Milton/Rovinescu Stock Compensation

[John S.]

RRichard,

"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."

Apples to grapes. But, just for you I'll play along.

First off: if Mr. Rovinescu showed up at negotiations it must mean that something huge is happening because usually Jazz pilots negotiate with Jazz management. So, to continue this debate let's pretend that the company is going broke, is on its last legs, and is spending 2% more than it takes in every day.

Second: if something that big is happening and Mr. Rovinescu presents us with a document that would give all flying under 250 miles to Tier III operators then we would counter with a document to show how Jazz could continue to do all that flying and STILL make money.

Further we show that not only could we do the flying under 250 miles but everything under 2000 miles and still make money. And even further we would show, using company numbers, to show that the more they use Jazz the more money they could make.

So, Richard, I guess what I'm saying is that my MEC would do exactly what yours is doing - offer Mr. Rovinescu some counter proposals. What I would hope and expect my MEC to NOT DO is the finger pointing and name calling that some ACPA officials seem to think is part of the process.

Let's turn this around:

Now what about the ACPA proposal to capture all the Jazz flying? It's is a bit of a joke - it's almost like some of your leaders just don't believe that AC is near a brink. Speaking of which, the way I see it is Air Canada has about five hurdles to navigate on the road to the CCRA exit. Some pilots at AC have no doubt they will succeed. Some have only small worries. But a few are not so sure and are preparing for any outcome.

I must say that I waffle on this.

There are days when I think that AC is so big and even if the unions have to give up 15% of their pensions they will, after enough bellyaching, give in and sign the new deal. Or even if the creditors have to take quite a gamble in the 'new equity' they will, for the most part, agree to the terms. In short, the hurdles will be crossed and AC will continue on into the future as it always has.

However there are days when I see that one of the hurdles is the resolution of the 110 seat flying.

- ACPA knows that it's theirs and has shown the company their really great up-to-the-minute fantastic new lower wage scale that will be part of the deal - when they get the new airplanes.

- ALPA knows that capturing that flying is where the growth at the regional level is going to come and therefore has also prepared their really great up-to-the-minute fantastic new lower wage scale that will be part of the deal.

ACPA and ALPA are now both trying to make their presentations to Mr. Li and his counselors. Since this is such a hot button issue (even bigger than the $300,000,000.00 lawsuit) there is no chance of your MEC and my MEC coming to any agreement on sharing this flying. It has to be done one of us or the other. And when on the days when I think of THOSE problems I'm not so sure AC will survive.

Here's a leading and very biased two part question: If you are a betting man, would you bet on the biggest, most powerful pilot group in the country, even if it might cost more? Or would you bet on the smaller pilot group which has demonstrated to some degree the good will and flexibility needed to recover from receivership intact?

You don't have to answer.

PS. Labtec - I don't think the 'Jazz dies, ACPA wins' scenario you put forward is too likely to happen. Besides, our costs will beat your costs if we are allowed to operate as we should and also to expand a little. Kind of scary for you, this race to who knows where?

[Guest CJRT]

Good points Labtec. I was responding to NEO's (imo) inaccurate and simplified statement. He raised some good arguements as well in his post. Just a thought to your last observation. A junior pilot, presumably younger in age, has a better chance to recover than a more senior pilot who is not in a position to retire. Whichever way it happens and pilots find themselves prematurely out of work, it doesnt matter which group they're from it'll still be a sad event for those individuals.

[IFG]

Labtec - Re: "...binding agreement in force the object for which was put into another contract with another bargaining unit. You cannot contract for the same object." - For clarity only (I don't wish to insert myself into the JAZZ-ACPA cross-fire), was not the JAZZ agreement to come into effect at the end of the current ACPA contract. That being so, the objects would not seem concurrently contracted.

I know it's a murky area, and some people have invoked CLC provisions for continuation of WAWCON's after the end of the contract, while collective bargaining is taking place ( http://laws.justice.gc.ca/en/L-2/16159.html#section-49 ). It appears, to my layman's eye, to hinge on whether scope issues are a "right or privilege of the employees in the bargaining unit", or an injuction, for the duration of the contract, on the Company's rights to run the enterprise as it sees fit. IAC, it's only a concern until collective bargaining is exhausted; after that, while such a transfer of work may cause great discomfort, where would a claim arise?

As an aside, it also puts a spotlight on Ms Pineau's 1999 confidence that two bargaining units negotiating the same work with the same common employer will not interfere with one anothers' bargaining rights. A tangled web indeed, whoever is doing the weaving...

Regards, IFG

[IFG]

Hi, neo - Re "If AC stock tanks, the recipients get nothing" - Absent some unannounced restriction (and I'm sure any such restraint on RM & CR's gain would have been highlighted), even if new AC stock does a Nortel from its present assumed value, the stake will be worth about $1M each. That's the galling part, that they get a (less) rich bonus even if the stock does tank. AC just has to survive for four years, that's all.

Yes, it is Mr Li's stock, but RM is on the board, CR is an old school chum and partner of Li's counsel, and they were in a position to influence the decision. The optics, from the point of view of employees, creditors and former share-holders is apalling. But I guess that's just business as usual, nothing new.

Cheers, IFG

[IFG]

Labtec - Re: "...binding agreement in force the object for which was put into another contract with another bargaining unit. You cannot contract for the same object." - For clarity only (I don't wish to insert myself into the JAZZ-ACPA cross-fire), was not the JAZZ agreement to come into effect at the end of the current ACPA contract. That being so, the objects would not seem concurrently contracted.

I know it's a murky area, and some people have invoked CLC provisions for continuation of WAWCON's after the end of the contract, while collective bargaining is taking place ( http://laws.justice.gc.ca/en/L-2/16159.html#section-49 ). That appears, to my layman's eye, to hinge on whether scope issues are a "right or privilege of the employees in the bargaining unit", or an injuction, for the duration of the contract, on the Company's rights to run the enterprise as it sees fit. IAC, it's only a concern until collective bargaining is exhausted; after that, while such a transfer of work may cause great discomfort, where would a claim arise?

As an aside, it also puts a spotlight on Ms Pineau's 1999 confidence that two bargaining units negotiating the same work with the same common employer will not interfere with one anothers' bargaining rights. A tangled web indeed, whoever is doing the weaving...

Regards, IFG

[Guest Labtec]

That was not my understanding. The parties were negotiating not for the future conclusion of the existing agreements but for the purpose of reducing unit costs while subsumed in the CCAA process. I stand to be corrected but that is what the bulletins from the company and the monitor suggested. If someone has better info please elighten me.

As I said its probably not going to be much of an issue if the Seabury group is allowed to shutdown JAZZ. It will mean a successorship application. The troubling part will be that the bulk of the flying will likely be contracted out. Do the existing JAZZ pilots want to follow that work to the new contractor? The argument to merge with AC should exist if you can prove that is where the work went but the difficulty is that AC shifts the flying around between the three groups already (Air Labrador, Georgian, Pacific Coastal, JAZZ and the Mainline).

It should be interesting.

My prediction? The poor hapless bus drivers in the sky will be spending alot more money on lawyers. You have to love pilots they love to litigate.

Labtec

[Buzz2]

"Wants and Needs", Don surely you don't take Rovinescu litely, regardless of pitting pilot group against pilot group, it is painfully obvious that the present structure needs revamping, AC is losing their collective shirts against these upstarts, and from your MEC's response to "The Meetings" this won't change. Once AC emerges from CCAA in the spring, this will all be like a learning exercise for the liquidation process that will follow in 2005. In my opinion Rovinescu has the right business plan not Milton, but I'm sure my overtones as a Jazz pilot will be squashed because I'm still learning to fly, like playing in the AHL, right Serge.

[Guest Nozzle]

"Pacific Coastal"

???? where do you get your info from?

[Guest Rob Assaf]

Years ago when canadien was the competion and westjet didn't exist, that was also the case and it didn't happen then. WestJet is the result of that failed merger.

Now we are in CCAA and I don't think we have any power to make it happen, even if we COULD agree on merger terms.

Regional pilots have seen an overall increase in their wages even taking into account the CCAA roll back with the status pay, so where the 70 to 110 seat come to is only left to yours and my imagintation and best guesses. It appears as if ACPA is trying to close the barn door after the horses have already got out.

The hot button issues will be (in my opinion) 1. survival of the company, leading to 2. survival of the pension. and 3. How many jobs protected. In that order.

If the company doesn't survive, there is no pension, and the number of jobs there is potentially doesn't matter if there is no company either.

It is going to come down to Jazz division making money or not existing.

Mainline division either making money or not exisiting.

Tango is gone for all intents and purposes and Zip???? with Jazz in the wings??? well you do the math.

I believe that mainline will be an Airbus and widebody Boeing operator and Jazz will look after the rest. If Airbus makes a 110 seat a/c then mainline will probably operate it due to training flow reasons. If the 110 seat comes from anywhere else, well ACPA better get it's head wrapped around seeing Jazz decals on it.

If that sounds harsh to anyone and threatens anyone well I'm sorry but I'm just a line pilot who is not unhappy with my current wages. Pre 911 ACPA could have probably written their own amounts on the cheques, as did a lot of US carriers pre 911. Post 911 it is a different world and to blame the lower cost regional pilot for your troubles would be a folly. Simple economics, supply and demand, etc.

Our current employer is broke. The new guy will be looking for ways to become profitable or he is out and the train stops. I don't care how much someone thinks they have a right to something, unless they are sole proprietors, they are empolyees, plain and simple.

Game plan should be, save the company, protect the pension, and how many jobs at our particular division at the end of it all will be a figure of interest, not a god given right.

But hey I could be wrong, Rob Assaf

[Guest dwb yyc]

Let me wrap this around my head.

Close the door on Jazz, throw 300 million in savings down the toilet and give the flying to unions that are not willing to make the company profitable. Legal challenges for the next 10 years. And for what purpose? SO ACPA will stop the whinning.

I think Mr. Li is a better business man than that.

[Homerun]

AC can not legally place the new 70-110 seat aircraft. It is as simple as that.

[Homerun]

Do you really think that Milton and Calin have different business plans? You of course realize that Milton is Calins boss.

[Mitch Cronin]

test

[Mitch Cronin]

Dangit! I lost it!

[Mitch Cronin]

Hi Neo,

Ok, the brown-noser comment was a bit tongue in cheekish... but you know I hold dogs in very high regard.

Re: "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."

Actually, I think I understand the mutual responsibilities of relationships of all sorts, quite well. I simply believe Mr. Milton's interests are not in a relationship of any kind with the lower ranks of his employees... He considers us as pawns in his chess game, and nothing more. He speaks to us, not with us.

Re: "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?"

Well, you said in that post: "If you intellectually analyze his situation and choices, I think he stands out as a potentially great airline CEO." and I don't agree... I think a great CEO would find the time to hobnob a bit, do the pep rally's and the bull sessions, a bit of listening, and a bit of showing appreciation and respect.

Sadly, it seems he thinks his frequent omnibus letters and sermons from the mount should have us all on his team. But his efforts fall flat in my book. I've seen lousy airline CEO's and decent ones, and I've seen pricks and great guys of all sorts in management, but I don't think I've ever seen one so high up that appeared nearly as clueless with regard to leadership.

Cheers,

Mitch

[Mitch Cronin]

Hi Greg,

I absolutely, wholeheartedly agree with all of that!

I think there's a small chance -probably very small- that we might be able to convince Mr. Milton to admit he needs to learn more about leadership, and take an active stance in repairing that. Though I'm inclined to think I'm punch tired and will shake my head in wonder when I read that sentence later.

....'scuse me, NASCAR's last race is just starting...

Cheers,

Mitch

[Guest neo]

Hi IFG,

"Absent some unannounced restriction (and I'm sure any such restraint on RM & CR's gain would have been highlighted)..."

Why are you sure about that? Restrictions and conditions on stock options and grants are rarely detailed in the press.

"That's the galling part, that they get a (less) rich bonus even if the stock does tank."

What's galling about this compensation package, over and above what is normal compensation for high-end executives in business. Or people in other lines of work, for example. Would that sports stars and entertainers get such conditional rewards. Alex Rodgriguez gets $125 million to play SS for the Texas Rangers, and he gets that whether or not the Rangers have even a sniff of a playoff game. (Oh, excuse me, there I go again comparing apples to oranges.)

I repeat, what is the galling issue in your mind? Whatever the stock is worth, whatever the money Mr. Milton and Mr. Rovinescu receive, they receive it entirely from Mr. Li's own bankroll. It has exactly nothing to do with Air Canada's own finances, other than that they now have a huge vested interest in seeing that those finances succeed.

"Yes, it is Mr Li's stock, but RM is on the board, CR is an old school chum and partner of Li's counsel, and they were in a position to influence the decision."

Yes, it is Mr. Li's stock. It's not Air Canada's money that's being used to reward the top executives. Mr. Li used his own money to do it.

Excuse me, RM is on what board, exactly?

And he influenced who, exactly? Are you saying that Air Canada's two top executives somehow manipulated the Board of Directors, who then ifluenced Mr. Li to give them $40 million of his own money? To be kind about it, that's a silly notion.

If the optics are appalling, I'd say it's because people aren't putting enough thought into the matter. And they're making assumptions and saying things that make very little to no sense at all. For example, Eric Reguly on the matter: "They should give the money back!" Oh please. Is this the best that Canada's national business paper can come up with?

To this point I'd say the majority of commentators on the matter have suspended all common sense in favor of blunt emotional response.

neo

[Guest neo]

Hi CJRT,

I said nothing about an "outside" group of pilots. I simply said another group of pilots. Is that not what JAZZ pilots are? Another group?

There's many assets at Air Canada that our executives can take advantage of. If being able to take advantage of an asset were the only criteria that mattered, would any of us be happy with the result? You're talking about corporate anarchy.

Agreements matter, CJRT. And Mr. Rovinescu chose to disregard one that he'd made with the mainline pilots. I'd feel exactly the same way about the matter if he told the JAZZ pilots that the mainline would now be doing all the work that's protected by the work contracted to JAZZ pilots.

I say it again: agreements matter. The mainline pilots walked away from the merger agreement with the connector airlines. That mattered. Mr. Rovinescu disregarded his agreement with the mainline pilots: that mattered. If anyone feels that they don't, they will be sadly, sadly mistaken as time goes on.

Best,

neo

[Guest Labtec]

I meant to say CMA. My apologies, its difficult to keep track of all of the companies JAZZ is contracting their flying to.

[Guest Labtec]

You keep thinking within your old paradigm (ACPA vs. ALPA). I am suggesting that our importance in the context of this agreement is only significant to us.

However, if you were to consider this what union would you rather deal with as a company? ALPA, a union that has won every battle its fought except Pineau or ACPA a union that has only won a single battle and lost all the others?

I'd rather deal with ACPA. Everytime the company rattles the sabres the leadership of ACPA is summoned to YUL hat in hand to offer up another contractual LET. You JAZZ boys have a misguided perception of ACPA. Just look at their track record. The ALPA contingent on the other hand has stuck it to ACPA in the KELLER award, and you have always managed to out negotiate mother Corp. Your contract, in many ways, is far superior to the mainline deal. Your reserve rules are a good example. For heaven's sake you are the highest paid dash-8 drivers in the world. The Air Canada pilots are the lowest paid in the Star Alliance. I have a friend who flies for TACA and he earns more on the 737 than we did at AC.

Ask yourself this: Is it that ACPA is so cunning that they constantly thwart your ambitions, or is it that the company is very happy dealing with a bunch of guys that are always convinced by company sabre rattling to gut their wages and working conditions? I have worked under both unions and I can tell you who I would want to deal with.

Labtec

[Guest neo]

"You'll notice that I'm not commenting on CR's negotiating tactics because I do think they are underhanded."

Then what, pray tell, are we debating? Did I not make that precise point in my original post?

Your choice in the situation we're in is to find the difference and focus on that, because in doing so you believe it justifies your position. However to do so, you must ignore the similarities, and doing so simply nullifies any balance to your argument.

I hear these kinds of arguments all the time from both sides of the equation. ACPA says JAZZ pilots are not the same as the mainline, the work is different, it's a different company, and on and on. Your position is from the other side, but of cut from the same cloth.

Until the mainline and regional pilots at Air Canada set aside the irrelevant differences and focus and act on the things that matter, we are condemned to doing far, far worse than we would by acting together.

neo

[IFG]

neo - Fair questions...

• "Why are you sure about that? Restrictions and conditions on stock options and grants are rarely detailed..."

Just that anticipating the predictable reaction, and perhaps unfair comparisons to Carty et al's self enrichment plans at AA while employees were sucking it up for the Company. Given the predictable PR challenges, I'd expect them to sugar-coat RM & CR's benefits (clearly a bitter pill for the other, scalped stake-holders) any way they could. BUT - "I'm sure" was not meant to imply "I know for sure.."

:S

• "What's galling about this compensation package, over and above what is normal compensation..."

I didn't mean to comment on the level of the bonus. You're right, for outstanding performance it's probably not out of line at all. It is galling, to me at least, that while the sacrifices of other employees taken for granted, RM & CR will collect millions if AC just staggers along for another 4-5 years, even if the stock plummets 90% (as far as we know about the terms of the stock provision). As for sports salaries - come on, neo, that's not even apples and oranges, more like apples and baseballs.

• "...RM is on what board, exactly?"

Uhh ... the AC Board? On this one, neo, I may stand corrected. I did infer from the "vote" reference ("Air Canada spokeswoman Priscille Leblanc said Mr. Milton abstained from the board of directors' vote that selected Mr. Li's offer" http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20031111/RAIRCEQ11 ) that RM was on the board. It's not unheard of for a CEO, but in a brief search, I can't find any listing of the Board members to confirm it (do you think they're in hiding?)

• "Are you saying that Air Canada's two top executives somehow manipulated the Board of Directors"

Not saying that, 'cause I don't know; I just commented on the optics, and even that only from specific points of view. They both were in a position to influence the decisions, and had hitherto undeclared personal interests, that's all.

All the best, IFG

[Don Hudson]

Richard;

Been thinking a lot more about this..

Considering the players and the stakes involved in either a successful outcome or a failure, how much to you really think the Investor knows about the pension matter?

[GTFA]

"Until the mainline and regional pilots at Air Canada set aside the irrelevant differences and focus and act on the things that matter, we are condemned to doing far, far worse than we would by acting together."

AMEN!

Now, who's going to start the ACT?

[IFG]

neo -

• "Why are you sure about that? Restrictions and conditions on stock options and grants are rarely detailed..."

Just that anticipating the predictable reaction, and perhaps unfair comparisons to Carty et al's self enrichment plans at AA while employees were sucking it up for the Co., I'd expect any mitigations to RM & CR's benefits would have been pre-emptively highlighted. "I'm sure" was not meant to imply "I know for sure.."

:S

• "What's galling about this compensation package, over and above what is normal compensation..."

I didn't mean to comment on the level of the bonus. You're right, for outstanding performance it's probably not out of line at all. It is galling, to me at least, that while the sacrifices of other employees taken for granted, RM & CR will collect millions if AC staggers along for another 4-5 years, even if the stock tanks (as far as we know about the terms of the stock provision).

• "...RM is on what board, exactly?"

On this one, neo, I could stand corrected if the G&M has it wrong. I infered from the following: "Air Canada spokeswoman Priscille Leblanc said Mr. Milton abstained from the board of directors' vote that selected Mr. Li's offer. Mr. Rovinescu is not on the board", that RM was on the board ( http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20031111/RAIRCEQ11 ). In a brief search to confirm it, I can't find any listing of the Board members (do you think they're in hiding?)

• "Are you saying that Air Canada's two top executives somehow manipulated the Board of Directors"

Not saying it, 'cause I don't know that, only commenting on the optics, and even that only from specific points of view. They both had the capability to influence the decisions, and hitherto undeclared personaL interests, that's all.

All the best, IFG