Cathay Pacific 2007 Annual Report Download - page 81

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27. Commitments and contingencies
(a) Outstanding commitments for capital expenditure authorised at the year end but not provided for in the
accounts:
Group Company
2007
HK$M
2006
HK$M
2007
HK$M
2006
HK$M
Authorised and contracted for 48,782 23,422 2,835 2,932
Authorised but not contracted for 5,676 1,646 5,670 1,638
54,458 25,068 8,505 4,570
Operating lease commitments are shown in note 9 to the accounts.
(b) Guarantees in respect of lease obligations, bank loans and other liabilities outstanding at the year end:
Group Company
2007
HK$M
2006
HK$M
2007
HK$M
2006
HK$M
Subsidiaries ––3,123 3,122
Associate 19 17 19 17
Staff 200 200 200 200
219 217 3,342 3,339
(c) The Company has under certain circumstances undertaken to maintain specified rates of return within the
Group’s leasing arrangements. The Directors do not consider that an estimate of the potential financial effect of
these contingencies can practically be made.
(d) The Company operates in many jurisdictions and in certain of these there are disputes with the tax authorities.
Provisions have been made to cover the expected outcome of the disputes to the extent that outcomes are
likely and reliable estimates can be made. However, the final outcomes are subject to uncertainties and resulting
liabilities may exceed provisions.
(e) The Company is the subject of investigations in respect of its air cargo operations by the competition authorities
of various jurisdictions including the United States, the European Union, Canada, Australia, Switzerland and New
Zealand. The Company has been cooperating with the authorities in their investigations. The investigations are
focused on issues relating to pricing and competition. The Company is represented by legal counsel in
connection with the investigations.
As noted in the Company’s announcement on 24th December 2007, the Company has received a Statement of
Objections from the European Commission with regard to the Company’s air cargo operations. The Company is
reviewing the Statement of Objections with legal counsel and will make a timely response to it.
The Company has been named as a defendant in a number of civil class action complaints in the United States,
Canada and Australia alleging violations of local competition laws arising from the Company’s conduct relating to
its air cargo operations. In addition, civil class action claims have been filed in the United States alleging
violations of competition laws arising from the Company’s conduct relating to certain of its passenger operations.
The Company is represented by legal counsel in the actions filed in the United States, Canada and Australia and
is defending those actions.
The investigations and civil actions are ongoing and the outcomes are subject to uncertainties. The Company is
not in a position at the present time to assess any potential liabilities and cannot therefore make any provisions.
Notes to the Accounts
Supplementary Information
Cathay Pacific Airways Limited Annual Report 2007 79