Investor Presentaiton
- 19 -
BUSINESS OF AIR CANADA
Air Canada has two reportable operating segments: Air Canada Services and Jazz. The table below sets forth the
relative financial result of each business activity for the year ended December 31, 2006:
(in millions)
Air Canada Services
AIR CANADA
YEAR ENDED DECEMBER 31, 2006
Jazz (¹)
Inter-
Segment
Elimination
Consolidated
Total
Operating Revenue
Passenger Revenue
Cargo Revenue
Other Revenue(2)
External Revenue.
$8,887
629
$8,887
629
644
$7
651
10,160
7
10,167
Inter-segment Revenue
79
1,374
$(1,453)
10,239
1,381
(1,453)
10,167
Special Charge for Aeroplan Miles (3)...
(102)
(102)
Total Revenue.
10,137
1,381
(1,453)
10,065
Operating Expenses (4)
10,023
1,237
(1,454)
9,806
Operating Income
$ 114
$ 144
$ 1
$ 259
(1) Includes Jazz's operations under the capacity purchase agreement with Air Canada. Jazz is consolidated within Air Canada's financial
statements under Accounting Guideline 15 - Consolidation of Variable Interest Entities. Air Canada consolidates Jazz as Air Canada has
certain contractual interest in Jazz through the Jazz CPA which may require Air Canada to absorb certain variability in the operations of
Jazz and make certain payments to Jazz. Air Canada does not hold any ownership interest in Jazz as at December 31, 2006. See
"Presentation of Segment Information".
(2) Other revenue includes revenues from the sale of the ground portion of vacation packages, ground handling services and other airline
related services, including maintenance services provided by Jazz.
(3) Total revenue includes a special charge of $102 million in connection with Air Canada's obligation for the redemption of pre-2002 Aeroplan
miles. For further details, refer to Note 20 of Air Canada's combined consolidated financial statements for the year ended December 31,
2006, which Note 20 is incorporated herein by reference. Air Canada's combined consolidated financial statements for the year ended
December 31, 2006 are available on SEDAR at www.sedar.com.
(4) Other expenses include a special charge for labor restructuring of $20 million.
The table below sets forth the proportions of passenger revenues derived from domestic, transborder and
international services of Air Canada Services for the years ended December 31, 2006 and December 31, 2005.
Domestic
Transborder.
International
Total......
Air Canada Services
Passenger Revenues (%)
for the years ended December 31
2006
2005
41
42
21
19
38
39
100%
100%
Air Canada is Canada's largest domestic and international airline and the largest provider of scheduled passenger
services in the Canadian market, the Canada-U.S. transborder market and in the international market to and from
Canada.
Jazz is Air Canada's regional affiliate. Air Canada has entered into a capacity purchase agreement with Jazz
pursuant to which Air Canada purchases substantially all of Jazz's fleet capacity based on predetermined rates and
determines the routes and schedule operated by Jazz. During the years ended December 31, 2006 and 2005, Jazz
derived substantially all of its revenues (over 99%) from the purchase by Air Canada of Jazz's fleet capacity. JazzView entire presentation