Leases
The Company’s leases have remaining terms of less than one year to 15 years. Residual value guarantees are also provided on certain vehicle operating leases. Cumulatively, these guarantees are minimal and are not included in lease liabilities as it is not currently probable that any amounts will be owed.
Components of lease expense recognized in the Company's Consolidated Statements of Income for the years ended December 31 are as follows:
| | | | | | | | | | | |
| (in millions of Canadian dollars) | 2025 | 2024 | 2023 |
| Operating lease cost | $ | 115 | | $ | 111 | | $ | 94 | |
| Short-term lease cost | 19 | | 19 | | 29 | |
| Variable lease cost | 5 | | 16 | | 10 | |
| Sublease income | (1) | | (2) | | (1) | |
| | | |
| Finance lease cost | | | |
| Amortization of ROU assets | 14 | | 11 | | 10 | |
| Interest on lease liabilities | 1 | | 2 | | 2 | |
| Total lease costs | $ | 153 | | $ | 157 | | $ | 144 | |
ROU Assets and Lease Liabilities recognized in the Company's Consolidated Balance Sheets are as follows:
| | | | | | | | | | | |
As at December 31
(in millions of Canadian dollars) | Classification | 2025 | 2024 |
| ROU Assets | | | |
| Operating leases | Other assets (long-term) | $ | 422 | | $ | 364 | |
| Finance leases | Properties | 100 | | 102 | |
| | | |
| Lease Liabilities | | | |
| Current liabilities | | | |
| Operating leases | Accounts payable and accrued liabilities | 111 | | 112 | |
| Finance leases | Long-term debt maturing within one year | 17 | | 14 | |
| Long-term liabilities | | | |
| Operating leases | Other long-term liabilities | 299 | | 254 | |
| Finance leases | Long-term debt | 10 | | 21 | |
The following table provides the Company's weighted-average remaining lease terms and discount rates:
| | | | | | | | |
| 2025 | 2024 |
| Weighted-Average Remaining Lease Term | | |
| Operating leases | 5 years | 4 years |
| Finance leases | 4 years | 4 years |
| | |
| Weighted-Average Discount Rate | | |
| Operating leases | 3.41 | % | 3.61 | % |
| Finance leases | 5.30 | % | 5.39 | % |
Cash Flow information related to leases is as follows:
| | | | | | | | | | | |
| As at December 31 (in millions of Canadian dollars) | 2025 | 2024 | 2023 |
| Cash paid for amounts included in measurement of lease liabilities | | | |
| Operating cash outflows from operating leases | $ | 127 | | $ | 114 | | $ | 96 | |
| Operating cash outflows from finance leases | 1 | | 1 | | 2 | |
| Financing cash outflows from finance leases | 11 | | 13 | | 13 | |
| | | |
| ROU assets obtained in exchange for lease liabilities | | | |
| Operating leases | $ | 191 | | $ | 105 | | $ | 62 | |
The following table provides the maturities of lease liabilities for the next five years and thereafter as at December 31, 2025:
| | | | | | | | |
| (in millions of Canadian dollars) | Finance leases | Operating leases |
| 2026 | $ | 18 | | $ | 143 | |
| 2027 | 2 | | 111 | |
| 2028 | 1 | | 83 | |
| 2029 | 1 | | 54 | |
| 2030 | 1 | | 39 | |
| Thereafter | 7 | | 58 | |
| Total lease future payments | 30 | | 488 | |
| Imputed interest | (3) | | (78) | |
| Present value of future lease payments | $ | 27 | | $ | 410 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.