18 replies to this topic

[livin']

Robert Milton managed to fracture and divide the Air Canada pilots to the point where they were a dysfunctional union, with a great amount of infighting.

My congratulations go to Calin Rovinescu for undoing what Milton did and uniting the association to the point that a vast majority of the pilots are pulling in the same direction.

Edited by livin', 16 February 2012 - 08:51 AM.

[rudder]

Are you really united? What is your 'unified' position on age 60? How about pension? Equipment grouping? AC staffed LCC?

CR had his underlings table a set of proposals that were intended to move as far backward as possible to counter ACPA's own revised bargaining proposals. The two sets of proposals all but cancel each other out so the starting point for the next 6 months of discussions will be based on either status quo or TA1.

The more relevant question here is whether all of this smoke and mirrors will actually result in a viable enterprise that creates cash rather than consumes it. I have serious doubts. What use is it to have a renewed collective agrement that simply takes the parties into CCAA? Everybody else knows where AC's fundamental problems lie but there is clearly no will nor a viable plan to avoid what many see as the inevitable outcome.

Edited by rudder, 16 February 2012 - 07:25 AM.

[livin']

If the corporation is truly interested in creating a separate and profitable LCC then they should be working with the pilots to get things going as quickly as possible. Air Canada does have cost issues, however pilot salaries are not one of them.If they immediatley cut pilot salaries by another 15% the corporation would still be losing money.

The more pressing issues that are affecting a profitable Air Canada are unskilled labour* and regional carrier costs.

Profitable LCC's take care of the employee's that take care of their aircraft. Take care of your maintenance and pilots and they will take care of your aircraft and fuel. Both Westjet and Southwest do this very well, and in both cases their pilots are better compensated than A320 pilots at Air Canada. In Southwests' case the pilots are unionized. Other labour groups in these organizations are also fairly compensated for the work that they do.

As far as the pilot association being united I believe that yes we are. 97% endorsement of our MEC indicates this. Are there things to be discussed? Of course. The majority do not want age 60+ but we do realize that it really is out of our hands, we also realize that there will probably be some pension changes as there have been with other groups and aircraft grouping, if done properly, can have mutual benefits for both parties. Air Canada LCC is not an issue as long as it is flown by air canada pilots under one contract.

unskilled labor
 

noun
1.
work that requires practically no training or experience for its adequate or competent performance.

Edited by livin', 16 February 2012 - 08:49 AM.

[rudder]

livin, on 16 February 2012 - 08:47 AM, said:

The more pressing issues that are affecting a profitable Air Canada are unskilled labour* and regional carrier costs.

Spoken like a typical egocentric pilot. Good luck bargaining for change for the unskilled AC labour groups (otherwise known as your co-workers) and regional carriers at the pilot bargaining table. It is just another farcical ACPA bargaining objective that cannot be achieved but certainly stirs the troops.

So what is your plan B? Status quo? What seems to be lost here is that everything has to change. This NIMBY mentality is going to be the death of AC. Hope that you are able to hire better CCAA counsel the second time around.

[livin']

rudder, on 16 February 2012 - 09:11 AM, said:

Spoken like a typical egocentric pilot. Good luck bargaining for change for the unskilled AC labour groups (otherwise known as your co-workers) and regional carriers at the pilot bargaining table. It is just another farcical ACPA bargaining objective that cannot be achieved but certainly stirs the troops.

Just pointing out the differences between airlines that are profitable and those that are not.

Compare westjet pilot salaries to those of of an AC A320 pilot and you won't find much difference. The same is not true for unskilled labour, and I'll give you 1000:1 odds that Westjet's regional airline will cost significantly less per ASM than what AC pays to jazz.

[dagger]

livin, on 16 February 2012 - 09:44 AM, said:

Just pointing out the differences between airlines that are profitable and those that are not.

Compare westjet pilot salaries to those of of an AC A320 pilot and you won't find much difference. The same is not true for unskilled labour, and I'll give you 1000:1 odds that Westjet's regional airline will cost significantly less per ASM than what AC pays to jazz.

The only issue with Jazz is cost per ASM provided, and AC has wrung some of the over market cost out of that through successive workouts. There is another  arbitration under way now. And as I noted, AC picking Skyservice for Toronto Island is another way to arbitrage down those costs. I doubt Skyservice ASMs cost as much as Chorus ASMs. AC is also helping Chorus acquire Q400s to replace higher ASM regional jets or ancient Dash-8s. Let's see how WS does with a prop fleet before assuming its success.

[seeker]

rudder, on 16 February 2012 - 09:11 AM, said:

What seems to be lost here is that everything has to change.

Right, so what are the important changes to the FA's contract that will make the company more competitive?  How about the CUPE contract - big changes there too, right?  Any changes to the executive remuneration lately?  I hardly think it's "egocentric" for a pilot to point out that the other employee groups are paid vastly more than our competitors while the pilots are paid virtually the same.

[seeker]

dagger, on 16 February 2012 - 09:50 AM, said:

I doubt Skyservice ASMs cost as much as Chorus ASMs.

Yeah, except at the other end the work is done by AC employees which nullifies most of the benefit.

[rudder]

seeker, on 16 February 2012 - 10:32 AM, said:

Right, so what are the important changes to the FA's contract that will make the company more competitive?  How about the CUPE contract - big changes there too, right?  Any changes to the executive remuneration lately?  I hardly think it's "egocentric" for a pilot to point out that the other employee groups are paid vastly more than our competitors while the pilots are paid virtually the same.

The existing and renewed collective agreements are not going to get AC even close to the finish line. Nor is the much ballyhooed LCC plan in isolation  going to be the panacea for a rapidly evolving marketplace.

Once again - everything must change.

[John S.]

livin, on 16 February 2012 - 08:47 AM, said:

As far as the pilot association being united I believe that yes we are. 97% endorsement of our MEC indicates this.

I don't want to rain on your parade but as one Air Canada Pilot said to me "It's a no risk no brainer to vote for a strike when Lisa Raitt won't let us go on strike. The vote  should have been 100% of 100%."

In other words don't take the 97% in favor of a strike you can't do as 97% support for your negots team or even 97% support for each other.

Again, I'm on the sidelines and this is coming from one of your own.

John

[DEFCON]

Let's end the LCC suspense. CANJET is AC's LCC future plan!

[Thebean]

Let's end the LCC suspense. CANJET is AC's LCC future plan!

I wonder who Transat would contract with to operate 737's for their winter sun program?  Sunwing?  WestJet?  Flair?  EnerJet?

[DEFCON]

"I wonder who Transat would contract with to operate 737's for their winter sun program?"


Just like Jazz, AC & Thomas Cook, it'll be a 'CPA'.

[Thebean]

DEFCON, on 17 February 2012 - 10:10 AM, said:

"I wonder who Transat would contract with to operate 737's for their winter sun program?"


Just like Jazz, AC & Thomas Cook, it'll be a 'CPA'.

Ah, the old "Beat 'em, hire 'em, regulate 'em or copy 'em" plan.

CanJet serving two masters?  I doubt it, especially if I know anything about JME, who according to legend, would rather cover himself in honey and run through a bear and wasp infested forest than acquiesce to such an arrangement.

I'm buying a wad of lottery tickets if that ever comes to pass.

[jkavafian]

DEFCON, on 17 February 2012 - 10:10 AM, said:

Just like Jazz, AC & Thomas Cook, it'll be a 'CPA'.

The CPA model is too expensive for airlines unless the implied margin is reduced substantially. Here's why: Jazz's initial margin was 10% and up to 16% in certain circumstances. About 3 years ago that was somewhat reduced by Air Canada. Think about it, which airline makes 10% or more profit margin? Basically not many can afford Jazz's prices unless it's profit margin is reduced to 2% or 3%. Jazz's profitability was artificially established to make it palatable as an income trust.

[rudder]

jkavafian, on 22 February 2012 - 06:49 AM, said:

The CPA model is too expensive for airlines unless the implied margin is reduced substantially. Here's why: Jazz's initial margin was 10% and up to 16% in certain circumstances. About 3 years ago that was somewhat reduced by Air Canada. Think about it, which airline makes 10% or more profit margin? Basically not many can afford Jazz's prices unless it's profit margin is reduced to 2% or 3%. Jazz's profitability was artificially established to make it palatable as an income trust.

Recall that the margin is based on controllable costs not all costs. The general ratio, notwithstanding the dramatic fluctuations in fuel pricing, is 60% controllable/40% non-controllable. Therefore a 10% CPA agreement is really just 6% on total revenues.

[jkavafian]

rudder, on 22 February 2012 - 07:01 AM, said:

Recall that the margin is based on controllable costs not all costs. The general ratio, notwithstanding the dramatic fluctuations in fuel pricing, is 60% controllable/40% non-controllable. Therefore a 10% CPA agreement is really just 6% on total revenues.

The actual margin is over 16% not 10%. From Jazz annual report:

During the fi rst quarter of 2009, Chorus reached an agreement

with Air Canada regarding the establishment of new rates for Controllable

Costs that are payable by Air Canada under the CPA in the following

three-year period (2009 to 2011, inclusive). The new rates which were

retroactive to January 1, 2009, apply a 16.72% mark-up on Chorus’

Controllable Costs for each of the years 2009 to 2011 (for the years 2006

to 2008 the percentage mark-up was 16.40%).

[rudder]

The CPA Amending Agreement also provides for adjustments to the Controllable Mark-Up in certain circumstances. Commencing January 1, 2010, if the Annual Delivered Block Hours are less than 375,000 Block Hours, the Controllable Mark-Up will be increased, to a maximum of 16.72%, to compensate Jazz for increased unit costs and lost margin due to the reduction in flying. If annual Delivered Block Hours are greater than 375,000 Block Hours, the Controllable Mark-Up of 12.50% shall only apply to Jazz’s fixed controllable charges and the Controllable Mark-Up of 12.50% shall be reduced to 5% on Jazz’s variable controllable charges.

Source: 2009 Annual Report Jazz Air Income Fund (page 35)

[jkavafian]

rudder, on 22 February 2012 - 07:50 AM, said:

The CPA Amending Agreement also provides for adjustments to the Controllable Mark-Up in certain circumstances. Commencing January 1, 2010, if the Annual Delivered Block Hours are less than 375,000 Block Hours, the Controllable Mark-Up will be increased, to a maximum of 16.72%, to compensate Jazz for increased unit costs and lost margin due to the reduction in flying. If annual Delivered Block Hours are greater than 375,000 Block Hours, the Controllable Mark-Up of 12.50% shall only apply to Jazz’s fixed controllable charges and the Controllable Mark-Up of 12.50% shall be reduced to 5% on Jazz’s variable controllable charges.

Source: 2009 Annual Report Jazz Air Income Fund (page 35)

No airline can afford to pay those magins.
Goin back to the original hypothesis that IF Transat were to do a CPA, I'm with Bean on this one and I too would buy lottery tickets.