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WestJet 2009 Annual Report 71
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
For the years ended December 31, 2009 and 2008
(Stated in thousands of Canadian dollars, except share and per share data)
12. Commitments and contingencies (continued)
(e) Fuel facility corporations
The Corporation has entered into nine arrangements whereby it participates in fuel facility corporations, along with other airlines, to contract for
fuel services at major Canadian airports. The fuel facility corporations operate on a cost recovery basis. The purpose of these corporations is to
own and fi nance the system that distributes fuel to the contracting airlines, including the leasing of land rights, while providing the contracting
airlines with preferential service and pricing over non-participating entities. The operating costs, including debt service requirements, of the
fuel facility corporations are shared pro rata among the contracting airlines. The nine fuel facility corporations are considered variable interest
entities and have not been consolidated within the Corporation’s accounts. In the remote event that all other contracting airlines withdraw from
the arrangements and the Corporation remained as sole member, it would be responsible for the costs of the fuel facility corporations, including
debt service requirements. As at November 30, 2009, the nine fuel facility corporations have combined total assets of approximately $341,487
and debt of approximately $307,825.
(f) Contingencies
The Corporation is party to legal proceedings and claims that arise during the ordinary course of business. It is the opinion of management that
the ultimate outcome of these and any outstanding matters will not have a material effect upon the Corporation’s fi nancial position, results of
operations or cash fl ows.
13. Financial instruments and risk management
(a) Fair value of fi nancial assets and fi nancial liabilities
The Corporation’s fi nancial assets and liabilities consist primarily of cash and cash equivalents, accounts receivable, derivatives both designated
and not designated in an effective hedging relationship, deposits, accounts payable and accrued liabilities, long-term debt and capital lease
obligations. The following tables set out the Corporation’s classifi cation and the carrying amount, together with the fair value, for each type of its
fi nancial assets and liabilities as at December 31, 2009 and 2008:
Fair value Amortized cost Totals
2009
Held-for-
trading Derivatives
Loans and
receivables
Other fi nancial
liabilities
Carrying
amount
Fair
value
Asset (liability)
Cash and cash equivalents $ 1,005,181 $ — $ — $ — $ 1,005,181 $ 1,005,181
Accounts receivable — — 27,654 — 27,654 27,654
Foreign exchange derivatives (i) — (1,249) — — (1,249) (1,249)
Fuel derivatives (ii) — (8,667) — — (8,667) (8,667)
Deposits (iii) 27,264 — — — 27,264 27,264
Accounts payable and accrued
liabilities (iv) —— — (221,208) (221,208) (221,208)
Long-term debt (v) — — — (1,219,777) (1,219,777) (1,323,120)
Obligations under capital leases (vi) — — — (4,102) (4,102) (4,102)
$ 1,032,445 $ (9,916) $ 27,654 $ (1,445,087) $ (394,904) $ (498,247)