Milton/Rovinescu Stock Compensation

[Guest Labtec]

Neo, Milton ain't giving you any of his bonus so save your breath.

Labtec

[Guest neo]

Hi John and thanks for your comments...

"Your comment that Mr. Rovinescu " . . . negotiated an agreement during CCAA with another pilot group to do the AC pilots' flying. . . " shows that you, like most ACPA pilots think that you ACPA pilots have a god-given-in-your-contract right to everything you want."

Should I sharpen my hyperbole poker for that one, too?

While I don't believe that God granted a particular piece of work to any labor group, I do believe in honoring agreements, and above and beyond that I even more strongly believe in fair dealing between employer and employees. Mr. Rovinescu's behavior might generously be described as "sharp practice", and that's counterproductive at a time when everyone needs to work together to save a sinking ship.

Were the shoe on the other foot, and had Mr. Rovinescu showed up at the negotiations with your fellow JAZZ pilots holding an agreement with Tier III operators to do all regional flying under say 250 miles, I would view the matter in the same way. Are you telling me you wouldn't? Come on, John.

While I agree that little is certain in the CCAA process or aviation's business climate in general, there is one thing that will never change and is as sure as night following day: greed. Mr. Rovinescu appears to have thought that he could take all the chips off the table with one deal of the cards. He didn't do our company any favors at all by acting that way.

Best,

neo

[Guest HPT-TOUR]

I second that.

[Guest neo]

My understanding is the same as IFG's, Don. I believe the compensation is a stock _grant_ made regardless of how well Air Canada performs in the future.

You are correct to state that the right thing was done by announcing the grant up front.

While the grant isn't purely performance-based, it obviously still has a huge performance element to its value. If AC stock tanks, the recipients get nothing. If it holds value, they get the amount being discussed presently, and if the stock appreciates they do even better.

While the announcement of the grant doesn't mention any time frames for divestiture of the stock, I would be very surprised indeed if there aren't restrictions on how quickly Mr. Milton and Mr. Rovinescu can sell their holdings.

Yes, there is an emotional reaction to the grant, but I hope our employees will take a moment to reflect on exactly what it is. It's Mr. Li using his OWN money to keep the people that he believes can make Air Canada a success. Mr. Li is willing to put down around $40 million of his personal cash to make that happen. That's an enormous vote of confidence from a very astute investor. If you look at it simply at face value, that's an equally positive indication that Air Canada is on the right track.

Best,

RR

[Guest Airmail]

"Yes, there is an emotional reaction to the grant, but I hope our employees will take a moment to reflect on exactly what it is. It's Mr. Li using his OWN money to keep the people that he believes can make Air Canada a success. Mr. Li is willing to put down around $40 million of his personal cash to make that happen. That's an enormous vote of confidence from a very astute investor. If you look at it simply at face value, that's an equally positive indication that Air Canada is on the right track."

That's exactly it neo -- no one should forget that AC still gets the proceeds (all $650 million of Mr. Li's money) to do whatever it wishes. Mr. Li is taking shares that he will be buying out of his own pocket and making grants to each of Milton and Rovinescu to ensure they stick around for a minimum of 4 years to implement the plan which they articulate and which he is putting his own money in.

I think it's truly unfortunate that one media outlet (the Globe and Mail) fueled by one rotten, yellow journalist with a personal vendetta against Milton can twist a story to the point that it no longer ressembles reality.

[ChicoChico]

John,

Are you saying this is a false statement then?

negotiated an agreement during CCAA with another pilot group to do the AC pilots' flying.

It is as far as I'm concerned, what happened. Trying to spin it any other way (as you are) is just that - SPIN.

Our contract is not God-given but it IS a contract and therefore what Calin did was both wrong and reprehensable not to mention disgusting.

My 2 cents anyway...

Cheers Chico

PS I agree that we should try to work together but as you know there are some pretty large obstacles in the way ($300,000,000).

[ChicoChico]

BTW I think that NEO says the same thing below.

[CanadaEH]

I'm a little off topic here, but will AC's third quarter results reflect all renegotiated leases/contracts that ARE being paid right now?

[Don Hudson]

Richard;

Re "If AC stock tanks, the recipients get nothing. If it holds value, they get the amount being discussed presently, and if the stock appreciates they do even better."

Fine. As long as the employees (who have put in the time and have a very long-term interest in AC's survival) do as well. By that, I mean keep their pensions and reasonable compensation.

Re "While the announcement of the grant doesn't mention any time frames for divestiture of the stock, I would be very surprised indeed if there aren't restrictions on how quickly Mr. Milton and Mr. Rovinescu can sell their holdings."

Yes, that would make sense. Otherwise, there's no "retention" pressure in the retention bonus.

Re "It's Mr. Li using his OWN money . . . . ,[and]

That's an enormous vote of confidence from a very astute investor."

Although its unimportant, I don't completely share that view. With the transfers of money which have taken place, Air Canada, prima facie, ought to be a very good investment and I think it took a lot of holding-down-the-lid on the excitement of the prospects of what this investment can do for whoever was chosen as The Investor. Now, longevity and commitment on the part of those same people is the key. I believe its there.

Also, as others have observed (Dagger, I think), one whiff of turnaround, profit and hearty success and all recollection of the crap and sourness leading up to and after April 1rst will evaporate,.. providing!, senior management does not attempt to do what Mr Justice Winkler cautioned them about what Mr Rovinescu was focussing on early in this process: This is a "Needs" matter, not a "Wants" matter*.

Success and bright prospects have a way of re-focussing efforts and even bringing cheer and I for one am definitely looking forward to the future. I hope we follow through on the clear signal that we intend to focus on our business instead of trying to run everyone else out of town domestically.

Don

-------------------------------

*"With the Air Canada board due to meet that evening to approve the $350 million Aeroplan deal with the Canadian Imperial Bank of Commerce, Winkler asked for Milton and Rovinescu, the former Stikeman Elliott mergers and acquisition strategist who's seen as leading the charge to crush union contracts, to meet him at the Royal York.

Getting to Toronto would be tough, said Milton, citing previous commitments.

Winkler insisted they needed to talk and pressed ahead despite Milton's suggestion that maybe just one of them could make the trip, or that getting a flight might be a problem.

When the two arrived at the Royal York, Winkler had one simple message:

"I don't have time for you guys to go on a `wants' hunt."

He urged them to draw up a new list of concessions "based on need, not greed" and halted talks for a few days.

While there were some glitches and logjams along the way to getting agreements with Air Canada's nine unions, all had tentative deals within hours of last Tuesday's court-ordered deadline — except the mainline pilots.

They were outraged by what they saw as an unfair attack — largely orchestrated, they believe, by Rovinescu — to severely weaken their powerful union by pitting its members against their archrivals at Jazz.

"There's a history between these two pilot groups —

I was well aware of that — and it coloured everything," says Winkler." - June 02, 2003, Toronto Star, Sue Pigg

[Seeker]

"Were the shoe on the other foot, and had Mr. Rovinescu showed up at the negotiations with your fellow JAZZ pilots holding an agreement with Tier III operators to do all regional flying under say 250 miles, I would view the matter in the same way. Are you telling me you wouldn't? Come on, John. "

I don't have time for a long response but the difference here is that we (Jazz) work for AC and tier III doesn't. I think the fact that we all get to experience the joys of CCAA at the same time proves this to be true.

CR may have done you (ACPA) wrong but don't try to draw parallels where none exist. The Jazz pilots should more correctly be refered to as: another "AC" pilot group and not as: another pilot group.

seeker

[dagger]

No.

As I posted some weeks ago, the lease renegotiations were signed between July and mid-October, with some still being wrapped up. Until a replacement lease takes effect, the old lease rate is counted for third quarter purposes. Therefore lease expense as it appears in the third and fourth quarter books will come down progressively month by month until all leases are renegotiated or terminated with the return of the aircraft.

Moreover, the third quarter will reflect some negative lease valuation adjustments (a non-cash item) that relate back to reduced aircraft valuations since Sept 11, 2001.

You won't have a true year over year comparison of lease costs until at least the first quarter and possibly the second of 04. Labor is even more complicated because terminations are occuring right through the end of 03 with some even going in the first quarter of 04.

[conehead]

You said;

I'm hopeful that after we are out of CCAA profit sharing will become worthwhile. I'm also hopeful that with reduced

management, and new compan policies, line employees will be able to make unilateral decisions that will be right for our

customers.

Reduced management????

Not in Line Maintenance, my friend. Waaayyy too much management.

[Guest GDR]

Hi Conehead

I don't know about specific cases, but since the filing of CCAA a whole layer of management jobs have disappeared.

Greg

[Guest neo]

Seeker,

NO analogy or comparison can be made that does not have some difference to it because no two things in life are EVER exactly equal. You can microscopically examine any comparison, find that difference, and then declare the comparison to be "invalid", "unfair" or the like. But in doing so you render invalid ANY attempt at comparison, and thereby relinquish the opportunity to learn the moral lesson. That's because virtually every lesson of that sort requires you to compare alternative courses of action.

I put it to you that it's irrelevant who Mr. Rovinescu decided to play off against the mainline pilots; the issue is that he chose to disregard his agreement with us and make a deal with someone else for the same work prior to even talking to us. You want to put a good spin on that because you're one of the pilots that Mr. Rovinescu made the outside deal with. But I'm sorry, it was bad business and counterproductive to Air Canada's longterm interests, your own included. That is, unless you're willing to have some other group of employees bidding against your own job. Try making the comparison, if you're willing.

neo

[GTFA]

Looks to me like it's time for ALPA and ACPA to bury the hatchet.

Man.... think of the myriad ways that we could flex and bend to massage this airline into not only a better way to fly but a better place to work. Somewhere we could focus on providing quality service without having to look over our shoulder to defend ourselves from others within the same company. For heaven's sake!

If the current representatives can't do it, get someone who can!!!!!!!!

GTFA

[Guest lancaster]

And why exactly do you consider it to be even remotely acceptable that someone gets compensated in the vicinity of 20m for driving a healthy company from profitability into 13B in debt in about 3 yrs? If you can rationalize that NEO, then perhaps you, as well as a few others deserve to be in the financial shape that you are!

[Guest chiselcharter]

In fact profit sharing according to Milton will be up and running in apox. 18 months. (actually he said a year and a half)

[Guest neo]

Hi Don,

I hesitate to repeat myself (for about a microsecond) and then say again:

Air Canada employees are not being compensated fairly. It's one of the reasons why I voted against the CCAA contract last summer. Air Canada employees have made a large sacrifice in order to make the company attractive to someone like Mr. Li. Yet we will not recover that sacrifice in anything like the way we should. The reason for that is because we have not taken an equity position in the MEANS of making the wealth; we are simply bystanders to it from the compensation point of view, skimming some of the gravy from the bowl via profit sharing.

Mr. Milton, the new shareholders and our own unions should have INSISTED that the employees take an equity position. In a labor-intensive industry with highly-skilled employees, it's the best way to go.

Mr. Rovinescu (or his proxy) will ALWAYS have a powerful motivation to squeeze the employees, because it's in his short-term interests to do so. The way the employees negate that motivation is by taking an equity position in the company. Not only do they then have some say (note: only SOME say) in how the company is run, but as Mr. Rovinescu or anyone like him squeezes more value out of the employees at work, those same employees watch their equity in the company grow by that same value.

You will never, I repeat never stop employees from being squeezed by appealing to owners' and management's sense of fair play, by pointing out the longterm futility of sharp labor practice, or by loudly proclaiming the sanctity of your labor agreement. The motivation to ignore all those factors in favor of short-term economic reasons is simply too high.

So if they're not going to stop, and they aren't, whatta ya gonna do? Take an equity position and defeat the cycle.

Best,

neo

[Guest neo]

I firmly believe that it's in the regional and mainline pilots' best interests to bargain as one unit for the flying work at Air Canada.

Richard Roskell

[Guest chiselcharter]

Who's kidding whom, the company was a mess well before Robert showed. I'm nor is any other employee too excited by Calin's methods but lets face facts it was needed, it's been done, it's out of our control so let's pitch in, help out and talk again in five years. Every thing bad for me personally has turned out for the best, pick on up and move on out for stewing and bitching resolves nothing.

[Guest neo]

A brown-noser? And what would I hope to gain from being one? There is nothing that Mr. Milton can offer me that I want.

You seem to take the view that in something as complex as relationships between leaders and followers that the issues are all in the hands of one or the other. I believe that's almost never the case in either personal relationships or ones of this sort.

I try to offer balanced comments and often they're about contentious issues. But let's say I'm wrong in this case and every last shred of the loyalty issue is entirely Mr. Milton's own doing: how does that change anything that I said in the above post?

I've clearly pointed out that Mr. Milton hasn't inspired the troops, that he hasn't created the empathy necessary between his leadership and his employees, that he hasn't dealt sufficiently with the employees' emotional response to the choices he's made. That may sound like brown-nosing to you, but somehow I don't expect to receive bouquets from the CEO's office any time soon.

neo

[Guest CJRT]

Calin did not promise Company flying to another outside group of pilots as you suggest. He agreed to take advantage of an Air Canada owned asset. That asset is the Jazz pilots. Like it or not, this group of pilots is 100% a part of Air Canada and have the same entitlement to Air Canada flying as does the ACPA group. Otherwise an interesting post Neo.

[Seeker]

Richard:

Bad business? Maybe. Counterproductive? Maybe, but for years and years I've listened to Air Canada employees ( not neccesarily you ) tell me that I am NOT an Air Canada employee and that Jazz ( AO, ANO, ABC, etc.) is a separate company. Now, surprise, surprise, we all end up in CCAA at the same time. Filed in court on the same letterhead. Sure looks to me like we're working for the same bunch.

I don't think I need to use a microscope to see the difference between: AC and Jazz, and Jazz and tier III. Big difference.

You'll notice that I'm not commenting on CR's negotiating tactics because I do think they are underhanded. OTOH I am very much aware of how it feels to have some other group of employees bidding against my job, that other group, my friend, is you!

seeker

[Guest Labtec]

That's an oversimplification of what occurred. There was a valid and binding collective agreement in force the object for which was put into another contract with another bargaining unit. You cannot contract for the same object. The first contract is binding not the second. This is correct when one applies common sense to contractual relationships and there is at least 400 years of common law to support that position.

It probably won't matter much when the smoke clears. The rumours we are hearing in the financial and legal community suggest that JAZZ will likely be shutdown some time in the new year. Bobby Milton has said he cares not a whiff for domestic market share, the Seabury group have looked at the costs at JAZZ and have privately suggested that the company has an unacceptable unit cost. There will be presentations before the Board and Mr. Li whereby ACPA and ALPA attempt to $lut themselves out as the cheapest. Privately, the people are involved see JAZZ as redundant and the corporation is probably better off keeping the high yield regional routes and contracting the rest out like they have done out east with Air Labrador.

We are going to be faced with another merger following a motion before the CIRB under the successorship legislation. Junior pilots from both groups will get slaughtered. Enjoy Christmas because there will likely be alot of blood on the floor in the new year.

Labtec

[Guest Skirt]

What he did do was try and break a valid, binding and legal (Canadian labour code...) collective agreement. (6)