CITIZENS OF THE WORLD - CORPORATE SUSTAINABILITY REPORT 2018 - Air Canada
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CITIZENS OF THE WORLD 2018 CORPORATE SUSTAINABILITY REPORT
At a Glance
CSR2018 As a responsible corporate citizen, Air Canada Air Canada’s process for defining the report content aspects using the Principles of Materiality and
has been reporting on corporate sustainability and the aspect boundaries included the following Stakeholder Inclusiveness. Rankings were based on
since 2012, in accordance with the Global steps: information and stakeholder opinions, which were
Reporting Initiative (GRI) framework. The GRI is an collected via interviews, workshops and surveys.
At a Glance internationally recognized standard for corporate • Identification of the sustainability topics deemed
reporting of economic, environmental and social relevant to Air Canada, in relation to GRI aspects. This report summarizes Air Canada’s sustainability
Letter from CEO performance. Air Canada declares that this 2018 This was done through discussions with the performance in a transparent and accountable
report has been prepared in accordance with the Air Canada Corporate Sustainability Working Group manner. Air Canada engaged Ernst & Young LLP
2018 Achievements / GRI Standards (applicable to reports published and Corporate Sustainability Steering Committee. to perform an independent, limited assurance
2019 Objectives on or after July 1st, 2018). The boundaries of this on selected performance indicators. For more
report include Air Canada, Air Canada Rouge® and information on the assurance scope and statement,
Corporate Sustainability • Prioritization of sustainability topics and
Governance and Transparency Air Canada Vacations®. please visit Limited Assurance.
identification of the associated material GRI
Ethics, Compliance and Risk
Financial Performance
Product and Service Development
Supply Chain
Sustainable Innovation,
Research and Development
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 2
Letter from the President and CEO
CSR2018 In a world that is constantly changing and evolving, we We are incredibly proud of our sustainability
nonetheless maintain deeply rooted connections to the achievements during the year. Air Canada received
people we fly, the more than 200 communities we serve, awards for “Best Sustainability Contribution”, “Best
and the environments in which we operate through our Corporate Sustainability Report in the Canadian
At a Glance extensive global network. Transport Sector” and was also identified as the “2018
Eco-Airline of the Year” by Air Transport World. In
Letter from CEO At Air Canada, we understand this gives us both a addition, we received several awards for our product,
responsibility and an obligation to demonstrate our values corporate culture and employee engagement, including
2018 Achievements / in all that we do. This includes ensuring that our company being named one of Canada’s Top 100 Employers (2019)
2019 Objectives itself is sustained and stands up for what is right for the for the sixth consecutive year. We effectively managed
long-term interest of our employees, customers, and the risks and hazards associated with the launch of
Corporate Sustainability
Governance and Transparency other stakeholders. It means we support research and 29 new routes and continued to bolster our programs
development and the exploration of innovative ways to to better protect employee, customer and company
Ethics, Compliance and Risk reduce our environmental footprint. It also means that we data, reducing exposure to cyber-risk. We increased
conduct ourselves and govern our business in a way that is our presence in the communities and the Air Canada
transparent, ethical and accountable. Foundation also raised a record of nearly 8 million
Financial Performance
Aeroplan Miles for children requiring medical care away
To this end, Air Canada has committed to report annually
from home.
Product and Service Development on its sustainability activities, and I am pleased to present
our 2018 Corporate Sustainability Report. It covers our While we remain committed to producing an annual
achievements throughout the year and, as in past years, is sustainability report next year, Air Canada will also post
Supply Chain
based on four pillars – safety, environment, employees regular updates on our sustainability activities throughout
Sustainable Innovation, and communities – addressed using principles developed the year. Please be sure to follow us online and engage
Research and Development by the Global Reporting Initiative (GRI). with us through social media on Facebook, Twitter and
Instagram or via email as we continue to share important
SAFETY As part of our further commitment to continuously improve
sustainability announcements, stories and updates.
our reporting and ensure our efforts remain relevant, in
2018, Air Canada undertook a materiality assessment
ENVIRONMENT
to identify the main sustainability concerns of our key
stakeholders, defined as investors, customers, employees
EMPLOYEES and suppliers. In addition, a Corporate Sustainability Calin Rovinescu
Working Group tasked with the monitoring and coordinating
COMMUNITIES of Air Canada’s sustainability initiatives was formed.
Citizens of the World 2018
Corporate Sustainability Report 3
2018 Sustainability Highlights and 2019 Key Goals
CSR2018 SAFETY
2018 ACHIEVEMENTS 2019 OBJECTIVES
At a Glance Safety
• Conducted a safety pulse survey with • Rank in the top 3 per cent of airlines included in
Letter from CEO Environment employees, with 81 per cent positive responses. the International Air Transport Association (IATA)
Operational Safety Audit.
2018 Achievements / • Managed the safety risks and hazards associated
2019 Objectives Employees
with the launch of 29 new routes. • Manage the safety risk and hazards associated
Corporate Sustainability with the introduction of the Airbus A220
Communities • Provided employees with an updated Alcohol
Governance and Transparency aircraft, new routes and new initiatives or
and Drug Policy to lend guidance and manage projects.
Ethics, Compliance and Risk In addition the risks associated with the legalization of
cannabis. • Implement all necessary training and other
Financial Performance measures required to effectively reintroduce
• Successfully implemented a Multi-Factor the Boeing 737 MAX in operations when
Authenticator pilot program to better protect appropriate.
Product and Service Development employee, customer and company data,
reducing exposure to cyber-risk. • Deploy the Multi-Factor Authenticator Program
Supply Chain to our entire employee base.
• Conducted a privacy maturity assessment to
Sustainable Innovation, help drive our improvements in protecting • Pursue the privacy action plan.
Research and Development employee and customer data.
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 4
2018 Sustainability Highlights and 2019 Key Goals
CSR2018 ENVIRONMENT
2018 ACHIEVEMENTS 2019 OBJECTIVES
At a Glance Safety
• Recognized as the 2018 Eco-Airline of the Year • Continue to progress on the 2020 Corporate
Letter from CEO Environment by Air Transport World. Waste Strategy through the following:
2018 Achievements / • Achieved IATA Environmental Assessment – Single-Use Plastics Reduction Program.
2019 Objectives Employees
(IEnvA) Certification, Phase 1.
Corporate Sustainability – Expansion of the collection and recycling
Governance and Transparency Communities • Exceeded the collective annual fuel efficiency process in certain Maple Leaf Lounges.
improvement targets of 1.5 per cent set for the
Ethics, Compliance and Risk In addition airline industry. – Centralization of waste infrastructure at our
Montréal headquarters.
• Continued to modernize our fleet, resulting in
Financial Performance – Continuous improvements audits to the
improved fuel efficiency, with the addition of 16
Boeing 737 MAX and five Boeing 787 aircraft. Onboard Domestic Recycling Program.
Product and Service Development
• Contributed to saving 160 tonnes of carbon • Advocacy with federal and provincial
emissions through the use of biojet fuel on 22 governments on effective climate policy
Supply Chain development for the aviation sector in Canada.
domestic flights for Earth Day.
Sustainable Innovation,
Research and Development • Operated, in partnership with the Edmonton
Airport Authority, a biofuel trade mission flight
SAFETY on May 2, 2018.
• Continued to advance the new livery
ENVIRONMENT deployment with a leading technology paint
system known as base coat / clear coat (BCCC)
EMPLOYEES system.
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 5
2018 Sustainability Highlights and 2019 Key Goals
CSR2018 EMPLOYEES
2018 ACHIEVEMENTS 2019 OBJECTIVES
At a Glance Safety
• Recognized as one of Canada’s Top 100 • Support the implementation of Amadeus Altéa
Letter from CEO Environment Employers and Canada’s Best Diversity Suite passenger service system by initiating
employers, named one of the top five most training for more than 10,000 employees.
2018 Achievements /
2019 Objectives Employees attractive company brands to work for in
Canada and one of Montréal’s Top Employers. • Create a change management Centre of
Corporate Sustainability Excellence.
Governance and Transparency Communities
• Enhanced the Emerging Leaders Program, a
corporate career development program for • Further develop the Emerging Leaders Program
Ethics, Compliance and Risk In addition managers. to focus more directly on succession plans in
key areas of the business.
Financial Performance • Implemented Buy-Time to Retirement and
Reduced Work Week programs for senior
employees to transition to retirement, while
Product and Service Development enabling the transfer of expertise to their
colleagues.
Supply Chain
• Marked International Women’s Day 2018 by
Sustainable Innovation, operating two intercontinental flights with
Research and Development all-female staff, and welcomed young women
considering employment in aviation during
SAFETY Young Women in Aviation Day.
ENVIRONMENT • Celebrated Pride, engaging in five memorable
events for employees and the community.
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 6
2018 Sustainability Highlights and 2019 Key Goals
CSR2018 COMMUNITIES
2018 ACHIEVEMENTS 2019 OBJECTIVES
At a Glance Safety
• The Air Canada Foundation granted financial • Develop community partnerships in support
Letter from CEO Environment and in-kind support to 275 Canadian registered of regional network performance, talent
charities focused on the health and well-being acquisition and socio-economic development.
2018 Achievements /
2019 Objectives Employees of children and youth, and provided assistance
for over 450 fundraising initiatives. • Achieve a fundraising goal for the Air Canada
Corporate Sustainability Foundation of $2M (net) to support charitable
Governance and Transparency Communities
• The Air Canada Foundation raised a record organizations focusing on the health and
7,595,245 Aeroplan Miles in December 2018 wellness of children and youth.
Ethics, Compliance and Risk In addition through its Matching Miles campaign for
children requiring medical care away from
Financial Performance home.
• Confirmed 150 community partnerships,
Product and Service Development such as those focused on the diversity of the
LGBTQ2+ community in Canada, the Rendez-
Supply Chain vous de la Francophonie, the Vimy Foundation,
and the Indspire Awards.
Sustainable Innovation,
Research and Development
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 7
2018 Sustainability Highlights and 2019 Key Goals
CSR2018 IN ADDITION
2018 ACHIEVEMENTS 2019 OBJECTIVES
At a Glance Safety
• First airline to be certified for CEIV Live Animals As we aim to further align with the United
Letter from CEO Environment by IATA. Nations’ Sustainable Development Goals, in 2019
we will be joining the United Nations Global
2018 Achievements / • Launched a “Supplier portal” to collect key
2019 Objectives Employees Compact (UNGC). The UNGC is a voluntary
supplier information and amended our formal corporate initiative for businesses looking to
Corporate Sustainability supplier risk assessment process for new commit and align their company’s strategies and
Governance and Transparency Communities
strategic suppliers to monitor for reputational operations with 10 principles outlined by the
risk issues. UN surrounding areas of anti-corruption, labour,
Ethics, Compliance and Risk In addition
environment and human rights.
Financial Performance There are many upcoming programs to further
secure Air Canada’s long-term sustainable
performance, including initiatives related to our
Product and Service Development
loyalty business. In the context of the integration
of Aeroplan Canada Inc., Air Canada will also be
Supply Chain working towards aligning sustainability initiatives
for maximum impact.
Sustainable Innovation,
Research and Development
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 8
Corporate Sustainability Governance and Transparency
CSR2018
Air Canada is committed In 2018, Air Canada undertook a materiality assessment to identify the main sustainability areas of focus of its key
stakeholders, comprised of our investors, customers, employees and suppliers. Air Canada also values feedback from
to conducting its business non-governmental organizations (NGOs) and engages with applicable governments. For the purpose of the Corporate
At a Glance sustainably and responsibly. Sustainability report, Air Canada identified and engaged its key stakeholders through targeted surveys. Air Canada also
made a feedback mechanism available via email at sustainability.developpement_durable@aircanada.ca. more›
To further this objective,
Letter from CEO
considerations of the
2018 Achievements /
2019 Objectives environmental, social
RESULTS OF STAKEHOLDER ANALYSIS CONDUCTED IN 2018
Corporate Sustainability
and economic aspects of Air Canada’s Materiality Matrix
Governance and Transparency sustainability are integrated
Ethics, Compliance and Risk into its business and
operations. Air Canada TOP 5 ISSUES
IMPORTANCE TO STAKEHOLDERS
Financial Performance
engages with stakeholder
GOVERNANCE
ECONOMIC
Safety
Product and Service Development
groups in a variety of ways, Human rights
Ethical business practices and policies
TOP Data
5 ISSUES
protection
SOCIAL
IMPORTANCE TO STAKEHOLDERS
ENVIRONMENTAL
and privacy
including meetings, surveys, Employee health and wellness Fleet management Transparency and disclosure
GOVERNANCE
ECONOMIC
1 Safety
Economic
Customer Safety
Supply Chain written correspondence, Waste management
Human rights
Corporate citizenship
Energy consumption
Ethical business
engagement
Sustainable governance
performance
practices and policies
of Air Canada
2 Economic performance of Air Canada
3 SOCIAL
Data protection and privacy
Water management Diversity and equal opportunity Data protection 4 Ethical business practices and policies
ENVIRONMENTAL
Sustainable Innovation, and ad hoc conversations. Greenhouse gas (GHG) emissions
Employee
Management health and wellness
of climate-related
Labour relations and employee engagement
Employee training
and privacy
& development Transparency and disclosure
Fleet management
5
6
7
Customer engagement
Transparency and disclosure
Fleet management
Noise Economic 1 Safety
Research and Development
Customer satisfaction Socio-economic
impact in Canada
risks and opportunities
Waste management Corporate
Sustainable procurement citizenship
practices
Energy consumption Customer
engagement
Sustainable governance
performance
of Air Canada
2 8 Sustainable
Economic
3 9DataEnergy
governance
performance
consumption
protection
of Air Canada
and privacy
Water management Diversity and equal opportunity 4 10Ethical
Labour relations
business and and
practices employee
policiesengagement
Biodiversity Community involvement
SAFETY surveys are conducted on a Greenhouse gas (GHG) emissions
TOP 10 ISSUES
Labour relations and employee engagement 5
6
Customer engagement
Transparency and disclosure
Employee training & development
Noise Management of climate-related 7 Fleet management
regular basis at Air Canada Socio-economic
impact in Canada
risks and opportunities
Sustainable procurement practices
8
9
10
Sustainable governance
Energy consumption
Labour relations and employee engagement
ENVIRONMENT
and on a yearly basis at Biodiversity Community involvement
TOP 10 ISSUES
EMPLOYEES Air Canada Vacations.
IMPORTANCE TO AIR CANADA’S BUSINESS
COMMUNITIES
IMPORTANCE TO AIR CANADA’S BUSINESS
Citizens of the World 2018
Corporate Sustainability Report 9
In addition, a Corporate
Sustainability Working Group
tasked with the monitoring and
CSR2018 coordinating of Air Canada’s
corporate sustainability initiatives
was formed. The group is comprised
of Air Canada senior management
At a Glance subject-matter experts from diverse
functions, including Environmental
Letter from CEO Affairs, Health and Safety, Strategic
Procurement, Legal, Compliance,
2018 Achievements / Communications and Community
2019 Objectives Partnerships, as well as Brand,
Investor Relations and Corporate
Corporate Sustainability
Governance and Transparency Audit & Advisory. The Working
Group reports on Air Canada’s
Ethics, Compliance and Risk sustainability performance and
makes recommendations to a
Corporate Sustainability Steering
Financial Performance
Committee, which includes several
Air Canada executives. Corporate
Product and Service Development sustainability activities are
reported to the Board of Directors
Supply Chain of Air Canada (Governance and
Nominating Committee).
Air Canada works with industry organizations Facilitation meeting organized in the context of
Sustainable Innovation,
Research and Development In 2018, Air Canada was governed by an eleven- globally on a variety of topics and participates the National Facilitation Committee (NFC) chaired
member Board of Directors committed to meeting in various committees. Of note, Air Canada is a by the Canadian Transportation Agency (as part of
SAFETY high standards of corporate governance in all aspects member of IATA, the National Airlines Council of Canada’s Facilitation Program).
of the Corporation’s affairs. The Board and executive Canada (NACC), an associate member of Airlines for
management believe that a strong, effective, America (A4A), the Latin American and Caribbean Air
ENVIRONMENT
independent board plays a crucial role in promoting Transport Association (ALTA), an associate member
the interests of stakeholders, maximizing shareholder of the Canadian International Freight Forwarders
EMPLOYEES Association (CIFFA), and the International Air Cargo
value and ensuring ethical business practices and
policies. Association (TIACA). Air Canada is also an observer
COMMUNITIES on the International Civil Aviation Organization
Citizens of the World 2018
Corporate Sustainability Report 10Ethics, Compliance and Risk
CSR2018
CODE OF CONDUCT and members of the Board and management are
required to review the Code and complete an
followed up to closure. Retaliation in any form
against any employee who, in good faith, reports
As a means of managing applicable corporate acknowledgment form on an annual basis confirming any concern or suspected non-compliance is strictly
At a Glance governance standards and maintaining best their undertaking in this regard. The Board, with the prohibited.
practices, we adopted and update, as required, our assistance of the Audit, Finance and Risk Committee,
Letter from CEO
Corporate Policy and Guidelines on Business Conduct is responsible for monitoring compliance with the
(better known as the “Code of Conduct”), which Code. The Code is available here. RISK MANAGEMENT
2018 Achievements / sets out guiding principles and ethical standards that The management of opportunities and risks is
2019 Objectives apply to our corporate activities. We encourage our employees to report any concerns considered in all our business processes. Strategic
or suspected non-compliance with laws and decisions are made by our executive team with
Corporate Sustainability Among other things, the Code addresses: compliance regulations, the Code of Conduct or the corporation’s
Governance and Transparency consideration of the implications to the business
with laws (including those related to competition policies through specified internal channels, and its stakeholders. Risks which may be material
and anti-corruption); privacy; fraud and ethics; including an anonymous ethics reporting hotline
Ethics, Compliance and Risk to Air Canada are identified and monitored through
discrimination and harassment; fair dealing with that is actively promoted throughout Air Canada the Company’s Enterprise Risk Management
other people and organizations; conflicts of and administered by a third party. All hotline
Financial Performance process which provides insight on a quarterly
interest; and reporting suspected non-compliance. reports are promptly investigated and basis to the Board of Directors (Audit, Finance and
All employees are required to abide by the Code,
Risk Committee) to support their oversight and
Product and Service Development
responsibilities. Risks to the Company are also
extensively discussed in the Fourth Quarter MD&A.
Supply Chain
more›
Sustainable Innovation,
Research and Development
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 11ANTI-CORRUPTION COMPETITION
One of the important elements identified through Competition law compliance is a continuous area
CSR2018 our risk assessment process is compliance with
anti-corruption laws and regulations. Compliance
of focus due to profound changes that the industry
experienced as a result of deregulation, liberalization
efforts have now evolved significantly through the and globalization, and the proliferation of new
development of a specific comprehensive anti- competition law regimes globally. Compliance efforts
At a Glance corruption compliance program, which includes are embedded in the Air Canada management
conducting interviews and focus group sessions system and include policies, specific guidelines, and
on anti-bribery risks and practices; a global Anti- regular targeted training. Periodic monitoring of
Letter from CEO
Corruption Policy and several guideline documents; such measures is done to improve retention and
2018 Achievements / a comprehensive communication plan and a tailored behaviour modification. Employees are made aware
2019 Objectives risk-based training program (comprising targeted in- that the potential impacts of non-compliance are
person training sessions for executives and selected material and could include substantial regulatory
Corporate Sustainability higher risk groups as well as general awareness penalties and sanctions, private damage actions and
Governance and Transparency
training for management employees). On a periodic criminal penalties against company officers, directors
Ethics, Compliance and Risk basis, we monitor or audit specific compliance and other personnel. more›
elements related to anti-corruption.
Financial Performance A Fraud Prevention Committee is also responsible for
monitoring the general state of fraud management
Product and Service Development at Air Canada, including new and emerging trends
and risks and the performance of company-wide
fraud mitigation structures and rhythms.
Supply Chain
In 2018, no material anti-corruption risk sensitivities
Sustainable Innovation, were reported or identified. Continued efforts were
Research and Development
devoted to increased education and awareness on
SAFETY the potential risks related to the practice of gifts
and entertainment and to our expansion to new
destinations in jurisdictions with higher corruption risk.
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 12AGAINST HUMAN TRAFFICKING • All Air Canada and Air Canada Rouge flight
attendants are trained on modern slavery and
In 2018, the Air Canada Foundation also partnered
with Beyond Borders to raise awareness about child
We ensure that our working practices respect and human trafficking awareness and how to recognize sex tourism and trafficking. Beyond Borders ECPAT
CSR2018 uphold the human rights of our employees, suppliers
and business partners. We are committed to act with
and report suspicious behaviour. We are planning
to expand this form of training to all customer
Canada is a bilingual national advocacy organization
advancing the rights of children everywhere to be
integrity in all our business dealings, to comply with service agents in Canada and abroad. free from sexual abuse and exploitation.
all applicable laws and to act responsibly when dealing
At a Glance with employees, customers, and suppliers or when • Air Canada has a “zero-tolerance” policy with A working group comprised of Air Canada senior
interacting with communities. As an increasingly respect to the sexual exploitation of children. management subject-matter experts is tasked with
growing global airline, we recognize we have an Both Air Canada and Air Canada Vacations seek to the identification and coordination of initiatives
Letter from CEO
on-going responsibility to ensure that appropriate ensure that partner hotels support this policy and in this regard. For more information on various
2018 Achievements / measures are implemented to mitigate the risk of that our business practices do not compromise it developments related to modern slavery and human
2019 Objectives slavery and human trafficking in our operations, either in any manner. trafficking, please refer to Air Canada’s Modern
directly or through our service providers. Air Canada Slavery and Human Trafficking Statement.
Corporate Sustainability has “zero tolerance” for any form of slavery or human
Governance and Transparency • Air Canada assesses risks related to human
trafficking in its operations and supply chain and
trafficking and forced labour associated with our
Ethics, Compliance and Risk upholds its commitment by doing the following:
operations and supply base in relation to new
routes and at new destinations.
• In selecting its suppliers, Air Canada carries out
Financial Performance
due diligence, using up-to-date industry standard
tools to identify legal and reputational issues. The
Product and Service Development reputational risk assessment encompasses human
trafficking risk.
Supply Chain
• Air Canada has implemented a Supplier Code
Sustainable Innovation, of Conduct, which forms an integral part of
Research and Development Air Canada’s material supplier contracts. It sets out
the standards we expect our suppliers to uphold at
SAFETY
all times relating to various matters including human
trafficking, slavery, child labour, non-discrimination
ENVIRONMENT and human rights, employment conditions, ethical
behaviour and much more. It also provides us the
EMPLOYEES ability to audit our suppliers for these concerns.
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 13Financial Performance
CSR2018 2018 ECONOMIC FOOTPRINT*
At a Glance Record
222 OPERATING REVENUE of
Letter from CEO DESTINATIONS
served in 2018
$18.1B
2018 Achievements /
2019 Objectives
$2.7B $1.17B
Corporate Sustainability NET CASH FLOWS OPERATING INCOME
Governance and Transparency from operating activities
Carried a record
Ethics, Compliance and Risk
Economic
Footprint
50.9M $791M $952M
PASSENGERS FREE CASH FLOW** Adjusted PRE‑TAX INCOME**
Financial Performance
Financial ADJUSTED
Sustainability NET DEBT** of
Product and Service Development EBITDAR** of
$5.9B $677M
Supply Chain
$2.85B at Dec. 31, 2018 Adjusted NET INCOME**
over
Sustainable Innovation,
Research and Development
33,000 $167M
SAFETY EMPLOYEES 12.6% ROIC** 2.1 LEVERAGE RATIO**
(adjusted net debt to trailing 12-month EBITDAR)
NET INCOME
worldwide (Return on invested capital) at Dec. 31, 2018
ENVIRONMENT
EMPLOYEES *The financial information for 2018 is as reported in Air Canada’s 2018 Annual Report. It has not been restated for the adoption of accounting standard IFRS 16 - Leases which became effective January 1, 2019.
**EBITDAR (earnings before interest, taxes, depreciation, amortization, impairment and aircraft rent), EBITDAR margin, adjusted pre-tax income, adjusted net income, adjusted earnings per share –
diluted, leverage ratio, free cash flow, ROIC and adjusted CASM are each non-GAAP financial measures and adjusted net debt is an additional GAAP measure. Additional information as well as
COMMUNITIES reconciliations of these measures to comparable GAAP measures can be found in Air Canada’s 2018 MD&A, available on SEDAR at www.sedar.com or Air Canada’s website at aircanada.com.
Citizens of the World 2018
Corporate Sustainability Report 14Financial Performance
CSR2018 FINANCIAL SUSTAINABILITY
We made significant progress in our goal all shareholders by increasing the underlying changed its name to Aeroplan Canada Inc. This
At a Glance of becoming a sustainably profitable global value of the remaining shares. The Company acquisition brings tremendous capabilities and
champion. Our key accomplishments in this purchased, for cancellation 3,013,822 shares at resources in analytics, marketing, technology
regard are further described in our public an average cost of $24.11 per share for aggregate and customer journey management.
Letter from CEO
disclosure file, including our 2018 MD&A. Of note: consideration of $73 million. As of May 9, 2019,
2018 Achievements / since May 2015, Air Canada has purchased, for
2019 Objectives cancellation, 24.9 million shares or 9 per cent of JAZZ
COST TRANSFORMATION outstanding shares. We concluded, in February
Corporate Sustainability
Governance and Transparency PROGRAM 2019, an agreement to
In 2018, we realized or identified savings of amend and extend our
Ethics, Compliance and Risk
AIR CHINA JOINT VENTURE capacity purchase agreement (“CPA”) with Jazz
$220 million under the new Cost Transformation
Economic Program (CTP) intended to secure $250 million In June, we announced an expanded cooperation Aviation LP, a wholly-owned subsidiary of Chorus
Footprint with Air China, and signed the first joint venture Aviation Inc. The amendments bolster the
Financial Performance in savings. We expect to achieve the remaining
Financial savings of $30 million by the end of 2019. agreement between a Chinese strength and competitiveness of the Air Canada
Sustainability and North American airline, Express brand and its coast-to-coast regional
Product and Service Development supporting the Canada- network, and provide significant CPA savings
NEW FARE STRUCTURE China Year of Tourism for Air Canada, while optimizing network and
Supply Chain 2018. fleet flexibility when compared to the previous
We updated our suite of branded fare products
agreement.
allowing us to further segment our customer
Sustainable Innovation,
Research and Development base and offer a wider variety of fare options AEROPLAN
and a customized on-board experience. These
new re-bundled fares provide more choice and We reached an agreement to Air Canada also continues to maintain
SAFETY
stimulate sales based on specific attributes, acquire Aimia Canada Inc.’s several defined benefit pension plans,
driving incremental revenue. Aeroplan loyalty business, including domestic registered pension plans,
ENVIRONMENT and entered into co-branded supplemental pension plans and international
credit card agreements with TD, CIBC, and Visa pension plans. Air Canada also has several
EMPLOYEES SHARE BUY BACK and, after year-end, Amex Bank of Canada. The defined contribution pension plans as well as
acquisition was completed on January 10, 2019 plans providing other retirement and post-
In 2018, Air Canada announced that it purchased
COMMUNITIES
and, following the closing, Aimia Canada Inc. employment benefits to its employees.
for cancellation outstanding shares, benefitting
Citizens of the World 2018
Corporate Sustainability Report 15Product and Service Development
CSR2018
Air Canada Rouge
At a Glance
Best Performing
LONG-HAUL AIRLINE
Letter from CEO
2018 Achievements /
Recognized as :
2019 Objectives
Corporate Sustainability
Governance and Transparency 29 First airline to be CERTIFIED FOR
NORTH AMERICA’S
NEW ONLY FOUR-STAR,
Ethics, Compliance and Risk ROUTES CEIV Live Animals Full Service International
by IATA Carrier by Skytrax
Financial Performance
Product and Service Development
FIVE STAR
Supply Chain OFFICIAL AIRLINE
Launch of an industry-leading end-to-end at APEX
Sustainable Innovation, PREMIUM TRAVEL EXPERIENCE
Research and Development
SAFETY
EXPANDED SCOPE AND REACH BEST NORTH AMERICAN AIRLINE
FOR INTERNATIONAL TRAVEL
ENVIRONMENT of Concierge service
and
BEST NORTH AMERICAN AIRLINE
EMPLOYEES FOR INFLIGHT EXPERIENCE
EXPANSION AND ADDITION by Business Traveller
COMMUNITIES of Maple Leaf Lounges
Citizens of the World 2018
Corporate Sustainability Report 16Supply Chain
CSR2018
To help us achieve our environmental goals sourcing strategy and supports our mission
At a Glance and promote responsible behaviour, we work to act responsibly and ethically. The code is
with various suppliers worldwide. Air Canada principle-based and sets out our expectations
Letter from CEO has more than 9,500 individual suppliers of suppliers to ensure their behaviour aligns
and in 2018 it spent $6.3 billion on products with Air Canada standards in the following
2018 Achievements / and services from Canadian suppliers alone, key areas: business integrity, responsible
2019 Objectives excluding fuel and labour. Air Canada’s total business practices, and responsible treatment
supplier spending in 2018 was $12.4 billion. of individuals and the environment. In 2018,
Corporate Sustainability
Governance and Transparency we launched a “Supplier portal” (available on
Despite the size of the supply chain, more than aircanada.com) to collect key information on
86 per cent of expenditures go to the top 100 existing and prospective suppliers. In addition
Ethics, Compliance and Risk
suppliers. Several branches within Air Canada to continually improving our Supplier Code
are charged with managing these relationships of Conduct, our Strategic Procurement team
Financial Performance but Strategic Procurement, whose purview amended its formal supplier risk assessment
also includes fuel purchases, accounts for the process for new strategic suppliers in order
Product and Service Development majority of the sourcing of these expenditures. for us to monitor for possible reputational risk
Air Canada endeavors to source locally issues. The assessment focuses on a multitude
Supply Chain wherever commercially feasible. of criteria, including environmental, health
and safety, cyber-security, privacy compliance,
The Supplier Code of Conduct is a key
Sustainable Innovation, criminal and other illegal activities.
Research and Development component of our responsible and sustainable
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 17Sustainable Innovation, Research and Development
CSR2018
In 2018, Air Canada was selected by the Government of is part of the “SCALE.AI” (Supply Chains and Logistics
Canada as one of five superclusters to receive funding Excellence. Artificial Intelligence) consortium. The SCALE.
At a Glance through the “Innovation Supercluster Initiative (ISI)”, AI consortium brings close to 120 retail, manufacturing,
exploring innovations through artificial intelligence. transportation, infrastructure, and information and
Letter from CEO The goal of ISI is to foster technological leadership, communications technology sectors together to build
create jobs and enhance skills, and to enable Canadian intelligent supply chains through artificial intelligence
2018 Achievements / companies to become global leaders. As such, Air Canada and robotics.
2019 Objectives
Corporate Sustainability
Governance and Transparency
Ethics, Compliance and Risk
Financial Performance
Product and Service Development
Supply Chain
Sustainable Innovation,
Research and Development
SAFETY
ENVIRONMENT
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 18SAFETY
CSR2018
Air Canada’s core value is Safety
At a Glance First, Always, and in 2018, a record
50.9 million people entrusted
Letter from CEO Air Canada with their travel plans.
2018 Achievements / Reflective of the 2018 Materiality
2019 Objectives
Matrix Assessment, safety remains
Corporate Sustainability
Governance and Transparency the top priority, making it also a
key component to our approach
Ethics, Compliance and Risk
toward sustainability.
Financial Performance
Product and Service Development
Supply Chain
Sustainable Innovation, Health and
Research and Development Safety
Safety
SAFETY
Management
Privacy and
ENVIRONMENT
Cybersecurity
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 19Occupational
CSR2018 Health and Safety
In an industry that is considered
At a Glance high risk, it’s imperative to have
robust Health and Safety programs
Letter from CEO
to ensure that all employees and
2018 Achievements / customers go home safe and sound
2019 Objectives
at the end of each day. Investing
Corporate Sustainability
Governance and Transparency in employees’ health and safety
not only ensures compliance with
Ethics, Compliance and Risk
regulations but also conveys that
Financial Performance they are valued and vital members
of the team.
Product and Service Development
At Air Canada, the Corporate Safety, Environment
Supply Chain
and Quality (CSEQ) branch, through its
Corporate Safety and Emergency Management
Sustainable Innovation, Health and department is responsible to ensure employee workplace issues, safety concerns and work illnesses provoke major crises for the families
Research and Development Safety safety programs are implemented, effective practices to find common understanding and in which they occur. Our Occupational Health
and continuously improving. Among other appropriate corrective actions to occupational and Safety (OHS) programs are designed to
Safety
SAFETY things, it monitors compliance with applicable health and safety concerns. Air Canada Rouge protect workers from occupational hazards.
Management
laws and regulations while tracking employee manages its occupational health and safety and These programs set out duties for all workplace
Privacy and safety-related incidents. Corporate Safety and emergency management program using the same parties and the rights for workers to ensure that
ENVIRONMENT
Cybersecurity Emergency Management also provides primary key principles as Air Canada. all employees work in a safe environment. The
support for several health and safety committees programs establish procedures for dealing with
EMPLOYEES throughout the organization as well as external A serious workplace injury or death changes workplace hazards and meeting our obligations
committees. These joint health and safety lives forever. Human loss and suffering are under applicable laws and regulations. more›
COMMUNITIES committees meet regularly to discuss relevant immeasurable, and occupational injuries and
Citizens of the World 2018
Corporate Sustainability Report 20The OHS programs present an opportunity the teams involved in injury prevention ensure
for all employees to provide input into the that integrity in the occupational health and
programs. All employees are encouraged to safety programs is maintained by monitoring LOST TIME INJURIES
CSR2018 provide suggestions and ideas on how to
improve safety. This methodology towards
key performance indicators and the hazard
prevention program for accuracy.
safety creates opportunities across the
organization as it helps foster a culture of Key performance indicators are monitored and
At a Glance continuous improvement. While the underlying
focus is safety, the programs also translate into
reviewed at branch management meetings.
These discussions include performance metrics,
prevention and mitigations for current hazards
6%
Letter from CEO cost savings by reducing employee absences.
and opportunities to bring forward action items
2018 Achievements / Air Canada uses a Safety Information to leadership. Key performance indicators include
2019 Objectives Management System that links to web-based non-compliance sanctions under applicable law,
Occupational Health and Safety software lost time injuries, lost time days lost and total
Corporate Sustainability tools. The configuration allows employees to workers compensation board costs.
Governance and Transparency
submit hazard reports including health and
safety concerns which are then handled by the In 2018, we saw an increase in Lost Time
Ethics, Compliance and Risk
appropriate committee via the tool. This online Injuries per 10,000 flights. This is in part
repository for health and safety information is due to growth in our operation and extreme
Financial Performance accessible to all health and safety committees. weather conditions experienced in the first
As it can collect and process all occupational quarter of 2018. Duties performed continued In 2018, we saw an
Product and Service Development health and safety-related events, it reduces to meet our standard operating procedures,
duplication and encourages collaboration among however employees required an adjustment increase in Lost Time
different employee groups as well as simplifying to new standards to account for the growth Injuries per 10,000 flights.
Supply Chain
file management and formal reporting to in operations. The trend within the injuries
government agencies as appropriate. continue to be strains and sprains which we This is in part due to
Sustainable Innovation, Health and
Research and Development Safety have a focused effort on in 2019 and we are also growth in our operation
The disability management professionals are looking at new tools to further prevent some of
SAFETY
Safety engaged to make it easier for injured workers the injuries that have been occurring. more› and extreme weather
Management
to come back to the workplace through the conditions experienced in
Privacy and Return to Work programs (for both Air Canada
ENVIRONMENT
Cybersecurity and Air Canada Rouge). These programs help the first quarter of 2018.
to ensure employees in need of medical
EMPLOYEES attention seek it immediately and are brought
back to work when capable, including in a
COMMUNITIES limited capacity. These programs along with
Citizens of the World 2018
Corporate Sustainability Report 21SAFETY PULSE SURVEY AUTOMATED REPORTING PROCESS
Bi-annual, voluntary confidential safety pulse surveys are In 2018, the automated internal complaint
CSR2018 conducted as an opportunity to get a sense of Air Canada
employees’ safety voice. These pulse surveys provide Air Canada
occupational health and safety resolution process
was enhanced and promoted during the North
with a benchmark for various points that provide a framework American Occupational Safety and Health (NAOSH)
for improvement for the following years. In 2018, 81 per cent activities week – a week to focus employers,
At a Glance of the respondents responded positively, up 3 per cent from employees, partners and the public on the
the previous survey held in 2016. This shows that the culture of safety importance of preventing injury and illness in the
is moving in a positive direction. We continue to progress on our culture workplace, at home and in the community.
Letter from CEO objective which is that we all understand that safety is the paramount
value we all must adhere to at Air Canada, at all levels, and make it the
2018 Achievements /
2019 Objectives primary concern in decision-making for everyone at Air Canada. CARING FOR CHANGE CAMPAIGN
Corporate Sustainability We are dedicated to creating a safe and inclusive
Governance and Transparency work environment for all employees, which includes
BOEING 737 MAX SIMULATORS being free from all forms of harassment. In 2018,
Ethics, Compliance and Risk The Boeing 737 MAX simulators became operational in the Fall of 2017. Air Canada’s Harassment Office launched a new
The first pilots trained were the team of instructors and check pilots awareness campaign called “Caring for Change” to
Financial Performance that would be responsible for the training and qualification of pilots help educate all employees, including managers, on
new to the Boeing 737 MAX. In 2018, both Boeing 737 MAX simulators harassment-related matters in the workplace. The
operated at full capacity in order to train enough pilots to operate the second phase of the Caring for Change campaign commenced in mid-2018
Product and Service Development
Boeing 737 MAX aircraft that were planned to be operational in 2018. and encourages managers to promote a respectful work environment
Air Canada is the only airline in North America to own Boeing 737 MAX by providing them guidelines and tools that can assist in responding to
Supply Chain simulators. These simulators will become key assets for Air Canada for any inappropriate behaviour that may be witnessed in the workplace. The plan
training required when the Boeing 737 MAX are reintroduced, as it enables is for both the first and second phases of the campaign to carry into 2019
Sustainable Innovation, Health and us to have direct oversight on the timing of the training. as the team continues to visit different stations throughout the Company.
Research and Development Safety
Safety more›
SAFETY
Management
Privacy and
ENVIRONMENT
Cybersecurity
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 22AC ROUGE: START THE CONVERSATION
Air Canada Rouge launched “Start the Conversation”, an
CSR2018 internal mental health campaign which was supported with
weekly initiatives and events for employees, promotional
videos and campaign photos. The campaign sought to raise
awareness about the reality of mental health and addressed
At a Glance topics like ‘breaking the stigma,’ ‘how to talk about mental
health’, and strategies for ‘maintaining wellness’.
Letter from CEO
2018 Achievements / UPDATED ALCOHOL AND DRUG POLICY
2019 Objectives As Safety is First, Always, and in preparation for the
Corporate Sustainability legalization of cannabis, we provided employees with an
Governance and Transparency updated Alcohol and Drug Policy. Specifically, this update
sought to lend guidance and manage the risks associated
Ethics, Compliance and Risk with substances which can impair employees’ ability to do
their jobs safely. Under the policy, Air Canada employees
Financial Performance may not be impaired by intoxicating substances while on
duty or in the workplace. Moreover, employees engaged
in safety-sensitive work and safety-critical work have
Product and Service Development
additional obligations and are held to a higher standard.
If employees are engaged in safety-critical work, they are
Supply Chain prohibited from using cannabis (except if prescribed as
medication, in which case accommodation measures may
Sustainable Innovation, Health and be required) and illegal drugs at all times, even when not on
Research and Development Safety
duty or not in the workplace.
Safety
SAFETY
Management
Privacy and
ENVIRONMENT
Cybersecurity
EMPLOYEES
COMMUNITIES
Citizens of the World 2018
Corporate Sustainability Report 23Safety Management
CSR2018
Safety management is a critical accountable executive with the Director of
Safety Security & Regulatory Affairs responsible
responsibility at Air Canada and for day-to-day administration and oversight
At a Glance impacts virtually every decision the of the SMS. An integrated safety management
process ensures that an appropriate flow of
airline makes. Given safety is the safety information is exchanged between the two
Letter from CEO
paramount priority for us, we have airlines and that it reaches all levels throughout
2018 Achievements / the corporation. The Air Canada Corporate Safety
2019 Objectives set up the appropriate structure, Board, chaired by the Chief Executive Officer,
Corporate Sustainability
processes and resources to ensure meets quarterly to oversee and guide the safety
Governance and Transparency program (which includes data from Air Canada
that all aspects of safety and safety
Rouge). Air Canada Rouge also holds quarterly
Ethics, Compliance and Risk stewardship are always prioritized meetings for its Corporate Safety Board.
and that safety measures are enacted New aircraft, new routes, changing
Financial Performance
in a proper and effective manner. organizational structures and business practices
present opportunities for development and
Product and Service Development Air Canada has established a Safety Management growth. Effective safety management is critical
System (SMS) that serves as a framework within to ensure hazards and risks are identified and
which systematic and comprehensive processes held to the lowest level. In 2018, we successfully
Supply Chain
and procedures for managing risk are developed, managed the safety risks and hazards associated
Sustainable Innovation, Health and applied and evaluated. The SMS also creates a with the launch of 29 new routes.
Research and Development Safety common support structure for all operational
groups, with clear elements and concise An investigation and research group consisting of
Safety experts recruited from across all the operational
SAFETY direction, so that they may perform their safety
Management
management functions effectively. Air Canada’s branches forms the core safety team. It collects
ENVIRONMENT
Privacy and President and Chief Executive Officer is the and manages information related to safety
Cybersecurity designated accountable executive for Air Canada’s gathered through each airline’s reporting system.
SMS with Air Canada’s Vice-President, Safety Supported by its investigation and flight data
EMPLOYEES responsible for day-to-day administration and monitoring experts, this group catalogues
corporate oversight of SMS. At Air Canada trends in incidents, reports on safety of flight,
COMMUNITIES Rouge, the company’s President is the designated conducts flight analysis and flight re-creations,
more› Citizens of the World 2018
Corporate Sustainability Report 24develops comprehensive statistical data for with the taxiway while landing in San Francisco. HEALTHY FOOD CHOICES
senior management and identifies operational The National Transportation Safety Board
trends, threats, risks and hazards. This group concluded during a final hearing on the report At Air Canada, we care about the health
CSR2018 leads all formal investigations, conducts
industry benchmarking activities, participates
that despite the situation, Air Canada has a
“robust” safety and reporting culture. Prior to
and wellbeing of our employees and
customers. In 2018, Air Canada was
in international aviation forums and provides the release of the report, we made a number of identified by the 2018-19 Airline Food
detailed quality analysis on the reporting tools operational and other changes to enhance safety Study as one of the top five airlines that
At a Glance and the safety process itself. based on preliminary findings. offer customers “healthiest” food choices
in the air. The study was released by the
Air Canada is scheduled to conduct the IOSA In 2019, we will continue to reinforce and
Letter from CEO Hunter College NYC Food Policy Centre
audit again in 2019. The IOSA program is an promote safety reporting, ensuring the protection
and DietDetective.com.
2018 Achievements / internationally recognized and widely accepted of safety critical information and associated
2019 Objectives evaluation system designed to assess the management obligations. This includes supporting The study assigned a “Health Score”
operational management and control systems the continued development and integration of (5 stars = highest rate; 0 star = lowest)
Corporate Sustainability of Air Canada. It is conducted on a bi-annual safety data analytics and artificial intelligence
Governance and Transparency based on 11 criteria including health
basis and is a critical audit that governs into the Safety Management System. and calorie levels of meals, level of
Ethics, Compliance and Risk international operations, code share and alliance transparency (display nutrient information
memberships. Successful completion of the Air Canada has a robust process in place to identify
and ingredients), menu innovation, and
audit is critical to Air Canada and as such, a and mitigate potential operational risks, including
Financial Performance cooperation in providing information.
determined and focused effort is required to as a result of new aircraft, routes or initiatives and
Based on the findings, our health score
demonstrate safe, sound and effective practices projects. Through this effective process, Air Canada
is 3.45 stars and our cooperation level is
Product and Service Development to the independent assessment team. expects to effectively and safely manage the
“very helpful” when it comes to providing
introduction of the new Airbus 220.
nutritional information. Average calories
To ensure robust safety management systems,
Supply Chain At Air Canada Vacations, contracts between the overall is 346, average
Air Canada maintains a safety reporting policy
organization and its partner hotels, and ground meal calories is
that ensures confidential reporting. Under this
Sustainable Innovation, Health and handlers include strict safety standards to which 351 and average
Research and Development Safety policy, except in the case of gross negligence or
suppliers are held. Site inspections are conducted individual
willful infractions, the identity of an employee
Safety annually to ensure that protocol is being followed snack calories
SAFETY who reports a hazard or occurrence, will not be
Management and standards are being met. Should Air Canada is 324.
disclosed unless agreed to by the employee or
Privacy and required by law, and no company disciplinary Vacations receive any complaints regarding the
ENVIRONMENT health and safety of its customers, complaints
Cybersecurity action, or reprisal, will be taken against the
reporting employee. are immediately addressed directly with the
EMPLOYEES supplier and further inspections are conducted,
In 2018, Air Canada received a final report on when required, to ensure appropriate corrective
COMMUNITIES an incident in 2017 in which an aircraft lined up measures have been made.
Citizens of the World 2018
Corporate Sustainability Report 25Privacy & Cybersecurity
CSR2018 The security of Air Canada’s IT systems is of Management and Privacy Governance.
paramount importance, and we take the security
of our employees and customers’ privacy Air Canada also successfully implemented a
At a Glance and data very seriously. Data protection and Multifactor Authenticator Program to better
cybersecurity is also identified as a key topic in protect employee, customer and company
Letter from CEO the 2018 materiality assessment that is the basis data, reducing exposure to cyber-risk,
of this report. and we will continue deployment to our
2018 Achievements / employee base in 2019.
2019 Objectives In 2018, Air Canada conducted a privacy
maturity assessment as part of its efforts During a 48-hour window in August,
Corporate Sustainability to prepare for the coming into force of the Air Canada detected unusual log-in on
Governance and Transparency its mobile app, affecting approximately
European Union’s General Data Protection
Regulation (GDPR) and hired a full-time privacy 1 per cent of its then 1.7 million app users.
Ethics, Compliance and Risk
leader and two full-time privacy legal counsels Upon detection of the behaviour, we took
as the core of the privacy organization it immediate action to block the attempts and
Financial Performance is building. Having been subject to privacy implemented additional protocols to protect
legislation in Canada, Air Canada is well-placed against further unauthorized attempts.
Product and Service Development to adapt to this latest major change in the All Air Canada mobile app accounts
legislative landscape on privacy. To that end, were locked, and potentially affected
policies and procedures were assessed and customers were contacted directly by email.
Supply Chain
revisions initiated, more robust breach reporting Cybersecurity breaches mainly arise from
Sustainable Innovation, Health and and management tools were developed and the theft of usernames and passwords.
Research and Development Safety measures to raise awareness of the importance To ensure continuous improvements,
of privacy were undertaken, including activities Air Canada increased education and
Safety awareness surrounding the importance of
SAFETY to mark International Data Privacy Day in
Management
January 2018. password protection and security, and data
ENVIRONMENT
Privacy and privacy through internal campaigns and a
Cybersecurity In 2019, we will pursue the privacy action plan, Cybersecurity Awareness Month.
with a focus on the following six broad areas to
EMPLOYEES improve our privacy maturity: Privacy Incident
Response, Policies & Documentation, Data Subject
COMMUNITIES Rights, Record of Processing Activities, Vendor Risk
Citizens of the World 2018
Corporate Sustainability Report 26You can also read
