AC in dire straits

[Guest ulamo]

Air Canada says it's in dire straits

By KEITH McARTHUR

From Tuesday's Globe and Mail

E-mail this Article

Print this Article

Advertisement

Air Canada is in dire financial straits and urgently needs to slash its labour costs, suggests a document prepared by the airline for its unions.

The document sums up Air Canada's difficulties in point form: "Revenue picture isn't getting any better, uncontrollable costs keep increasing. Going through too much cash."

It suggests that most large U.S. airlines — also hastening to slash costs — don't face the immediate pressure Air Canada does, because most "have deeper pockets."

"We all have to share the same sense of urgency . . .," says the document, which was presented to union leaders last month. "We must also deal with the immediacy of our current situation; we cannot afford to wait."

Air Canada has asked its unions to help it slash labour costs by about $650-million or more than 20 per cent, to compete with low-cost rivals such as Calgary-based WestJet Airlines Ltd.

On Monday, Air Canada was scheduled to meet representatives of the Canadian Union of Public Employees, which has said it will not give Air Canada the concessions it is asking for.

The document — "The model is broken . . . Dealing with the new reality" — was given to union heads last month as the airline began its push for concessions. It points out that Air Canada's cash reserves have fallen 50 per cent in just one year, noting that Air Canada has fewer assets left to sell. In 1997, Air Canada owned 51 per cent of its fleet. By 2003, that ratio has fallen to 4 per cent.

And the document says Air Canada must pay back $373-million in debt in 2003, and $300-million to $700-million "every year for the next several years." But in the past 11 years, Air Canada has accumulated just $193-million from operations.

"We must generate cash from running this business," it says.

The document was presented to unions the day Air Canada unveiled its fourth-quarter results. But the urgency of the presentation differed in tone from a conference call on the same day with analysts and the media.

Asked in the public conference call if Air Canada is facing a cash crunch, president and chief executive officer Robert Milton pointed out that the airline had $2.5-billion in assets that could easily be sold to raise cash.

He said Air Canada needs to reduce labour costs to compete with low-cost carriers, but emphasized that the airline was not facing an urgent financial crisis.

"It's a lousy environment in the airline industry in North America, and Air Canada is doing better than anybody else, and I intend for us to continue to do that," he said.

Asked whether the airline had hired bankruptcy lawyers — like some of its U.S. counterparts — Mr. Milton suggested Air Canada was much better off than its U.S. peers because it is losing less money.

"We're playing in a completely different game," he said.

"The model is broken" document lays out a three-pronged plan for dealing with Air Canada's problem.

First, it says, Air Canada must "dramatically" improve productivity and lower its costs.

Second, the airline must lobby the federal government to lower the fees charged by airports and the air traffic control system.

Third, Air Canada will "push further into the low-fare market" using its new lower cost structure.

"The low-cost carriers are eating our lunch . . .," the document states. "We need to become a low-cost carrier. We can't make this work without a cost-competitive structure."

One chart in the document shows that Air Canada's productivity is "well below" most U.S. airlines — except for the two that have filed for Chapter 11 bankruptcy protection.

CUPE, which represents the company's flight attendants, has rejected Air Canada's plea for concessions.

The Canadian Auto Workers union, which represents customer sales and service workers, say they will consider opening their contract to change work rules, but will not accept pay cuts or layoffs.

And the unions representing machinists and pilots are conducting financial analyses to determine how bad the situation is before agreeing to concessions.

[Guest WTFO]

Ain't that just like AC pilots.

" Prove your loosing money then we'll talk "

What you don't believe it?

By the time they feel "helping out" is the right thing to do to save their jobs, it'll be too late.

Go ahead, I dare you, I double dare you to string out your current wages as long as you can.

WTFO !!

[dozerboy]

Hey WTFO...GFYO!!!

[Guest Panama Jack]

WTFO wrote:

""Ain't that just like AC pilots.

" Prove your loosing money then we'll talk "

What you don't believe it? "


Everybody does believe it. But before you ask employees to blindly take a wage cut it is prudent to ascertain whether the Company is wasting money elsewhere and asking families to subsidize that waste.

If you saw all sorts of waste going on at your company, and they came to you and said "we need to cut your wages to stay in business" you would also probably say-- "hold on just a minute-- will this actually solve the problem or am I just cannon fodder?"

As I read it, the Pilot and Mechanic response is the most reasonable-- they are willing to consider it but they want to understand the issues. It's called "taking ownership" of the problem. As for some other groups, "no-way, never" is arrogant and stubborn. Perhaps they are trying to milk all they can before the cow dies?

I think you have a chip on your shoulder WTFO against red team pilots. Too bad you have this problem.

[Guest Tri-spool]

WTFO,

If you have nothing intelligent to post with some constructive criticism vs destructive, childish comments, please for God's sake don't post. All you do is show your infantile age, and irritate everyone else on the forum.

Cheers!

[Guest WTFO]

Good Post Panama Jack.
Dispite my cheeky post earlier, I totally agree with you.

Dozerboy - That was hilarious, a good reply.

Somehow from all the experience I have had with a pilots union, I doubt that the pilots will take a wage cut.

The power company usually has to threaten to cut the lights before a pilot union group will budge.

WTFO !!
WTFO

[Guest Panama Jack]

Hey WTFO,

You just showed you are a true gentleman, and have made me respect you.

Our industry is going through very challenging times. I don't know who you fly with, but I have a great deal of respect for my fellow professionals at the different companies. I do have, for example, an amazing amount of respect for my colleagues at WestJet. I think they run an incredibly sharp operation and were hired because they are great individuals, and I like to think that I was also hired for the same reason at my company.

As pilots, I truly believe that we all share more in common than we have differences.

I find it sad and immature when we see pilots of one company sniping another. For me, it hits a nerve. Most of us applied to all the companies here in Canada (yup, all 4 of them) and probably took the first one that came along. Getting chosen by one was tough enough as it was-- they don't all exactly send you job offers, and I could have just as easily been a pilot for Brand "X" Airlines as Brand "Y" Airlines. We look to get provide the best we can for ourselves, in return for our career sacrifices, and our families. We also try to do our part for our company and ask that they take care of us, in turn.

God knows, maybe one day I'll end up at your airline. But behind the different uniform, I am still a professional pilot, just like you.

If we do meet up, I owe you a brew.

[Guest WTFO]

Another good post.

WTFO