2023 Consolidated Financial Statements and Notes
AIR CANADA
2023 Consolidated Financial Statements and Notes
Right-of-use assets are accounted for under IAS 16 Property, Plant and Equipment. Aircraft recorded as right-of-use
assets have the same accounting policies as directly owned aircraft, meaning the right-of-use assets are
componentized and depreciated over the lease term. Consistent with owned aircraft, any qualifying maintenance events
are capitalized and depreciated over the lesser of the lease term and expected maintenance life.
Changes to the terms and conditions, or events impacting the extension of a lease would usually require an assessment
of whether it is a lease modification which could involve recalculating lease assets and liabilities using a revised discount
rate.
Maintenance provisions for end-of-lease return obligations are recorded, as applicable, on aircraft leases as a
maintenance expense over the term of the lease. Any changes to the provision for end-of-lease conditions are
recognized as an adjustment to the right-of-use asset and subsequently amortized to the income statement over the
remaining term of the lease.
Aircraft Leases
As at December 31, 2023 the Corporation had 75 aircraft under right-of-use leases (71 aircraft as at December 31,
2022), and recorded such aircraft as right-of-use assets and lease liabilities of Air Canada in accordance with the
requirements of IFRS 16. Additionally, Air Canada is the lessee in respect of certain aircraft used by its regional carrier,
Jazz, providing services under a capacity purchase agreement and recorded such aircraft as right-of-use assets and
lease liabilities of Air Canada. As at December 31, 2023, there were 81 aircraft (99 aircraft as at December 31, 2022)
operating under these arrangements on behalf of Air Canada.
Property Leases
The Corporation has leases related to airport terminal operations space and other real estate leases. For leases related
to terminal operations space, there are generally effective substitution rights in the hands of the lessor and therefore
these are not considered lease contracts under the standard. Leases with reciprocal termination rights with a notice
period of less than 12 months are considered short-term leases and therefore excluded from balance sheet recognition
under the practical expedient. Finally, those airport terminal contracts with entirely variable lease payments are also
excluded since variable lease payments, other than those based on an index or rate, are excluded from the
measurement of the lease liability. This results in a portfolio of property leases that are recorded as right-of-use assets
and lease liabilities under the standard which relate to dedicated space in Air Canada's hub locations of Toronto,
Montreal and Vancouver, lease contracts on building space dedicated to the Corporation for offices, airport and
maintenance operations, Maple Leaf Lounges and land leases.
S) INTANGIBLE ASSETS
Intangible assets are initially recorded at cost. Indefinite life intangible assets are not amortized while assets with finite
lives are amortized on a straight-line basis over their estimated useful lives.
International route rights and slots
Marketing-based trade names
Technology-based (internally developed)
Contract-based (Aeroplan commercial agreements)
Remaining
Estimated
amortization
Useful
Life
period as at
December 31,
2023
Indefinite
Indefinite
5 to 15 years
Not applicable
Not applicable
1 to 12 years
11.5 years
7 years
Air Canada has international route rights and slots which enable the Corporation to provide services internationally.
The value of the recorded intangible assets relates to the cost of route and slot rights at Tokyo's Narita International
Airport, Washington's Reagan National Airport and London's Heathrow Airport.
Air Canada and certain of its subsidiaries have trade names, trademarks, and domain names (collectively, "Trade
Names"). These items are marketing-based intangible assets as they are primarily used in the sale and promotion of
Air Canada's and/or a subsidiary's products and services. If there were plans to cease using any of the Trade Names,
the specific names would be classified as finite and amortized over the expected remaining useful life.
Development costs that are directly attributable to the design, development, implementation and testing of identifiable
software products are recognized as technology-based intangible assets if certain criteria are met, including technical
feasibility and intent and ability to develop and use the technology to generate probable future economic benefits;
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