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Air Canada reports second quarter results; Jazz Air LP no longer consolidated by Air Canada.


Air Canada has reported that as a result of the distribution by ACE Aviation Holdings Inc of units of Jazz Air Income Fund on 24 May 2007, ACE's ownership interest in Jazz Air Income Fund was reduced from 58.8% to 49.0%. Jazz Air Income Fund holds all the outstanding units of Jazz Air LP.

Additionally the airline said that the change in ownership interest gave rise to a reconsideration of which entity should consolidate Jazz and, as a result, Jazz Air Income Fund (and not Air Canada) was deemed to be the primary beneficiary of Jazz under Canadian GAAP Accounting Guideline No. 15 - Consolidation of Variable Interest Entities. As of the distribution date, Air Canada no longer consolidates Jazz and has one reportable segment, while as prior to the distribution date, Air Canada had two reportable segments: Air Canada Services and Jazz.

As a result of the deconsolidation, Air Canada's consolidated results for the second quarter 2007 and for the first six months of 2007 are not directly comparable to Air Canada's consolidated results for the same periods in 2006.

For the second quarter 2007, Air Canada said that its net income of CAD155m compared to a net income of CAD152m in the comparable 2006 quarter. The operating income of CAD88m in the second quarter of 2007 compared to an operating income of CAD113m in the second quarter of 2006, a decline of CAD25m.

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Publication:Airline Industry Information
Article Type:Brief article
Geographic Code:1CANA
Date:Aug 10, 2007
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