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Air Canada comments on arbitration with Jazz

Canada´s flag carrier Air Canada has issued a statement on a decision this week in the arbitration relating to the benchmarking provisions of its capacity purchase agreement with regional airline operator Chorus Aviation´s Jazz Aviation LP subsidiary.

According to Air Canada, the arbitration relates to the method and calculations Air Canada and Jazz are to use to compare the rate of growth of Jazz´s controllable unit costs to those of a group of comparable operators.

The arbitration panel ruled that although Jazz´s unit costs increased faster than the comparable operators, the result of the 2009 Benchmark exercise was to maintain the current 12.5% controllable mark-up as per the August 1, 2009 amendment to the CPA.

As provided for in the CPA, the parties will commence negotiations in 2014 to set the CPA rates for the next three-year period 2015-2017. The term of the CPA expires on December 31, 2020.

In line with Air Canada´s priority for cost reduction and sustainable profitability, Air Canada will both work with Jazz to explore cost reduction initiatives and continue to pursue its regional airline diversification strategy that includes the Request for Proposal process underway for certain existing US regional transborder routes.

Air Canada is Canada´s largest domestic and international airline serving more than 175 destinations on five continents. Canada´s flag carrier provides scheduled passenger service directly to 60 Canadian cities, 49 destinations in the United States and 67 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America.

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