Air Canada 2007 Annual Report Download - page 131

Consolidated Financial Statements and Notes
131
18. 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, a number of whom, including
the Corporation, have received a statement of objections from the European Commission that sets out the European
Commission’s preliminary assessment in relation to such matter. Competition authorities have sought or requested
information from the Corporation as part of their investigations. The Corporation is cooperating with these investigations
which are likely to lead to proceedings against the Corporation and a number of airlines and other cargo operators in certain
jurisdictions. The Corporation is also named as a defendant in a number of class action lawsuits that have been fi led before
the United States District Court and in Canada in connection with these allegations. Management has determined it is not
possible at this time to predict with any degree of certainty the outcome of these proceedings, but these proceedings may
result in a material liability to the Corporation.
Porter Airlines Inc.
In February 2006, Jazz commenced proceedings before the Ontario Superior Court of Justice against Porter Airlines Inc.
(“Porter”) and other defendants (collectively the “Porter Defendants”) after Jazz became aware that it would be excluded
from operating fl ights from Toronto City Centre (Island) Airport (the “TCCA”). On October 26, 2007, the Porter Defendants
counter-claimed against Jazz and Air Canada alleging various violations of competition law, including that Jazz and
Air Canada’s commercial relationship contravenes Canadian competition laws, and claiming $850 in damages. Concurrently
with the Ontario Superior Court of Justice proceedings, Jazz commenced judicial review proceedings against the Toronto
Port Authority (”TPA”) before the Federal Court of Canada relating to Jazz’ access to the TCCA. The Porter Defendants
were granted intervener and party status in these proceedings. In January of 2008, Porter fi led a defence and counterclaim
against Jazz and Air Canada making allegations and seeking conclusions similar to those in the Ontario Superior Court
counterclaim. Management views Porter’s counterclaims in both jurisdictions as being without merit.
Pay Equity
The Canadian Union of Public Employees (“CUPE”), which represents the Corporation’s fl ight attendant, has a complaint
before the Canadian Human Rights Commission where it alleges gender-based wage discrimination. CUPE claims the
predominantly female fl ight attendant group should be paid the same as the predominantly male pilot and mechanics
groups because their work is of equal value. The complaint dates from 1991 but has not been investigated on the merits
because of a legal dispute over whether the three groups work in the same “establishment” within the meaning of the
Canadian Human Rights Act. On January 26, 2006, the Supreme Court of Canada ruled that they do work in the same
“establishment” and sent the case back to the Canadian Human Rights Commission, which may now proceed to assess the
merits of CUPE’s complaint. On March 16, 2007, the Canadian Human Rights Commission referred the complaint against
the Corporation for investigation. The Corporation considers that any investigation will show that it is complying with the
equal pay provisions of the Canadian Human Rights Act; however, management has determined it is not possible at this
time to predict with any degree of certainty the fi nal outcome of the Commission’s investigation.
Claim by the Air Canada Pilots Association
In October 2006, 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 it. 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 respondents’ cross-motion to dismiss ACPA’s claim. ACPA has
not appealed the dismissal of the injunction application but has appealed the order dismissing its claim and the appeal is
scheduled to be heard by the Ontario Court of Appeal in March 2008. Management is of the view that the ACPA claim is
without merit.