Air Canada v. Westjet: a load of garbage!
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Air Canada v. Westjet: a load of garbage!
Air Canada won't block WestJet suit
By KAREN HOWLETT
UPDATED AT 12:04 PM EDT Wednesday, Jul 21, 2004
Air Canada says it will not try to block WestJet Airlines Ltd. from launching a countersuit against it in the rival airlines' battle over the alleged theft of business secrets.
Air Canada has accused former WestJet senior executive Mark Hill, who resigned last week, of masterminding an elaborate espionage scheme to siphon flight data from an Air Canada employee website.
WestJet and Mr. Hill will be in court tomorrow, seeking the go-ahead to launch a counterclaim against Air Canada. The company needs judicial approval because Air Canada is operating under court protection from its creditors.
Air Canada said yesterday it will not oppose the litigation. However, it reiterated that the counterclaims made by WestJet and Mr. Hill are without merit, calling them "a diversionary tactic."
WestJet and Mr. Hill are seeking leave from the court to countersue Air Canada for what they allege was "unlawful seizure" of Mr. Hill's garbage, which, they say, contained confidential WestJet information.
Both sides agree that investigators hired by Air Canada removed garbage outside Mr. Hill's residence on March 22 and April 5. Air Canada dismisses Mr. Hill's assertion that the garbage was removed from his private property.
In a statement filed in Ontario Superior Court, Air Canada says the investigators removed the garbage from a publicly accessible laneway, and that the documents seized from Mr. Hill's garbage contain nothing but "fragmentary and/or illegible" information.
"Thus, as a result of abandoning his garbage to the vagaries of municipal garbage collection, Hill lost any privacy interest he had in that garbage."
Air Canada is set to complete its restructuring by Sept. 30. Its stock price plunged 35 cents, or 33 per cent, to 70 cents yesterday on the Toronto Stock Exchange as shareholders digested the news that they stand to get very little under the restructuring.
GLOBEANDMAIL.COM
By KAREN HOWLETT
UPDATED AT 12:04 PM EDT Wednesday, Jul 21, 2004
Air Canada says it will not try to block WestJet Airlines Ltd. from launching a countersuit against it in the rival airlines' battle over the alleged theft of business secrets.
Air Canada has accused former WestJet senior executive Mark Hill, who resigned last week, of masterminding an elaborate espionage scheme to siphon flight data from an Air Canada employee website.
WestJet and Mr. Hill will be in court tomorrow, seeking the go-ahead to launch a counterclaim against Air Canada. The company needs judicial approval because Air Canada is operating under court protection from its creditors.
Air Canada said yesterday it will not oppose the litigation. However, it reiterated that the counterclaims made by WestJet and Mr. Hill are without merit, calling them "a diversionary tactic."
WestJet and Mr. Hill are seeking leave from the court to countersue Air Canada for what they allege was "unlawful seizure" of Mr. Hill's garbage, which, they say, contained confidential WestJet information.
Both sides agree that investigators hired by Air Canada removed garbage outside Mr. Hill's residence on March 22 and April 5. Air Canada dismisses Mr. Hill's assertion that the garbage was removed from his private property.
In a statement filed in Ontario Superior Court, Air Canada says the investigators removed the garbage from a publicly accessible laneway, and that the documents seized from Mr. Hill's garbage contain nothing but "fragmentary and/or illegible" information.
"Thus, as a result of abandoning his garbage to the vagaries of municipal garbage collection, Hill lost any privacy interest he had in that garbage."
Air Canada is set to complete its restructuring by Sept. 30. Its stock price plunged 35 cents, or 33 per cent, to 70 cents yesterday on the Toronto Stock Exchange as shareholders digested the news that they stand to get very little under the restructuring.
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IMO, I think Air Canada should stop wasting time and energy on un-neccerssary court cases against rivals, and start putting more focus on positively restructing the company.
They should be taking companies/people to court when they have the time and real need to do it
Dan
They should be taking companies/people to court when they have the time and real need to do it
Dan
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Dan you don't know the whole story...
Cloudy skies forming above WestJet's founder
By DEBORAH YEDLINMonday, July 19, 2004 - Page B2
Calgary's golden boy, WestJet CEO Clive Beddoe, was the subject of many a Stampede conversation late last week following the news of Mark Hill's resignation from the company.Mr. Hill, the former vice-president of strategic planning at WestJet, is named along with another WestJet employee in a lawsuit launched by Air Canada in April that alleges the pair engaged in a very sophisticated form of corporate espionage, accessing confidential information and using it to plan routes and optimize yields.
One of the questions asked over beef, beans and beer was whether Mr. Hill's resignation was an admission of guilt or whether it was offered up as a sacrificial lamb to save the company. Another was whether Mr. Beddoe knew of Mr. Hill's actions. If Mr. Beddoe didn't know anything, it's safe to ask what kind of handle he has on other members of his senior management team and whether there might be other things going on at WestJet that Mr. Beddoe doesn't know about. On the other hand, if Mr. Beddoe was aware of Mr. Hill's activities and didn't do anything until Air Canada filed its lawsuit, it casts quite a shadow on the founder of WestJet, which has managed to make money during some very challenging times.
WestJet maintains that the information obtained in more than 200,000 hits to the Air Canada website was neither confidential nor of use to the company in making changes to its fares, loads or routes.But not everyone buys that.A research note recently published by seasoned airline analyst Claude Proulx at BMO Nesbitt Burns suggests the information was potentially very valuable because it likely helped WestJet better manage its inventory of seats and adjust the prices for those seats accordingly. Now that the database is no longer being used, it will be interesting to see what the load factors for both companies look like in the months ahead.
Also of note are the timing of the announcements of a number of route pairings identical to where Air Canada was flying at times when these flights were regularly oversold, and the move to Pearson Airport from Hamilton. One might suggest, and rightly so, that there's nothing wrong with a competitor moving in to meet demand, because such decisions are based on extensive due diligence and research. On the other hand, where did such detailed information come from?
It inevitably raises the question as to whether WestJet's business plan was as sound as it appeared or the result of a little extra help.This is of particular interest to investors, not just because of the potential ethical implications, but also because the Canadian airline industry is becoming a rather interesting place, given the unrelenting expansion by Jetsgo, Air Canada's impending emergence from bankruptcy protection and persistently high oil prices. The fact is that WestJet is no longer the sole low-cost carrier in Canada, with the number of low-fare seats available to consumers having doubled, putting more downward pressure on pricing.And WestJet in particular is being singled out because investors are becoming increasingly concerned with the company's rapid expansion; it's no longer just a regional airline targeting underserved routes and flying into cheap airports.
"I'm watching them become too big," said one money manager who no longer holds the stock.One of the concerns is that the expansion is going to compromise the airline's profitability because it needs to generate more revenue in order to support the larger structure. Why, for example, should it bother to fly into New York's LaGuardia Airport from Toronto -- a destination already well served by seven other airlines offering more than 50 flights a week?
And while it may not have a union, which does help the expense side of the equation, history suggests that some form of labour organization is inevitable -- even Southwest Airlines, the low-fare no-frills U.S. carrier on which WestJet based its business model -- has a union to deal with.Add on the fact that WestJet pays for much of its costs -- fuel, maintenance, lease and interest -- in U.S. dollars, and that its June load numbers failed to impress the Street, and the result is that some analysts are cutting earnings estimates for 2004 by as much 50 per cent for the second quarter.
The company's shares seem to be reflecting all these concerns, having steadily fallen from a 52-week high of $21.13 reached early in the year to Friday's close of $13.70. A year ago, the comments about WestJet would have been unreservedly positive even as the stock languished at levels not far off from where it was on Friday.Now, it's a bit different.
The remarks are now tinged with an air of disappointment -- either because of the lawsuit facing the company or the fact that its business plan is so different from what it once was, and concerns as to whether the expansion plans will come back to haunt Mr. Beddoe and the "little airline that could."
[email protected]
Cloudy skies forming above WestJet's founder
By DEBORAH YEDLINMonday, July 19, 2004 - Page B2
Calgary's golden boy, WestJet CEO Clive Beddoe, was the subject of many a Stampede conversation late last week following the news of Mark Hill's resignation from the company.Mr. Hill, the former vice-president of strategic planning at WestJet, is named along with another WestJet employee in a lawsuit launched by Air Canada in April that alleges the pair engaged in a very sophisticated form of corporate espionage, accessing confidential information and using it to plan routes and optimize yields.
One of the questions asked over beef, beans and beer was whether Mr. Hill's resignation was an admission of guilt or whether it was offered up as a sacrificial lamb to save the company. Another was whether Mr. Beddoe knew of Mr. Hill's actions. If Mr. Beddoe didn't know anything, it's safe to ask what kind of handle he has on other members of his senior management team and whether there might be other things going on at WestJet that Mr. Beddoe doesn't know about. On the other hand, if Mr. Beddoe was aware of Mr. Hill's activities and didn't do anything until Air Canada filed its lawsuit, it casts quite a shadow on the founder of WestJet, which has managed to make money during some very challenging times.
WestJet maintains that the information obtained in more than 200,000 hits to the Air Canada website was neither confidential nor of use to the company in making changes to its fares, loads or routes.But not everyone buys that.A research note recently published by seasoned airline analyst Claude Proulx at BMO Nesbitt Burns suggests the information was potentially very valuable because it likely helped WestJet better manage its inventory of seats and adjust the prices for those seats accordingly. Now that the database is no longer being used, it will be interesting to see what the load factors for both companies look like in the months ahead.
Also of note are the timing of the announcements of a number of route pairings identical to where Air Canada was flying at times when these flights were regularly oversold, and the move to Pearson Airport from Hamilton. One might suggest, and rightly so, that there's nothing wrong with a competitor moving in to meet demand, because such decisions are based on extensive due diligence and research. On the other hand, where did such detailed information come from?
It inevitably raises the question as to whether WestJet's business plan was as sound as it appeared or the result of a little extra help.This is of particular interest to investors, not just because of the potential ethical implications, but also because the Canadian airline industry is becoming a rather interesting place, given the unrelenting expansion by Jetsgo, Air Canada's impending emergence from bankruptcy protection and persistently high oil prices. The fact is that WestJet is no longer the sole low-cost carrier in Canada, with the number of low-fare seats available to consumers having doubled, putting more downward pressure on pricing.And WestJet in particular is being singled out because investors are becoming increasingly concerned with the company's rapid expansion; it's no longer just a regional airline targeting underserved routes and flying into cheap airports.
"I'm watching them become too big," said one money manager who no longer holds the stock.One of the concerns is that the expansion is going to compromise the airline's profitability because it needs to generate more revenue in order to support the larger structure. Why, for example, should it bother to fly into New York's LaGuardia Airport from Toronto -- a destination already well served by seven other airlines offering more than 50 flights a week?
And while it may not have a union, which does help the expense side of the equation, history suggests that some form of labour organization is inevitable -- even Southwest Airlines, the low-fare no-frills U.S. carrier on which WestJet based its business model -- has a union to deal with.Add on the fact that WestJet pays for much of its costs -- fuel, maintenance, lease and interest -- in U.S. dollars, and that its June load numbers failed to impress the Street, and the result is that some analysts are cutting earnings estimates for 2004 by as much 50 per cent for the second quarter.
The company's shares seem to be reflecting all these concerns, having steadily fallen from a 52-week high of $21.13 reached early in the year to Friday's close of $13.70. A year ago, the comments about WestJet would have been unreservedly positive even as the stock languished at levels not far off from where it was on Friday.Now, it's a bit different.
The remarks are now tinged with an air of disappointment -- either because of the lawsuit facing the company or the fact that its business plan is so different from what it once was, and concerns as to whether the expansion plans will come back to haunt Mr. Beddoe and the "little airline that could."
[email protected]
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Touchy. Pretty much knew most of that thread already as I have been following it for a small while. Mainly Air Canadas side of thigns. Enjoyed my breakfast in Montreal for 2 weeks with the Gazette infront of me daily talking about AC. And of course, my visits to Canada dot com.
I still kind of stand by my original post. Yes it does sound suspect about westjet, but fundamentally do you not agree that Canada should try to keep working on its infrastructure and business plans, and putting things like thisa few years down the line? Don't quote me on this, but I feel confident in saying that most court cases of this scale last for years anyway! Cant it be put off so they have more time to themselves, and then revisit the issue in 1 or 2 years time?
Dont want to sound ignorant. Just being simplistic
I still kind of stand by my original post. Yes it does sound suspect about westjet, but fundamentally do you not agree that Canada should try to keep working on its infrastructure and business plans, and putting things like thisa few years down the line? Don't quote me on this, but I feel confident in saying that most court cases of this scale last for years anyway! Cant it be put off so they have more time to themselves, and then revisit the issue in 1 or 2 years time?
Dont want to sound ignorant. Just being simplistic
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Your right Dan, we don't know the whole story, only the recent bad press for Westjet that you posted. You seem to be ommitting years of unfair and destructive practices by Air Canada towards all it's domestic rivals, while being the governement's favorite pet. Once Westjet turned the tides it's funny how quickly Air Canada was able to find something to tarnish Westjet's image. This whole deal is a public relations battle. Both suits will lead to nowhere.
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OK, so assume AC proves that Westjet did indeed steal its business secrets. What damages did AC suffer? Pretty hard to prove any real damages in my opinion. Whole thing a waste of time and shareholders money.
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WJ has already admitted that they did commit espionage on AC’s confidential website using a computer program designed for that purpose. Some financial pundits are speculating that the settlement could go as high as $400Million ca which is no small change. Beyond that there exists the possibility that criminal charges could be laid. The fact that they did it is already established, what the penalty will be, could take years
The defence that WJ is offering is getting more ridiculous every day leaving many wondering whether WJ knows the difference between right and wrong.
Oh and all this AC bashing that’s going on is completely irreverent to this case....
The defence that WJ is offering is getting more ridiculous every day leaving many wondering whether WJ knows the difference between right and wrong.
Oh and all this AC bashing that’s going on is completely irreverent to this case....
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AC bashing by whom? I personally dont think I'm bashing them. Have flown many times and felt staff and service was fine. Prices a little high nevertheless.
You know what I think. Get on with their own business.
You know what I think. Get on with their own business.
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But the quantum of damages will be hard to prove. The financial pundits can say all they want but they aren't the ones who have to make a convincing case before a judge in a fairly conservative jurisdiction (Ontario).
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Air Canada Seeks $220 Million in Lawsuit against WestJet
MONTREAL, July 22 /CNW Telbec/ - Air Canada today filed an amended Statement of Claim with the Ontario Superior Court of Justice seeking $220 million in damages in its lawsuit against WestJet Airlines and its former Vice President of Strategic Planning, Mark Hill.
WestJet and certain executives were involved in corporate espionage on a massive scale against Air Canada. Mark Hill has admitted that WestJet surreptitiously accessed an internal employee website nearly a quarter of a million times over a 12-month period, and created automated technology to download and analyze passenger load and booking information.
As a result, WestJet acquired a competitive advantage by obtaining access to the number of passengers booked on any flight on any route Air Canada flies anywhere in the world, for up to a year into the future. To its advantage and to Air Canada's detriment, WestJet then used Air Canada's confidential information to compile computer-generated reports for use in strategic planning, routing and pricing decisions, with a high degree of accuracy and very little risk.
Air Canada's $220 million claim includes $170 million in compensation, $25 million in punitive damages and $25 million for WestJet's intentional destruction of documents when it learned Air Canada had discovered the espionage.
Mr. Hill resigned from WestJet last week, several months after being placed on paid leave in the aftermath of it becoming publicly known that he and WestJet had engaged in corporate espionage.
Air Canada looks forward to hearing in open court WestJet's explanation for improperly accessing Air Canada's confidential employee website nearly a quarter of a million times over a 12-month period.
__________________
MONTREAL, July 22 /CNW Telbec/ - Air Canada today filed an amended Statement of Claim with the Ontario Superior Court of Justice seeking $220 million in damages in its lawsuit against WestJet Airlines and its former Vice President of Strategic Planning, Mark Hill.
WestJet and certain executives were involved in corporate espionage on a massive scale against Air Canada. Mark Hill has admitted that WestJet surreptitiously accessed an internal employee website nearly a quarter of a million times over a 12-month period, and created automated technology to download and analyze passenger load and booking information.
As a result, WestJet acquired a competitive advantage by obtaining access to the number of passengers booked on any flight on any route Air Canada flies anywhere in the world, for up to a year into the future. To its advantage and to Air Canada's detriment, WestJet then used Air Canada's confidential information to compile computer-generated reports for use in strategic planning, routing and pricing decisions, with a high degree of accuracy and very little risk.
Air Canada's $220 million claim includes $170 million in compensation, $25 million in punitive damages and $25 million for WestJet's intentional destruction of documents when it learned Air Canada had discovered the espionage.
Mr. Hill resigned from WestJet last week, several months after being placed on paid leave in the aftermath of it becoming publicly known that he and WestJet had engaged in corporate espionage.
Air Canada looks forward to hearing in open court WestJet's explanation for improperly accessing Air Canada's confidential employee website nearly a quarter of a million times over a 12-month period.
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AC clearly have a case then by the sound of things. Coincidence that Mr Hill resigned?
I still stand by my opinion, but C$220million will help on their way to successful restructuring, theres no doubt about that.
Would help me a bit out too!
I still stand by my opinion, but C$220million will help on their way to successful restructuring, theres no doubt about that.
Would help me a bit out too!
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From to-day's (July 23) Globe and Mail:
The statement of claim does not explain how Air Canada arrived
at the $220 million figure. (p. B1)
I still don't think there's much chance of AC getting a lot out of this lawsuit. Large punitive damage awards are hard to come by in Canadian courts and don't forget, this matter is before a judge,
not a jury.
The statement of claim does not explain how Air Canada arrived
at the $220 million figure. (p. B1)
I still don't think there's much chance of AC getting a lot out of this lawsuit. Large punitive damage awards are hard to come by in Canadian courts and don't forget, this matter is before a judge,
not a jury.
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Air Canada's CAD $220 million claim includes CAD $170 million ($126 million) in compensation, $25 million ($18.5 million) in punitive damages and $25 million for WestJet's alleged destruction of documents when it learned Air Canada had discovered its activities.
There is a rumor some AC employees are considering a class action lawsuit against WJ for damages a move that I totally concur with. I also keep reading from WJ supporters that WJ will get away with just a slap on the wrist. I wouldn’t be to sure about that, AC has hired a top notch legal team and AC doesn't go into to court on a whim. I think the amount of the settlement is going to surprise the industry. In fact the analysts expect WJ shares to be discounted until the amount of the settlement is established.
There is a rumor some AC employees are considering a class action lawsuit against WJ for damages a move that I totally concur with. I also keep reading from WJ supporters that WJ will get away with just a slap on the wrist. I wouldn’t be to sure about that, AC has hired a top notch legal team and AC doesn't go into to court on a whim. I think the amount of the settlement is going to surprise the industry. In fact the analysts expect WJ shares to be discounted until the amount of the settlement is established.
