2023 Consolidated Financial Statements and Notes
AIR CANADA
2023 Consolidated Financial Statements and Notes
adjustment to maintenance accruals and the recognition of future credits that will be available under the amended
agreement. Given the significantly reduced aircraft operations and fleet reductions during the COVID-19 pandemic, this
agreement was amended by the parties to convert the nature of the services from a power-by-the-hour basis to a time
and materials contract and to reduce the number of items covered under the agreement.
K) OTHER OPERATING EXPENSES
Included in Other operating expenses are expenses related to building rent and maintenance, airport terminal handling
costs, professional fees and services, crew meals and hotels, advertising and promotion, insurance costs, and other
expenses. Other operating expenses are recognized as incurred.
L) FINANCIAL INSTRUMENTS
Recognition
Financial assets and financial liabilities, including derivatives, are recognized on the consolidated statement of financial
position when the Corporation becomes a party to the financial instrument or derivative contract.
Classification
The Corporation classifies its financial assets and financial liabilities in the following measurement categories: (i) those
to be measured subsequently at fair value (either through other comprehensive income or through profit or loss) and
(ii) those to be measured at amortized cost. The classification of financial assets depends on the business model for
managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to
be measured at amortized cost unless they are designated as those to be measured subsequently at fair value through
profit or loss (irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and
losses are either recorded in profit or loss or other comprehensive income.
The Corporation reclassifies financial assets when and only when its business model for managing those assets
changes. Financial liabilities are not reclassified.
The Corporation has implemented the following classifications:
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Cash and cash equivalents, short-term investments, restricted cash, and long-term investments are classified as
assets at fair value through profit and loss and any period change in fair value is recorded through Interest income
and Financial instruments recorded at fair value in the consolidated statement of operations, as applicable.
The equity investment in Chorus is classified as an asset at fair value through other comprehensive income and
any period change in fair value is recorded through other comprehensive income in the consolidated statement of
comprehensive income, as applicable.
Accounts receivable and Aircraft-related and other deposits are classified as assets at amortized cost and are
measured using the effective interest rate method. Interest income is recorded in the consolidated statement of
operations, as applicable.
Accounts payable, credit facilities, and long-term debt are classified as other financial liabilities and are measured
at amortized cost using the effective interest rate method. Interest expense is recorded in the consolidated
statement of operations, as applicable.
Measurement
All financial instruments are required to be measured at fair value on initial recognition, plus, in the case of a financial
asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition or issue of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities
carried at fair value through profit or loss are expensed in profit or loss. Financial assets with embedded derivatives are
considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Subsequent to initial recognition, financial assets that are held within a business model whose objective is to collect
the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on
the principal outstanding are generally measured at amortized cost. All other financial assets including equity
investments are measured at their fair values at the end of subsequent accounting periods, with any changes taken
through profit and loss or other comprehensive income (irrevocable election at the time of recognition).
Impairment
The Corporation assesses all information available, including, on a forward-looking basis, the expected credit losses
associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the
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