Investor Presentaiton
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refusal or inability of a supplier, or to source goods and services on terms and pricing and within the timeframes
acceptable to the Corporation, could have a material adverse effect on the Corporation's business, results from
operations and financial condition.
Aeroplan
Through its relationship with Aeroplan, the Corporation is able to offer its customers who are Aeroplan members
the opportunity to earn Aeroplan miles. Based on customer surveys, Management believes that rewarding customers
with Aeroplan miles is a significant factor in customers' decision to travel with Air Canada and Jazz and contributes to
building customer loyalty. The failure by Aeroplan to adequately fulfill its obligations towards the Corporation under
an Amended and Restated Commercial Participation and Services Agreement dated June 9, 2004, as amended,
including by the agreements dated May 13, 2005 and October 13, 2006 (the "Aeroplan CPSA") and in connection with
the Aeroplan program, or other unexpected interruptions of Aeroplan services which are beyond the Corporation's
control could have a material adverse effect on the Corporation's business, results from operations and financial
condition.
Jazz
Under the Jazz CPA, Jazz provides the Corporation's customers service in lower density markets and higher
density markets at off-peak times throughout Canada and to and from certain destinations in the United States and also
provides valuable traffic feed to the Corporation's mainline routes. The Corporation reimburses Jazz, without mark-up,
for certain pass-through costs incurred directly by Jazz, such as fuel, navigation, landing and terminal fees and certain
other costs. Significant increases in such pass-through costs, the failure by Jazz to adequately fulfill its obligations
towards the Corporation under the Jazz CPA, or other unexpected interruptions of Jazz's services which are beyond the
Corporation's control could have a material adverse effect on the Corporation's business, results from operations and
financial condition. In addition, the Jazz CPA requires that Jazz maintain a minimum fleet size and contains a
minimum average daily utilization guarantee which requires that the Corporation make certain minimum payments to
Jazz regardless of the revenue generated by Jazz.
Pension Plans
Canadian federal pension legislation requires that the funded status of registered pension plans be determined
periodically, on both a going concern basis (essentially assuming indefinite plan continuation) and a solvency basis
(essentially assuming immediate plan termination).
The solvency liability is influenced primarily by long-term interest rates and by the investment return on plan
assets. The interest rate used to calculate benefit obligations for solvency purposes is a prescribed rate derived from the
interest rates on long-term Government of Canada bonds. In the current low interest rate environment, the calculation
results in a higher present value of the pension obligations, leading to a larger unfunded solvency position.
In May 2004, Air Canada and the Office of the Superintendent of Financial Institutions agreed on a protocol
pursuant to which the solvency funding requirements for the Corporation's registered pension plans provided for in the
then existing regulations were amended retroactive to January 1, 2004. The Corporation is required to make substantial
annual cash contributions, and the level of those contributions will increase in the event of poor pension fund
investment performance and/or further declines in long-term Government of Canada bond rates. Underfunded pension
plans or a failure or inability by the Corporation to make required cash contributions to its registered pension plans
could have a material adverse effect on the Corporation's business, results from operations and financial condition.
Equal Pay Litigation
CUPE, which represents the Corporation's flight attendants, has two complaints before the Canadian Human
Rights Commission where it alleges 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. The complaints date from 1991 and 1992 but have not been investigated on the merits because of a legal
dispute over whether the three groups work in the same "establishment" within the meaning of the Canadian Human
Rights Act. On January 26, 2006, the Supreme Court of Canada ruled that they do work in the same "establishment"
and sent the case back to the Canadian Human Rights Commission, which may now proceed to assess the merits of
CUPE's complaints. On March 16, 2007, the Canadian Human Rights Commission referred the complaint for
investigation.View entire presentation