Air Canada 2009 Annual Report Download - page 136

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2009 Air Canada Annual Report
136
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 Air Canada. Competition authorities have sought or
requested information from Air Canada as part of their investigations. Air Canada is 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 including in the European Union where all formal procedural steps preceding a decision have been
completed. Air Canada 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.
During 2008, Air Canada recorded a provision of $125 as a preliminary estimate. This is only an estimate based upon the
current status of the investigations and proceedings and Air Canada’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
suffi cient 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 and such
provisions could have a material adverse effect on Air Canada’s fi nancial position.
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’s 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.
On October 16, 2009, Jazz discontinued its suit in the Ontario Superior Court against Porter. However, Jazz is continuing its
proceedings in the Federal Court of Canada against the TPA, to which Porter intervened. The counterclaim fi led by Porter
in the Ontario Court against Jazz and Air Canada has been stayed pending the outcome of the mirror counterclaim in the
Federal Court. Management views Porter’s counterclaims in both jurisdictions as being without merit.
Pay Equity
The Canadian Union of Public Employees (“CUPE”), which represents Air Canada’s fl ight attendants, has fi led 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
Air Canada for investigation. Air Canada 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 that it is not possible at this time to
predict with any degree of certainty the fi nal outcome of the Commission’s investigation.