Air Canada 2014 Annual Report Download - page 47

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47
2014 Management’s Discussion and Analysis
9. FINANCIAL AND CAPITAL MANAGEMENT
9.1. LIQUIDITY
Air Canada manages its liquidity needs through a variety of strategies including by seeking to sustain and
improve 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. At December 31, 2014, unrestricted liquidity
amounted to $2,685 million (comprised of cash and short-term investments of $2,275 million and undrawn
lines of credit of $410 million). This compared to unrestricted liquidity of $2,364 million (comprised of cash and
short-term investments of $2,208 million and undrawn lines of credit of $156 million) at December 31, 2013.
In January 2015, in order to effectively manage financing costs, the amount outstanding under an undrawn
line of credit was reduced by $116 million. As at January 31, 2015, the amount available under undrawn lines of
credit was $315 million.
9.2. FINANCIAL POSITION
The following table provides a condensed consolidated statement of financial position of Air Canada as at
December 31, 2014 and as at December 31, 2013.
CANADIAN DOLLARS IN MILLIONS DECEMBER 31, 2014 DECEMBER 31, 2013 $ CHANGE
ASSETS
Cash, cash equivalents and short-term investments $ 2,275 $ 2,208 $ 67
Other current assets 1,203 1,080 123
Current assets 3,478 3,288 190
Property and equipment 5,998 5,073 925
Intangible assets 305 304 1
Goodwill 311 311 -
Deposits and other assets 556 494 62
TOTAL ASSETS $ 10,648 $ 9,470 $ 1,178
LIABILITIES
Current liabilities $ 3,537 $ 3,190 347
Long-term debt and finance leases 4,732 3,959 773
Pension and other benefit liabilities 2,403 2,687 (284)
Maintenance provisions 796 656 140
Other long-term liabilities 313 375 (62)
TOTAL LIABILITIES 11,781 10,867 914
TOTAL EQUITY (1,133) (1,397) 264
TOTAL LIABILITIES AND EQUITY $ 10,648 $ 9,470 $ 1,178