Qantas 2009 Annual Report Download - page 131
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Please find page 131 of the 2009 Qantas annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.129 Qantas Annual Report 2009
Notes to the Financial Statements
for the year ended 30 June 2009
29. Contingent Liabilities
Detailsofcontingentliabilitiesaresetoutbelow.TheDirectorsareoftheopinionthatprovisionsarenotrequiredwithrespecttothesematters,asitis
notprobablethatafuturesacriceofeconomicbenetswillberequiredortheamountisnotcapableofreliablemeasurement.
Qantas Group Qantas
2009 2008 2009 2008
$M $M $M $M
Performance guarantees and letters of comfort to support operating lease commitments
andotherarrangementsenteredintowithotherpartiesbycontrolledentities 6 31 6 31
Generalguaranteesinthenormalcourseofbusiness 161 150 161 150
Contingentliabilitiesrelatingtocurrentandthreatenedlitigation 3 3 3 3
170 184 170 184
AIRCRAFT FINANCING
As part of the financing arrangements for the acquisition of aircraft, the Qantas Group has provided certain guarantees and indemnities to various lenders
andequityparticipantsinleveragedleasetransactions.Incertaincircumstances,includingtheinsolvencyofmajorinternationalbanksandotherAAArated
counterparties,theQantasGroupmayberequiredtomakepaymentsundertheseguarantees.
Qantas and certain controlled entities have entered into asset value underwriting arrangements with lenders under certain aircraft secured financings.
Thesearrangementsprotectthevalueoftheaircraftsecuritytothelenderstoapre-determinedlevel.Thisisreectedbythebalanceofaircraftsecurity
deposits held with certain financial institutions.
TheQantasGrouphasprovidedstandardtaxindemnitiestotheequityinvestorsincertainleveragedleases.Theindemnitieseffectivelyguaranteethe
after-taxrateofreturnoftheinvestorsandtheQantasGroupmaybesubjecttoadditionalnancingcostsonfutureleasepaymentsifcertainassumptions
madeatthetimeofenteringthetransactions,includingassumptionsastotherateofincometax,subsequentlybecomeinvalid.
FREIGHT INVESTIGATIONS AND CLASS ACTIONS
Qantascontinuestoco-operatewithregulatorsintheirinvestigationsintoallegedpricexingintheaircargomarket.Theseinvestigationsrevealedthatthe
practiceadoptedbyQantasFreightandthecargoindustrygenerallytoxandimposefuelsurchargeswaslikelytohavebreachedrelevantcompetition
laws.Duringtheyearended30June2009,theFederalCourtofAustraliaorderedQantastopayapenaltyof$20million.Thisamounthasbeenjointly
recommendedtotheCourtbyQantasandtheAustralianCompetitionandConsumerCommissionandresolvesQantas’liabilityinAustraliainrelationto
theregulatoryinvestigation.On7July2009,QantaspledguiltytoonecountofpricexinginCanadaandagreedtopayaneofCanadian$155,000.
ThisresolvesQantas’regulatoryliabilityinCanada.
Qantashasprovided$30millionasat30June2009(2008:$40million).Thisprovisionreectsmanagement’sbestestimateofpotentialsettlements
andcostsarisingfromoutstandingregulatoryinvestigationsinEurope,NewZealandandotherjurisdictions.However,futuredevelopmentsinthese
investigationsmayaltermanagement’scurrentview.Qantasexpectstheoutcomeoftheseoutstandingregulatoryinvestigationswillbeknownover
thenexttwoyears.
Inadditiontoinvestigationsbyregulatorsforbreachesofrelevantcompetitionlaws,classactionshavecommencedagainstQantas(andotherairlines)in
AustraliaandtheUnitedStates.Qantashasbeenthreatenedwiththirdpartyclassactionsinotherjurisdictions.Qantashasanumberofdefencestothese
classactionsandQantas’ultimateliabilityundertheseactionsisnotexpectedtobeknownforanumberofyears.
TRAVEL AGENT LITIGATION
AclassactionclaimwasmadeduringaprioryearbyanumberoftravelagentsagainstQantasandotherairlinesasaresultoftravelagentsnotbeingpaid
commissiononfuelsurcharges.QantaswassuccessfulintheinitialactionheardinFederalCourt.ThematteriscurrentlyonappealtotheFederalCourt.