Air Canada 2012 Annual Report Download - page 74

2012 Air Canada Annual Report
74
As at December 31, 2012, Air Canada has a provision of $29 million relating to outstanding claims in this matter, which is
recorded in accounts payable and accrued liabilities on Air Canada’s consolidated statement of financial position. This
provision is an estimate based upon the status of the investigations and proceedings at this time and Air Canada’s assessment
as to the potential outcome for certain of them. The provision does not address the proceedings and investigations in all
jurisdictions, but only where there is sufficient information to do so. Air Canada has determined it is not possible at this time
to predict with any degree of certainty the outcome of all proceedings and investigations. As stated above, Air Canada is
appealing the decision issued by the European Commission and, if and as appropriate, based on the outcome of any updates
regarding this appeal as well as developments regarding proceedings and investigations in other jurisdictions, may record
adjustments to the provision and/or its income in subsequent periods as required.
Billy Bishop Toronto City Airport
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 Billy Bishop Toronto City Airport. 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 million in damages. On October 16, 2009, Jazz
discontinued its suit in the Ontario Superior Court against Porter.
The counterclaim filed by Porter in the Ontario Superior Court of Justice against Jazz and Air Canada was stayed pending the
outcome of a mirror counterclaim made by Porter in the Federal Court in relation to proceedings in the Federal Court that
have been discontinued. This stay in the Ontario Superior Court has now been lifted and the counterclaim has been
reactivated. Management views Porter’s counterclaim as being without merit.
Pay Equity
The Canadian Union of Public Employees (“CUPE”), which represents Air Canada’s flight attendants, filed a complaint in 1991
before the Canadian Human Rights Commission alleging 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. Litigation on a preliminary matter was pursued through the Supreme Court of Canada, and the
Commission did not begin investigating the complaint on the merits until March 2007. The Commission concluded its
investigation in 2011 and decided not to refer the complaint to the Canadian Human Rights Tribunal for inquiry. CUPE has
initiated proceedings before the Federal Court to challenge this determination, which Air Canada is seeking 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 (“ACPA”) 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.
Future Legal Proceedings
Airlines are susceptible to various claims and litigation, including class action claims, in the course of operating their business
or with respect to the interpretation of existing agreements. Any future claims or litigation could also have a material adverse
effect on Air Canada, its business, results from operations and financial condition.
Key Personnel
Air Canada is dependent on the experience and industry knowledge of its executive officers and other key employees to
execute its business plan. If Air Canada were to experience a substantial turnover in its leadership or other key employees, Air
Canada, its business, results from operations and financial condition could be materially adversely affected. Additionally, Air
Canada may be unable to attract and retain additional qualified key personnel as needed in the future.