Star Article

[Guest GDR]

RICK EGLINTON/TORONTO STAR

Mr.Justice Warren Winkler is seen as having brilliance, good humour and winning warmth.

Judge's plain speaking saved Air Canada

Justice Winkler man on a mission

'Brought reason' to the negotiations

SUSAN PIGG

BUSINESS REPORTER

Mr. Justice Warren Winkler is a man on a mission — to help save Air Canada from bankruptcy.

So it's no surprise that Winkler was stunned recently when the airline's chief executive balked at his request to meet in Toronto —just days into critical bargaining for $1 billion in labour concessions. Robert Milton was concerned that it might be tough to get a flight out of Montreal on such short notice.

"You just grounded 40 planes," Winkler told the beleaguered airline boss. "Why don't you take one of those?"

The Ontario Superior Court justice, who is being credited with brokering the tentative deal with Air Canada's pilots that may prove to be the key to survival for the country's national carrier, is being lauded as a man of quiet brilliance, good humour and winning warmth.

And it's "Wink" Winkler's tough, no-nonsense approach — usually delivered with a light touch — that both union bosses and management credit with getting the airline through one of the riskiest parts of the restructuring process, major job cuts and work rule changes from its 40,000 employees.

Milton praised Winkler yesterday for conducting "an extremely disciplined and focused mediation process," with the nine unions at Air Canada and its low-cost regional carrier Jazz.

"I recognize what a difficult and unsettling time this has been for all of Air Canada's employees," said Milton of the labour negotiations that became log-jammed Friday — bringing the airline perilously close to bankruptcy — as mainline pilots protested contracts that would see Jazz add planes and Air Canada lose them.

"A successful ratification of all the tentative agreements will establish the foundation to move forward (negotiating concessions with) lessors, lenders, key suppliers and other stakeholders," he said in a statement after yesterday's tentative deal with the pilots, reached almost three hours after a court-imposed Saturday midnight deadline.

Under the agreement, yet to be ratified by Air Canada's 3,100 pilots, the carrier's complex restructuring will move ahead while its warring pilots' unions turn to an arbitrator who will decide which pilots will fly which planes when the airline emerges from bankruptcy protection months from now.

"At some point we made the decision that, for the sake of all the employees at Air Canada, it was better to get on with this deal and get on with life than fight a fight that we really felt strongly about," said Captain Don Johnson, president of the Air Canada Pilots Association.

"We did what we had to do."

Air Canada's goal is to use lower-paid Jazz pilots — many of whom make less than pilots at profitable Calgary-based WestJet Airlines — as the backbone of a new discount carrier that Air Canada hopes will turn its shattered fortunes around.

As the clock ticked past the midnight deadline for the pilots, the airline's lone holdout union, fears grew that the logjam couldn't be broken and the matter would return to court at 8 a.m. yesterday where Mr. Justice James Farley — or the federal government — would impose a deal aimed at stabilizing the struggling national carrier.

But by 2:30 a.m. yesterday — after the pilots agreed to Winkler's plan for arbitration — the Air Canada pilots agreed to a deal that reportedly includes about $250 million a year in concessions, and just 300 instead of the proposed 800 layoffs, 14 to 16 per cent pay cuts, more time in the cockpit and less vacation time and benefits.

And the company has to get the agreement of the Air Canada pilots' union before it can transfer any aircraft with more than 55 seats to Jazz — despite an earlier agreement with the Jazz pilots to give them that work.

Johnson refused to discuss details until members have seen the offer.

The final deals provide better protections for the Air Canada pilots who would otherwise have had fewer jobs and less bargaining clout going forward, while the Jazz pilots could have had a major stake flying regional jets, including new-generation, 110-seat planes that eventually will become a mainstay at the new Air Canada.

"Air Canada isn't out of the woods yet. This is a pivotal step, but it's just a first step," says Winkler, who was appointed by Farley May 9 to act as a buffer and broker between Air Canada and its unions, renowned for a mutual lack of respect that has worsened considerably since the difficult merger with Canadian Airlines and the carrier's worsening financial tailspin.

Air Canada was within "minutes" of "cratering" as the pilot talks dragged on, putting vital cost cutting at risk, says Winkler.

"This was a crisis of national proportions because of the importance of Air Canada to the whole Canadian fibre. Air Canada is an institution.

"People were coming up to me saying, `My brother in Moncton works for Air Canada.' `My sister works for Air Canada in Vancouver.' `Don't let this thing go down.'"

For the past three weeks, Winkler's home away from home has been the 616-square-foot Panorama Suite on the 32nd floor of the downtown Toronto Hilton hotel — negotiation central — where all the parties but the mainline pilots have been meeting since Farley ordered them into fast-track talks May 9 out of fear the airline's financial situation was growing perilous.

He's spent hours lounging in the suite's comfy chairs, shooting the breeze, sharing a few laughs and winning the confidence of tough-talking union bosses and nervous Air Canada executives who would kibitz over a game of pool, a little TV or marvel at the stunning view of Toronto.

During the last nine days, Winkler says, he's been home for just 15 minutes. At the peak of the crisis he was almost relieved to watch people rushing down University Ave. — through the glass walls of the hotel's scenic elevators — and would think to himself, "Ah, the rest of the world is okay."

Winkler projected an "air of confidence that made everyone feel the immense challenge could be met," says Kevin Howlett, Air Canada's vice-president of labour relations. "He was able to cut through a lot of the emotions and frame the issues in absolute business terms."

Pamela Sachs, head of the flight attendants' union, the Canadian Union of Public Employees, almost gushes when talking about Winkler.

She credits him with moving her union's talks with the company light years, within just a few hours.

He gained the trust of union officials quickly for a number of reasons, she says. "He's straight as an arrow;" and he told the company to back off on any attempts to dilute pension plans and reined in corporate executives who saw the bankruptcy protection process as their best chance to finally gut 66 years of union contracts.

"I told Air Canada I'm not going to ask employees to give up 1 more cent than they have to. And I'm not going to ask them to give up their pensions. Period," Winkler says.

"I know what that would have done to my family if my father lost his pension.

He would have been helpless."

He warned the unions to be reasonable and not wait for a government bailout that wasn't coming.

Managers "couldn't get their heads around" his insistence that pensions are "a sacred trust," says Winkler.

But he held firm for more than a week as executives tried again and again to win pension concessions.

But it was the directive to Milton and chief restructuring chief Calin Rovinescu May 13 that delights some union leaders most.

Within just days of beginning talks with the unions at Farley's direction, Winkler says he could see that management had to get a better grip on the exact concessions it needed.

With the Air Canada board due to meet that evening to approve the $350 million Aeroplan deal with the Canadian Imperial Bank of Commerce, Winkler asked for Milton and Rovinescu, the former Stikeman Elliott mergers and acquisition strategist who's seen as leading the charge to crush union contracts, to meet him at the Royal York.

Getting to Toronto would be tough, said Milton, citing previous commitments.

Winkler insisted they needed to talk and pressed ahead despite Milton's suggestion that maybe just one of them could make the trip, or that getting a flight might be a problem.

When the two arrived at the Royal York, Winkler had one simple message:

"I don't have time for you guys to go on a `wants' hunt."

He urged them to draw up a new list of concessions "based on need, not greed" and halted talks for a few days.

While there were some glitches and logjams along the way to getting agreements with Air Canada's nine unions, all had tentative deals within hours of last Tuesday's court-ordered deadline — except the mainline pilots.

They were outraged by what they saw as an unfair attack — largely orchestrated, they believe, by Rovinescu — to severely weaken their powerful union by pitting its members against their archrivals at Jazz.

"There's a history between these two pilot groups —

I was well aware of that — and it coloured everything," says Winkler.

The animosities go back a decade. For much of that time the mainline pilots have tried to maintain a stranglehold on virtually all jet flying, but have conceded some flying on 50-seater regional jets.

The Jazz pilots, who feel they've always been treated like second-class citizens, have been pushing for more and bigger regional jets.

The discussions were heated, says Winkler, over what Air Canada pilots president Johnson sees as less a fight about cost-cutting than an attempt to weaken the power of the mainline pilots.

The Jazz pilots were trying to contain their glee at the chance to win jobs at the expense of the mainline pilots, who they believe "have had a boot to our necks for years," in the words of one veteran Jazz pilot.

But as the talks went into Wednesday, Thursday, then Friday with almost no progress, Winkler says he realized something drastic had to be done.

He rounded up key pilot leaders Saturday night — with just five hours to go to the deadline — and, with no forewarning, had them all go to the suite's boardroom.

It was the first time, through the whole process, that they'd met face to face.

"I'm a believer that the way to resolve disputes is to have the parties face to face. You get them talking to each other," Winkler says.

But by 10 p.m., the strategy was failing miserably and the two sides were still "miles apart" and digging in their heels even deeper.

"Tense was the understatement of the three weeks," he says with a wry smile.

"I decided to dig deep down into the reservoir of creativity and come up with something," and within the hour asked the leaders to consider putting the issue of who flies what planes before an impartial third party for resolution when the new planes start joining the fleet.

The Air Canada pilots credit Winkler with questioning the logic of some of the company's plans and say he stopped the negotiations cold when he asked what was going to happen to the 250 Air Canada pilots who would otherwise fly the planes that might be transferred to Jazz.

"Apparently the room went quiet because the answer was obvious — they'd be walking the streets," said one Air Canada pilot who's been briefed on the talks. "Winkler brought reason to the talks."

The Air Canada pilots wouldn't back down on protecting their flying, out of fear the mainline airline could be down to just 132 aircraft and Jazz up to well over 200 from its current 93 by 2006.

As the deadline came and went, some anxious union leaders — fearful the lack of a pilots' deal could cause their deals to fall apart — gathered in the lobby with reporters, awaiting word of a deal.

"After midnight we still hadn't gotten agreement on many issues," says Johnson.

"It was close. But it just needed a little movement, and we supplied that."

That came about at 2:30 a.m. Farley decided to waive a court appearance tentatively scheduled for 8 a.m.

"In our view, (the flying issue) is still unresolved," says Johnson, fearing it could get bogged down endlessly in the arbitration process.

But Winkler, the consummate optimist, disagrees.

"I have to be positive all the time, because I am always looking for solutions," he says, explaining the challenge of his decades spent on complex mediations.

"I know there are going to be critical periods when things will be dismal. You always have those periods.

"But when you learn to expect them, you know they're going to come, you know how to deal with them.

"I like these people," Winkler says of the Air Canada talks.

"I liked them right from the start.