Air Canada 2007 Annual Report Download - page 136

2007 Air Canada Annual Report
136
applicable term. The rates under the Jazz CPA are subject to periodic adjustment with the next adjustment scheduled
for the start of 2009. Amounts related to the CPA are included on the Expense from CPA with Jazz line in the table
above.
Jazz Master Services Agreement (Jazz MSA)
Air Canada and Jazz are parties to the Jazz MSA pursuant to which the Corporation provides certain services to
Jazz in return for a fee based on the fair market value of the services provided by the Corporation to Jazz. Pursuant
to the Jazz MSA, the Corporation provides Jazz with infrastructure support consisting principally of administrative
services in relation with information technology, corporate real estate, environmental affairs and legal services. Jazz
benefi ts from certain information technology services available to the Corporation from third parties and from the
Corporation’s internal information technology resources.
Either Air Canada or Jazz may elect to terminate any services under the Jazz MSA (without terminating the whole Jazz
MSA) or the entire Jazz MSA upon one year’s prior written notice. The Jazz MSA terminates upon the termination of the
Jazz CPA.
Jazz Trademark License Agreements
Air Canada and Jazz are parties to the Jazz Trademark License Agreement pursuant to which the Corporation has
granted Jazz a royalty-free, non-exclusive, non-sublicensable, non-assignable right to use certain trademarks owned
or registered by the Corporation around the world including “Jazz” and certain trademarks which incorporate the
Air Canada name, and/or Air Canada’s roundel design, solely in association with the Jazz business. The Jazz Trademark
License Agreement can be terminated in the event that the Jazz CPA is terminated. However, Air Canada and Jazz
have also entered into a Jazz Special Trademark Agreement which would grant all of the Corporation’s rights to the
Jazz trademark to Jazz (and preclude the Corporation from using the Jazz trademark or licensing the Jazz trademark
to third parties) upon the occurrence of certain events involving (i) the expiration or termination of the Jazz CPA if,
at such time, Jazz is no longer an affi liate of the Corporation; (ii) the occurrence of a change of control pursuant to
which Jazz ceases to be an affi liate of the Corporation if, at or prior to such time, the Jazz CPA has expired or has been
terminated; or (iii) the sale or transfer of all or substantially all of the assets or business of Jazz to a third party that
is not an affi liate of the Corporation if, at or prior to such time, the Jazz CPA has expired or has been terminated.
The Relationship between the Corporation and ACTS
As described in Note 20, on October 16, 2007, ACE announced the completion of the sale of ACTS LP pursuant
to which ACTS LP sold substantially all of its assets, liabilities and business to ACTS Aero. ACTS Aero conducts the
business previously operated by ACTS LP.
The ACTS Maintenance Agreements, the ACTS Master Services Agreement, the ACTS Trademark License Agreement,
the Repair Schemes and Non-Compete Agreement and the ACTS General Services Agreements, all between
Air Canada and ACTS LP and described below and in Note 20 were assigned from ACTS LP to ACTS Aero upon closing
of the monetization of ACTS. On closing of the ACTS sale, Air Canada recorded proceeds of $28 for the sale of a
building to ACTS Aero, $17 for the settlement of a intercompany note with ACTS LP, $20 pursuant to the transfer
of repair schemes and the funding of a letter of credit in the amount of $101 related to a “Pension and Benefi ts
Agreement” as described in Note 20. ACTS Aero is a related party to Air Canada due to ACE’s investment in both
entities.
ACTS Maintenance Agreements
ACTS Aero and Air Canada are parties to a general terms and related services agreements effective October 1, 2006,
pursuant to which ACTS Aero provides technical services to the Corporation including engine and auxiliary power
unit maintenance services, aircraft heavy maintenance services (excluding line and cabin maintenance services which
are provided by the Corporation), component maintenance services, paint services, training services and ancillary
services. ACTS Aero serves as the Corporation’s exclusive repair agency in respect of aircraft heavy maintenance,
engine maintenance, auxiliary power unit maintenance services as well as for maintenance services relating to
certain components. ACTS Aero serves as the Corporation’s non-exclusive repair agency in respect of other services
provided. Except for the services agreement relating to aircraft heavy maintenance services, which expires in October
2011, and the services agreement relating to paint services, which expires in October 2009, each of the agreements
referred to above expires in October 2013.