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Air Canada fuel surcharge lawsuit authorized from Quebec judge

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Air Canada fuel surcharge

MONTREAL — A Quebec Superior Court judge has authorized a class action lawsuit against Air Canada after the company allegedly used a surcharge to bill passengers for the cost of fuel and then some.

The lawsuit, approved to proceed as a class action Monday, argues the country’s largest airline “illegally overcharged its customers” by more than 200 per cent — and more than the fuel cost itself — on some flights.

Michael Vathilakis, the petitioners’ lawyer, said Air Canada misrepresented the stated purpose of the surcharge, which was to partially offset the fluctuating price of jet fuel.

“What Air Canada did was represented to passengers that they were collecting this amount in order to offset volatility, when in fact the allegations are that they were in many cases actually reaping a real profit on it,” Vathilakis said in a phone interview.

“In multiple cases, they charged an amount that was equal to or higher than the entire cost of fuel for the flight.”

The lawsuit cites one example in which Air Canada allegedly charged business and economy passengers 105 per cent of the total fuel cost on a flight to Paris in January 2014.

Each economy passenger on that flight allegedly paid $238 in fuel surcharges alone — $163 more than they should have, according to Air Canada’s definition of the charge. The airline took in $73,878 in fuel supplements on the flight, rather than the $23,164 it should have charged, according to the lawsuit.

The suit states Air Canada’s contract with consumers allows it to charge them up to one-third of the cost of fuel.

The class action concerns customers in Quebec who bought international tickets to destinations outside the U.S., Mexico and the Caribbean between April 2012 and November 2014.

The plaintiffs, brothers George and David Itzkovitz, are requesting damages of $273 million for affected passengers.

Air Canada said Tuesday it disagrees with the allegations.

“We intend to vigorously defend our position through the courts,” spokeswoman Angela Mah said in an email.

The lawsuit is not the first time frustration over fuel charges has bubbled to the surface.

Last year, the Quebec Court of Appeal upheld a lower court authorization of a class action lawsuit for provincial residents who paid fuel surcharges when redeeming Aeroplan points to buy Air Canada flights within Canada or the U.S.

In 2017, the Quebec Superior Court authorized a class action against Air Canada over fuel surcharges that allegedly topped actual fuel costs on international flights.

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Retired British Columbia fisherman wins $60-million lottery jackpot

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RICHMOND, B.C. — A retired fisherman from Richmond, B.C., has reeled in the catch of a lifetime — a $60-million lottery haul.

The B.C. Lottery Corp. says Joseph Katalinic matched all seven numbers in last month’s Lotto Max draw to win the largest lottery prize in the province’s history.

It says in a release there have previously been three $50-million winners in the province.

Katalinic retired as a commercial fisherman 20 years ago and told the lottery corporation he now plans to “live like a king.”

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U.S. central bank was split on rate cut decision

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Federal Reserve officials were widely divided at their meeting last month when they decided to cut rates for the first time in a decade, with some arguing for a bigger rate cut while others insisted the Fed should not cut rates at all.

The minutes of the July 30-31 discussions released Wednesday show two officials believed the Fed should cut its benchmark policy rate by a half-percentage point, double the quarter-point reduction the central bank eventually agreed upon. On the other end, some Fed officials argued for no rate cut at all, believing that the economy was beginning to improve after a soft patch in the spring.

The minutes did not indicate any consensus on the pace of future cuts.

Financial markets have been turbulent since the July 31 rate cut, diving 800 points one day last week on the Dow Jones Industrial Average, as bad news has piled up in terms of the slowing global economy and the latest developments in President Donald Trump’s trade war with China.

Because of these developments, investors have become convinced the central bank will follow up the July rate cut with further cuts at coming meetings. But private economists are not so sure, believing the Fed may want to save some of its rate cut ammunition should the economy take a serious turn for the worse with the possibility of a recession.

The minutes provided little clarity on what the future course for rates will be, but markets are hoping that Fed Chairman Jerome Powell may send a stronger signal about future rate hikes when he delivers the keynote address at the Fed’s annual policy conference at Jackson Hole, Wyoming, on Friday.

“There is little sign that the Fed is willing to push back on the markets,” said Michael Pearce, senior economist at Capital Economics. “As such, another (quarter-point) cut in September still looks like a good bet, if only because the Fed will not want to disappoint lofty market expectations.”

The two Fed officials who argued for a bigger rate cut “favoured a stronger action to better address the stubbornly low inflation rates of the past several years,” the minutes said.

The July action was approved on an 8-2 vote with Esther George, president of the Fed’s Kansas City regional bank, and Eric Rosengren, president of the Boston Fed, dissenting and arguing that they favoured no rate cut at all.

The minutes said the majority view supported a quarter-point cut, viewing it as a “mid-cycle adjustment,” a phrase Powell used in his press conference that caused an adverse market reaction by investors hoping the July cut will be the first in a series of rate reductions.

The minutes highlighted three main reasons for the cut, including recent signs of deceleration of the economy and concerns about persistently low inflation. Officials also believed a rate cut would be a “prudent step from a risk-management perspective.”

The minutes said the Fed was worried about a slowdown in business investment and the global headwinds that are affecting Europe, Japan and other regions.

“Participants were mindful that trade tensions were far from settled and that trade uncertainties could intensify again,” the minutes said.

On Aug. 1, the day after the Fed’s rate cut, Trump announced that he would impose 10 per cent tariffs on $300 billion in Chinese imports in an effort to force the Chinese to make more trade concessions at the bargaining table. Since that announcement, Trump has said he would postpone about half of those tariffs until Dec. 15 to avoid hurting American consumers during the holiday shopping season.

But economists are warning that the tariffs already imposed will likely slow U.S. growth in coming quarters.

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RBC mixed third quarter; Pembina acquires Kinder Morgan Canada

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RBC’s mixed results set a cautiously optimistic tone as third-quarter earning season begins for Canadian banks: Royal Bank of Canada leaned on its retail-banking and wealth-management divisions to boost third-quarter profit and overcome a weak spell in capital markets, setting a cautiously optimistic tone as earnings season for Canada’s big banks begins. Canada’s largest bank by assets is the first major lender to report fiscal third-quarter results, and its performance was mixed. Story (James Bradshaw)

CEO of RBC Capital Markets announces retirement, discusses outlook for division: On Doug McGregor’s 11-year watch as chief executive, RBC Capital Markets grew from a regional player into a leading global investment bank, navigating storms that swept away far larger institutions. Story (Andrew Willis)

Ontario Teachers’ Pension Plan first half results show move toward fixed income: Ontario Teachers’ Pension Plan made a strong shift to bonds in the first half of the year and benefited from robust returns in fixed income. The pension plan said it posted an overall 6.3 per cent return in the first half of 2019 and closed the quarter with a portfolio of $198.5-billion. Fixed income led the returns, Teachers said. Story (David Milstead)

Manulife tripled CannTrust holdings before licence scandal, SEC records show: Manulife Asset Management jacked up its holdings of CannTrust Holdings Inc. stock in the second quarter – just in time for the company’s surprise disclosure that it was growing cannabis without a licence. Story (David Milstead)

Toronto fintech Drop sees $44-million in latest funding round: Royal Bank of Canada is backing an upstart loyalty-management program geared at millennials called Drop Technologies Inc. as part of a US$44-million venture-capital financing. Story (Sean Silcoff)

DEALS NEWS: MERGERS, ACQUISITIONS, IPOs and FINANCINGS

Pembina to acquire Kinder Morgan Canada and other assets in $4.35-billion deal: Pembina Pipeline Corp. is buying Kinder Morgan Canada Ltd. and the U.S. portion of a key condensate pipeline for $4.35-billion, a deal that will bolster its position in the high-demand oil storage and transport business. For Houston-based Kinder Morgan Inc., the sale marks its exit from Canada after it sold its largest asset – the Trans Mountain oil pipeline – to Ottawa last year for $4.4-billion. It follows a formal process to seek buyers for the majority-owned Canadian operation that ended in the spring after failing to attract acceptable proposals. Story

Alibaba postpones up to $15-billion Hong Kong listing amid protests: sources: China’s biggest e-commerce company Alibaba Group Holding Ltd has delayed its up to $15-billion listing in Hong Kong amid growing political unrest in the Asian financial hub, two people with knowledge of the matter told Reuters. Story (Reuters)

IN CASE YOU MISSED IT

For Canadian bank stocks, ‘the risk/reward equation is not stacking up attractively’: Merrill Lynch bank analyst Ebrahim Poonawala has turned more cautious on Canadian banks ahead of upcoming profit reports. Story (Scott Barlow)

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