Westjet 2011 Annual Report Download - page 69

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Notes to Consolidated Financial Statements
For the years ended December 31, 2011 and 2010
(Stated in thousands of Canadian dollars, except share and per share amounts)
│
1. Statement of significant accounting policies
The consolidated annual financial statements of WestJet Airlines Ltd. (the Corporation) for the years ended December 31, 2011
and 2010, were authorized for issue by the Board of Directors on February 7, 2012. The Corporation is a public company
incorporated and domiciled in Canada. The Corporation provides airline service and travel packages. The Corporation’s shares
are publicly traded on the Toronto Stock Exchange. The principal business address is 22 Aerial Place N.E., Calgary, Alberta, T2E
3J1 and the registered office is Suite 1400, 350 - 7 Avenue SW, Calgary, Alberta, T2P 3N9.
(a) Basis of presentation
These consolidated annual financial statements and the notes thereto have been prepared in accordance with IAS 1 –
Presentation of financial statements under International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
These are the Corporation’s first consolidated annual financial statements prepared in accordance with IFRS. For all periods up to
and including December 31, 2010, the Corporation prepared its consolidated financial statements in accordance with Canadian
Generally Accepted Accounting Principles (GAAP). In accordance with IFRS 1 – First-time adoption of IFRS, the Corporation has
restated all required prior period financial information to be in accordance with IFRS.
For a description of the accounting policy and financial statement presentation transitional adjustments together with the
reconciliation of financial statement balances from Canadian GAAP to IFRS refer to note 22.
These consolidated annual financial statements have been prepared on a historical cost basis except for certain financial assets
and liabilities, including derivative financial instruments that are measured at fair value. Where applicable, these differences have
been described in the notes hereto.
Amounts presented in these consolidated annual financial statements and the notes hereto are in Canadian dollars, the
Corporation’s reporting currency, unless otherwise stated. The Corporation’s functional currency is the Canadian dollar.
(b) Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Corporation and its wholly owned subsidiaries,
as well as the accounts of five special-purpose entities (SPEs), which are utilized to facilitate the financing of aircraft. The
Corporation has no equity ownership in the SPEs; however, the substance of the relationship between the Corporation and the
SPEs indicates that they are controlled by the Corporation. Accordingly, the accounts of the SPEs have been consolidated in the
Corporation’s financial statements and all intercompany balances and transactions have been eliminated.
(c) Seasonality
The airline industry is sensitive to general economic conditions and the seasonal nature of air travel. The Corporation
experiences increased domestic travel in the summer months and more demand for transborder and international travel over the
winter months, thus reducing the effects of seasonality on net earnings.
(d) Revenue recognition
(i) Guest
Guest revenues, including the air component of vacation packages, are recognized when air transportation is provided. Tickets
sold but not yet used are reported in the consolidated statement of financial position as advance ticket sales.
(ii) Other
Other revenues include charter revenue, cargo revenue, net revenues from the sale of the land component of vacation packages,
ancillary revenues and other.
Charter and cargo revenue is recognized when air transportation is provided.
Revenue for the land component of vacation packages is generated from providing agency services equal to the amount paid by
the guest for products and services, less payment to the travel supplier, and is reported at the net amount received. Revenue
from the land component is deferred as advance ticket sales and recognized in earnings on completion of the vacation.
Ancillary revenues are recognized when the services and products are provided to the guests. Included in ancillary revenues are
fees associated with guest itinerary changes or cancellations, second checked baggage fees, excess baggage fees, buy-on-board
sales, pre-reserved seating fees, and ancillary revenue from the Frequent Guest Program (FGP).
WestJet Annual Report 2011 69