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What's a "Loyalty Bonus"???????


Guest Nigol
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Guest Starman

Of course ALPA didn't turn down the pay increase (which, in my case was a lot less than 30%, since I was flying the DC10 at the time of the merger). When merging employees from two companies into one, you have to harmonize pay rates and the Canadian group snapped back to AC rates in giving up the concessionary reductions we had taken throughout the previous 8 years. In 1992, Canadian's pilot pay rates were higher than Air Canada's.

It would be very difficult to merge two groups under the lower pay scale of the smaller group. And I won't criticize anyone for getting what they can negotiate. Nor will I criticize original AC employees for taking the bonus offered to them during their negotiations except in the case of CUPE which, 2 years after the merger negotiated a bonus for one side of their membership. It's management's position which I question... after all, they are the ones writing the cheques... (on a line of credit, no less...)

However, there were many other cost savings in Canadian's Flt Ops Dept. which should have been a focus for management as the groups were merged. Less reserve coverage, blocking sim and check/training flights, fewer supervisory/check pilots per seat mile...these thing make a difference and would be making a difference to the bottom line now if these practices had been employed by the combined company.

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Guest Starman

Of course ALPA didn't turn down the pay increase (which, in my case was a lot less than 30%, since I was flying the DC10 at the time of the merger). When merging employees from two companies into one, you have to harmonize pay rates and the Canadian group snapped back to AC rates in giving up the concessionary reductions we had taken throughout the previous 8 years. In 1992, Canadian's pilot pay rates were higher than Air Canada's.

It would be very difficult to merge two groups under the lower pay scale of the smaller group. And I won't criticize anyone for getting what they can negotiate. Nor will I criticize original AC employees for taking the bonus offered to them during their negotiations except in the case of CUPE which, 3 years after the merger, negotiated a bonus for one side of their membership. It's management's position which I question... after all, they are the ones writing the cheques... (on a line of credit, no less...)

However, there were many other cost savings in Canadian's Flt Ops Dept. which should have been a focus for management as the groups were merged. Less reserve coverage, blocking sim and check/training flights, fewer supervisory/check pilots per seat mile...these thing make a difference and would be making a difference to the bottom line now if these practices had been employed by the combined company.

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No, I was not kidding about the vision some employees had of air canada. You can throw around all the silly numbers you want about the big U.S. carriers the reality is that the best UA/AA ever did was around 20 percent market share. Go back and re-read the post.
UA and the biggies did make some huge mistakes in bargaining. Again, I just think the loyality bonus was a big mistake. Give it back if you are now so concerned about the company.

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Bonuses also do not contribute to compounding at the next contract. In fact a bonus will do a lot to prevent your compensation from keeping pace with general inflation and the relative compensation of others in the economy at large.

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You asked a question, I proved you incorrect with some factual data. You wanted to know about contracts, I offered you factual data.

If you want to compare Canada and the US majors then ask the question. Please preface that question with a basic understanding of the differences in playing fields, including government interference, United States Participation Act etc etc..

Re: Loyalty bonus. After ALL this time you still have not demonstrated even a basic knowledge of the origin of this so called bonus. Care to take a stab at it?

Re ” Give it back if you are now so concerned about the company.” We will, and more.

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I have all the knowledge I need on the Air Can bonuses. Also, it was you that did some comparing to the US biggies. I just added information. The differences in playing fields between US/Canada. Are you talking how AC was created with all the Govt' protections in place and how over the years they were unable to comptete in a free market. AC has benifited from being a crown corp and must now face the music. Canjet, Westjet,Jestsgo,Skyservice,Air Trnasat are not going away. Air Can has an image problem and the customer will take a competitor most anytime over the perceived Post Office with wings. So, anyway its been pleasant having this debate. Cheers.

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Guest Wilber

Don't blame the employees. Along with buying back shares at a price he inflated, it is just part of the billion plus that Milton knocked off the bottom line to save his own job.

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Okay, I do understand that it is difficult to turn down a bonus. And I take back that I called the employees greedy. Having said that, has any body figured out what the hell Milton is all about. Where are all the BOD's? The shareholders? It is time for Milton to go.

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Perhaps especially difficult when your company is reporting record profits [the origin, the pilots in 2000] and especially when this profit is realized through the efforts and concessions of the employees. A little knowledge is a good thing zipped.

As for the flight attendants, they are entitled to start from the same place as all employee groups once the concessions begin.

As for Milton and the BOD, I will leave that discussion for another time.

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If I'm not mistaken, the first group to get a bonus was the pilots. We sorta got them through the back door. Our negotiations weren't going well and we had an arbitrator, (Bruce Outhouse), called in. The company had been offering us SAUs, (Share Appreciation Units), which amounted to a type of profit sharing. Outhouse asked the company what they estimated the cost of these SAUs to be. The company negotiators came up with a figure and Outhouse said ok, give that to them as a bonus instead of SAUs.

The point I am trying to make is that the company did not intentionally negotiate for bonuses. They rather had it foisted on them. Once one union got it then of course the other unions were bound to get it in their negotiations as well.

Mind you, a bonus is a one time thing where a 1% pay increase gets paid forever. (At least that was the theory until recently.)

Greg Robinson

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However, there were many other cost savings in Canadian's Flt Ops Dept. which should have been a focus for management as the groups were merged. Less reserve coverage, blocking sim and check/training flights, fewer supervisory/check pilots per seat mile...these thing make a difference and would be making a difference to the bottom line now if these practices had been employed by the combined company.

You've got your facts wrong Starman.
Jan 4, 2000 CAI had 16.77 pilots per a/c.
AC had 13.9 pilots per a/c.
These numbers come from the ALPA merger commitee. Also generally widebody a/c have more pilots per a/c due to a number of factors. 29.55% of AC's fleet was widebody compared to 24% of CAI's.
Who had the more productive flight ops department?

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You are not mistaken Greg.

The company negotiators valued the SAU offer at 50 million, that came to be the value of the ‘bonus’ [that is an incorrect term as it was part of the negotiation and mot a bonus of any sort, except that it was a bonus we got it at all given the performance of AC-T]. Now if I'm not mistaken, the issue price was 15 dollars [$7.50 sticks in my head as well for some reason] either way, I am not mistaken when I say this was a ploy by the company negotiators and also that the SAU grant would never have activated, it was worthless.

But you already knew all that didn't you zipped?

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You are not mistaken Greg.

The company negotiators valued the SAU offer at 50 million, that came to be the value of the ‘bonus’ [that is an incorrect term as it was part of the negotiation and not a bonus of any sort, except that it was a bonus we got it at all given the performance of AC-T].

Now if I'm not mistaken, the issue price was 15 dollars [$7.50 sticks in my head as well for some reason] either way, I am not mistaken when I say this was a ploy by the company negotiators and also that the SAU grant would never have activated, it was worthless.

But you already knew all that didn't you zipped?

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The strike price of the SAUs that we had previously received was 7.50. They expire this Dec and as I have never cashed them in I guess they are going to become worthless. C'est la vie.

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There was no real issue price, as a matter of fact, I'm not 100% sure what you mean.

Basically if you wanted to cash in your SAUs they took the value of the stock at the end of the month and gave you the amount that exceeded 7.50.

ie. If the stock was at 10.00 you received 2.50 for each SAU held. They held no value other than that and couldn't be sold or traded.

As I mentioned earlier they expire this Dec, so if you are like me it will take a miracle for them to have any value at all.

Thanks for the encouragement.

Greg

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The SAU issue we received and the bonus issue [we didn’t receive, at least not in SAUs] were two different issues.

By ‘issue price’ I meant the value with which the bonus SAUs [floated by the AC negotiators in 2000] were to be predicated on, which later went on to become what is now known as the “Loyalty Bonus” which of course had, and still has, nothing to do with loyalty or fighting off ONEX, as the myth goes...at all.

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If you are going to do a proper analysis you should include the daily aircraft utilization rate. Then look at the ratio comparing number pilots to hours flown or revenue passenger miles produced.
Don't be surprised when you find out the daily aircraft utilization rate at CP was nearly double that of AC.

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Guest Philip Aubin

Just for clarity, pretty much any SAU plan has a strike price equal to the share price at the time of the grant (or the contract in our case). I believe that the share price was floating at close to twenty dollars towards the end of negotations.

For instance, in 1998 we did accept an SAU plan when the stock price was around 7.50. Therefore the strike price for those grants were 7.50.

Philip Aubin
AC pilot

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