Air Canada 2011 Annual Report Download - page 36

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2011 Air Canada Annual Report
36
9. FINANCIAL AND CAPITAL MANAGEMENT
9.1. Liquidity
Air Canada manages its liquidity needs through a variety of strategies, which include seeking to achieve positive cash from
operations, sourcing committed financing for new and existing aircraft and through other financing activities.
At December 31, 2011, cash, cash equivalents and short-term investments amounted to $2,099 million, or 18% of 2011
operating revenues (2010 – $2,192 million, or 20% of 2010 operating revenues), exceeding Air Canada’s minimum target
liquidity level of 15% of 12-month trailing operating revenues.
Liquidity needs are primarily related to meeting obligations associated with financial liabilities, capital commitments, ongoing
operations, contractual and other obligations (including pension funding obligations), covenants in credit card and other
agreements. Refer to sections 9.6, 9.7 and 9.8 for schedules of Air Canada’s capital commitments, contractual and pension
funding obligations. Air Canada monitors and manages liquidity risk by preparing rolling cash flow forecasts, monitoring the
condition and value of assets available to be used as well as those assets being used as security in financing arrangements,
seeking flexibility in financing arrangements, and establishing programs to monitor and maintain compliance with terms of
financing agreements. Air Canada’s principal objective in managing liquidity risk is to maintain a minimum unrestricted cash
balance in excess of a target liquidity level of 15% of annual operating revenues.
9.2. Financial Position
The following table provides a condensed statement of financial position of Air Canada as at December 31, 2011 and as at
December 31, 2010.
(Canadian dollars in millions) December 31, 2011 December 31, 2010 Change $
Assets
Cash, cash equivalents and short-term investments $ 2,099 $ 2,192 $ (93)
Other current assets 1,228 1,155 73
Current assets 3,327 3,347 (20)
Property and equipment 5,088 5,629 (541)
Intangible assets 312 317 (5)
Goodwill 311 311 –
Deposits and other assets 595 549 46
Total assets $ 9,633 $ 10,153 $ (520)
Liabilities
Current liabilities $ 3,153 $ 3,124 $ 29
Long-term debt and finance leases 3,906 4,028 (122)
Pension and other benefit liabilities 5,563 3,328 2,235
Maintenance provisions 548 493 55
Other long-term liabilities 469 468 1
Total liabilities 13,639 11,441 2,198
Total equity (4,006) (1,288) (2,718)
Total liabilities and equity $ 9,633 $ 10,153 $ (520)
Movements in current assets and current liabilities are described in section 9.4 of this MD&A. Long-term debt and finance
leases are discussed in section 9.3 of this MD&A.
Property and equipment amounted to $5,088 million at December 31, 2011, a reduction of $541 million from December 31,
2010. The reduction was mainly due to the impact of depreciation expense of $688 million in 2011. Additions to property and
equipment amounted to $160 million in 2011, including progress payments on future aircraft deliveries and facilities of
$77 million, flight equipment including capitalized maintenance events of $64 million, and ground and other equipment of
$14 million.