Guest lupin Posted April 8, 2003 Share Posted April 8, 2003 Have a look at the globe and mail's article http://www.globeandmail.com/servlet/story/RTGAM.20030408.rairc0408/BNStory/Business/?query=air+canada Milton staying seems to be part of GE capitals'condition for lending AC money,So for everyone hoping he was going to leave ,....think again.....Personally I'm very curious to see what his next move will be.We seem to be doing better then most of the yanks so maybe he is leading us in the right direction. Any comments? Lupin Link to comment Share on other sites More sharing options...
Guest lupin Posted April 8, 2003 Share Posted April 8, 2003 Air Canada's contract with GE Capital also includes an unusual condition, requiring that the airline's current management team remain in place. The agreement prohibits "a direct or indirect change in senior management of the borrower." Lupin Link to comment Share on other sites More sharing options...
Guest neo Posted April 8, 2003 Share Posted April 8, 2003 Very interesting. Those who have an axe to grind with our senior management should take note. Had GE not provided operating capital to Air Canada to cover us in this crisis, I can't imagine how ugly things might look. GE Capital is also the largest (I believe) and most successful financial agency of its kind in the world. They do not suffer fools with their money. I'd suggest that GE's belief in our current management's abilities is at least part of what is saving all of us. neo Link to comment Share on other sites More sharing options...
dagger Posted April 8, 2003 Share Posted April 8, 2003 I don't want to praise GE Capital too much, but they were a key player in the 2000 restructuring of Canadian's debt. The biggest favor they have done is to sideline the government. Those vultures were waiting to get their hooks into this issue for political gain. You can bet they would have crapped all over AC, mocked management, crowed about all the changes they would have to make, about how tough they were going to be so that the taxpayer wouldn't be on the hook. And in the end, they would have bungled it. As Andrew Coyne suggested in a recent column, the New air Canada would be back in CCAA a year or two from now. Without the government., I would bet AC does a much better job restructuring. It won't have Collenette lecturing and hectoring AC to go after the business market - what's left of it - and get out of serving the leisure market. It won't have Clive Beddoe as one of its 31 million new shareholders telling it to do "what it does best", namely serve a now non-existant high end market. Instead, we are seeing an influx of professional and smart money - Texas Pacific, the Ontario Teachers' Pension Fund, Onex, GE Capital. The haircuts are well under way, with CIBC being required to pay market rates for its Aeroplan points. The lessors are next. Those talks are well under way, and you can bet lead lessors like GE Capital will virtually assure a haircut for the whole group. They know what has to be done in the current environment to keep their assets flying. The airports and NavCan have been given a haircut on existing fees. Labor will have to give - no surprise for anyone on this forum. The government is under a great deal of pressure to help the industry with lower airport rents and taxes. Link to comment Share on other sites More sharing options...
Seeker Posted April 8, 2003 Share Posted April 8, 2003 Yes, but what we really want to know is: Where are the new RJ's going? Predictions? Link to comment Share on other sites More sharing options...
Guest sleveen Posted April 8, 2003 Share Posted April 8, 2003 Would love to see them at jazz but dont think that will happen, history has a funny way of repeating itself Link to comment Share on other sites More sharing options...
Guest Nigol Posted April 8, 2003 Share Posted April 8, 2003 The new RJs will go to whomever can fly them cheapest. So far with our present collective agreement at JAZZ we are not going to be flying them.(unless we give wage & benefit concessions) Link to comment Share on other sites More sharing options...
dagger Posted April 8, 2003 Share Posted April 8, 2003 You can't assume much until a couple pieces of the puzzle come into focus. Obviously, there is the ACPA and ALPA contracts and how those negotiations play out. What was a clear Jazz cost advantage before CCAA may be narrowed in the negotiations ahead. That's not just a wage issue, but a question of work rules and flexibility. For sake of argument, ACPA might offer a special package of rules and compensation to keep all regional jets the way they agreed to special terms for Zip. Also, there is the question of Jazz ownership. Jazz is on the market. If Jazz was attracting some interest before CCAA, it will be more attractive on two levels after a restructuring. If AC is seen as viable for the long term, then it makes an investment in Jazz more palatable for would-be owners as AC would continue to buy most or all of Jazz's flying. And any cost savings wrung out of Jazz also improve its operations. Even government concessions on rent and fees would improve Jazz's outlook. Lowering the fee/surcharge add-on would be stimulative for short-haul travel. Coming out of CCAA, I would also expect Air Canada to consider an IPO structure based on the income trust. Now that Jazz is flying as power by the hour (since April 1), such a trust structure is feasible. So I suspect Air Canada can't even answer the question of who gets what yet. Link to comment Share on other sites More sharing options...
Seeker Posted April 8, 2003 Share Posted April 8, 2003 It looks like a Mexican stand-off. If you assume that both groups would be willing to take considerable cuts to pay rates in order to secure the work that means that other factors will come into play. ACPA could offer to give concessions in the flying they already do, a sort of package deal but it doesn't seem like they have much of a postion to bargain from. The advantage to having Jazz do the work comes from the fact that all their support staff is cheaper and there is nothing that ACPA can do about this. Link to comment Share on other sites More sharing options...
Guest Rob Assaf Posted April 8, 2003 Share Posted April 8, 2003 Dagger, Reading your opinion above, would it not be assumed (bad word I know) that in order to make Jazz more marketable post CCAA that Scope would have to be addressed. Understand that I am not advocating removal of scope, just a more practical application. Under present ACPA contract language, which I realize is going to be subject to review, Jazz would not be as attractive as it should be in order to attract a reasonable dollar value. Thoughts? Rob Assaf Link to comment Share on other sites More sharing options...
dagger Posted April 8, 2003 Share Posted April 8, 2003 I think the short answer to your first question is not necessarily. You market Jazz to investors as a regional feeder, with a favorable contractual arrangement with Air Canada. If Jazz flies 90 seaters does not make it more attractive to Jazz investors. And AC also has to consider what to do with ACPA pilots. In theory you could have Jazz pilots fly 747s, and they would do it more cheaply under their current contract, but that is not in the cards. In the end, AC will bargain hard with all labor groups but will want to leave all labor groups - or at least majorities in all groups - believing that some good can come out of this process. Also, it stands to reason that if AC is going to spin off Jazz, it wouldn't want to radically increase its dependence on Jazz. So there are a lot of issues to balance here. Link to comment Share on other sites More sharing options...
Guest Dick Dastardly Posted April 8, 2003 Share Posted April 8, 2003 Having spent 11 years at the feeder followed by 5 at the mainline (16 total), I'd be a little miffed if I end up on the street because Jazz operates all the RJ's. That said, I can certainly appreciate the concerns of Jazz pilots if the reverse were true. It seems that we need to create some middle ground where time from both divisions is recognized so that neither group gets overly impacted. Link to comment Share on other sites More sharing options...
Guest sleveen Posted April 8, 2003 Share Posted April 8, 2003 I'll put my money on the first part of your response, should hear the whipsaw being pulled over any day now, TIMBER!!!! Link to comment Share on other sites More sharing options...
Guest sleveen Posted April 8, 2003 Share Posted April 8, 2003 You don't say Dick. Link to comment Share on other sites More sharing options...
Guest Doc Posted April 8, 2003 Share Posted April 8, 2003 I would also guess that AC will farm regional flying to the best bidder. Jazz, after CCAA and reduction could be sold as is with its reduced route structure governed by the/a commercial agreement. For new bases and routes it would make sense to find the best bidder, with the equipment they want. At the same time they could enter modified agreements where the Tier carrier would risk share with AC to some degree (or completely), making it cheaper for AC to feed mainline. It is just a guess but Jazz's role will likely change dramatically unless it can bid effectively against other bidders--should AC follow that route. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.