Air Canada 2012 Annual Report Download - page 139

2012 Consolidated Financial Statements and Notes
139
18. CONTINGENCIES, GUARANTEES AND INDEMNITIES
Contingencies and Litigation Provisions
Investigations by Competition Authorities Relating to Cargo
The European Commission and the United States Department of Justice investigated and the Competition Bureau in Canada is
investigating alleged anti-competitive cargo pricing activities, including the levying of certain fuel surcharges, of a number of
airlines and cargo operators, including Air Canada. Competition authorities in several jurisdictions sought or requested
information from Air Canada as part of their investigations. Air Canada has been cooperating with these investigations, which
are likely to lead, or have led, to proceedings against Air Canada and a number of airlines and other cargo operators in certain
jurisdictions. Air Canada is also named as a defendant, and may otherwise become implicated, in a number of class action
lawsuits and other proceedings that have been filed before the United States District Court, in Canada and Europe in
connection with these allegations. In the United States, the investigation by the US Department of Justice has concluded with
no proceedings having been instituted against Air Canada and in 2012, the Corporation entered into a settlement agreement
relating to class action proceedings in the United States in connection with these allegations under which Air Canada made no
admission of liability. Under the settlement agreement for which final court approval was obtained, a payment of $8 was
made by Air Canada in 2012.
In 2010, the European Commissions issued a decision finding that 12 air cargo carriers (including groups of related carriers)
had infringed European Union competition law in the setting of certain cargo charges and rates for various periods between
1999 and 2006. Air Canada was among the carriers subject to the decision and a fine of 21 Euros (approximately C$29 at an
exchange rate of $1.3970) was imposed on Air Canada. Air Canada is appealing this decision and filed an application for
appeal before the European General Court. In 2011, Air Canada paid the fine, as required, pending the outcome of its appeal.
As at December 31, 2012, Air Canada has a provision of $29 relating to outstanding claims in this matter, which is recorded in
Accounts payable and accrued liabilities. This provision is an estimate based upon the status of investigations and proceedings
at this time and Air Canada’s assessment as to the potential outcome for certain of them. The provision does not address the
proceedings and investigations in all jurisdictions, but only where there is sufficient information to do so. Air Canada has
determined it is not possible at this time to predict with any degree of certainty the outcome of all proceedings and
investigations. As stated above, Air Canada is appealing the decision issued by the European Commission and, if and as
appropriate, based on the outcome of any updates regarding this appeal as well as developments regarding proceedings and
investigations in other jurisdictions, may adjust the provision in its results for subsequent periods as required.
Billy Bishop Toronto City Airport
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 flights from Billy Bishop Toronto City Airport. On October 26, 2007, the Porter Defendants counterclaimed 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. On October 16, 2009, Jazz discontinued
its suit in the Ontario Superior Court against Porter.
The counterclaim filed by Porter in the Ontario Superior Court of Justice against Jazz and Air Canada was stayed pending the
outcome of a mirror counterclaim made by Porter in the Federal Court in relation to proceedings in the Federal Court that
have been discontinued. This stay in the Ontario Superior Court has now been lifted and the counterclaim has been
reactivated. Management views Porter’s counterclaim as being without merit.
Pay Equity
The Canadian Union of Public Employees (“CUPE”), which represents Air Canada’s flight attendants, filed a complaint in 1991
before the Canadian Human Rights Commission alleging gender-based wage discrimination. CUPE claims the predominantly
female flight attendant group should be paid the same as the predominantly male pilot and mechanics groups because their
work is of equal value. Litigation of a preliminary matter was pursued through to the Supreme Court of Canada, and the
Commission did not begin investigating the complaint on the merits until March 2007. The Commission concluded its
investigation in 2011 and decided not to refer the complaint to the Canadian Human Rights Tribunal for inquiry. CUPE has
initiated proceedings before the Federal Court to challenge this determination which Air Canada is seeking to have upheld. Air
Canada considers that any proceedings will show that it is complying with the equal pay provisions of the Canadian Human