2019 Annual Information Form March 30, 2020
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2019 Annual InformationD Form March 30, 2020 - 0 - TABLE OF CONTENTS EXPLANATORY NOTES ........................................................................................................................... - 1 - CORPORATE STRUCTURE ..................................................................................................................... - 3 - INTERCORPORATE RELATIONSHIP ................................................................................................. - 3 - THE BUSINESS .......................................................................................................................................... - 4 - STRATEGY ................................................................................................................................................... - 5 - CONTRACTED CARRIERS ...................................................................................................................... - 5 - ROUTES AND SCHEDULES .................................................................................................................... - 6 - AIR CANADA VACATIONS AND AIR CANADA ROUGE .............................................................. - 7 - SIGNIFICANT ACQUISITIONS ........................................................................................................... - 8 - STAR ALLIANCE® ...................................................................................................................................... - 9 - JOINT VENTURE AND CODESHARE PARTNERSHIPS ................................................................ - 9 - CARGO......................................................................................................................................................... - 10 - AIR CANADA’S ENVIRONMENTAL OBJECTIVES ....................................................................... - 10 - FINANCIAL OVERVIEW ....................................................................................................................... - 12 - SIGNIFICANT FINANCING TRANSACTIONS .............................................................................. - 13 - RATINGS .................................................................................................................................................... - 14 - PENSION PLAN ARRANGEMENTS ................................................................................................... - 20 - AIRCRAFT FLEET .................................................................................................................................... - 20 - EMPLOYEES AND ARRANGEMENTS WITH UNIONS ................................................................ - 21 - FACILITIES ............................................................................................................................................... - 23 - TRADEMARKS .......................................................................................................................................... - 24 - REGULATORY ENVIRONMENT .......................................................................................................... - 24 - INDUSTRY OVERVIEW AND COMPETITIVE ENVIRONMENT ............................................... - 31 - RISK FACTORS ........................................................................................................................................ - 35 - MARKET FOR SECURITIES ................................................................................................................. - 36 - TRANSFER AGENT AND REGISTRAR.............................................................................................. - 36 - DIVIDEND RECORD ............................................................................................................................... - 36 - DESCRIPTION OF CAPITAL STRUCTURE ..................................................................................... - 37 - DIRECTORS AND EXECUTIVE OFFICERS ..................................................................................... - 43 - AUDIT, FINANCE AND RISK COMMITTEE ................................................................................... - 46 - INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ............... - 49 - LEGAL PROCEEDINGS .......................................................................................................................... - 49 - MATERIAL CONTRACTS ....................................................................................................................... - 49 - EXPERTS .................................................................................................................................................... - 50 - ADDITIONAL INFORMATION............................................................................................................ - 50 - GLOSSARY OF TERMS .......................................................................................................................... - 51 - SCHEDULE A: CHARTER OF THE AUDIT, FINANCE AND RISK COMMITTEE ................. - 56 - 1. GENERAL PURPOSE ...................................................................................................................... - 56 - 2. COMPOSITION AND QUALIFICATION .................................................................................. - 56 - 3. MEETINGS AND PROCEDURE ................................................................................................... - 57 - 4. RESPONSIBILITIES AND DUTIES .......................................................................................... - 58 - 5. OTHER RESPONSIBILITIES AND DUTIES ........................................................................... - 62 - EXPLANATORY NOTES Response to COVID-19 - Air Canada, along with the rest of the global airline industry, is facing a severe drop in traffic and a corresponding decline in revenue as a result of the coronavirus (COVID-19) outbreak and travel restrictions imposed in many countries around the world, including Canada and the United States. Air Canada has been taking measures in response to the outbreak including through significant cuts in capacity, cost reduction and capital deferral initiatives, seeking additional liquidity through financing arrangements and suspending purchases under its normal course issuer bid. The full impact and duration of the outbreak remains unknown and Air Canada may take additional measures, including in response to any future developments. Except where otherwise noted, the information in this Annual Information Form (“AIF”) is current as at December 31, 2019 and is provided prior to measures undertaken in response to the COVID- 19 outbreak. Air Canada and the Corporation - References in this AIF to Air Canada and to the “Corporation” include references, as the context may require, to Air Canada and its subsidiaries collectively, Air Canada and one or more of its subsidiaries, one or more of Air Canada's subsidiaries, or Air Canada itself. Subsidiaries - References in this AIF to the term “subsidiary” or “subsidiaries” refer, in relation to any entity, to any other entity, including a corporation or a limited partnership, which is controlled, directly or indirectly, by that entity. Defined Terms - For an explanation of defined terms, capitalized terms and expressions used in this AIF, refer to the section entitled “Glossary of Terms” at the end of this AIF. Currency - All currency amounts used in this AIF are stated in Canadian dollars, unless otherwise indicated. Industry and Market Data - Market data and certain industry forecasts used throughout this AIF were obtained from internal surveys, market research, publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable at the relevant time, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal surveys, industry forecasts, market research and other publicly available information, while believed to be reliable, have not been independently verified, and the Corporation does not make any representation as to the accuracy or completeness of such information. Any estimates and forecasts involve risks and uncertainties and are subject to change based on various factors, including those discussed below under “Caution Regarding Forward-Looking Statements”. Caution regarding forward-looking statements - Air Canada’s public communications may include forward-looking statements within the meaning of applicable securities laws. Such forward-looking statements are included in this AIF and may be included in other communications, including filings with regulatory authorities and securities regulators. Forward- looking statements may be based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, comments relating to guidance, strategies, expectations, planned operations or future actions. Forward-looking statements are identified using terms and phrases such as , “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar terms and phrases, including references to assumptions. - 1 - Forward-looking statements, by their nature, are based on assumptions, including those described herein and are subject to important risks and uncertainties. Forward-looking