Please perform horizontal analysis and provide recommendations

December 31, 2016 (Canadian dollars in millions) Assets Current Cash and cash equivalents Short-term investments Total cash, cash equivalents and short-term investments December 31, December 31, 2017 2018 $ 787 2,192 2,979 642 3,162 630 4,077 Restricted cash Accounts receivable Promissory notes receivable Aircraft fuel inventory Spare parts and supplies inventory 126 707 79 107 148 814 91 115 161 796 109 111 Prepaid expenses and other current assets 349 425 417 $ 15,114 465 9,252 1,583 318 311 456 17,782 444 9,729 1,969 404 311 39 19,197 $ 1,644 1,961 1,927 Advance ticket sales Current portion of long-term debt and finance leases 2,073 707 2,469 671 2,717 455 Total current liabilities Long-term debt and finance leases 4,424 5,911 5,448 6,197 Pension and other benefit liabilities 2,436 2,592 2,547 Maintenance provisions Other long-term liabilities Deferred income tax Total liabilities Shareholders' Equity Share capital 922 202 $ 13,895 1,003 167 49 14,360 1,118 151 52 15,164 797 799 798 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 4,347 468 8,520 1,153 315 311 Contributed surplus Hedging reserve Retained earnings Total shareholders' equity Non-controlling interests Total equity Total liabilities and shareholders' equity 83 3 336 1,219 1,219 $ 15,114 69 2,554 75 3,160 17,782 19,197 (Canadian dollars in millions) 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 December 31, 2016 December 31, 2017 $ 13,148 512 1,017 14,677 14,593 708 951 2,279 2,408 2,510 859 880 816 703 489 462 349 242 91 1,244 13,332 1,345 2,927 2,617 2,671 905 938 956 770 538 503 383 254 30 1,389 (38) 48 (374) 58 (76) 4 19 120 60 (311) 36 (65) 23 52 21 (21) (89) (20) (468) 877 (1) $ 876 1,286 743 2,029 $ 3.16 $ 3.10 7.44 7.31 December 31, 2018 16,223 803 1,039 3,969 2,842 2,873 964 1,003 1,080 807 602 518 433 294 1,506 (317) 108 (331) 35 (50) (1) 9 (188) (34) 405 (238) 167 0.61 0.60 (Canadian dollars in millions) Cash flows from (used for) Operating Net income Adjustments to reconcile to net cash from operations Deferred income tax Depreciation, amortization and impairment Foreign exchange (gain) loss Gain on sale and leaseback of assets Gain on debt settlements and modifications Loss on disposal of assets Employee benefit funding less than expense Financial instruments recorded at fair value Change in maintenance provisions Changes in non-cash working capital balances Other Financing Proceeds from borrowings Reduction of long-term debt and finance lease obligations December December 31, 31, 2016 2017 $ 876 839 (34) (19) 89 299 10 148 194 19 2,029 (759) 984 (183) (52) (21) 237 (14) 125 342 50 2,538 (2,275) 733 Shares purchased for cancellation Distributions related to aircraft special purpose leasing entities (94) (32) (71) Issue of shares Financing fees Net cash flows used in financing activities Investing Short-term investments Additions to property, equipment and intangible assets 2 (2) 137 9 (26) (99) (2,921) (998) 352 351 (9) (2,326) (17) 5 740 (16) 215 572 $ 787 (145) 787 642 Proceeds from sale of assets Proceeds from sale and leaseback of assets Other Net cash flows used in investing activities Effect of exchange rate changes on cash and cash equivalents Decrease in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year December 31, 2018 167 232 1,118 328 (9) 188 257 14 98 267 35 1,210 (73) 5 (12) (848) 11 293 47 (12) 642 630 Share Contributed Hedging Retained capital surplus reserve earnings (Canadian dollars in millions) January 1, 2017 (1) 797 83 3 388 Net income Remeasurements on employee benefit liabilities Fuel derivatives designated as cash flow hedges, net - - (3) 2,029 189 - Total comprehensive income Share-based compensation Shares issued (Note 11) Shares purchased and cancelled under issuer bid (Note 11) 14 (12) (5) - - 9 (59) Reclassification of equity settled award to cash settled award (Note 2i) - (9) - (2) 799 69 - 2,554 Net income Remeasurements on employee benefit liabilities Fuel derivatives designated as cash flow hedges, net - - - 167 503 - Total comprehensive income Share-based compensation Shares issued (Note 11) Shares purchased and cancelled under issuer bid (Note 11) 8 (9) 9 (3) - - (64) December 31, 2018 798 75 - 3,160 December 31, 2017 (1) Total shareholders' equity 1,271 2,029 189 (3) Share capital (Canadian dollars in millions) January 1, 2015 $ 835 Net income Remeasurements on employee benefit liabilities Fuel derivatives designated as cash flow hedges, net - 9 9 (71) Total comprehensive income Share-based compensation Shares issued (Note 11) Shares purchased and cancelled under issuer bid (Note 11) 6 (11) Distributions 3,422 167 503 - 9 5 (73) 4,033 December 31, 2015 (16) $ 825 Net income Remeasurements on employee benefit liabilities Fuel derivatives designated as cash flow hedges, net - Total comprehensive income Share-based compensation Shares issued (Note 11) Shares purchased and cancelled under issuer bid (Note 11) 3 (31) Distributions December 31, 2016 $ 797 Contributed surplus Hedging reserve Retained earnings (deficit) Total shareholders' equity Noncontrolling interests Total equity $ 77 - ($ 2,113) ($ 1,201) $ 68 ($ 1,133) - (11) 303 1,015 - 303 1,015 (11) 5 - 308 1,015 (11) 1 (2) (11) - 1,318 (35) - 1,307 (34) 4 5 - 1,312 (34) 4 - - (47) (63) - (63) - - - - (46) (46) $ 76 ($ 11) ($ 877) $ 13 $ 27 $ 40 - 14 876 412 - 876 412 14 - 876 412 14 8 (1) 14 - 1,288 (12) - 1,302 (4) 2 - 1,302 (4) 2 - - (63) (94) - (94) $ 83 $3 $ 336 $ 1,219 (27) (27) $ 1,219 $