Cathay Pacific 2011 Annual Report Download - page 86

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32. Commitments and contingencies
(a) Outstanding commitments for capital expenditure authorised at the year end but not provided for in the
accounts:
Group Company
2011
HK$M
2010
HK$M
2011
HK$M
2010
HK$M
Authorised and contracted for 99,272 75,290 5,701 3,913
Authorised but not contracted for 17,175 11,958 8,962 8,987
116,447 87,248 14,663 12,900
Operating lease commitments are shown in note 12(b) to the accounts.
(b) Guarantees in respect of lease obligations, bank loans and other liabilities outstanding at the year end:
Group Company
2011
HK$M
2010
HK$M
2011
HK$M
2010
HK$M
Subsidiaries ––4,120 4,235
Associates 489 62 489 62
Staff 200 200 200 200
689 262 4,809 4,497
(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 and proceedings with regard to its air cargo operations by the
competition authorities of various jurisdictions, including the European Union, Canada, Australia, Switzerland,
Korea and New Zealand. The Company has been cooperating with the authorities in their investigations and,
where applicable, vigorously defending itself. The investigations and proceedings are focused on issues relating
to pricing and competition. The Company is represented by legal counsel in connection with these matters.
In December 2008, the Company received a Statement of Claim from the New Zealand Commerce Commission
(“NZCC”) with regard to the Company’s air cargo operations. The Company, with the assistance of legal
counsel, has responded. In May – June 2011, the first stage trial in this matter was heard in the Auckland High
Court. In August 2011, the Auckland High Court issued its first stage decision, holding that it had jurisdiction
over all claims brought by the NZCC.
In July 2009, the Company received an Amended Statement of Claim from the Australian Competition &
Consumer Commission with regard to the Company’s air cargo operations. The Company, with the assistance
of legal counsel, has responded.
In May 2010, the Korean Fair Trade Commission (“KFTC”) announced it will fine several airlines, including
Cathay Pacific, for their air cargo pricing practices. In November 2010, KFTC issued a written decision and
Cathay Pacific’s fine was KRW 5.35 billion (equivalent to HK$36 million at the exchange rate current as of the
date of the announcement). Cathay Pacific has filed an appeal in the Seoul High Court challenging the KFTC’s
decision in December 2010.
Notes to the Accounts SUPPLEMENTARY INFORMATION
84