Air Canada's Business Case Study

1210 Words5 Pages
Air Canada maintains several defined benefit pension plans, including domestic registered pension plans, supplemental pension plans and international pension plans. Air Canada’s pension funding obligations may vary significantly based on a wide variety of factors. Any changes to these factors may result in an increase in Air Canada’s obligations. Besides, deteriorating economic conditions or a prolonged period of low or decreasing interest rates may result in significant increases in Air Canada’s funding obligations, which could result in a huge adverse effect on Air Canada`s business. Underfunded pension plans, failure or inability by Air Canada to make required cash contributions to its registered pension plans will harm Air Canada`s…show more content…
In section 9.8, MD&A provides more detailed information on above mentioned issue. Current legal proceedings Air Canada is involved in or may be subject to legal proceedings which could negatively impact the company`s operations. Recently, Air Canada was involved in investigations by competition authorities relating to Air Canada Cargo division and mandatory retirement issues. MD&A explains the details of the court proceedings. External risks Fuel cost, airport user and air navigation fees, foreign exchange, Aeroplan, Star Alliance, key suppliers, regional carriers, economic and geopolitical conditions, competition. Fuel cost Cost of fuel is also one of Air Canada’s largest operation costs items. Fuel prices have and may continue to fluctuate widely depending on many factors and, therefore Air Canada cannot accurately predict fuel prices. Due to the competitive nature of the airline industry, Air Canada may not be able to pass an increase in fuel prices to its customers by increasing its fares. In addition, Air Canada may be unable to appropriately or sufficiently hedge the risks associated with fluctuations in fuel prices. Furthermore, the impact of lower jet fuel prices could be offset by increased price competition, resulting in decreased revenues. Significant fluctuations in fuel prices could have a potential negative effect on Air Canada. Foreign
Open Document