WestJet Airlines has apologized to Air Canada for stealing secrets from a computer system -- details that allegedly fuelled its move out of Hamilton airport.
The discount carrier admitted the espionage "was undertaken with the knowledge and direction of the highest management levels of WestJet," but did not name individuals. It agreed to pay a settlement of $15.5 million -- $5.5 million toward Air Canada's investigation and lawsuit costs and the balance to children's charities across the country.
The payment settles a $220 million lawsuit Air Canada filed naming WestJet and its key executives, including chairman and founder Clive Beddoe.
WestJet said management entered a protected Air Canada website "to download detailed and commercially sensitive information without authorization or consent from Air Canada."
"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 (chairman) Robert Milton."
Neither Air Canada nor WestJet would comment beyond the joint statement.
In earlier legal documents, Air Canada alleged WestJet accessed the website more than 250,000 times over 12 months in 2003 and 2004, downloading information about passenger loading and bookings up to a year in advance -- data that could be used to target profitable routes for competition.
When Air Canada launched the suit in April 2004, commercial vice-president Montie Brewer said: "I believe that WestJet's recent move from Hamilton to Toronto as its hub was a result of WestJet's knowledge of Air Canada's loads out of Toronto."
WestJet moved 60 per cent of its flights from Hamilton to Toronto in 2004.
WestJet denied the connection and said the data it used was available from "many sources, including counting passengers at airports ..."
WestJet countersued, claiming Air Canada hired private investigators to sift through an executive's trash and accusing Air Canada of abusing the courts in a campaign to destroy the discount carrier. That claim was struck down by an Ontario judge last year.
Calgary airline analyst Rick Erickson praised Air Canada for a "magnanimous" action to settle "the most acrimonious lawsuit in Canadian airline history.
"For WestJet to capitulate like this and admit its senior executives were aware of this must mean Air Canada had something pretty substantial," he added, noting the final settlement is "pocket change" for WestJet compared to the cost of fighting and potentially losing the full suit.
Erickson added the settlement means it will never be known just how big a part the espionage played in WestJet's decision to leave Hamilton -- a move he said was driven by several forces.
"To be a player in eastern Canada WestJet had to be in Toronto, it had no choice," he said.
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The Calgary-based airline's second-quarter profit hit a record $22.4 million, beating all market expectations.
WestJet is looking at lost opportunities worth hundreds of million of dollars because of its inability to link with other airlines.
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