Air Canada 2014 Annual Report Download - page 50

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50 2014 Annual Report
9.5. CONSOLIDATED CASH FLOW MOVEMENTS
The following table provides the cash flow movements for Air Canada for the periods indicated:
CANADIAN DOLLARS IN MILLIONS
FOURTH QUARTER FULL YEAR
2014 2013 $ Change 2014 2013 $ Change
NET CASH FLOWS FROM OPERATING ACTIVITIES $ 20 $ 68 $ (48) $ 941 $ 731 $ 210
Proceeds from borrowings 200 304 (104) 1,178 1,973 (795)
Reduction of long-term debt and finance lease
obligations (121) (238) 117 (677) (1,646) 969
Issue of common shares, net - 8 (8) 1 14 (13)
Other ----(15) 15
NET CASH FLOWS FROM FINANCING ACTIVITIES 79 74 5 502 326 176
Short-term investments 37 59 (22) (100) (210) 110
Additions to property, equipment and intangible assets (386) (344) (42) (1,501) (962) (539)
Proceeds from sale of assets 4 35 (31) 72 70 2
Other 10 46 (36) (3) 41 (44)
NET CASH FLOWS USED IN INVESTING ACTIVITIES (335) (204) (131) (1,532) (1,061) (471)
DECREASE IN CASH AND CASH EQUIVALENTS (236) (62) (174) (89) (4) (85)
Cash and cash equivalents, beginning of period 897 812 85 750 754 (4)
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 661 $ 750 $ (89) $ 661 $ 750 $ (89)
The following table provides the consolidated calculation of free cash flow for Air Canada for the periods
indicated:
CANADIAN DOLLARS IN MILLIONS
FOURTH QUARTER FULL YEAR
2014 2013 $ Change 2014 2013 $ Change
CASH FLOWS FROM OPERATING ACTIVITIES $ 20 $ 68 $ (48) $ 941 $ 731 $ 210
Additions to property, equipment and intangible assets (386) (344) (42) (1,501) (962) (539)
FREE CASH FLOW (1) $ (366) $ (276) $ (90) $ (560) $ (231) $ (329)
1 Free cash flow is not a recognized measure for financial presentation under GAAP, does not have a standardized meaning and is not comparable to measures presented by other public
companies. Air Canada considers free cash flow to be an indicator of the financial strength and performance of its business because it shows how much cash is generated from the
business after investing in capital assets, which is available to meet ongoing financial obligations, including repaying debt, and reinvesting in Air Canada.
Free cash flow
Cash from operations of $941 million for the full year 2014 improved $210 million versus 2013, consistent with the
improvement in operating income. Negative free cash flow deteriorated $90 million in the fourth quarter of 2014
and $329 million in the full year 2014 from the same periods in 2013. Free cash flow was impacted by the addition
of one Boeing 777-300 and six Boeing 787-8 aircraft in 2014. The decline in free cash flow in the fourth quarter
of 2014 was driven by the addition of two Boeing 787-8 aircraft, as well as changes in non-cash working capital,
particularly the timing of fuel payments when compared to the same quarter in 2013.
Net cash flows used in financing activities
Proceeds from borrowings amounted to $200 million in the fourth quarter of 2014 and $1,178 million in the full
year 2014. In the fourth quarter and the full year 2014, reduction of long-term debt and finance lease obligations
amounted to $121 million and $677 million, respectively. Refer to section 9.3 “Adjusted Net Debt” of this MD&A for
additional information on Air Canada’s financing activities.