Air Canada 2013 Annual Report Download - page 43

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2013 Management’s Discussion and Analysis
43
9. FINANCIAL AND CAPITAL MANAGEMENT
9.1. Liquidity
Air Canada manages its liquidity needs through a variety of strategies which include improving cash from operations, sourcing
committed financing for new and existing aircraft, and through other financing activities.
Liquidity needs are primarily related to meeting obligations associated with financial liabilities, capital commitments, ongoing
operations, contractual and other obligations (including pension funding obligations), and covenants in credit card and other
agreements. Refer to sections 9.6, 9.7 and 9.8 of this MD&A for information on Air Canada’s capital commitments, pension
funding obligations and contractual 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 liquidity level of $1.7 billion. This minimum target level was determined in conjunction with
Air Canada’s liquidity risk management strategy and replaces the previous target of maintaining at least 15% of 12 month
trailing revenues. At December 31, 2013, unrestricted liquidity amounted to $2,364 million or 19% of annual operating
revenues, comprised of cash and short-term investments of $2,208 million and undrawn lines of credit of $156 million. This
compared to unrestricted liquidity of $2,018 million (comprised of cash and short-term investments of $1,973 million and
undrawn lines of credit of $45 million) or 17% of annual operating revenues at December 31, 2012.
9.2. Financial Position
The following table provides a condensed consolidated statement of financial position of Air Canada as at December 31, 2013
and as at December 31, 2012.
(Canadian dollars in millions) December 31, 2013 December 31, 2012 $ Change
Assets
Cash, cash equivalents and short-term investments $ 2,208 $ 1,973 $ 235
Other current assets 1,080 1,028 52
Current assets 3,288 3,001 287
Property and equipment 5,073 4,711 362
Intangible assets 304 314 (10)
Goodwill 311 311 –
Deposits and other assets 494 510 (16)
Total assets $ 9,470 $ 8,847 $ 623
Liabilities
Current liabilities $ 3,190 $ 3,259 $ (69)
Long-term debt and finance leases 3,959 3,259 700
Pension and other benefit liabilities 2,687 4,686 (1,999)
Maintenance provisions 656 571 85
Other long-term liabilities 375 419 (44)
Total liabilities 10,867 12,194 (1,327)
Total equity (1,397) (3,347) 1,950
Total liabilities and equity $ 9,470 $ 8,847 $ 623
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 sections 9.3 and 9.5 of this MD&A.