Why AC is Doomed......

[Guest WA777]

As I have said many times...the monotonous union position continues to show that there is absolutely no understanding of what is happening.....Here is a recent "intelligent" quote......

CAW's Gary Fane...

"We were willing to help them based on need, but these proposals are based on greed," said Gary Fane, head of the transportation unit of the Canadian Auto Workers Union, which represents ticket and reservations staff at the airline.

The judge will eventually finish the job for them....sad...sad...sad

Here is a link to one of numerous articles:

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1051643352821&call_pageid=968332188492&col=968793972154

[LongTimer V]

How about bad management,and until their gone nothing will change.

[Guest Airmail]

Is this the same Gary Fane that said:

"You'd better put it into bankruptcy protection before you ask us to give it any money."

- National Post, March 23

I wonder what Fane was thinking when he encouraged a CCAA filing?

Eat your words Gary Fane!

[Guest Airmail]

This management goes and so does the $1.05 billion in GE DIP financing which mean no money to pay for salaries, fuel, etc.

[Guest Airmail]

This management goes and so does the $1.05 billion in GE DIP financing which mean no money to pay for salaries, fuel, etc.

[Guest Airmail]

This management goes and so does the $1.05 billion in GE DIP financing which mean no money to pay for salaries, fuel, etc.

[E-HANDLE]

I don't think Gary Fane needs to eat any words at all.

AC was asking for $650 million in wage and working condition reductions, and I remember Mr. Milton saying that they had made all the progress they could on all other fronts. Now AC is saying it needs to cut $2.4 billion.

Given AC's financial position, would CCAA not been inevitable? And had the unions taken the cuts before CCAA, would they not be asked again for more?

[dragon]

” I wonder what Fane was thinking when he encouraged a CCAA filing?”

Employees at Air Canada, represented by their unions, are obviously in no mood to accept sole responsibility for the financial mess the corporation finds themselves in – nor should they. As with the FA union at American, AC employees are reacting to a stimuli, with respect to the feelings toward our management. If you must continue to blame employees then go ahead. I believe you will have company, as the current regime seems very happy to try and unload the responsibility onto the unions. Remember, for every action there is an equal and opposite reaction..

Another thing. Employees, by and large, do not trust Milton. CCAA was the only way to force accountability onto a management team still, even on the eve of a CCAA filing, resisting protocol with respect to financial documents, including employee pension information.

Today, we read our National newspapers, which are inundated with management initiated, AC Union bashing. This is the tried and true, predictable strategy of AC. As I alluded, there will be a reaction and it will not be the one Milton or Rovinescu are hoping for.

Finally, despite what some say, there is a feeling amongst employees that AC will not be allowed to fail. Yes it will, no it won’t. who knows for sure. Again, I believe that employees will get on board only after others, more responsible for the current situation, are held accountable, both publicly and financially.

Gary Fane will not be eating anything different for dinner tonight than he would have a month ago.

[LongTimer V]

[Guest Airmail]

Actually...AC was seeking $650 million in labour concessions prior to April 1 and it must now seek $770 million -- so which is worse?

With $650 million in labour savings the company said it would go to other suppliers to get their own haircuts in a cooperative way -- now under CCAA, the creditors have a say in the employees' future. So which is worse?

Fane wanted CCAA and he got it.

CCAA = $2.4 billion in improvements being demanded not just by management but by the creditors as well.

[Guest Airmail]

Exactly how has CCAA injected new accountability on management that it didn't already have prior? If anything, CCAA has only proven that the only people at AC the financial community (GE, TPG, CIBC, etc) have any confidence in is the Milton management team. Whether labour likes it or not, that's simply the reality and if you have any doubts, read the court filings on the GE DIP financing or the recent comments by TPG regarding AC.

If the "spin" you've accepted is that CCAA is somehow a good thing or was some brilliant strategic move to push management around then no wonder you don't have a problem with Fane et al calling for a CCAA filing in the first place.

CCAA is a painful process for employees. If you have any doubts, just ask any employee at United or USAirways (where the judge didn't even have to throw out collective agreements due to the pressure creditors bring to the situation and the demands they and bondholders make on labour to take significant haircuts). CCAA was avoidable and management tried to avoid it.

But the issue now is that CCAA is a reality so haircuts will be required all around -- for Fane to now balk at the new target is simply disingenuous on his part.

Fane asked for it now he has to live with it because his only alternative is liquidation and any AC employee who somehow thinks that a cheque will come flying in from YOW in the event of liquidation is truly deluding himself because any such funding would come with so many strings attached -- such as no domestic AC routes -- that what will be left will only require a fraction of the number of employees today. So even under that scenario, the pain will be severe (much more severe than a private sector restructuring). Just how could the government justify putting anything on the table which could be perceived as subsidizing competition against WJ and others? Makes no political sense whatsoever.

So the bravado from Fane sounds great but accomplishes nothing and if he maintains his stance, the CAW members had better pray that they still have jobs and pensions when it's all over.

[Guest ACguy]

Indeed, Milton is a savy individual when it comes to saving himself and management team. A poison pill has been utilized before to save his hide along with his cronies. Undoubtedly, it will work once again. Why? The government loves the hands-off approach with little publicity in it for them. In so far as to address the brilliance or masterminded plans that the Milton team has rendered is questionable. I applaud the quick thinking and "blunt" truths regarding an industry in change. Many alternatives have been implemented by both management and joe blow at the bottom of the pile. However, one must ask weather the deal in 99 to offer such inflated prices for Air Canada and Canadian shares along with the relatively small haircut the former Canadian bonderholders realized. Combine this with 10 year poison pills with at least three companies ie CARA CIBC.....not too mention the "labour peace" they needed to realize the savings....and asked for extensive contracts with longterm job guarantees. Add that all up with governmental agreements for service to small communities and fare regulation, oh and lets not forget the assumed debt really sounds like a good move in hindsight doesn't it? Why not have let ONEX and AMR buy AC or some other bidder? cause he didn't work for them and would show executive weakness and hurt his intrensic value on the market of CEO's and Board of Directors employement pool. Now mix with the absence of trust created between all parties (EG Sign a contract with FAs not 3 months ago promising a bonus knowing full well it would not happen), a little war in the Gulf, SARs, 9-11 and the result is obvious. Your right, all the employees should work for free just to service the 13 billion in dept interest payments. Its all about what the workers have done. Remember, on every collective agreement is the signature of every CEO of Air Canada along with management types. Is there no accountability for their signatures and bargining?

[dagger]

Since the CCAA filing, I have seen no evidence of union-bashing. For one thing, the judge isn't going to stand for it. I have seen signs of bad faith on the unions' part. So if you need to keep looking for scapegoats, fine, but it's not going to secure your future employment. You know a deal has to be made, and the sooner your unions get about negotiating it, the better for you.

[dozerboy]

Calin...is that you?

[Guest Airmail]

[Guest Skirt]

LMFAO! I was thinking the same thing Dozer!

[Guest neo]

"Given AC's financial position, would CCAA not been inevitable?"

No. AC is in CCAA to temporarily protect it from creditors foreclosing on debt. If, prior to CCAA, you present a deal to the creditors showing a viable business plan and a way to repay the debt, they don't foreclose.

"And had the unions taken the cuts before CCAA, would they not be asked again for more?"

This thinking is illogical; the two issues do not have a cause and effect in the way you suggest. There is a point at which employee concessions will satisfy the creditors. If, by negotiating, you reach that point PRIOR to CCAA, then you save everyone... employees, owners and creditors the expense of going through CCAA. But if you do not reach a negotiated settlement prior to CCAA, why in the world would you expect to have to give LESS afterwards?

As near as I can tell, our unions squandered our negotiating leverage prior to CCAA. To imagine that you're going to give less by putting the company in bankruptcy protection is a strategy that completely escapes my understanding.

neo

[dozerboy]

Neo,

I think that most AC pilots that I have talked to, although respecting your right to fair speech, are really tired of your constant ACPA bashing.

Good God Man, you had better be running for some ACPA leadership next round.

[dozerboy]

Calin...is that you?

[zipped]

My money is on Fane. He has more airlines experience than Milton has in his little pinky.

[Guest ACguy]

The real question you must ask yourself is why was CCAA so quick? The pension shortcomings versus cash on hand. There was not a concerted effort by management to "negotiate" prior to the CCAA. Look at AMR, they have exhuasted the 2359 deadline time and time again. This would lead me to believe that we are exactly where Milton wants to be. Why? The stock would never pay dividends again to shareholders under current MASSIVE debt interest payments. There was little good faith in the bargining process prior to CCAA. The spin doctors keep highlighting the labour costs which were fixed and have been for years...all the while the debt kept growing into an out of control monster>>>>That my good man is why we are in CCAA and now Milton and Calin can address the debt. By chance, the opportunity to bash some heads and beat labour costs down.

[dragon]

dagger,

I was not looking for any scapegoats, I was simply sharing some observations, through my eyes. The sooner EVERYONE; management, government, creditors, stakeholders and employees get about negotiating it the better for us..

To separate employees, to publicly spank unions will not accelerate the desires outcome, IMO.

About your union bashing comment, that one was way too easy dagger, for many many more, search industry news on the ACPA website, the first two weeks of April.

Air Canada has filed for bankruptcy protection before a Toronto court.

Robert Milton, chief executive officer, was expected to announce the filing today. A court hearing was scheduled for 1 p.m. EST.

Globe and Mail, April 01, 2003

“Chief executive Robert Milton said travellers and suppliers will be protected, but he had bitter words for the unions, heaping most of the blame on them for the mess the company finds itself in.

With the exception of the Canadian Auto Workers, Milton said the other unions failed to take seriously his call in February to reduce labour costs by $650 million a year. Eleventh-hour talks Monday to strike deals with the pilots union and others failed.

"I'm convinced the vast majority of Air Canada's employees recognize that the world has changed," Milton said in a conference call.

"It is imperative that the union leadership, who have not been able to comprehend the need for change, get with the program."

Toronto Star April 01, 2003

Milton went further during a conference call, accusing some union leaders of "burying their heads in the sand" given the hard times the airline industry has faced.

Totonto Star April 02, 2003

Air Canada's chief executive officer, Robert Milton, continued to put the onus squarely on the unions to help reduce labour costs.

He described the costs as "simply untenable in the new airline environment."

"There cannot be a successful restructuring without a radical, wholesale revision to work rules and changes under the collective agreements governing the company's 31,000 unionized employees," Mr. Milton said yesterday.

Globe and Mail April 03, 2003

I guess Justice Farley will stand for it after all.

[Guest neo]

Sorry ACGuy, I can't agree with that perspective. Mr. Milton personally asked the employees, through their unions, to negotiate and he asked the unions to do it "FAST": his emphasis, not mine. That was February 6th. You cannot characterize the response from our unions as anything other than slow, at best.

CCAA happened because our company ran out of money to pay creditors; not because our management decided to stick it to the unions. When you run out of money to pay your debts, what other choice do you have? The reason we ran out of money so abruptly was because our advance bookings evaporated once war broke out. You will recall that advance bookings are included in an airline's "cash on hand."

You might be willing to believe that being in CCAA is exactly where Mr. Milton wants to be, but what rational person would ever want to be there, given any decent alternative? The alternative for employees was to negotiate outside of CCAA, and use the leverage of staying out to enhance our negotiating position. Now that shareholders will probably be wiped out, and that bond and credit holders will take a court-imposed haircut, what leverage do we have now?

Our unions made no serious attempts to negotiate until it was too late; indeed, most of them practically DARED Mr. Milton to take us into CCAA. Once he did, the predictable rationalizations are all being trotted out: we would have gone to CCAA anyway; we'd just have to take another cut in CCAA; the company didn't want to negotiate; it was all a big conjob; etc, etc. But those rationalizations don't wash, no matter how hard you spin 'em.

Debt can be addressed in any number of ways, but it must be addressed. When our employees turned their backs on Mr. Milton's request to negotiate, the die was cast. When exactly it would be thrown simply depended on how fast the cash was burned. And that, under the circumstances, was not a predictable rate but subject to events over which none of us had control. However, no one but a fool would have thought that it wasn't a realistic possibility.

We, the employees, had an opportunity to negotiate outside of CCAA, but we did not take it. It's our right to make a choice like that, to be sure, but it's also our responsibility to acknowledge and own up to our part in this situation.

Best wishes,

neo

[Guest neo]

Sorry ACGuy, I can't agree with that perspective. Mr. Milton personally asked the employees, through their unions, to negotiate and he asked the unions to do it "FAST": his emphasis, not mine. That was February 6th. You cannot characterize the response from our unions as anything other than slow, at best.

CCAA happened because our company ran out of money to pay creditors; not because our management decided to stick it to the unions. When you run out of money to pay your debts, what other choice do you have? The reason we ran out of money so abruptly was because our advance bookings evaporated once war broke out. You will recall that advance bookings are included in an airline's "cash on hand." The pension issue was simply one more straw that broke the camel's back. Do you imagine that the Federal regulator of pensions would force AC into CCAA simply to get them to make up an underfunded pension? Of course not Under other circumstances, AC would have simply negotiated with the regulator to make up the shortfall over time.

You might be willing to believe that being in CCAA is exactly where Mr. Milton wants to be, but what rational person would ever want to be there, given any decent alternative? The alternative for employees was to negotiate outside of CCAA, and use the leverage of staying out to enhance our negotiating position. Now that shareholders will probably be wiped out, and that bond and credit holders will take a court-imposed haircut, what leverage do we have now?

Our unions made no serious attempts to negotiate until it was too late; indeed, most of them practically DARED Mr. Milton to take us into CCAA. Once he did, the predictable rationalizations are all being trotted out: we would have gone to CCAA anyway; we'd just have to take another cut in CCAA; the company didn't want to negotiate; it was all a big conjob; etc, etc. But those rationalizations don't wash, no matter how hard you spin 'em.

Debt can be addressed in any number of ways, but it must be addressed. When our employees turned their backs on Mr. Milton's request to negotiate, the die was cast. When exactly it would be thrown simply depended on how fast the cash was burned. And that, under the circumstances, was not a predictable rate but subject to events over which none of us had control. However, no one but a fool would have thought that it wasn't a realistic possibility.

We, the employees, had an opportunity to negotiate outside of CCAA, but we did not take it. It's our right to make a choice like that, to be sure, but it's also our responsibility to acknowledge and own up to our part in this situation.

Best wishes,

neo

[dragon]

Exactly how? For the FIRST time, EVER, the books of Air Canada are available by all affected, post April 01, 2003 the day AC filed for CCAA, that’s how. It is not about bravado, it is about accountability, IMO.

As for faith in the Management team. You know as well as I do that Milton is being directed now, the question of faith and accountability will be answered once, and if, AC emerges from CCAA. If, at that point, Robert Milton receives a resounding endorsement, I will acknowledge that to you.

The spin I’ve accepted is that I have grown weary of the anti union, predictable targeting of AC unions when the problems are bigger and more complex. Milton knows that and consciously chooses to continue, unabated, on his path. The spin I’ve accepted is that Robert Milton, purposely, consciously and with much deceit, has watched the employee pension plans deteriorate to a tune of 2.5 Billion under funded. That’s the spin I have accepted.

The process will be painful, we are here for reasons and the reasons are not solely in the lap of unions. UAL, AA are were they are as much for the two men that lead them at the time and the acrimonious relationship apparent at the company they presided over, now add AC.

Finally, nobody is asking for a cheque from OW are they?..