Reference no: EM131900306

Question: 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 willpay $5.5 million tocover Air Canada's investigation and litigation costs, and make a $10-million donation to children's charities in the names of both airlines.

The lawsuit centred on allegations that WestJet management used the password of a former Air Canada employee to access a website 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 Canadausedprivate investigators to search through recycling material at the home of a WestJet executive in Oak Bay, B.C.

Shares of WestJet rose 55 cents to $11.63 on the TSX, while shares of Air Canada's parent company, ACE Aviation Holdings, were up 20 cents at $32.73.

Conduct additional research to thoroughly understand the issue, then answer the following questions:

1. What were the points of failure in this incident? For each failure point, identify whether the failure was legal or ethical.

2. Which company was in the wrong? Justify your answer.

Properly reference your work, including any websites you use (in APA format).