The Feds

[DEFCON]

Has any group forced management to come clean as to the role of the feds in forcing? AC to purchase CDN?

It seems to me that the overstaffing levels of today which will lead to tomorrows reductions are about equal to those taken in vis a vis the CDN acquisition. If the feds had a hand in AC’s decision to purchase CDN should they not now cough up some serious coin to pay for their political motivations?

PS: I am not talking about UI benefits or retraining allowances.

[Guest Starman]

There were some areas within both companies that overlapped and caused some overstaffing after the merger, however pilots have been hired since the merger because the CDN contract was more productive and the jobs brought into the combined company required increased pilot staffing even after the overlap was resolved.

By the way, Robert Milton is on record as saying that AC purchased CDN as a going concern for valid business reasons. One need only read the Air Canada Annual Report for 2000 for confirmation of this. The politicians in this country have a lot to answer for in regards to the last 20 years of aviation policy, but I don't think they have much to worry about on the merger itself.

[Guest George]

By the way, Robert Milton is on record as saying that AC purchased CDN as a going concern for valid business reasons. One need only read the Air Canada Annual Report for 2000 for confirmation of this.

Yeah, and RM is going to come out in the Annual Report and say "the feds made me do it...."

It must be nice to be so naive!

[Guest b52er]

If that is the case, should the feds not cough up some serious coin for all the ex C3er's thrown out on the street due to political motivations, or ex Canjetters and Royal? Nobody shed any tears except for those effected, and quite frankly, C3 was perhaps the best airline we had in Canada at the time........almost (present company excluded). Perhaps their political motivations and thought processes were temporarily impaired as C3 should have been gauranteed by our feds to be saved over you know who.

[Moon The Loon]

Wrong conclusion, I am afraid. And that from one who lost his job at C3.

It was a very poorly managed business that had mislead its investors of only 6 months when it announced plans to acquire Royal and CanJet I. It had no new business plan from its initial plan in 1988. It had no line of credit with any financial institution. It owned no assets. It survived virtually month to month.

I certainly didn't think this way when the Feds were being asked for money. Nobody likes the prospect of being thrown away like yesterday's trash, but that's what it felt like at the time.

Many of us have been away from that trash heap now for a year and a half. The smell only became obvious after we had a good clean bath.

It's an argument in hindsight now as the previous owner of the company is dead. Only pure conjecture would be the outcome of further discussion of what C3 as an airline might have continued to be.

Just my opinion of the events that happened.

I don't believe ANY money should be given to AC to fix its problems. Sink or swim. If it sinks (and it won't because the Feds will intervene with legislation), the short term solution would be for the Feds to announce "Open Skies" with the Yanks - something that I believe was well on its way to fruition pre-911. That could prove to be a poison pill for any future competition growing within Canada to fill the void. Existing companies would continue their growth but any new startups wouldn't stand a chance. On the other hand, it might provide increased foreign ownership of those existing companies giving them increased access to capital. That secondary discussion is moot given that the Feds will intervene to prevent the bankruptcy from proceeding.

If it swims, it'll be more like flailing around in the shallow end of the pool - not really swimming but getting from A to B by walking across the bottom of the pool. The labour problems at the combined AC/Jazz are monstrous. One foot in the deep end and it'll be all over!

Just more opinion.

[Guest Starman]

Well 'scuse me while I knock the hayseed outta my workboots, but if a CEO of a publicly traded company makes false or missleading statements in an annual report to shareholders, wouldn't that be an indictable offense?

I think that RM's hand was forced by circumstances and not by politicians. After blowing a billion dollars of shareholder's money to safeguard his own job during the Onex takeover bid, he knew that the Feds could have opened up ownership restrictions to allow foreign investment to restructure CDN. He couldn't very well hide behind the AC participation act and then cry foul if CDN had found another source of capital, so he had to control the merger of the two companies. It's just too bad that he didn't do what Onex would have done and formed a new company going forward with the best practices of both. If we had CDN's cost structure combined with AC's yield over the last three years, we would have been in a much better position to weather the hard times we are faced with.

[Guest jeanmermoz]

I heard that you were less productive than AC at the time, like in many other part of CAI.

[Homerun]

oh please. This continuing theme about CAI's cost structure is the biggest pile of bs going. Canadian had a cost problem. Period. It's costs were higher than its revenues. Period. Yes, its casm was less than AC's, but Canadian did not have a revenue problem. It had a size problem. It had far too big a network to sustain, with costs far too high to ever hope to make a profit. Also, talk to someone in the know about the pilot contracts. AC had a more efficient pilot contract. That is why your working conditions are inferior now to what they used to be.

[Guest Starman]

That is not true. Canadian flew more revenue seat miles per pilot and more average block hours per pilot than Air Canada. Why else do you think Air Canada had to hire pilots after we all went to the ACPA contract?

[Homerun]

We hired more pilots because a) there was close to 100 retirements in 2000 and again in 2001 and the asm we operated increased by 6% in 2000 and another 4% in 2001. The CAI contract included block protection and credit for training events as well as f/o's instead of RP's. These things reduce stick time and increase cost. Call Fauteaux and ask him which contract was more efficient. He is the definitive authority.

[Guest Starman]

The overall cost structure of CDN was lower, admitted by AC in the Annual Report for 2000, and the pilot productivity was definitely higher at CDN. We ran with half the reserve coverage, and we averaged more block hours per year with fewer check/supervisory pilots per ASM also.

Who's Fauteaux anyway?

[Guest propup]

It’s funny, the woes of Air Canada seem to be tied to the acquisition of Cdn Airlines. I happen to agree in this deregulated world, they probably should not have purchased Cdn. Why introduce the dissention of merged seniority lists and protectionism that it breeds. And for what reason, to purchase routes? Gates? Slots? Westjet has the right idea once again, grow don’t merge.

On the other hand everyone seems to have forgotten the term “burn the furniture to heat the house”. This refers to Air Canada’s undercut the competition to create a monopoly and drive the yield up policy. The Cdn folks flew to many of the same destinations with similar load factors at arguably a cheaper cost structure yet they showed red ink while Air Canada reported black ink. How did they do it was always on the employees mind. Rumors from sources including this forum now indicate that assets were sold including aircraft and then leased back. Very little if any money seems to have been made actually carrying people.

I thinks we have to look deeper into Air Canada’s past business practices if we are to assign blame.

Where do we go from here. Well I am tired of the crying and vote no rhetoric. How many pilots and for that matter other specific airline job employees think they can replace their newly reduced wage by switching companies or industries if this falls apart? I know I can’t. Whatever I do will have me starting at a lower salary. Those voting no must either be very sure this is a bluff on the part of the company, creditors and that the government was lying when they say there will be no bailout or they have another opportunity to which I say “take it and move on” as many of us do not have that option.

[Homerun]

I said I agreed that CAI casm was lower. The fact remians however that CAI's total costs were much higher than it's revenues. The network was too large for the customer base, too many a/c, too many employees.