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129 Qantas Annual Report 2009
Notes to the Financial Statements
for the year ended 30 June 2009
29. Contingent Liabilities
Detailsofcontingentliabilitiesaresetoutbelow.TheDirectorsareoftheopinionthatprovisionsarenotrequiredwithrespecttothesematters,asitis
notprobablethatafuturesacriceofeconomicbenetswillberequiredortheamountisnotcapableofreliablemeasurement.
Qantas Group Qantas
2009 2008 2009 2008
$M $M $M $M
Performance guarantees and letters of comfort to support operating lease commitments
andotherarrangementsenteredintowithotherpartiesbycontrolledentities  6 31 6 31
Generalguaranteesinthenormalcourseofbusiness 161 150 161 150
Contingentliabilitiesrelatingtocurrentandthreatenedlitigation 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
andequityparticipantsinleveragedleasetransactions.Incertaincircumstances,includingtheinsolvencyofmajorinternationalbanksandotherAAArated
counterparties,theQantasGroupmayberequiredtomakepaymentsundertheseguarantees.
Qantas and certain controlled entities have entered into asset value underwriting arrangements with lenders under certain aircraft secured financings.
Thesearrangementsprotectthevalueoftheaircraftsecuritytothelenderstoapre-determinedlevel.Thisisreectedbythebalanceofaircraftsecurity
deposits held with certain financial institutions.
TheQantasGrouphasprovidedstandardtaxindemnitiestotheequityinvestorsincertainleveragedleases.Theindemnitieseffectivelyguaranteethe
after-taxrateofreturnoftheinvestorsandtheQantasGroupmaybesubjecttoadditionalnancingcostsonfutureleasepaymentsifcertainassumptions
madeatthetimeofenteringthetransactions,includingassumptionsastotherateofincometax,subsequentlybecomeinvalid.
FREIGHT INVESTIGATIONS AND CLASS ACTIONS
Qantascontinuestoco-operatewithregulatorsintheirinvestigationsintoallegedpricexingintheaircargomarket.Theseinvestigationsrevealedthatthe
practiceadoptedbyQantasFreightandthecargoindustrygenerallytoxandimposefuelsurchargeswaslikelytohavebreachedrelevantcompetition
laws.Duringtheyearended30June2009,theFederalCourtofAustraliaorderedQantastopayapenaltyof$20million.Thisamounthasbeenjointly
recommendedtotheCourtbyQantasandtheAustralianCompetitionandConsumerCommissionandresolvesQantas’liabilityinAustraliainrelationto
theregulatoryinvestigation.On7July2009,QantaspledguiltytoonecountofpricexinginCanadaandagreedtopayaneofCanadian$155,000.
ThisresolvesQantas’regulatoryliabilityinCanada.
Qantashasprovided$30millionasat30June2009(2008:$40million).Thisprovisionreectsmanagement’sbestestimateofpotentialsettlements
andcostsarisingfromoutstandingregulatoryinvestigationsinEurope,NewZealandandotherjurisdictions.However,futuredevelopmentsinthese
investigationsmayaltermanagement’scurrentview.Qantasexpectstheoutcomeoftheseoutstandingregulatoryinvestigationswillbeknownover
thenexttwoyears.
Inadditiontoinvestigationsbyregulatorsforbreachesofrelevantcompetitionlaws,classactionshavecommencedagainstQantas(andotherairlines)in
AustraliaandtheUnitedStates.Qantashasbeenthreatenedwiththirdpartyclassactionsinotherjurisdictions.Qantashasanumberofdefencestothese
classactionsandQantas’ultimateliabilityundertheseactionsisnotexpectedtobeknownforanumberofyears.
TRAVEL AGENT LITIGATION
AclassactionclaimwasmadeduringaprioryearbyanumberoftravelagentsagainstQantasandotherairlinesasaresultoftravelagentsnotbeingpaid
commissiononfuelsurcharges.QantaswassuccessfulintheinitialactionheardinFederalCourt.ThematteriscurrentlyonappealtotheFederalCourt.