attached is the vertical and horizontal analysis of two companies A and B, please review this and provide key observations and recommendations when compared to each other

Vertical Analysis in Milions- Company B Air Canada December 31 (In Millions) (C 2018 2017 Amount Percent (%) Amount Operating revenues Passenger Cargo Other Total revenues Operating expenses Aircraft fuel Regional airlines expense Wages, salaries and benefits Airport and navigation fees Aircraft maintenance Depreciation, amortization and impairment Sales and distribution costs Ground package costs Aircraft rent Catering and onboard services Communications and information technology Special items Other Total operating expenses Operating income Non-operating income (expense) Foreign exchange gain (loss) Interest income Interest expense Interest capitalized Net financing expense relating to employee benefits Gain (loss) on financial instruments recorded at fair value Gain on sale and leaseback of assets Gain on debt settlements and modifications Loss on disposal of assets Other Total non-operating expense Income before income taxes Income tax (expense) recovery Net income Net income per share Basic earnings per share Diluted earnings per share 16,223 803 1,039 $ 18,065 90% 4% 6% 100% 14,593 708 951 $ 16,252 3,969 2,842 2,873 964 1,003 1,080 807 602 518 433 294 1,506 $ 16,891 1,174 (317) 108 (331) 35 (50) (1) 23% 17% 17% 6% 6% 6% 5% 4% 3% 3% 2% 9% 100% 2,927 2,617 2,671 905 938 956 770 538 503 383 254 30 1,389 $ 14,881 1,371 120 60 (311) 36 (65) 23 9 (188) (34) ($769) 405 (238) $ 167 -1% 24% 4% 100% 0.61 0.60 41% -14% 43% -5% 7% 0% 52 21 (21) ($85) 1,286 743 $ 2,029 7.44 7.31 Air Canada mber 31 (In Millions) (CAD) 2017 2016 Percent (%) Amount Percent (%) 90% 4% 6% 100% $ 13,148 512 1,017 $ 14,677 90% 3% 7% 100% 20% 18% 18% 6% 6% 6% 5% 4% 3% 3% 2% 0% 9% 100% 2,279 2,408 2,510 859 880 816 703 489 462 349 242 91 1,244 $ 13,332 1,345 (38) 48 (374) 58 (76) 4 17% 18% 19% 6% 7% 6% 5% 4% 3% 3% 2% 1% 9% 100% 19 (89) (20) ($468) 877 (1) $ 876 -4% 19% 4% 100% -141% -71% 366% -42% 76% -27% -61% -25% 25% 100% $ 3.16 $ 3.10 8% -10% 80% -12% 16% -1% Vertical Analysis in Milions- Company B Company B Assets Current Cash and cash equivalents Short-term investments Total cash, cash equivalents and short-term investments Restricted cash Accounts receivable Promissory notes receivable Aircraft fuel inventory Spare parts and supplies inventory Prepaid expenses and other current assets Total current assets Deposits and other assets Property and equipment Pension assets Intangible assets Goodwill Deferred income tax Total assets Liabilities Current Accounts payable and accrued liabilities Advance ticket sales Current portion of long-term debt and finance leases Total current liabilities Long-term debt and finance leases Pension and other benefit liabilities Maintenance provisions Other long-term liabilities Deferred income tax Total liabilities Shareholders' Equity Share capital Contributed surplus Hedging reserve December 31 (In Millions) (CAD) 2018 2017 Amount Percent (%) Amount Percent (%) 630.0 4077.0 3.3% 21.2% 642 3,162 3.6% 17.9% $ 4,707 161.0 796.0 109.0 111.0 417.0 $ 6,301 444 9,729 1,969 404 311 39 $ 19,197 24.5% 0.8% 4.1% 0.6% 0.6% 2.2% 8.3% 2.3% 50.7% 10.3% 2.1% 1.6% 0.2% 100% $ 3,804 148 814 91 115 325 $ 5,297 465 9,252 1,583 318 311 472 $ 17,698 21.5% 0.8% 4.6% 0.5% 0.6% 1.8% 29.9% 2.6% 52.3% 8.9% 1.8% 1.8% 2.7% 100% 1,927 2,717 13% 18% 1,961 2,469 14% 17% 455 5,099 6,197 2,547 1,118 151 52 $ 15,164 3% 34% 41% 17% 7% 1% 0% 100% 671 5,101 5,448 2,592 1,003 167 49 $ 14,360 5% 36% 38% 18% 7% 1% 0% 100% 798 75 - 4% 0% - 799 69 - 4% 0% - Retained earnings Total shareholders' equity Non-controlling interests Total shareholders' equity Total liabilities and shareholders' equity 3,160 4,033.0 $ 19,197 16% - 2,554 3,422.0 $ 17,782 14% 100% Millions) (CAD) 2016 Amount Percent (%) $ 787 2,192 5.2% 14.5% $ 2,979 126 707 79 107 349 $ 4,347 468 8,520 1,153 315 311 $ 15,114 19.7% 0.8% 4.7% 0.5% 0.7% 2.3% 28.8% 3.1% 56.4% 7.6% 2.1% 2.1% $ 1,644 2,073 12% 15% 707 4,424 5,911 2,436 922 202 $ 13,895 5% 32% 43% 18% 7% 1% 100% 797 83 3 5% 1% - 100% 336 1,219.0 $ 15,114 2% 8% 100% Horizontal analysis- In Millions Company B Assets Current Cash and cash equivalents Short-term investments Total cash, cash equivalents and short-term investments Restricted cash Accounts receivable Promissory notes receivable Aircraft fuel inventory Spare parts and supplies inventory Prepaid expenses and other current assets Total current assets Deposits and other assets Property and equipment Pension assets Intangible assets Goodwill Deferred income tax Total assets Liabilities Current Accounts payable and accrued liabilities Advance ticket sales Current portion of long-term debt and finance leases Total current liabilities Long-term debt and finance leases Pension and other benefit liabilities Maintenance provisions Other long-term liabilities Deferred income tax Total liabilities Shareholders' Equity Share capital Contributed surplus Hedging reserve Retained earnings 2018 2017 Amount Amount 630.0 4077.0 642 3,162 $ 4,707 $ 3,804 161.0 148 796.0 814 109.0 91 111.0 115 417.0 325 $ 6,301 $ 5,297 444 465 9,729 9,252 1,969 1,583 404 318 311 311 39 472 $ 19,197 $ 17,698 1,927 2,717 1,961 2,469 455 671 5,099 5,101 6,197 5,448 2,547 2,592 1,118 1,003 151 167 52 49 $ 15,164 $ 14,360 798 75 3,160 799 69 2,554 2016 Amount $ 787 2,192 $ 2,979 126 707 79 107 349 $ 4,347 468 8,520 1,153 315 311 $ 15,114 $ 1,644 2,073 707 4,424 5,911 2,436 922 202 $ 13,895 797 83 3 336 Total shareholders' equity Non-controlling interests Total shareholders' equity Total liabilities and shareholders' equity 4,033.0 3,422.0 $ 19,197 $ 17,782 1,219.0 $ 15,114 2018 (YoY change in %) Amount 2017 (YoY change in %) Amount -2% 29% -23% 31% 24% 9% -2% 20% -3% 28% 19% -5% 5% 24% 27% 0% -92% 8% -2% 10% 22% 15% 13% 13% 7% -7% 18% -1% 8% 27% 1% 0% 15% 16% 16% -32% 0% 14% -2% 11% -10% 6% 6% 0% 9% 24% -5% 13% -8% 6% 8% -21% 3% 0% -20% 87% 18% 8% 64% 15% Horizontal analysis- In Millions Company B Operating revenues Passenger Cargo Other Total revenues Operating expenses Aircraft fuel Regional airlines expense Wages, salaries and benefits Airport and navigation fees Aircraft maintenance Depreciation, amortization and impairment Sales and distribution costs Ground package costs Aircraft rent Catering and onboard services Communications and information technology Special items Other Total operating expenses Operating income Non-operating income (expense) Foreign exchange gain (loss) Interest income Interest expense Interest capitalized Net financing expense relating to employee benefits Gain (loss) on financial instruments recorded at fair value Gain on sale and leaseback of assets Gain on debt settlements and modifications Loss on disposal of assets Other Total non-operating expense Income before income taxes Income tax (expense) recovery Net income Net income per share Basic earnings per share 2018 Amount 2017 Amount 16,223 803 1,039 $ 18,065 14,593 708 951 $ 16,252 3,969 2,842 2,873 964 1,003 1,080 807 602 518 433 294 1,506 $ 16,891 1,174 (317) 108 (331) 35 (50) (1) 2,927 2,617 2,671 905 938 956 770 538 503 383 254 30 1,389 $ 14,881 1,371 120 60 (311) 36 (65) 23 9 (188) (34) ($769) 405 (238) $ 167 52 21 (21) ($85) 1,286 743 $ 2,029 0.61 7.44 Diluted earnings per share 0.60 7.31 2016 Amount 2018 (YoY change in %) Amount 2017 (YoY change in %) Amount $ 13,148 512 1,017 $ 14,677 11% 11% 13% 57% 9% 2% 11% 23% - - 36% 74% 9% 18% 8% 14% 7% 12% 2,279 2,408 2,510 859 880 816 703 489 462 349 242 91 1,244 $ 13,332 1,345 (38) 48 (374) 58 (76) 4 19 (89) (20) ($468) 877 (1) $ 876 $ 3.16 7% 14% 13% 32% 5% 15% 12% 23% 3% 12% 13% 24% 16% 21% - - 8% 21% 14% 27% -14% -13% - - -364% 734% 80% 125% 6% -11% -3% -40% -23% -34% -104% -125% - - -57% - - - 62% 70% 805% 64% -69% -54% -132% 23700% -92% -81% - - -92% -81% $ 3.10 -92% -81% Vertical analysis Assets Current assets: Cash and cash equivalents Marketable securities Total cash, cash equivalents and marketable securities Restricted cash Accounts receivable Prepaid expenses, deposits and other Inventory Total current assets Non-current assets: Property and equipment Intangible assets Other assets Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities Advance ticket sales Deferred rewards program Non-refundable guest credits Current portion of maintenance provisions Current portion of long-term debt Total current liabilities Maintenance provisions Long-term debt Other liabilities Deferred income tax Total liabilities Share capital Equity reserves Hedge reserves Retained earnings Total shareholders' equity Total liabilities and shareholders' equity Company A December 31 (In thousands) (CAD) 2018 2017 Amount Percentage Amount 1,185,806 93,771 1,279,577 18% 1% 19% 1,147,076 226,090 1,373,166 115,615 145,544 190,242 39,742 1,770,720 1,770,720 4,814,200 54,851 118,284 6,758,055 2% 2% 3% 1% 26% 26% 71% 1% 2% 100% 109,700 129,648 138,676 43,045 1,794,235 1,794,235 4,567,504 59,517 78,584 6,499,840 654,422 695,367 224,608 62,914 101,852 536,044 2,275,207 278,898 1,442,913 33,512 424,958 4,455,488 548,979 106,655 6,856 1,640,077 2,302,567 6,758,055 15% 16% 5% 1% 2% 12% 51% 6% 32% 1% 10% 100% 8% 2% 0% 24% 34% 100% 549,844 695,111 203,433 43,288 82,129 153,149 1,726,954 270,347 1,895,898 19,171 374,946 4,287,316 548,977 97,514 (1,902) 1,567,935 2,212,524 6,499,840 Company A ber 31 (In thousands) (CAD) 2017 2016 Amount Percentage Percentage 18% 3% 21% 1,520,822 1,520,822 25% 25% 2% 2% 2% 1% 28% 28% 70% 1% 1% 100% 102,649 127,785 181,070 33,535 1,965,861 1,965,861 4,036,880 66,187 95,368 6,164,296 2% 2% 3% 1% 32% 32% 65% 1% 2% 100% 13% 16% 5% 1% 2% 4% 40% 6% 44% 0% 9% 100% 8% 2% 0% 24% 34% 100% 547,490 626,635 155,567 42,942 103,571 145,128 1,621,333 262,663 1,901,530 8,374 309,694 4,103,594 555,716 93,039 (11,003) 1,422,950 2,060,702 6,164,296 13% 15% 4% 1% 3% 4% 40% 6% 46% 0% 8% 100% 9% 2% 0% 23% 33% 100% Vertical analysis Company A December 31 (In thousands) (CAD) 2018 2017 Amount Percent (%) Amount Revenue: Guest Other Total Revenue Operating expenses: Aircraft fuel Salaries and benefits Rates and fees Depreciation and amortization Sales and marketing Maintenance Aircraft leasing Other Employee profit share Total operating expenses Operating income Non-operating income (expense): Finance income Finance cost Gain (loss) on foreign exchange Gain (loss) on disposal of property and equipment Gain (loss) on derivatives Total non-operating expense Earnings before income tax Current Deferred Total non-operating expense Net earnings Earnings per share: Basic Diluted 4,483,529 249,933 4,733,462 95% 5% 100% 3,822,045 680,275 4,502,320 1,231,632 999,381 691,293 429,906 440,292 232,053 139,703 398,038 15,937 4,578,235 155,227 27% 22% 15% 9% 10% 5% 3% 9% 0% 100% 950,043 935,145 644,763 403,021 384,452 203,227 165,902 330,014 46,793 4,063,360 438,960 29,421 (57,027) 2,966 4,049 1,246 (19,345) 135,882 14,812 29,605 44,417 91,465 -152% 295% -15% -21% -6% 100% 19,626 (53,710) (4,877) 6,562 (2,426) (34,825) 404,135 58,645 61,912 120,557 283,578 0.80 0.80 2.44 2.42 Company A mber 31 (In thousands) (CAD) 2017 2016 Percent (%) Amount Percent (%) 85% 15% 100% 3,556,941 565,918 4,122,859 86% 14% 100% 23% 23% 16% 10% 9% 5% 4% 8% 1% 100% 765,867 854,056 617,573 350,484 356,745 209,226 178,445 291,024 59,342 3,682,762 440,097 19% 21% 15% 9% 9% 5% 4% 7% 1% 91% -56% 154% 14% -19% 7% 100% 16,618 (49,074) 7,402 (3,314) 4,504 (23,864) 416,233 133,055 (12,280) 120,775 295,458 -70% 206% -31% 14% -19% 100% 2.46 2.45 Horizontal analysis- In thousands Company A Revenue: Guest Other Operating expenses: Aircraft fuel Salaries and benefits Rates and fees Depreciation and amortization Sales and marketing Maintenance Aircraft leasing Other Employee profit share Earnings from operations Non-operating income (expense): Finance income Finance cost Gain (loss) on foreign exchange Gain (loss) on disposal of property and equipment Gain (loss) on derivatives Earnings before income tax Income tax expense (recovery): Current Deferred Net earnings Earnings per share: Basic Diluted 2018 Amount 4,483,529 249,933 1,231,632 999,381 691,293 429,906 440,292 232,053 139,703 398,038 15,937 4,578,235 155,227 2017 Amount 3,822,045 680,275 4,502,320 950,043 935,145 644,763 403,021 384,452 203,227 165,902 330,014 46,793 4,063,360 438,960 29,421 (57,027) 2,966 4,049 1,246 (19,345) 135,882 19,626 (53,710) (4,877) 6,562 (2,426) (34,825) 404,135 14,812 29,605 44,417 91,465 58,645 61,912 120,557 283,578 0.80 0.80 2.44 2.42 A 2016 Amount 3,556,941 565,918 4,122,859 765,867 854,056 617,573 350,484 356,745 209,226 178,445 291,024 59,342 3,682,762 440,097 16,618 (49,074) 7,402 (3,314) 4,504 (23,864) 416,233 133,055 (12,280) 120,775 295,458 2.46 2.45 2018 (YoY change in %) Amount 17% -63% -100% 30% 7% 7% 7% 15% 14% -16% 21% -66% 13% -65% 50% 6% -161% -38% -151% -44% -66% -75% -52% -63% -68% -67% -67% 2017 (YoY change in %) Amount 7% 17% 8% 19% 9% 4% 13% 7% -3% -8% 12% -27% 9% 0% 15% 9% 252% 151% 286% 31% -3% -127% 120% 0% -4% -1% -1% Horizontal analysis- In thousands Company A Assets Current assets: Cash and cash equivalents Marketable securities Total cash, cash equivalents and marketable securities Restricted cash Accounts receivable Prepaid expenses, deposits and other Inventory Non-current assets: Property and equipment Intangible assets Other assets Total assets Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities Advance ticket sales Deferred rewards program Non-refundable guest credits Current portion of maintenance provisions Current portion of long-term debt Non-current liabilities: Maintenance provisions Long-term debt Other liabilities Deferred income tax Total liabilities Share capital Equity reserves Hedge reserves Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 2018 2017 1,185,806 93,771 1,279,577 1,147,076 226,090 1,373,166 115,615 145,544 190,242 39,742 1,770,720 4,814,200 54,851 118,284 6,758,055 109,700 129,648 138,676 43,045 1,794,235 4,567,504 59,517 78,584 6,499,840 654,422 695,367 224,608 62,914 101,852 536,044 549,844 695,111 203,433 43,288 82,129 153,149 1,726,954 270,347 1,895,898 19,171 374,946 4,287,316 548,977 97,514 (1,902) 1,567,935 2,212,524 6,499,840 278,898 1,442,913 33,512 424,958 4,455,488 548,979 106,655 6,856 1,640,077 2,302,567 6,758,055 2016 1,520,822 1,520,822 102,649 127,785 181,070 33,535 1,965,861 4,036,880 66,187 95,368 6,164,296 547,490 626,635 155,567 42,942 103,571 145,128 1,621,333 262,663 1,901,530 8,374 309,694 4,103,594 555,716 93,039 (11,003) 1,422,950 2,060,702 6,164,296 2018 (YoY change in 2017 (YoY change in %) %) 3% -59% -33% - -7% 5% 12% 37% -8% -1% 5% -8% 51% 4% 19% 0% 10% 45% 24% 250% -100% 3% -24% 75% 13% 4% 0% 9% -460% 5% 4% 4% -11% 6% 1% -31% 22% -10% 12% -11% -21% 5% 0% 10% 24% 1% -26% 5% 6% 3% 0% 56% 17% 4% -1% 5% -478% 9% 7% 5%