Dave Ritchie; The IAM speaks:

[Mitch Cronin]

Please pass me a bucket.....

APPLICATION UNDER SECTION 19.1

OF THE CANADA LABOUR CODE

(APPLICATION FOR AN INTERIM ORDER)

BEFORE THE CANADA INDUSTRIAL RELATIONS BOARD

BETWEEN:

INTERNATIONAL ASSOCIATION OF MACHINISTS

AND AEROSPACE WORKERS

Complainant

and

AIR CANADA

Respondent

AFFIDAVIT OF DAVE RITCHIE

I, DAVE RITCHIE, of the City of Toronto, in the Province of Ontario, MAKE OATH AND SAY AS FOLLOWS:

1. I am the General Vice President for Canada of the International Association of Machinists and Aerospace Workers (“IAMAW”), and as such, have knowledge of the following facts.

2. The IAMAW holds bargaining rights with Air Canada and represents a bargaining unit of approximately 13,000 members employed by Air Canada (the Employer”).

3. I have reviewed the facts as set out in paragraphs 4-14 of Schedule A to the Section 94 Application filed by the Union on February 23, 2004 and adopt them as true to my direct knowledge. I have also reviewed the facts as set out in a supplementary letter to the Board dated February 25, 2004 and adopt them as true to my direct knowledge.

IAMAW Pension Plan

4. Members of the IAMAW at Air Canada enjoy the protection of a defined benefit pension plan which has been in place for successive Collective Agreements and which was renewed most recently in 2003. Article 20.17.01 of the subsisting Collective Agreement, a copy of which is marked and attached hereto as Exhibit “A”, states expressly that there shall be no modification or amendment to the plan without the consent of the union. That obligation binds Air Canada right now.

5. This commitment was renewed in 2003 during the CCAA process. At that time the IAMAW and Air Canada executed a Memorandum of Agreement which included the following language the meaning of which could not be more clear:

Pension benefits will remain unchanged. The Unions agreed to cooperate with the Company in its representation to OSFI respecting the amortization of the funding deficit over ten (10) year.

A copy of the excerpt from the Memorandum of Agreement is marked and attached hereto as Exhibit ”B”.

Collective Bargaining

6. I have been personally and extensively engaged in collective bargaining on behalf of my union and its members for over 30 years both in the federal and provincial jurisdictions. In recent years I have had considerable experience with both Air Canada and Canadian Airlines International Limited as they have struggled with complex collective bargaining issues in times of great economic stress. The IAMAW has played an important sometimes pivotal role in attempting to ensure the continued survival of Air Canada, and Canadian Airlines before it, while at the same time representing our members to the best of our ability. This task has been challenging as the union has been required to make very difficult decisions which are inevitably controversial within the membership. I also have had extensive experience dealing with provincial and federal conciliators and mediators.

7. All of the collective bargaining with which I have been involved has been premised upon the concept of the union acting as exclusive bargaining agent. It sends its representatives to the bargaining table who are presumed to speak for all members of the bargaining unit. The employer sends its representatives. We do not question their legal authority to speak for the employer. Mediators and conciliation officers frequently meet privately with the parties and frequently confidentially. Sometimes there are collective bargaining ‘black-outs’. In the federal jurisdiction the Canada Labour Code provides for timely lawful means of pressure open to either party. The Code prohibits attempts to coerce, discriminate, or unduly influence employees in a variety of ways. This is elementary and known to anyone engaged in labour relations in Canada.

8. I have never heard of any employer in Canada suggesting that collective bargaining, or negotiations of any kind with a union or anyone else for that matter, should take place in public. I would not expect to negotiate with all of the shareholders of the company nor do I accept that an employer should be permitted to bargain directly with members of my union. It is my opinion that collective bargaining in the manner proposed by Air Canada is not collective bargaining at all but, rather, a transparent attempt to avoid dealing with the union and to bargain directly with union members. In fact, negotiating in a ‘fish bowl’ with the unstated (or stated) assumption that a union cannot be trusted to either speak for, or speak to, its members is the antithesis of the Canadian collective bargaining model in my experience. Effective mediation and conciliation, as expressly contemplated by the Code, would be paralysed in such circumstances. Air Canada has now ‘upped the ante’ even further by resorting to direct threats, as later described herein, which have and will cause additional damage to the union and its members in the current situation.

9. The recent tactic of Air Canada, described more fully in our Application, is particularly offensive and potentially destructive for another reason. Under the guise of open communication, it is a thinly disguised effort to discredit the unions and to divide their memberships. It is particularly offensive to me as General Vice President of the IAMAW because it is based upon the falsehood that our leadership does not speak for its members and that our union is not democratic. The fact is that the IAMAW is a democratic institution with a history of more than 100 years in the United States and Canada. We were here long before Air Canada itself. Our leadership and members of our bargaining teams are either staff representatives or persons elected by the membership. The IAMAW constitution requires that all collective agreements be ratified by its members.

10. The Bulletins and Correspondence, attached to our initial Application, disclose all of this absolutely plainly and without any equivocation whatsoever. They also set out clearly that Robert Milton, the President and CEO of Air Canada, has purported to set himself up as an intermediary– on behalf of employees-- with Trinity Time Investments, the proposed equity investor. Mr. Milton proposes “to break the log jam” on behalf of employees and Air Canada by his intervention. Mr. Milton does all of this notwithstanding Air Canada’s contractual commitments to the IAMAW on the pension issues, notwithstanding the position taken by the IAMAW on these questions, and notwithstanding that difficult issues remain with the regulator, OSFI, which require the IAMAW’s assistance and cooperation.

11. Air Canada has now gone a further step. Air Canada maintains a website which is linked to a site maintained by Trinity Time Investments, the proposed equity investor. Among other things, the Trinity site includes an “Open Letter to Air Canada Employees”. There can be no question that Air Canada intends that its employees read this open letter. The letter is the classic ‘threat letter’; in fact it is not nearly as subtle as many I have read in the past. The employment of all Air Canada employees is directly threatened “unless the company’s pension and benefits structure is gradually brought into line...”. The web site contains other offensive material to the same effect.

12. t is impossible for me to conclude otherwise than that this conduct by Air Canada has been calculated in absolute contempt for the IAMAW, its other unions, the CIRB and the Code. Air Canada is a major federal employer of significance to the Canadian economy with access to sophisticated labour lawyers and labour relations personnel. It must be presumed to know exactly what it is doing and in fact it has said so. Air Canada itself describes its proposed “open forum” collective bargaining model of as being a “real departure from the past” in Bulletin #59. Air Canada has linked its website directly to the Trinity Time site where its employees are invited to read and ponder the threats contained therein. The implicit message is that Air Canada’s unions are not the legitimate spokespersons for Air Canada’s employees and that their judgment should not be trusted by union members.

13. With respect to the IAMAW and its declaration of a new “open forum” model for collective bargaining, it would appear that Air Canada presumes that it can change the way it deals with its unions unilaterally. It is obvious that the Bulletins and letter sent by Air Canada to its employees are intended to drive a wedge between members and their own unions. It is obvious that, having failed to get the answer it wants from its unions on the pension issue, Air Canada is attempting to deal directly with individual employees. All one needs to do to reach this conclusion is to read Bulletin #60 which purports to set up an employee poll. This employer appears to think that it can deal directly with employees with impunity on an issue of vital importance regardless of whether or not they are represented by an exclusive bargaining agent. What makes Bulletin #60 all the more appalling is the cynical way in which the poll question is framed-- obviously designed to elicit the answer which Air Canada seeks.

14. With respect to the Board, Air Canada appears to assume that it can unilaterally alter the fundamental assumptions underpinning the Code, or, that the Board will either do nothing about it, or, that the Board is helpless to provide any meaningful timely remedy. If all of this fails, it has provided itself with the unlawful insurance policy of directly threatening its employees in an effort to coerce the result which it seeks– a result directly opposite to the bargain it struck with its unions in 2003.

Harm

15. It is my opinion that this recent conduct of Air Canada has done and will continue to do serious harm to the IAMAW and its members. There must be an immediate Board response before the poison spreads further and the unions are further discredited. If this conduct is not addressed it will irrevocably alter the way Air Canada deals with its unions and employees in the future and will be seen as a clear precedent for other federal employers. The IAMAW and the other unions are attempting daily to address complex issues relating to the CCAA process. No doubt there will be many other challenges ahead. If Air Canada is permitted to continue this path, union members will be unable to look to the elected officers and staff of the IAMAW for effective leadership. Democratically elected union leaders will always be subject to being undermined by employer direct dealing. No contract or collective agreement will ever be secure. We can only look to the CIRB to redress this injury immediately and effectively. There is nothing that is going on here which resembles the Canadian labour relations system with which I am familiar.

16. I make this affidavit in support of the IAMAW’s application for interim relief and for no other purpose.

SWORN before me at the

City of Toronto in the

Province of Ontario

this day of February, 2004

__________________________ __________________________

Commissioner, etc. Dave Ritchie

[Mitch Cronin]

Unless Trinity was bluffing....

....I think I hear that final trumpet sound... "Taps", isn't it?

Yo Clive.... ?

Have I been too mouthy to come begging? :S

[LongTimer V]

The trouble i have is that the IAMAW does and have not kept the membership in the loop.We usually hear about it after its a done deal.And thats not right.So if the IAM wants to make deals,we should know before Air Canada management tells us what we agreed to.

[Guest victor]

You don't have to be a low-cost carrier to survive in today's airline markets (think of Emirates, Singapore Airlines, Skywest, etc, etc), but what you do have to have is employees and management that are working as a team.

As an outsider it seems to me that Air Canada is riddled with Jurassic strategies, plans and policies, but the biggest Jurassic issue, the one that could do the most to sink the company in the long term, is labour relations. You guys don't trust your management, your management doesn't trust you. You guys are fighting to preserve a world that doesn't exist anymore.

I know that, in terms of training, qualifications, experience, etc., you Air Canada pilots and AMEs and Flight Attendants and baggage handlers are at least the equal of your counterparts at WestJet. And yet you guys are incredibly inefficient. In most cases, in the average business day, you are each accomplishing about half of what your counterparts at WestJet are.

If you guys can't get together with your mangement and solve this problem, it won't matter what aircraft you are operating or what gates you have at what airport, you are not going to make it.

You guys should be looking over your shoulder. Its a tough world out there and no one is protecting you anymore. It's not WestJet you should be worrying about - you've already lost that battle. What you need to worry about now is Open Skies, which will be here one way or another. What are you going to do when you have Singapore Airlines carrying passengers on daily flights between Hong Kong and Toronto, and American Airlines between Toronto and London and Continental between Montreal and Paris (not to mention JetBlue flying from Edmonton)?

CCAA is a once in a lifetime opportunity for you to get your collective act together. From what I see you are squandering it. The rest of the world has moved on. Defined benefit pension plans are a thing of the past. Heck, half of WestJet's current employees are going to retire as millionaires, and they don't even have a pension plan.

[CanadaEH]

[Guest AME]

victor

Your assessment of the state of labour relations is spot on, however I doubt we'll see cabotage in the near future as any agreement would have to be reciprocal and the US isn't ready to allow foreigners that kind of access

[Arctic Ace]

"however I doubt we'll see cabotage in the near future as any agreement would have to be reciprocal and the US isn't ready to allow foreigners that kind of access"

This brings up an interesting point. From what I've been led to believe its the U.S. carriers that are opposed to any sort of cabotage rights in the U.S.

If Air Canada were to fail tommorrow would our federal government be so desperate as to give away the farm? Why are you so sure it would have to be reciprocal?

I feel Milton was missing the point when he spoke of how well Air Canada would compete in a cabatoge environment. If it got to that point I don't think Air Canada would be around to enjoy it. I believe their failure would be the reason for cabatoge.

My concern is that cabotage (and not necessarily reciprocal cabotage) is the federal government's backup plan should Air Canada not get its collective act together.

The airlines in Canada should be in Ottawa's face on this one to ensure our Feds look after the Canadian airline industry and not just put a bandaid on the air transportation system in Canada.

[Arctic Ace]

"however I doubt we'll see cabotage in the near future as any agreement would have to be reciprocal and the US isn't ready to allow foreigners that kind of access"

This brings up an interesting point. From what I've been led to believe its the U.S. carriers that are opposed to any sort of cabotage rights in the U.S.

If Air Canada were to fail tommorrow would our federal government be so desperate as to give away the farm? Why are you so sure it would have to be reciprocal?

I feel Milton was missing the point when he spoke of how well Air Canada would compete in a cabatoge environment. If it got to that point I don't think Air Canada would be around to enjoy it. I believe their failure would be the reason for cabatoge.

My concern is that cabotage (and not necessarily reciprocal cabotage) is the federal government's backup plan should Air Canada not get its collective act together.

The airlines in Canada should be in Ottawa's face on this one to ensure our Feds look after the Canadian airline industry and not just put a bandaid on the air transportation system in Canada.

[Guest AME]

The way I see it, and I could be out to lunch, is that if AC were to fail, the airlines of the foreign countries served would pick up the slack on those routes (that includes transborder) and any extra domestic capacity required could be done by allowing the remaining Canadian carries to wet lease aircraft and crews until they can ramp up to cover the short fall.

By doing it this way or something like it would allow a Canadian carrier to grow to fill the void while only facing the same competition that AC now faces, the only difference would be the up hill battle to regain market share.

Brett

ps: like I said I could be way out in left field with this one

[Arctic Ace]

Sounds like a reasonable solution to me. The concerns I have with the cabotage scenario are hypothetical only at this point. In the unlikely event that our government should do something foolish that may hurt our industry perhaps proactive discussion and industry awareness may be a good idea at this point.

[Guest victor]

Why would cabotage be such a bad thing?

Wouldn't the federal government insist on enforcing current immigration regulations, which would mean that all those foreign carriers would have to use Canadian flight crews when flying inside Canada?

[Arctic Ace]

Not likely. About the only way that could work for the airlines involved would have the foreign carrier setting up what would amount to a seperate company to operate Canadian routes. Now you're getting into increasing the foreign ownership limit of 25%. A whole different kettle of fish.

[Guest victor]

Why do we need a foreign investment limit anyway?

In terms of passenger numbers, the domestic Canadian market is about 4% of the US domestic market. Montreal, the second busiest airport in Canada, sees as much passenger traffic as the 40th busiest in the US. Delta Airlines alone carries about five times as many domestic passengers as the entire Canadian industry.

Now that Don Carty is gone from American, there isn't anyone in the US industry that thinks having the right to fly on Canadian domestic routes is any big deal.

On the other hand, imagine what a wonderful opportunity cabotage could be for Air Canada. The number of US domestic passengers who connect in Chicago alone is almost four times the total of all domestic passengers in Canada. Imagine turning Toronto into a US domestic hub, connecting passengers from New England, the Midwest, etc. onto flights to Florida, Arizona, Las Vegas, the West Coast, etc. Imagine achieving the critical mass to compete for the international traffic coming out of Dayton and Indiannapolis and Rochester and dozens of other communities.

The US and the European Union are negotiating Open Skies right now, and cabotage is on the agenda. Will it happen? "Yes," if Europe has its way. "Not for another ten or fifteen years," if the US senate has its way. One way or another, its coming.

Only problem is, Canada is excluded from the negotiations. This is not good.

[Arctic Ace]

"Why do we need a foreign investment limit anyway?"

Thats up to us. Do we want an airline industry controlled by foreign interests? What should the limit be set at?

"On the other hand, imagine what a wonderful opportunity cabotage could be for Air Canada."

This assumes reciprocal cabotage and that is my point. I wouldn't assume anything at this point. What convinces you reciprocal cabotage is a given?

[Guest victor]

"Do we want an airline industry controlled by foreign interests?"

Why not? Heck, half our retail industry is foreign owned. More than half the food we eat comes from foreign producers. All the cars made in Canada come from foreign-owned manufacturing plants. On the other hand, half the banking industry in the Caribbean is controlled by Canadian banks, we own half the broadcast industry in New Zealand, half the mining industry in Venezuala, we even run the postal service in Lebanon. What's the big deal?

"This assumes reciprocal cabotage and that is my point. I wouldn't assume anything at this point. What convinces you reciprocal cabotage is a given?"

I agree with you. I hope our federal government isn't so dumb that they would give away unilateral cabotage. My point is that our government needs to be fighting to get onto the negotiating table so that Canada doesn't get left out of a single airline market that could end up being 80 times larger than ours. If this happens the US and European airlines become the Walmarts of the industry and Air Canada becomes the UCS Smoke Shop.

[Arctic Ace]

Again, my point is the feds reaction to a failed Air Canada. They may entertain a non-reciprocal cabotage arrangement to maintain a strong domestic air service. This is where Canada's airline industry must be proactive as much of our clout would be lost without Air Canada at the table with us.

[Guest victor]

I agree.

I think one of the strategies of people like WestJet and Jetsgo and CanJet is to become big enough quickly enough that, if Air Canada fails, they are seen by the feds as a viable basis for the Canadian industry going forward.

If Air Canada does fail, which I think would not be a good thing, let's hope that the carriers that are remaining really can step up to the plate.

[Arctic Ace]

There will be no problem stepping up to the plate but it can't happen overnight. This is why the feds must be convinced not to give away the farm but perhaps short term lease a small part of it fo awhile.

[Guest M. McRae]

The problem is, once the squatters settle in, they are damned hard to evict.

[Arctic Ace]

ain't that the truth. First our airspace, then our water.