CAW loses

[Fido]

This part was cut off from the Flt Attend thread:

Meanwhile, an arbitrator has ruled in the case of new Air Canada sales and service agents who are represented by the Canadian Auto Workers union.

In June, agents ratified a four-year collective agreement, but a contentious pension issue was referred to arbitrator Kevin Burkett. On Friday night, Air Canada announced that new CAW hires will join Air Canada’s “hybrid pension regime consisting of part defined contribution and part defined benefit plan.”

Defined benefit pensions provide a guaranteed payout level on retirement, but defined contribution plans don’t.

The ruling will affect CAW members hired after the June 27 ratification date of the tentative agreement.

[Airband]

“hybrid pension regime consisting of part defined contribution and part defined benefit plan.”

Crikey, sounds like the third gender option on the new Australian passport....

[FA@AC]

So AC gets its transition away from DB. I wonder if the CAW gets anything in return.

It's probably too late for CUPE to negotiate an ACPA-style deal even if they do decide to put their members before their ideology. I expect we'll now go down the same path as the CAW.

[Fido]

So AC gets its transition away from DB. I wonder if the CAW gets anything in return.

It's probably too late for CUPE to negotiate an ACPA-style deal even if they do decide to put their members before their ideology. I expect we'll now go down the same path as the CAW.

No union at AC has anything left to bargain with now for or against a DC for new hires.

[dagger]

No union at AC has anything left to bargain with now for or against a DC for new hires.

Pretty much. No arbitrator is going to rule differently for CUPE, IAM ACPA.

And AC will take a short strike by any of them rather than agree not apply the CAW award to those groups.

With this issue settled, with a rejected tentative agreement serving as a benchmark for an arbitrator, the odds CUPE or IAM can do any better than CAW are minimal. Any salary lost in strikes prior to the legislated return to work will be cash poured down the drain.

[FA@AC]

And AC will take a short strike by any of them rather than agree not apply the CAW award to those groups.

Perhaps, but I'm sure nonetheless that AC would much prefer to avert a strike than to endure one. The disruption from a near-shutdown, however brief, would be considerable. Aside from the financial damage, the PR would be terrible.

If AC is now confident that it has its DC plan for new hires, it might feel able to open the purse strings somewhat in other areas of the contract. If CUPE can read the writing on the wall, it might come to the conclusion that it would be futile not to adopt a more practical stance on the pension matter and to accept whatever crumbs AC might still be willing to offer to avoid a strike in exchange for CUPE's agreement to settle the pension issue without arbitration. We may yet see sufficient compromise from both ends to reach a last-minute settlement. Unfortunately, Susan Welscheid's letter to us of this week turned the temperature up quite a bit, and may have made it less likely that cool heads will prevail at the bargaining table.

[dagger]

Perhaps, but I'm sure nonetheless that AC would much prefer to avert a strike than to endure one. The disruption from a near-shutdown, however brief, would be considerable. Aside from the financial damage, the PR would be terrible.

If AC is now confident that it has its DC plan for new hires, it might feel able to open the purse strings somewhat in other areas of the contract. If CUPE can read the writing on the wall, it might come to the conclusion that it would be futile not to adopt a more practical stance on the pension matter and to accept whatever crumbs AC might still be willing to offer to avoid a strike in exchange for CUPE's agreement to settle the pension issue without arbitration. We may yet see sufficient compromise from both ends to reach a last-minute settlement. Unfortunately, Susan Welscheid's letter to us of this week turned the temperature up quite a bit, and may have made it less likely that cool heads will prevail at the bargaining table.

You do not give one group (CUPE) more than you gave another (CAW)

As for your supposition that AC might be more generous in other areas (CAW) because it has won the arbitration, I'd put it to you that in labor relations, what you do in one round is carried over to the next. As I said earlier, if there are CUPE-specific areas, AC might bend so long as it doesn't cost too much, but not as it pertains to pay and benefits. Remember the line in Gladiator where Maximus tells his troops, "Brothers, what we do in life echoes in eternity" ? Ditto with labor relations.

[FA@AC]

You do not give one group (CUPE) more than you gave another (CAW)

As for your supposition that AC might be more generous in other areas (CAW) because it has won the arbitration, I'd put it to you that in labor relations, what you do in one round is carried over to the next. As I said earlier, if there are CUPE-specific areas, AC might bend so long as it doesn't cost too much, but not as it pertains to pay and benefits. Remember the line in Gladiator where Maximus tells his troops, "Brothers, what we do in life echoes in eternity" ? Ditto with labor relations.

I see your point, but if CUPE was willing to compromise on the pension front, that compromise could be viewed as horse trading. AC did offer ACPA a 5% raise in year one--a response, I assume, to ACPA's willingness to be realistic on pensions. Nonetheless, I expect that it's now too late to make any such deal, and I don't hold much hope out that the tools at CUPE would know how to do it anyway.

[Homerun]

I see your point, but if CUPE was willing to compromise on the pension front, that compromise could be viewed as horse trading. AC did offer ACPA a 5% raise in year one--a response, I assume, to ACPA's willingness to be realistic on pensions. Nonetheless, I expect that it's now too late to make any such deal, and I don't hold much hope out that the tools at CUPE would know how to do it anyway.

The 5% raise in year 1 of the ACPA failed TA was not as it appeared. The raise was actually 2%, the other 3% was in exchange for a number of concessions in other areas of the agreement, such as aircraft groupings. There was no quid for the pension change.

ACPA and AC reached TA 1 completely outside of formal bargaining. It is now dead and buried and when Negots resume there will be no carry over from TA 1. New day, new airplane.

[mrlupin]

Interesting choice of quote Dagger,

"Brothers, what we do in life echoes in eternity" ? Ditto with labor relations.

AC isn't exactly a labor relations model... It actually seems highly efficient at pissing of it's labor forces and inefficient at mobilizing them.

As for the ruling, it doesn't seem enough to help AC through with it's pension problems. Taking away future employee pension plans does very little to address the present DB plan deficits. In 2014, AC's contribution holiday ends. The corporation will have to put money in the plan and it has said that it will not be able to. (CAW documentation) It is likely to come back for another round of attacks on the pension plan.

If the pension plan is the problem, then why is it that we keep kicking the can into the future? We keep hoping for the economy to spring back and for things to get back to the way they were... What if that does not happen? In 2003 pension issues caused CCAA (simplification), later AC had to extend the contribution holiday and now it's the new hires taking a hit. Why not try to fix the plan? All these last approaches are band aid solutions... they do not address the long term problems with the plan.

[Guest]

The CAW thinks they won. Having read a few articles I think it is a stalemate.

http://www.caw.ca/en/10611.htm

[dagger]

The CAW thinks they won. Having read a few articles I think it is a stalemate.

http://www.caw.ca/en/10611.htm

It looks like they are boasting that they gave the principal of no DC away in direct negotiations. For months, they said they referred the question to arbitration. Strikes me as the CAW trying to cover its tracks with a lot of bravura. But the principal has been abandoned.

[dagger]

Interesting choice of quote Dagger,

In 2014, AC's contribution holiday ends.

Except all of the unions so far have made subtle concessions on pensions. From the part DC plan for new hires, to the changes in early retirement points, etc, I've been told it will have a moderate impact on the amount of the solvency deficit to be made up come 2014.

[Tiburon]

Except all of the unions so far have made subtle concessions on pensions. From the part DC plan for new hires, to the changes in early retirement points, etc, I've been told it will have a moderate impact on the amount of the solvency deficit to be made up come 2014.

Come on dagger, no one believes that.

AC has amassed nearly 2 Billion dollars in losses in the last 5-6 years. This has been partially mitigated by asset sales and favorable currency fluctuations but there is little equity left.

There is a 2 Billion dollar pension solvency deficit due in the next year or so and the operating margins are near or below zero. This stock is worth about 1.60 today.

The company has one of the highest break even load factors in the industry and what about this LCC? why chase the low end of the market time and time again.

These contract concessions, that that have all been rejected anyway, don't even rise to the level of rearranging the deck chairs on the Titanic, it's more like throwing the ice cubes from the bar overboard in an attempt to stave off the inevitable.

No one I know in the business thinks they can survive much longer.

If you (or Bean) were tasked to devise a business plan, what would you do?

Reorganize under full bankruptcy ala Swissair? Start all over again with a new startup?

Tinkering around the edges is not an option for much longer.

Where is the path forward for AC?

What say you?

[mrlupin]

Except all of the unions so far have made subtle concessions on pensions. From the part DC plan for new hires, to the changes in early retirement points, etc, I've been told it will have a moderate impact on the amount of the solvency deficit to be made up come 2014.

Morning Dagger,

If I can frame this in a different light... (and correct me if I am wrong)

1)The DC plan for new hires is a way to reduce future obligations from the corporation to the pension plan. If there are no new entrants to the DB plan, then liabilities are limited to current employees and retirees.

2)Current employees keep the DB plan but get their benefits diluted due to changes in the plan.

-Age plus years of service now have to add up to 85,

-instead of best three years being used to calculate pension payout the company uses best five years effectively reducing the amount that will be paid out in the form of pensions.

3) current retirees carry on with no changes (indexing of the plan was removed some years ago)

Close?

[Guest]

Go to 1hour and 40 minutes of the pod cast, interesting interview. Right near the end.

http://proxy.autopod...2019%202011.mp3