Air Canada 2011 Annual Report Download - page 130

2011 Air Canada Annual Report
130
Pay Equity
The Canadian Union of Public Employees (“CUPE”), which represents Air Canada’s flight attendants, filed 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 was not 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, to 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, and an investigation
proceeded and was concluded in 2011 with a determination that the complaint will not be referred to the Canadian Human
Rights Tribunal for inquiry. CUPE has initiated proceedings before the Federal Court to challenge this determination which Air
Canada will seek to have upheld. Air Canada considers that any proceedings 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 final outcome of the proceedings.
Mandatory Retirement
Air Canada is engaged in a number of proceedings involving challenges to the mandatory retirement provisions of certain of
its collective agreements, including the Air Canada-Air Canada Pilots Association collective agreement which incorporate
provisions of the pension plan terms and conditions applicable to pilots requiring them to retire at age 60. Air Canada has fully
or partially resolved some of these complaints and is defending others. At this time, it is not possible to determine with any
degree of certainty the extent of any financial liability that may arise from Air Canada being unsuccessful in its defence of
these proceedings, though any such financial liability, if imposed, would not be expected to be material.
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 material adverse effect on the financial position or the results of the Corporation.
With respect to 23 aircraft leases, the difference between the reduced rents as a result of the implementation of the Plan of
Reorganization, Compromise and Arrangement under the Companies’ Creditors Arrangement Act (“CCAA”) on September 30,
2004 and amounts which would have been due under the original lease contracts will be forgiven at the expiry date of the
leases if no material default has occurred by such date. In the event of a material default which does not include any cross
defaults to other unrelated agreements (including unrelated agreements with the counterparties to these aircraft leases), this
difference plus interest will become due and payable and all future rent will be based on the original contracted rates. Rent
expense is being recorded on the renegotiated lease agreements and any additional liability would be recorded only at the
time management believes the amount is likely to be incurred.
Refer to Note 11 for a continuity schedule of litigation provisions.
Guarantees
Guarantees in Fuel Facilities Arrangements
The Corporation participates in fuel facility arrangements operated through Fuel Facility Corporations, along with other
airlines that contract for fuel services at various major airports in Canada. The Fuel Facility Corporations operate on a cost
recovery basis. The purpose of the Fuel Facility Corporations is to own and finance the system that distributes the fuel to the
contracting airlines, including leasing the Land Rights under the land lease. The aggregate debt of the five Fuel Facility
Corporations in Canada that have not been consolidated by the Corporation under SIC Interpretation 12 – Consolidation of
Special Purpose Entities is approximately $187 as at December 31, 2011 (2010 – $171), which is the Corporation's maximum
exposure to loss before taking into consideration the value of the assets that secure the obligations and any cost sharing that
would occur amongst the other contracting airlines. The Corporation views this loss potential as remote. Each contracting
airline participating in a Fuel Facility Corporation shares pro rata, based on system usage, in the guarantee of this debt. The
maturities of these debt arrangements vary but generally extend beyond five years.