2023 Consolidated Financial Statements and Notes
AIR CANADA
2023 Consolidated Financial Statements and Notes
2. BASIS OF PRESENTATION AND SUMMARY OF MATERIAL ACCOUNTING
POLICIES
The Corporation prepares its financial statements in accordance with generally accepted accounting principles in
Canada ("GAAP") as set out in the CPA Canada Handbook - Accounting ("CPA Handbook") which incorporates
International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS
Accounting Standards").
These financial statements were approved for issue by the Board of Directors of the Corporation on February 15, 2024.
These financial statements are based on the accounting policies described below. These policies have been
consistently applied to all the periods presented.
Amendments to IAS 1, Presentation of Financial Statements - Disclosure of Accounting Policies
In February 2021, the IASB issued amendments to IAS 1 that require entities to disclose material accounting policy
information instead of significant accounting policies. The amendments are effective for annual periods beginning on
or after January 1, 2023. The Corporation adopted this amendment effective the 2023 annual period with no substantial
impact on the disclosure of its accounting policies.
Certain comparative figures have been reclassified to conform to the financial statement presentation adopted for the
current year.
A) BASIS OF MEASUREMENT
These financial statements have been prepared under the historical cost convention, except for the revaluation of cash,
cash equivalents, short-term investments, restricted cash, long-term investments, the equity investment in Chorus, and
derivative instruments which are measured at fair value.
B) PRINCIPLES OF CONSOLIDATION
These financial statements include the accounts of Air Canada and its subsidiaries. Subsidiaries are all entities which
Air Canada controls. For accounting purposes, control is established by an investor when it is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over
the entity. All inter-company balances and transactions are eliminated.
C) PASSENGER AND CARGO REVENUES
Passenger and cargo revenues are recognized when the transportation is provided, except for revenue on unlimited
flight passes which is recognized on a straight-line basis over the period during which the travel pass is valid. The
Corporation has formed alliances with other airlines encompassing loyalty program participation, interline agreements
and code sharing and coordination of services including reservations, baggage handling and flight schedules.
Revenues are allocated based upon formulas specified in the agreements and are recognized as transportation is
provided. Passenger revenue also includes certain fees and surcharges and revenues from passenger-related services
such as seat selection and excess baggage which are recognized when transportation is provided. Passenger revenues
are reduced for any passenger compensation for delayed and cancelled flights paid directly to a customer. Airline
passenger and cargo advance sales are deferred and included in Current liabilities. The Corporation records an
estimate of breakage revenue, which is recorded at the time when transportation was scheduled to be provided, for
tickets that will expire unused. These estimates are based on historical experience and other considerations.
D) CAPACITY PURCHASE AGREEMENT
Air Canada enhances its domestic and transborder network through commercial agreements with regional carriers,
including Jazz. Under these agreements, Air Canada markets, tickets and enters into other commercial arrangements
relating to these flights and records the revenue it earns under Passenger revenue when transportation is provided.
Capacity purchase fees are presented as a separate line item in the consolidated statement of operations and exclude
the component of fees related to aircraft costs which are accounted for as lease liabilities in accordance with IFRS 16.
Pass-through costs, which are direct costs incurred by the regional carriers and charged to the Corporation and other
costs incurred by the Corporation which are directly related to regional carrier operations are included in the line items
to which they relate in the consolidated statement of operations.
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