Intermediate Financial Accounting Assignment 2022

Intermediate Financial Accounting 2
Intermediate Financial Accounting 2
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Intermediate Financial Accounting 2
Executive Summary (Fact Sheet)
To understand the uniqueness of Air Canada, we have to consider different facts
of this company including its history, market, market share, operation management,
employees, and other relevant information including financials, etc.
History-Air Canada was established in 1936 under the legislation of the Federal
Government of Canada and was under the supervision of Canadian National railways.
The company had started its operation of servicing passengers since 1937. The company
was listed in Canadian stock exchange market in 1988 by offering 43% of its share to the
public. In 2001, the company had acquired Canadian Airlines and in 2003, the company
had filed for bankruptcy protection. (aircanada, n.d)
Market and Market Share- The market share of domestic passengers is 46% of Air
Canada, while the international market share of the company is increased substantially
due to poor performance of different European airlines.
Competitors- As per Statista, main competitors of the company are Westjet,
Porter and Flair for Canadian domestic market of airlines as per seats offered. While Air
Canada occupies 46% of domestic passengers as per seats offered, Westjet occupies 14%,
Porter-5%, Foster-2% and others -14%. (Mazareanu, 2018)
Operations- As per publication of Air Canada dated August 20, 2013; the
company had planned to start a state-of-the-art Operation Centre in Brampton, Ontario.
This operation centre is operative round-the-clock with the total staff capacity of 400
employees and ensures supervision of 600 flights of Air Canada every day. As per the
President and Chief Executive Officer, Calin Rovinescu, this centre would ensure
different level of operation including flight dispatch, revenue management, airport,
operation control, maintenance, cargo, scheduling of crew, management of customer
journey and Air Canada rouge from the same office. This service would ensure safe
journey for the passengers with time-bound deliverance and reasonable comfort level.
This Operational Centre would be responsible for different operational aspects including:
1) Making decision of operating flights by 48 hours of prefixed departure;
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Intermediate Financial Accounting 2
2) Ensuring the deployment of proper resources like crews and the aircraft with
availability;
3) Ensuring flight management with efficiency to ensure safe and timely arrival of
passengers;
4) Combating crisis management including scheduled cancellation and changes,
including changes of aircraft or addition of extra flights for unexpected situations;
5) Ensuring implementation and development of recovery plans for natural disaster
like winter storms. (Canada, 2013)
Officers- the Company runs its operations with the full staff strength of 29,900 as
on 2018.
Financials- the Company has operating revenue of 16.2 billion Canadian Dollars,
operating expense of 16.9 billion Canadian dollars, and total holding assets of
approximately 19.2 billion Canadian dollars. Market value of Air Canada is 6.6 billion
US Dollars.
Other relevant information- other relevant information considered for this
industry is customer satisfaction, derived through emphasizing on four criteria. They are-
1) annual customer complaints; 2) share of Canadian air passengers used Air Canada for
last 12 months, 3) share of Canadians consider the service quality of Air Canada as good
or excellent; and 4) share of Canadians consider the service quality is deteriorating. For
first criterion, complaints lodged in last year are 2380. For second criterion, 39%
Canadian passengers used this airline for their journey. For third criterion, 51% of
Canadian passengers rank service of Air Canada as good or excellent; while 44% of
Canadian passengers think it is deteriorating for last ten years.
Identification of important Annual Report components
Annual report is consisted of different annual financial statements made as per
followed accounting standard with respective notes to understand them easily by the
stakeholders. Basic statements like income statement features the net income of the
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company after statutory compliance of tax and other provisions, consolidated financial
position features the assets, liabilities and equities of the company, cash flow projects the
inflow and outflow of funds. Income statement derives the income of the company by
considering the revenue less respective expenses and statutory tax on profit. This profit is
divided amongst stakeholders as per divisible dividend declared by the management. The
consolidated financial position projects the assets and liabilities of the company with the
basic distinction of current and non-current in nature. Cash flow projects the cash
position of the company.
Investors’ area of interest
The investors are interested in the above three statements to understand historical
financial position of the company. Income statement is considered to know the profit
margin and its %age against revenue with declaration of divisible dividend for last
financial periods. Consolidated financial statement is considered to understand if the
assets are more than liabilities. Cash flow is considered to understand the cash position of
the company. All these three statements are preliminary to understand the financial and
business health of the organization by assessing the historical financial information.
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References
aircanada. (n.d). Air Canada. Retrieved August 7, 2019, from AirCanda.com:
https://www.aircanada.com/ca/en/aco/home.html?
&ef_id=CjwKCAjw7anqBRALEiwAgvGgmxLNwxYlqQCOrSNboIu9HeK6z4BiKXwFKEAgxnajfAwtjPIli
H26ChoC8Y4QAvD_BwE:G:s&s_kwcid=AL!5182!3!220922544913!e!!g!!air
%20canada&acid=EXT:SEM:POS+Asia+Brand%7CIndia%7CBrand%7CExact%7CEn
Canada, A. (2013, Augut 20). Air Canada Opens State-of-the-art Global Operations Centre in Brampton,
Ontario. Retrieved August 7, 2019, from Newswire CA: https://www.newswire.ca/news-
releases/air-canada-opens-state-of-the-art-global-operations-centre-in-brampton-ontario-
512819331.html
Mazareanu, E. (2018, November 27). Major airlines' domestic market share in Canada in 2018*.
Retrieved August 7, 2019, from Stastia: https://www.statista.com/statistics/545642/air-carrier-
canada-domestic-market-share/
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