Air Canada 2011 Annual Report Download - page 66

2011 Air Canada Annual Report
66
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
participation in the low-cost market, 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 these 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 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 widebody 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.
Aeroplan®
Through its commercial agreement with Aeroplan, Air Canada is able to offer its customers who are Aeroplan members the
opportunity to earn Aeroplan Miles. Based on customer surveys, management believes that rewarding customers with
Aeroplan Miles is a significant factor in customers’ decision to travel with Air Canada and contributes to building customer
loyalty. The failure by Aeroplan to adequately fulfill its obligations towards Air Canada under the Aeroplan Commercial
Participation and Services Agreement and in connection with the Aeroplan program, or other unexpected interruptions of
Aeroplan services which are beyond Air Canada’s control, could have a material adverse effect on Air Canada, its business,
results from operations and financial condition.