Airways Annual Report 2019



Credit risk Airways is exposed to credit risk through: a) cash and cash equivalents on deposit with banks; b) interest rate swaps and foreign exchange contracts with counterparties; and c) customers with outstanding receivables. Airways’ primary objective in managing credit risk is to minimise financial loss resulting from counterparties failing to meet obligations. The policies that have been established to meet this objective include: • requiring a credit rating of A1 (short term) or A+ (long term) as rated by Standard and Poor’s, or equivalent credit rating from another internationally recognised rating agency, for all banking and derivative counterparties • setting a maximum exposure of $10 million to any individual counterparty. Adherence to these policies is continuously monitored and reported monthly. There have been no breaches during the current or previous financial year. Airways’ exposure to credit risk is outlined in the balance sheet (showing cash and cash equivalents and derivative financial instruments) and note A6, setting out trade and trade receivables and the current provision in place against these balances. Airways’ five largest customers account for 74% (2018: 73%) of total revenue and 69% (2018: 67%) of total accounts receivable at balance date. No collateral is held over these receivables. No unusual risk has been identified by Airways in relation to these companies, however overdue debts are continuously monitored to identify and address any potential specific credit risks. B2  CAPITAL MANAGEMENT Airways’ primary objectives when managing capital are to safeguard its ability to continue as a going concern and to maintain a target gearing ratio over the medium term (five years). In order to maintain or adjust the capital structure, Airways may adjust the amount of dividends paid to Shareholders; return capital to Shareholders; increase or reduce debt; sell assets; or reduce capital expenditure.


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