MONTREAL — Air Canada together with the Quebec government and the federal government is facing down a class-action lawsuit seeking up to $1 billion.
The lawsuit was filed on behalf of former employees of defunct aircraft maintenance company Aveos against Air Canada and the governments of Quebec and Canada. Aveos filed for creditors’ protection under CCAA in March 2012. Some 2,600 employees were working for Aveos when it closed down. The suit seeks compensation for lost income excluding benefits, along with punitive and non-punitive damages.
According to the Canadian Press and other reports, the lawsuit blames the Quebec government for preparing to withdraw a lawsuit it successfully launched against Air Canada after reaching a “secret agreement” with the company in exchange for its promise to purchase up to 75 Bombardier CSeries aircraft. Under the 1988 Air Canada Public Participation Act that permitted the airline’s privatization, Air Canada was required to perform heavy maintenance on its fleet in Montreal, Winnipeg and Mississauga.
The province won an original court decision in 2013 and a Quebec Court of Appeal ruling last November that the airline had breached its legal obligations. An appeal was slated to be heard by the Supreme Court but the province says it will suspend the suit once the CSeries order is firmed up.
As part of the agreement, Air Canada is required to do maintenance on these planes in Quebec for at least 20 years starting in 2019. However, work could continue to be done on the rest of its fleet elsewhere in Canada and in places like Hong Kong, Singapore and Israel.
The lawsuit accused the province of having “promoted its interests” to justify its US$1 billion investment in the CSeries program.
It also claims the federal government, by proposing to alter the law governing the airline, has endorsed Air Canada’s attitude.
Transport Minister Marc Garneau has said Ottawa will change the law to avoid future litigation.
A spokesman for the minister said the government can’t comment because the lawsuit is before the courts. Quebec officials couldn’t be reached for comment.
Air Canada wouldn’t specifically comment on the lawsuit.
Spokeswoman Isabelle Arthur noted that the airline has reached agreements with the governments of Quebec and Manitoba to conduct maintenance in those provinces, while Ottawa has tabled a bill modernizing the Air Canada Public Participation Act enacted 30 years ago.
