report Download - page 107

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2011 Consolidated Financial Statements and Notes
107
11. PROVISIONS FOR OTHER LIABILITIES
The following table provides a continuity schedule of all recorded provisions. Refer to Note 19 for additional information on
Litigation provisions. Current provisions are recorded in Accounts payable and accrued liabilities.
Maintenance (a) Labour (b) Asset retirement (c) Litigation Total provisions
At December 31, 2010
Current $ $ 15 $ $ 71 $ 86
Non-current 493 25 23 541
493 40 23 71 627
Changes arising during the year $ 64 $ 10 $ $ 74
Amounts disbursed (8) (14) (31) (53)
Changes in estimates 25 (3) (3) 19
Accretion expense 13 2 1 16
Foreign exchange loss 13 13
At December 31, 2011 $ 600 $ 38 $ 21 $ 37 $ 696
Current $ 52 $ 8 $ $ 37 $ 97
Non-current 548 30 21 599
$ 600 $ 38 $ 21 $ 37 $ 696
(a) Maintenance provisions relate to the provision for the costs to meet the contractual return conditions on aircraft under
operating leases. The provision relates to leases with expiry dates ranging from 2012 to 2024 with the average remaining
lease term of approximately four years. The maintenance provisions take into account current costs of maintenance
events, estimates of inflation surrounding these costs as well as assumptions surrounding utilization of the related
aircraft. Assuming the aggregate cost for return conditions increases by 2%, holding all other factors constant, there
would be a cumulative balance sheet adjustment to increase the provision by $12 at December 31, 2011 and an increase
to maintenance expense in 2012 of approximately $1. If the discount rates were to increase by 1%, holding all other
factors constant, there would be a cumulative balance sheet adjustment to decrease the provision by $13 at
December 31, 2011. Due to low market rates of interest, a 1% decrease in discount rates was not considered a reasonable
scenario.
(b) 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 provisions amounting to $3 was no longer required and was adjusted in 2010. The non-current provision is
recorded in Other long-term liabilities.
(c) Under the terms of certain land and facilities leases, the Corporation, including 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. The related leases expire over terms
ranging from 2012 to 2039. These provisions are based on numerous assumptions including the overall cost of
decommissioning and remediation and the selection of alternative decommissioning and remediation approaches. The
non-current provision is recorded in Other long-term liabilities.