Air Canada 2008 Annual Report Download - page 143

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Consolidated Financial Statements and Notes
143
17. CONTINGENCIES, GUARANTEES AND INDEMNITIES
Contingencies
Investigations 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 with these
investigations, which are likely to lead, or have led, to proceedings against the Corporation and a number of airlines and
other cargo operators in certain jurisdictions including in the European Union where all formal procedural steps preceding a
decision have been completed. 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.
During 2008, the Corporation recorded a provision of $125 as a preliminary estimate. This estimate is based upon the
current status of the investigations and proceedings and the Corporation’s assessment as to the potential outcome for
certain of them. This provision does not address the proceedings and investigations in all jurisdictions, but only where there
is sufficient information to do so. Management has determined it is not possible at this time to predict with any degree of
certainty the outcome of all proceedings and investigations. Additional material provisions may be required.
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 flights 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 filed 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 flight attendants, has a complaint
before the Canadian Human Rights Commission where it alleges 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. 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 final outcome of the Commission’s investigation.
Other Contingencies
Various other lawsuits and claims, including claims filed by various labour groups of Air Canada 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.