JAZZ and AC make Deal

[Kip Powick]

Air Canada strikes deal at Jazz unit

Regional carrier workers trim back terms of contracts

Paul Vieira - Financial Post - Saturday, May 24, 2003

Air Canada and its unions have reached their first deal as part of the company's restructuring, with a majority of the 3,500 workers at the airline's regional unit, Jazz, agreeing to revised terms of their contracts.

Details were being finalized last night and a media conference is tentatively scheduled for today. It would mark the first breakthrough by the Montreal carrier to find $770-million in savings from its workforce.

The reworked Jazz contracts are for six years, sources told the Financial Post. Employees agreed to either pay cuts, relaxed work rules, such as number of hours worked, or both.

"There is a deal," said an insider familiar with the union-Jazz negotiations.

Nathalie Megann, a Jazz spokeswoman, declined to comment, citing a media blackout imposed on the talks by Justice Warren Winkler, appointed as a facilitator by the Ontario Superior Court of Justice.

Unions representing Jazz workers include the Air Line Pilots Association; the Teamsters (flight attendants); the Canadian Auto Workers (maintenance and ticket agents); and the Canadian Air Line Dispatchers Association.

Deals with the pilots, dispatchers, and maintenance and ticket agents were agreed to yesterday, while negotiators for flight attendants were still working out last-minute details.

News of the Jazz deals came as the company was explaining to union officials the concessions it is seeking on workers' pension plans -- a cut in benefits by 10% for workers who stay at the airline. This could prove to be the biggest obstacle in obtaining new contract.

"The CAW will let this company go down before it allows management to touch the pensions," said one well-placed observer who did not want to be identified.

Sources familiar with the talks say Judge Winkler is adamant that the two sides come to an understanding, and quickly. The Montreal airline is seeking $770-million in labour savings by cutting 7,100 jobs, rolling back employees' pay by up to 15% and amending work rules.

The $770-million is to be spread out among the airline's several unions.

"Judge Winkler is telling the two sides to find the savings," said one source. "He's just saying, 'Get to the numbers. It doesn't matter how.' "

The court has given the two sides until May 28 to resolve differences.

However, people familiar with the Air Canada-union meetings -- which are taking up a good chunk of an entire floor at Toronto's downtown Hilton hotel -- said the airline is unwilling to compromise, saying what it is offering workers is a "take it or leave it" proposition. Calin Rovinescu, the airline's No. 2 executive and its chief restructuring officer, is at the talks, which are expected to go on all weekend.

"These are not talks. This is Air Canada saying, 'Sign on or else,' " said one lawyer who did not want to be identified.

Air Canada workers are being asked to take permanent pay cuts of 10%, or 15% in the case of pilots on the mainline carrier, and have their allowed vacation time reduced by a week. In return, the airline's 25 most senior executive have committed to take 15% pay cuts.

Sources say the pilots are being asked to sign a six-year contract, which would see the 15% wage rollback in place for the first three years of the pact, to be proceeded by 1% annual raises for the remainder of the deal. Also, pilots would see 20% of their workforce, or 604 jobs, eliminated; their expense accounts slashed by 40%; and the maximum hours worked per month increased to 95 hours.

"This is pretty bad news," said one senior pilot, who declined to be named. "It looks bloody awful. But the court will impose something on you if you don't accept it, so the preferred way is to negotiate. But this is pretty severe."

Don Johnston, president of Air Canada Pilots Association, declined to confirm the new deal offered by the company, but said his union is in a tough spot.

"We are in a very, very poor situation," he said. "They have asked for a yes or no answer, yet it's unclear how to interpret half the stuff they have presented."

[Guest q650]

That's not really breaking news. The press conference starts at 1:40 so we'll have the news by then including details.

[Guest av8tr]

It's better than liquidating. I will lose my job but at least I know that there will be a company to come back to when I get recalled.

[Guest av8tr]

It's better than liquidating. I will lose my job but at least I know that there will be a company to come back to when I get recalled.

[Guest Starman]

There's a lot to this rumoured package which is unclear at this point. Are the 600+ layoffs immediate, or positions removed during the life of the 6 year contract? (makes a huge difference)

Blocking to 95 hours will increase book-off rates and require fat reserve coverage. They'd be better off to keep the block average to something reasonable and reduce the reserve coverage, thereby increasing overall productivity.

It also seems to me that the focus on reducing non-taxable per diems and hotel costs is primarily driven by the desire to reduce flight attendant costs which are attached to the pilot's contract via "me too" clauses. (hint to management - if the F/A's want "me too" it should apply to the percentage wage reduction also)

Obviously, the new business plan requires $770 million in labour cost savings, and I have no argument against that. But beware of the shell game going on that has Unions jockeying for position in the shifting sands. We should all be taking an equal burden as we lower the cost of doing business.

[wizard]

C.A.W. is also representing JAZZ workers in stores,ramp,cabin service.