Last Updated Mon, 29 May 2006 08:45:26 EDT
CBC News
WestJet apologized to Air Canada on Monday and will pay $15.5 million to settle a lawsuit over a case of corporate espionage.
In a joint press release, WestJet apologized to its competitor and Air Canada top executive Robert Milton. Calgary-based WestJet will also pay $5 million to Air Canada for its investigation and litigation costs, and make a $10-million donation to children's charities in the names of both airlines.
The lawsuit centred around allegations that WestJet management used the password of a former Air Canada employee to access a web site maintained by Air Canada to download "detailed and commercially sensitive" information.
"This practice was undertaken with the knowledge and direction of the highest management levels of WestJet and was not halted until discovered by Air Canada," the two companies said in a statement.
"This conduct was both unethical and unacceptable and WestJet accepts full responsibility for such misconduct."
Air Canada has accepted WestJet's apology and both companies have dropped their litigation against each other.
Air Canada filed suit against WestJet in 2004 seeking $220 million. WestJet countersued later that year, alleging Air Canada used private investigators to search through recycling material at the home of a WestJet executive home in Oak Bay, B.C.
WestJet Airlines Ltd. has admitted to spying on Air Canada in an out-of-court settlement, ending the two-year legal fight.
Industry sources say the two airlines hammered out a deal late Sunday. Faxes and e-mails were exchanged Sunday afternoon as WestJet sought to halt the negative publicity generated by Air Canada's lawsuit, and the country's largest carrier requested and later obtained an apology for unethical behaviour.
In a joint statement released before markets opened Monday, WestJet apologized for accessing a confidential Air Canada website designated for reservations.
”This practice was undertaken with the knowledge and direction of the highest management levels of WestJet and was not halted until discovered by Air Canada,” the release said. ”This conduct was both unethical and unacceptable and WestJet accepts full responsibility for such misconduct. WestJet sincerely regrets having engaged in this practice and unreservedly apologizes to Air Canada and Mr. Robert Milton.”
Air Canada said it has accepted WestJet's apology. All legal proceedings between the parties have been dropped.
As part of the settlement, WestJet will pay Air Canada's investigation and litigation costs of $5.5-million. As well, WestJet has accepted an Air Canada request that it make a $10-million donation in the name of both airlines to children's charities across the country.
”Both parties have expressed a desire to turn the page on this unfortunate chapter with finality and are pleased that children's charities across Canada will also benefit from this settlement arrangement,” the statement said.
Montreal-based Air Canada launched its lawsuit against WestJet in April 2004, accusing the discount carrier of hacking into a confidential internal website designated for reservations. WestJet had previously denied any wrongdoing.
Air Canada argued that WestJet used information on so-called load factor, or the proportion of seats filled, to help devise its counter-attack on routes.
The case has been the talk of Canada's airline industry.
In the spring of 2004, Air Canada hired detectives to snoop through the garbage of a WestJet co-founder, unearthing shredded documents. Air Canada later hired computer experts to electronically piece the shredded papers back together.
WestJet, founded in 1996, had been on a major expansion program when the lawsuit made headlines.
Air Canada, by sharp contrast, filed for bankruptcy protection in the spring of 2003. Industry observers say that any information gleaned by WestJet would help the smaller carrier in its dogfight in the skies.
Air Canada emerged from bankruptcy protection in September, 2004.
Way to go Clive !!
His only regret? Caught with his hand in the cookie jar
But... Obviously, there was wrong doing. The extent of that wrong doing also has no monetary value other than the expenses involved in getting it through the legal system. They may have been guilty, but not of much
Sorry GG.
The bolding in this thread makes it way easier to read. I can barely read as it is. I'd prefer the article in pictures but nobody's done that yet.
Hey Birddog, can you make a picture thread about this? You've got pictures for everything else!!
"ouch!!! there goes profit share again"
Hey BLISTER here is a "theory" The 5 mill. to AC gets covered by other "sources" and seeing that the 10 Mill. is going to charity it is a tax deduction, shouldn't affect the COOKIE jar to bad. Better ask mommy for an advance on the allowance so you can cash in the rise in WestJet stock.
I thought that was pretty classy putting the 10 million toward a charity. I don't think this is going to hurt West Jet though. They have a pretty solid reputation and I don't think most customers really care about this sort of thing.
Hmm if AC’s legal expenses are approximately $5M then WJ’s legal expenses are probably about the same amount. Simple math makes it $10M for legal expenses paid for by WJ. I suspect WJ probably carries some sort of liability insurance in this instance which probably will lighten the financial load but that’s only a guess. WJ knew the jig was up and they chose the path of least resistance, to bad they didn’t do that in the first place.
However Canadians are a funny people so time will tell is if the average traveler will hold WJ’s feet to the fire for their admission of wrong doing or even worse their blatant stone walling in face of the facts..
Oh with oil at $70 there is not going to be any sustainable rise in the value of airline shares probably a short bump but that's about it.
Rebel wrote:
However Canadians are a funny people so time will tell is if the average traveler will hold WJ’s feet to the fire for their admission of wrong doing or even worse their blatant stone walling in face of the facts..
I seriously doubt the Canadian average traveller gives a flying f*ck whether WJ is guily or not.
All they care about is, can WJ get me from point "A" to point "B" as cheap as they have in the past or at least cheaper than AC.
More comfortable? Who cares. Especially when the biggest issue is how much a ticket costs. WJ's routes are all pretty much in the range that comfort never becomes a big deal. And, realistically, how much more comfortable are the seats? Maybe, maybe when WJ gets into the international long haul game the seat quality will be a valid issue but they'll never take that leap on their mighty 37's. Too comfortable making an average business from AC's research and good planning (and getting busted at it!!). Losers.
ei ei owe wrote:More comfortable? Who cares. Especially when the biggest issue is how much a ticket costs. WJ's routes are all pretty much in the range that comfort never becomes a big deal. And, realistically, how much more comfortable are the seats?
What do you mean who cares. WJ seats are normally cheaper and the seats are way more comfortable. I'm a fairly big guy so mabey it just makes a bigger difference to me. I haven't seen anything that would lead me to belive AC has anything on WJ
Rebel,
Maybe you should ask for an advance on your allowance too. 70$ a barrel oil is going to be a fact of business for a very long time. Just for fun let's say you bought 100K of WJA today, get back to us in one month and see how much you might be up! My guess LOTS
forbes wrote:Rebel,
Maybe you should ask for an advance on your allowance too. 70$ a barrel oil is going to be a fact of business for a very long time. Just for fun let's say you bought 100K of WJA today, get back to us in one month and see how much you might be up! My guess LOTS
You can't honestly believe that (err maybe if you're in the business of trying to flog the stock) but I'm not surprised at the WJ spin on the outcome. WJ has to save face somehow..
May 30, 2006. 07:27 AM DAVID OLIVE BUSINESS COLUMNIST
Now that Robert Milton has extracted his pound of flesh from arch-rival Clive Beddoe, the rest of us might hope for some respite from the arrogance of an industry with its back turned to the customer.
Or for an apology — from Ottawa, perhaps — for the scarcity of choice in a business that even Beddoe, CEO of WestJet Airlines Ltd., acknowledged earlier this month is a "relatively strong duopoly." By that he means an industry that will continue to get away with cheerless service, cramped cabins, the imposition of fuel, security and other surtaxes — and charging $5.50 for a thimble of execrable coffee.
If there were too many airlines in the 1990s, all lacking viability, today's passenger unfriendly industry suffers from the utter domination by one carrier, Air Canada, of long haul international routes, and from Air Canada and WestJet divvying up the domestic business. In yesterday's out of court settlement between the duopolists of a two-year dispute over WestJet's hacking of an internal Air Canada website, Air Canada got what it was holding out for: one of the most humiliating grovels in recent Canadian corporate history.
Never mind that the $15.5 million settlement is a fraction of the $220 million Air Canada ostensibly sought in a lawsuit filed in 2004 — the damages supposedly arising from WestJet's alleged espionage. This wasn't a legal action by Air Canada, it was a marketing campaign.
Accused endlessly by self-styled populist Beddoe of being a bullying would-be monopolist, Air Canada chief executive Robert Milton was determined to take WestJet down a moral notch or two. And he's done so, entirely due to the "misconduct" to which WestJet fessed up yesterday, making a sham of the Calgary-based carrier's two-year long denials of wrongdoing.
If Air Canada's stranglehold on air travel arises from sheer size and ubiquity, WestJet's appeal has always been in its underdog image as a kind-hearted alternative to a monolithic Air Canada — an image that doesn't quite square with spying in your neighbour's back window.
In an early bid to get the embarrassing episode behind him, Beddoe apologized back in August 2004 for the 243,630 times Air Canada says WestJet tapped into one of its confidential websites, over a 10-month stretch beginning in May 2003. But Beddoe stubbornly clung to the assertion that Air Canada had not suffered from WestJet's insatiable curiosity about its chief competitor's scheduling and pricing strategy.
Beddoe thus played into Milton's hands, giving Air Canada cause to drag out a case that kept alive suspicions about WestJet's moral character.
It's not every day — or every decade — that a company admits to "unethical" conduct by its "highest management levels," as WestJet did yesterday in finally putting the case to rest.
But with Beddoe and five current and former WestJet executives named in Air Canada's lawsuit to be cross-examined by Air Canada's legal team, Beddoe suddenly folded.
In yesterday's joint statement by the two airlines, WestJet "unreservedly apologizes" to both Air Canada and "Mr. Robert Milton" — a reminder of how intensely personal is the acrimony between these two first officers. Even when Robert Crandall's American Airlines was trying to smother fellow Dallas carrier Southwest Airlines in the cradle, the relationship between Crandall and Southwest co-founder Herb Kelleher was for the most part one of mutual admiration for each other's tenacity.
Conditions are notably frostier in the Canadian industry. It would have pleased Milton no end to have the unflattering testimony of Beddoe & Co. enter the public record — preferably in drawn-out stages, further undermining WestJet's cultivated image as the selfless counterpart to a heartless giant.
In truth, both carriers are doing their best to keep small fry like CanJet, Harmony and Porter Airlines, which hopes to fly out of Toronto's Island Airport, in their place. And with their combined heft, which comes of having 90 per cent of the domestic scheduled market, they hope to dampen the enthusiasm of any would be startups.
That would account for Beddoe's recent bashing of the nascent Porter, whose planned fleet of turboprops "scare the bejesus" out of passengers made to sit next to a propeller "spinning around at thousands of revolutions per minute just past your nose." It goes without saying that there's nothing frightening about the benign 44,000 pounds of thrust from the engine outside your window on takeoff in a jet airliner.
Like most free market capitalists, Milton and Beddoe don't much care for free market competition. And the sorry record of failed North American airlines, including our own Canada 3000, Royal Aviation, Roots Air and Jetsgo, only strengthens the belief of Milton and Beddoe — unspoken, of course — that crowded skies and an abundance of consumer choice are unhealthy for investors.
Having largely completed the turnaround of Air Canada since it emerged from bankruptcy protection in 2004, Milton will sooner than later accept one of the multitude of job offers he often brags of receiving.
Milton's arrival in the cockpit at the troubled United, Delta or Northwest will conclude one of the longest-running spitting matches in Canadian business. But it's unlikely that an admittedly chastened Beddoe will resist a parting shot.
As recently as November, Beddoe pronounced himself stunned by the news that Milton had topped a recent ranking of Canada's most capable executives. Said Beddoe at the time: "How do you bankrupt a monopoly and get named CEO of the year?"
They just got caught is all .
Every company has some form of intelligence gathering on what the competition is doing .
Just look at How the price of gas changes at the pumps like synchronized swimming and the big oil companies say that there is no cartel.
Some companies are just smarter at gathering intel .
They got caught in a easy trap set by a 'Former ' employee.
Rule one in the spy game is never trust a former employee as you will never know where their true loyaties lay .
Westjet will probably use more professional means in the future just as most large companies do .They are called Consultants and provide a degre of seperation from the dirty deeds that are part of industry.
ei ei owe wrote:More comfortable? Who cares. Especially when the biggest issue is how much a ticket costs. WJ's routes are all pretty much in the range that comfort never becomes a big deal. And, realistically, how much more comfortable are the seats?
What do you mean who cares. WJ seats are normally cheaper and the seats are way more comfortable. I'm a fairly big guy so mabey it just makes a bigger difference to me. I haven't seen anything that would lead me to belive AC has anything on WJ
Have you ever sat in the new RJ's? Waayyy more comfortable than the 737. Minus the annoying jokes too....
Cyxe, I must be flying on the wrong RJ's becasue as far as I'm concerned the RJ seat is on par with a Metro seat. Also I have flown WestJet at least 6 times in the last 6 months and have yet to here a joke told. Again I must be on the wrong 737's.
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