Air Canada 2010 Annual Report Download - page 78

2010 Air Canada Annual Report
78
Airport User Fees and Air Navigation Fees
With the privatization of airports and air navigation authorities over the last decade in Canada, new airport and air navigation
authorities have imposed significant increases in their fees. Though certain authorities have implemented some fee reductions,
if authorities in Canada or elsewhere were to increase their fees, Air Canada, its business, results from operations and financial
condition could be materially adversely affected.
Strategic, Business, Technology and Other Important Initiatives
In order to operate its business, achieve its goals and remain competitive, Air Canada continuously seeks to identify and
devise, invest in, implement and pursue strategic, business, technology and other important initiatives, such as those relating
to the aircraft fleet restructuring, business processes, information technology, revenue management, cost transformation,
improving premium passenger revenues, expansion of flying capacity (including in respect of new routes), corporate culture
transformation, initiatives seeking to ensure a consistently high quality customer service experience and others. These initiatives,
including activities relating to their development and implementation, may be adversely impacted by a wide range of factors,
many of which are beyond Air Canada’s control. Such factors include the performance of third parties, including suppliers, the
implementation and integration of such initiatives into Air Canada’s other activities and processes as well as the adoption and
acceptance of initiatives by Air Canada’s customers, suppliers and personnel. A delay or failure to sufficiently and successfully
identify and devise, invest in or implement these initiatives could adversely affect Air Canada’s ability to operate its business,
achieve its goals and remain competitive and could have a material adverse effect on Air Canada, its business, results from
operations and financial condition.
For instance, a key component of Air Canada’s business plan is the completion of Air Canada’s fleet restructuring program
through the acquisition of new and more efficient Boeing 787 aircraft. A delay or failure in the completion of Air Canada’s fleet
restructuring, including further delays by the manufacturers in the delivery of the wide-body aircraft, or an inability to remove,
as planned, certain aircraft from the fleet in coordination with the planned entry into service of new aircraft, could adversely
affect the implementation of Air Canada’s business plan which may, in turn, have a material adverse effect on Air Canada, its
business, results from operations and financial condition.
Dependence on Technology
Air Canada relies heavily on technology, including computer and telecommunications equipment and software and Internet-
based systems, to operate its business, increase its revenues and reduce its costs. These systems include those relating to Air
Canada’s telecommunications, websites, computerized airline reservations and airport customer services and flight operations.
These technology systems may be vulnerable to a variety of sources of failure, interruption or misuse, including by reason
of third party suppliers’ acts or omissions, natural disasters, terrorist attacks, telecommunications failures, power failures,
computer viruses, unauthorized or fraudulent users, and other operational and security issues. While Air Canada continues
to invest in initiatives, including security initiatives and disaster recovery plans, these measures may not be adequate or
implemented properly. Any such technology systems failure, interruption or misuse could materially and adversely affect Air
Canada’s operations and could have a material adverse effect on Air Canada, its business, results from operations and financial
condition.
Key Supplies and Suppliers
Air Canada is dependent upon its ability to source, on favourable terms and costs, sufficient quantities of goods and services
in a timely manner, including those available at airports or from airport authorities or otherwise required for Air Canada’s
operations such as fuel, aircraft and related parts and aircraft maintenance services (including maintenance services obtained
from Aveos). In certain cases, Air Canada may only be able to access goods and services from a limited number of suppliers and
transition to new suppliers may take significant amounts of time and require significant resources. A failure, refusal or inability
of a supplier may arise as a result of a wide range of causes, many of which are beyond Air Canada’s control. In addition, there
can be no assurance as to the continued viability of any of Air Canada’s suppliers. Any failure or inability of Air Canada to
successfully source goods and services, including by reason of a failure, refusal or inability of a supplier, or to source goods and
services on terms and pricing and within the timeframes acceptable to Air Canada, could have a material adverse effect on Air
Canada, its business, results from operations and financial condition.