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17. CONTINGENCIES, GUARANTEES AND INDEMNITIES
Contingencies
Investigation by Competition Authorities Relating to Cargo
The European Commission, the United States Department of Justice and the Competition Bureau in Canada,
among other competition authorities, are investigating alleged anti-competitive cargo pricing activities, including
the levying of certain fuel surcharges of a number of airlines and cargo operators, including the Corporation.
Competition authorities have sought or requested information from the Corporation as part of their
investigations. The Corporation is cooperating fully with these investigations. The Corporation is also named as
a defendant in a number of class action lawsuits that have been filed before the United States District Court and
in Canada in connection with these allegations. It is not possible at this time to predict with any degree of
certainty the outcome of these proceedings. It is the Corporation's policy to conduct its business in full
compliance with all applicable competition laws.
Pay Equity
Complaints filed in 1991 and 1992 with the Canadian Human Rights Commission against Air Canada and the
former Canadian Airlines International on behalf of flight attendants at the two airlines alleging discrimination in
negotiated wages were referred to the Canadian Human Rights Tribunal in 1996 for inquiry. By agreement of all
parties, the inquiry before the Tribunal was limited to whether flight attendants at each airline were in the same
establishment as pilots and technical operations personnel. Under the applicable legislation, a complaint can
only compare the value of employees work and their wages if they work in the same establishment. In
December 1998 the Tribunal found that pilots, flight attendants and technical operations personnel were in
different establishments at each airline. This decision was upheld on judicial review by the Federal Court Trial
Division, but overturned by the Federal Court of Appeal in 2004. The Supreme Court of Canada in January
2006 dismissed Air Canada's appeal from this latter decision and has remitted the complaints to the
Commission for investigation. The parties are awaiting instructions from the Commission on how to proceed
with the complaints. The value of each employee's work will be assessed on the basis of the skill, effort and
responsibility it demands as well as the conditions under which it is performed. During the restructuring under
CCAA, it was agreed that any resolution of the complaints would have no retroactive financial impact prior to
September 30, 2004. Air Canada, upon consultation with legal counsel, considers that any investigation will
show that it is complying with the equal pay provisions of the Canadian Human Rights Act; however,
management is not able to determine the final outcome of the Commission's investigation.
Claim by the Air Canada Pilots Association
In October 2006, the Air Canada Pilots Association (“ACPA”) commenced proceedings before the Ontario
Superior Court of Justice against Air Canada, ACE and certain members of the board of directors of Air Canada
alleging that certain past and future actions are oppressive to them. A variety of remedies were sought against
the parties including an injunction to impose, among other things, limits on corporate distributions including
those contemplated under the ACE plan of arrangement which became effective on October 10, 2006.
Following a hearing in December, 2006, Mr. Justice Cumming of the Ontario Superior Court of Justice
dismissed ACPA's application for an injunction and granted Air Canada's motion to dismiss ACPA's claim.
ACPA has not appealed the dismissal of the injunction application but has appealed the order dismissing its
claim.
Other
Various other lawsuits and claims, including claims filed by various labour groups of Air Canada and Jazz, are
pending by and against the Corporation and provisions have been recorded where appropriate. It is the opinion
of management that final determination of these claims will not have a significant material adverse effect on the
financial position or the results of the Corporation.
Guarantees
With respect to 45 aircraft leases, the difference between the amended rents from the restructuring
arrangements and amounts due under the original lease contracts will be forgiven at the expiry date of the
117
Combined Consolidated Financial Statements 2006