doomed to fail???

[Guest lupin]

Is it actually possible to reduce cost in an existing company to levels similar to the discount carriers?

Working in the maintenance side of things,I have noticed that what will drive productivity,seems to be where you worked before,the conditions you have experienced in the past and the training you have received.

Air Canada has a huge battle if it stands to increase productivity to within striking range of discount carriers.The mentality in this company cannot be changed overnight nor will one year be enough to get things rolling "smoothly" .The work rules established at AC in the maintenance side of things through tocm,(our maintenance control manual) are excessively restrictive.The work rules I understand are there to protect the company but at what costs?Usually productivity.

The issue of a layoff affecting roughly 30% of maintenance is also very disturbing.I understand that cost reductions are necessary but if you retain only the employees that have 10 years and over in the company, are you going to be able increase productivity?With any dealings with Unions you have to wonder how a company can get ahead.Getting rid of the junior employees working at a lower cost,and keeping the expensive ones that may still have the goverment worker mentality.

Are wage cuts the answer??I am shure they are part of the answer.What I am suggesting though.... Is that even with benefits and salaries cut to below discount carrier levels Air Canada would fail to have a competitive edge over the discounters.The recent events have a tendency to create unrest in the labour group and wuth that will come alot of bitterness.How will productivity increase out of all of this?

Lupin

Mitch...you've been through a few restructuring....what are your thoughs?And Dagger?

[Guest GDR]

Thought provoking post lupin. Another question I have is how much power do these judges have? Can they force any of the parties to bend if they wind up off side? By any party I mean one of the unions, one of the creditors or the company.

In other words can any one party scupper an agreement or can the judges force a settlement?

[Don Hudson]

Greg;

I strongly suspect the judge has the power to unilaterally "create" an agreement. Labour law does not consider Collective Agreements "sacrosanct" in the same sense that a business contract is. We only need to take a look at our own Liberals here in BC and their unilateral cancellation of the BC Nurses Union contract last year to know that this is possible.

In Negots 2000, Federal Minister Bradshaw indicated to us during our work with Mr Outhouse that it would be in our best interests to settle. While we may value the results in different ways, there was little doubt that an "agreement" was on its way. I suggest that this is even more the case today for union representatives which do not come to the table.

Don

[Guest GDR]

Thanks Don.

I think that you have a good grasp of it. As I understand it under Chap 11 down south it's pretty much an automatic that the contracts can be opened up. However, under the CCAA contracts cannot automatically be opened up, but the legislation is loose enough that the judge does have the power to do it, even though there has been no precedence for it.

This then all fits with what you have said in your post, and also seems to be consistent with the actions that Judge Farley has taken, particularly in regard to his appointing of Judge Winkler.

What I'm trying to sort out in my own mind is this. It appears to me that the courts are taking a very activist position in all of the proceedings and they are not going to allow anyone to put AC into liquidation. Would you agree with that Don? Does anyone else have any thoughts on this. I'm certainly feeling more optimistic all the time.

Greg

[Guest GDR]

Hello Mr. F

A couple of thoughts on your post. According to management they reduced costs on Tango flights by 25% through such things as more seats, no meals, one less FA, no interlining baggage etc. Crew costs are only one way of reducing our costs.

With your Grande Prairie, (a great little town), Edmonton example there are other factors involved. If we carry enough passengers that are connecting transborder or overseas in addition to the local traffic then maybe we could make a route like that pay even if we do have costs that are some what higher than the competition.

I think that aeroplan is another advantage that we have to allow a route to be profitable.

However, I just drive the bus and I'm certainly no marketing expert but that seems to make sense to me.

Greg Robinson

[Guest Philip Aubin]

Don,

Actually recent jurisprudence from Quebec indicates that employee contracts are protected. A lower court ruling that allowed a contract to be voided was overturned.

The only reason that employees need to come to the table is negotiate with the creditors and make the company more valuable as a going concern than liquidated. This is a more than strong enough incentive in my book.

Philip Aubin

[Don Hudson]

Hello Phil; Always good to see your thoughts.

If recent jurisprudence indicates that collective agreements have the same level of legal authority and protection as business contracts, (in other words, if a company breaks a collective agreement, its breaking the law and can be prosecuted), then I think that is a good thing. In BC however, we are not as enlightened, and the Liberals are still doing as they wish....A rabbit trail I will pursue here no further.

Re "This is a more than strong enough incentive in my book."

Agreed. Completely...

Don

[Don Hudson]

Hello Greg;

Lovely day on the coast...

Re "This then all fits with what you have said in your post, and also seems to be consistent with the actions that Judge Farley has taken, particularly in regard to his appointing of Judge Winkler."

Yes, I think so. That is the sense I have of it. I believe for those with the antennae, the signals are very strong indeed.

"What I'm trying to sort out in my own mind is this. It appears to me that the courts are taking a very activist position in all of the proceedings and they are not going to allow anyone to put AC into liquidation. Would you agree with that Don?"

As per the above observation, yes, I would agree. In fact, Farley, in his direction to Winkler made succinct observations regarding the "social" factor of an AC "failure". That means to me, that a very wide view is being taken on this filing.

At the same time, and I believe you would agree, I think that such a determination of the filing's outcome (that AC will survive) should not be relied upon to "extract" the maximum from the process. We must rely upon those who's senses are very finely tuned by experience and in-depth knowledge. In our own case, I believe we have those people in place. The reason I think we collectively must now act is that it is plain that all other stakeholders are appearing at the table and not just the employees. While we cannot hope for complete fairness at all times or in all quarters and appropriate sunshine on the entire process, there is enough there that the employees should act accordingly.

Don

[Don Hudson]

Mr Frustrated;

Re "Wages are a very small part of the overall cost equation but takes the most focus as it appears the easiest solution."

With this, I agree. In direct costs (no benefits/pensions/sick days etc added in), on a full A340 with 284 passengers, each passenger will pay about $28CAD for their flight crew on a 13hr flight to Hong Kong, and perhaps $30 if there's a fourth.

That's about the same as the security fee and the Airport Improvement Fee combined.

Think about that for a moment.

On domestic flights, the amount is smaller.

On corporate culture...

I have seen dagger's opinions that it doesn't matter. I believe there is something more to the opinion because frankly the depth of the opinions this member offers is out of sync with the shallow view that people's sense of community and well-being don't matter to a business. So I suspend judgement on that.

One thing I do believe: This CCAA filing will unite Air Canada's employees like the proverbial hanging in the morning. There's nothing like a common cause...

I have seen many, many comments expressing how "poorly" Air Canada employees treat their customers. However, I have yet to actually hear enough stories to make that a truism. It seems to me just another band-wagon approach, begun by those who don't fly much or who have an interest in washing our face with snow. The experiences I have had and have witnessed on every, (not just some) AC flight I have been on, has been uniformly excellent, and concerned with the customer.

No one from any other airline will be able to claim a 100% passenger satisfaction rate either. I am sure our competitors have their share of "problems". They just don't make good reading, especially in the present environment...

Fire the "old and slow" employees? Pretty simple-minded pedantic approach, making it easy to brush off such a "suggestion". Good, solid and dedicated work comes from all levels...experienced and old, well-trained and young...the spectrum is very wide. Even from your own experience, you must admit that there are duffers and hard-workers at all levels. In your world, who would you get rid of, how, and why? Just asking.

Don

[Guest Bulkwheat]

Hello Don and Philip,

Great to see you both on this form as well. I thought that while the two of you were conversing I might be able to get your thoughts on an off topic matter but an important one none the less.

The topic that comes up on a daily basis amongst us junior AC pilots is the dreaded layoff question(s).

Will the Company layoff pilots?...If so, how many?...For how long?...When?....Will packages be offered to senior pilots that want to go?

I personally hope that the overwelming retirement numbers over the next many years, along with the incredible cost of downtraining and then uptraining

pilots will save us from layoff. To my knowledge the Company has only uttered the word "pilot layoffs" on one occasion in passing so to speak. The media reports that AC will be a smaller airline because we will be flying more 70 - 90 seat aircraft instead of the 400's or as many large aircraft. I don't believe they have said that Air Canada wants to dramatically reduce the fleet numbers.

Unfortunately my colleagues and I have noticed a thought trend lately amongst many co-workers that pilot layoffs are inevitable, period.

Just wondering what your thoughts are gentlemen?

Thanks..Barney

[Guest Bulkwheat]

Hello Don and Philip,

Great to see you both on this form as well. I thought that while the two of you were conversing I might be able to get your thoughts on an off topic matter but an important one none the less.

The topic that comes up on a daily basis amongst us junior AC pilots is the dreaded layoff question(s).

Will the Company layoff pilots?...If so, how many?...For how long?...When?....Will packages be offered to senior pilots that want to go?

I personally hope that the overwelming retirement numbers over the next many years, along with the incredible cost of downtraining and then uptraining

pilots will save us from layoff. To my knowledge the Company has only uttered the word "pilot layoffs" on one occasion in passing so to speak. The media reports that AC will be a smaller airline because we will be flying more 70 - 90 seat aircraft instead of the 400's or as many large aircraft. I don't believe they have said that Air Canada wants to dramatically reduce the fleet numbers.

Unfortunately my colleagues and I have noticed a thought trend lately amongst many co-workers that pilot layoffs are inevitable, period.

Just wondering what your thoughts are gentlemen?

Thanks..Barney

[Guest Bulkwheat]

Hello Don and Philip,

Great to see you both on this form as well. I thought that while the two of you were conversing I might be able to get your thoughts on an off topic matter but an important one none the less.

The topic that comes up on a daily basis amongst us junior AC pilots is the dreaded layoff question(s).

Will the Company layoff pilots?...If so, how many?...For how long?...When?....Will packages be offered to senior pilots that want to go?

I personally hope that the overwelming retirement numbers over the next many years, along with the incredible cost of downtraining and then uptraining

pilots will save us from layoff. To my knowledge the Company has only uttered the word "pilot layoffs" on one occasion in passing so to speak. The media reports that AC will be a smaller airline because we will be flying more 70 - 90 seat aircraft instead of the 400's or as many large aircraft. I don't believe they have said that Air Canada wants to dramatically reduce the fleet numbers.

Unfortunately my colleagues and I have noticed a thought trend lately amongst many co-workers that pilot layoffs are inevitable, period.

Just wondering what your thoughts are gentlemen?

Thanks..Barney

[Guest Bulkwheat]

Hello Don and Philip,

Great to see you both on this form as well. I thought that while the two of you were conversing I might be able to get your thoughts on an off topic matter but an important one none the less.

The topic that comes up on a daily basis amongst us junior AC pilots is the dreaded layoff question(s).

Will the Company layoff pilots?...If so, how many?...For how long?...When?....Will packages be offered to senior pilots that want to go?

I personally hope that the overwelming retirement numbers over the next many years, along with the incredible cost of downtraining and then uptraining

pilots will save us from layoff. To my knowledge the Company has only uttered the word "pilot layoffs" on one occasion in passing so to speak. The media reports that AC will be a smaller airline because we will be flying more 70 - 90 seat aircraft instead of the 400's or as many large aircraft. I don't believe they have said that Air Canada wants to dramatically reduce the fleet numbers.

Unfortunately my colleagues and I have noticed a thought trend lately amongst many co-workers that pilot layoffs are inevitable, period.

Just wondering what your thoughts are gentlemen?

Thanks..Barney

[Guest Bulkwheat]

Hello Don and Philip,

Great to see you both on this form as well. I thought that while the two of you were conversing I might be able to get your thoughts on an off topic matter but an important one none the less.

The topic that comes up on a daily basis amongst us junior AC pilots is the dreaded layoff question(s).

Will the Company layoff pilots?...If so, how many?...For how long?...When?....Will packages be offered to senior pilots that want to go?

I personally hope that the overwelming retirement numbers over the next many years, along with the incredible cost of downtraining and then uptraining

pilots will save us from layoff. To my knowledge the Company has only uttered the word "pilot layoffs" on one occasion in passing so to speak. The media reports that AC will be a smaller airline because we will be flying more 70 - 90 seat aircraft instead of the 400's or as many large aircraft. I don't believe they have said that Air Canada wants to dramatically reduce the fleet numbers.

Unfortunately my colleagues and I have noticed a thought trend lately amongst many co-workers that pilot layoffs are inevitable, period.

Just wondering what your thoughts are gentlemen?

Thanks..Barney

[Guest Bulkwheat]

Hello Don and Philip,

Great to see you both on this form as well. I thought that while the two of you were conversing I might be able to get your thoughts on an off topic matter but an important one none the less.

The topic that comes up on a daily basis amongst us junior AC pilots is the dreaded layoff question(s).

Will the Company layoff pilots?...If so, how many?...For how long?...When?....Will packages be offered to senior pilots that want to go?

I personally hope that the overwelming retirement numbers over the next many years, along with the incredible cost of downtraining and then uptraining

pilots will save us from layoff. To my knowledge the Company has only uttered the word "pilot layoffs" on one occasion in passing so to speak. The media reports that AC will be a smaller airline because we will be flying more 70 - 90 seat aircraft instead of the 400's or as many large aircraft. I don't believe they have said that Air Canada wants to dramatically reduce the fleet numbers.

Unfortunately my colleagues and I have noticed a thought trend lately amongst many co-workers that pilot layoffs are inevitable, period.

Just wondering what your thoughts are gentlemen?

Thanks..Barney

[dagger]

I'm not going to comment on where costs cuts should come from - wages vs productivity. I think my past posts have seen productivity improvement as the area where the best long term improvement can be achieved. It also creates a springboard for growth when the market permits, especially internationally.

That being said, one must keep in mind that this isn't only about the labor cost portion of AC's expenses, but just about every penny it generates and spends above and below the operating line.

[Guest Retyred]

Philip-

I thought you raised an interesting, but generally overlooked point, regarding 'jurisprudence' in Quebec.

If one reads through all the parameters of CCAA you will find that a Company normally files in the Province that is host to its head office.. Quebec for Air Canada. This may be overidden if a Company does the majority of its business in another Province.

If you read through the initial application ..item 57..you will see that Air Canada goes out of its way to to define that it maintains executive offices in Toronto ( Ex. VP Operations) and that Toronto is also its major hub for domestic, transborder and transatlantic travel.

I always believed the company was acutely aware of the Quebec ruling you spoke of. Because union contracts were going to be a significant issue in the process, it wanted, under no circumstances, to file in a jurisdiction that had already established legal precedent that would make it virtually impossible to 'bend' the contracts!!

In a nutshell, I think the company was 'shrewd', to say the least, in filing in Ontario...where I think it felt it would have the best chance to have a run at the union contracts.

[IFG]

Hi. Don - It's my impression that the law regarding CBA's and CCAA is still murky; I'd agree the Quebec court decision is a good one for labour, but not secure until the SCC pronounces on it. Regardless, Philip Aubin hits the nail with his observation on the other compelling reasons for you all to participate in the process.

Regarding contractual abrogation by government (oops, down that rabbit trail ... ), I believe the legislature is supreme. Campbell probably learned some tricks from Bob Rae's band of merrie pranksters, who held it over the Ontario P.S. unions when they agreed to his government's cuts (did you guys in Lotusland hear about our "Rae Days" back when?)

Cheers, IFG

[Guest GDR]

>>I think that such a determination of the filing's outcome (that AC will survive) should not be relied upon to "extract" the maximum from the process.<<

Exactly. I personally would go one step further. It wouldn't bother me that if in the end we find that we gave more than what was required to keep us out of liquidation. I say this partly because I want to see the company prosper rather than just limp along, as we want long term stability out of this process. I also would like to see as recompense for lost wages a viable profit sharing plan, whether it be SAU's, SAR's, options or a straight issue of company shares. If the company does prosper we would stand to recover some or all of our lost wages.

Incidently, I know I have been critical in the past but I am definitely gaining confidence in the ability of the ACPA leadership to deal with our situation.

It sure isn't a slam dunk but I'm a lot more confident about the outcome than I was a couple of weeks ago.

Greg

[Don Hudson]

IFG;

Re "did you guys in Lotusland hear about our "Rae Days" back when?"

Absolutely we did...we watched Rae with a lot of interest. He was the one who said to a reporter that, although slightly left wing, , he resented the impression that he was born with a silver spoon in his mouth, and what's more, the upstairs maid, cook and nannies also resented it.

dh

[Guest CJ]

Good Question

Good Question

Good Question.....LOL

[Guest GDR]

I remember when I heard the always politically correct Bob Rae use the expression brinkspersonship. What a guy!

[dagger]

"If Tango's costs were reduced by 25%, where did the savings come from? Certainly not in enhanced productivity, favourable lease terms or flying to non-hub airports. "

As outlined in the 2001 annual report, Tango cut its costs by

Substituting more economy for business class on the aircraft, thereby "densing up the plane, improved productivity. Usually, there was no increase in crew.

Without interlining of baggage, there is reduced baggage handling cost.

There is less meal and drink expense because it's no frills. (Don't ever underestimate the cost of putting complete meal service on a flight).

Eighty percent of bookings are made over the internet, which means no travel agent computer fees and less call centre labor.

Because it is a simple product, Tango has a small management group - just a handful of managers.

Simplicity - this is a big part of AC's proposed new business plan. By making the fare structure and inventory management simpler, as Milton announced recently - more like Tango or Zip - AC is going to eliminate a lot of back-of-the-house staff that manage inventory and capacity, allocating seats to each fare type, etc. Similarly, a simpler fare structure based on the discount model - although it can have some premium pricing in the mix for business class, or last minute bookings - will facilitate internet bookings. Ultimately, that will mean significant attrition in call centres. So going simple is a way to automate sales, ticketing, etc. There are enormous savings to be achieved in the CAW ranks.

Frankly, Air Canada should have to hire any passenger agents for a decade or more. If you boost productivity through labor contract updating, you keep pushing out the date for hiring new passenger agents. You end up with fewer agents handling more and more passengers because more and more passengers are self booking and using automatic check-in features.

In essence, with good labor productivity, Air Canada's costs should actually CONTINUE to come down after restructuring. Air Canada has had a much, much lower rate of internet bookings than Westjet. That also means it has much more room for improvement. One area where the two sides - management and labor - might also find a compromise is on a two-tier wage scale for future hires. That would make expansion particularly attractive because the company could hire up seasonal labor in airports at a very low cost.

[dagger]

Don't lose sight of government in all of this. Amazing how AC ended up with Farley, a judge who has handled high profile restructurings and who is not afraid to knock heads and rattle cages. No matter what side you are on (unless you are a creditor rooting for liquidation), he is the ideal judge to get a decent resolution if there is one out there.

I don't think you end up with the all-star bankruptcy judge by accident. I am cynical enough to imagine that strings were pulled by government to put Farley on the case.

Now, Farley sends in Justice Winkler to crack heads in the labor talks. How convenient. A judge who was a labor lawyer, Winkler will get a hand on the issues for each bargaining, and if Farley - or the feds - want an arbitrator to impose terms, what better man than Winkler. It also distances Farley from the substance of any order involving labor because Winkler will be the one reporting back to the court on the behavior of the parties.

[Guest Retyred]

Dagger-

"You don't end up with an all-star bankruptcy judge by accident" !!

Spot on sir..that was no accident or coincidence..they filed where they wanted and got the right man for the job to boot! After I read a little of his history, I too realized that there was more to this than outright 'luck of the draw'.

Needless to say, we're getting much closer to finding out exactly how this 'unique' arrangement plays itself out.