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17. FINANCIAL INSTRUMENTS (CONTINUED)
Sensitivity analyses
The sensitivity analyses shown above are hypothetical and should not be considered predictive of future performance. They only include financial
instruments (derivative and non-derivative) and do not include the future forecast hedged transactions. As the sensitivities are only on financial
instruments the sensitivities ignore the offsetting impact on future forecast transactions which many of the derivatives are hedging. Changes in fair value
can generally not be extrapolated because the relationship of change in assumption to change in fair value may not be linear.In addition, for the purposes
of the above analyses, the effect of a variation in a particular assumption is calculated independently of any change in another assumption. In reality,
changes in one factor may contribute to changes in another, which may magnify or counteract the sensitivities. Furthermore, sensitivities to specific
events or circumstances will be counteracted as far as possible through strategic management actions. The estimated fair values as disclosed should not
be considered indicative of future earnings on these contracts.
LIQUIDITY RISK
Air New Zealand holds significant cash reserves to enable it to meet its liabilities as they fall due and to protect operations from unanticipated external
factors or events.
The following table sets out the contractual, undiscounted cash flows for non-derivative financial liabilities:
GROUP
AS AT 30 JUNE 2010
BALANCE
SHEET
$M
CONTRACTUAL
CASH FLOWS
$M
< 1 YEAR
$M
1-2 YEARS
$M
2-5 YEARS
$M
5+ YEARS
$M
Trade and other payables 352 352 352 - - -
Secured borrowings 263 270 114 71 46 39
Finance lease obligations 812 940 80 83 308 469
Amounts owing to associates 13 13 13 - - -
Total non-derivative liabilities 1,440 1,575 559 154 354 508
GROUP
AS AT 30 JUNE 2009
BALANCE
SHEET
$M
CONTRACTUAL
CASH FLOWS
$M
< 1 YEAR
$M
1-2 YEARS
$M
2-5 YEARS
$M
5+ YEARS
$M
Trade and other payables 374 374 374 - - -
Secured borrowings 391 412 117 123 111 61
Finance lease obligations 888 1,060 82 84 282 612
Amounts owing to associates 1 1 1 - - -
Total non-derivative liabilities 1,654 1,847 574 207 393 673
AIR NEW ZEALAND
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 30 JUNE 2010
33