For AC Pilots

[Guest neo]

Dear Colleague,

Now that some of the furor surrounding recent events has subsided, perhaps we might take a look at the outcome so far. In a nutshell, we've collectively invested about $1 Billion in Air Canada, and received absolutely nothing for it other than the same jobs we always had with discounted wages and benefits. Am I the only one who considers this a less than satisfactory deal?

Consider: creditors of Air Canada, almost all of whom are owed far, far less money than we have put on the table, will wind up receiving ownership in Air Canada. Just like us, they will continue to do business with Air Canada as well. Their invoices will be paid, their principle and interest returned, and so forth. Yet for the hit they took in CCAA, they will also receive shares in the New Air Canada. They will prosper accordingly because you and I put all our money on the table and took NOTHING off!

I put the responsibility for this debacle right where it belongs: on my own shoulders. That's because I could see it coming, I watched it happen, and I wasn't fast enough, loud enough, or tough enough to keep the issue in front of you. In my defense, I have been busy with other things, but it's no excuse. I pride myself on alerting my colleagues to issues that need to be brought to their attention, and I failed to do enough in this case. I'm sorry. Having said that, I'm raising the issue now because to do so may do some good for the future. There may well be other opportunities for us to negoatiate a proper return for our investment in Air Canada.

I urge every pilot, and every employee for that matter, to recognize the assets that we bring to the table: namely, time and skill. Collectively, we put millions of hours a year in at Air Canada, and time is the most valuable asset there is. Furthermore, collectively we know how to operate one of the most complex pieces of corporate machinery in existence: the modern airline. I believe it's necessary that Air Canada's employees stop undervaluing those assets and start expecting them to bring a satisfactory long-term return.

Ownership in Air Canada is part of the equation that can bring employees long-term prosperity. But it's not something that's going to be handed to them on a platter. The people on the other side of the table are smart, fast and tough and they never, ever give something away if they don't have to. If we aren't smart enough to recognize that ownership in Air Canada is worthwhile, if we aren't smart enough to recognize the value of what we bring to the table, they're not going to do the nice thing and educate us. They will keep taking off the table what we keep putting on, for as long as we keep doing it. So the answer is to be just as smart, just as fast, and just as tough as they are.

I cannot say it strongly enough: Take a look at what you put on the table, and take a look at what you got for it. Now take a look at what the creditors have given, and have a look at what they get for it. If you're like me, and you think we sold ourselves too cheaply, then maybe next time we won't let it happen.

Best wishes,

Richard Roskell

[DEFCON]

I remember a post of yours from a ways back that compared the employee financial investment vs the creditor group and the return for such to each. I agreed with you then (silently) and do now NEO.

Should Milton et al carry the day with whatever plan they come up with it's my bet that AC will be right back where it is today in very short order. At that time perhaps your message will be heeded by the employee groups.

[Guest in_the_sky]

Richard,

Would you have been willing to sacrifice your pension for maintaing current benefits and wages that have been years in the making?

[Guest GDR]

Hi Richard

I gotta disagree with you on this. (I think that you thought I might. )

First off we chopped our salaries by a billion because our jobs at reduced pay are better than no jobs at all.

The creditors as I understand it will be given new shares in exchange for the debt. A holder of a hundred dollar bond will receive about 25 dollars or less worth of new stock. (I realize it's mostly vulture funds holding the bonds right now, but that's not the point. AC is still converting a hundred dollar debt to 25 dollars in equity.)

Whereas the bondholder will give up a hundred dollar bond to get $25 in stock, you and I will be able to buy it on the open market for $25.

Also, the current holders of AC debt will be minority stakeholders in the company, as I understand things. The majority stakeholder(s) will be those who put new capital into the company whether it be ONEX, or anyone else.

I'd also like to point out that we have profit sharing in our contract, which you were advocating, we do pre CCAA. I know that it is only part of your proposal, but it is certainly better than nothing. If the company does well the employees will be able to recover some of their lost wages.

The employees are just one of the parties taking a bath in all of this. The original holders of AC's debt are probably taking the biggest hit.

IMHO

Greg Robinson

[dragon]

NEO and DEFCON

I too agreed then as I do again now.

Unfortunately, our goose is cooked, figuratively speaking with no pun intended, until 2009 for all intent and purpose, is it not?

I used to advocate a series of strong and concise messages from ACPA [i say ACPA because that is where my vote counts], opportunity permitting, to resurrect a relationship of accountability with Robert Milton and his band of builders. Most of the oldertimers minimized my way of thinking and usually relegated my feelings to either youthful exuberance or rebel without a cause status. Basically, I keep quiet now. So, today the relationship continues, as, or more, dysfunctional than ever I’ve personally seen it.

Yes, we [employees] could have done a lot better IMO, and the added bonus, so could have the company.

[Guest GDR]

Hi Richard

I gotta disagree with you on this. (I think that you thought I might. ) After posting most of this I deleted it and decided that what I said didn't reply to your whole post.

First off we chopped our salaries by a billion because our jobs at reduced pay are better than no jobs at all.

The creditors as I understand it will be given new shares in exchange for the debt. A holder of a hundred dollar bond will receive about 25 dollars or less worth of new stock. (I realize it's mostly vulture funds holding the bonds right now, but that's not the point. AC is still converting a hundred dollar debt to 25 dollars in equity.)

Whereas the bondholder will give up a hundred dollar bond to get $25 in stock, you and I will be able to buy it on the open market for $25.

Also, the current holders of AC debt will be minority stakeholders in the company, as I understand things. The majority stakeholder(s) will be those who put new capital into the company whether it be ONEX, or anyone else.

I'd also like to point out that we have profit sharing in our contract, which you were advocating, we do pre CCAA. I know that it is only part of your proposal, but it is certainly better than nothing. If the company does well the employees will be able to recover some of their lost wages.

The employees are just one of the parties taking a bath in all of this. The original holders of AC's debt are probably taking the biggest hit.

I did largely agree with your pre CCAA proposals and I still would like to see the company go down that road in the future. Once we filed for CCAA however we had lost that chance. No question in my mind we blew it. In the end it was only ACPA that made a significant offer to try and prevent the filing, and even then it was last minute.

I won't be around long enough to benefit from the profit sharing, but I'm hopeful that it will work out for the employee group. I agree with you though, that I wish that there was a more comprehensive plan, that would be similar to what our friends at WestJet have.

IMHO

Greg Robinson

[Guest rance]

Neo;

Why do employees feel they are owed more and should have ownership in the company they work for?

The company pays you for a service you provide.You do the service and they pay the price for that service, end of story.What you are paid for that service is clearly spelled out in a legal contract.If you feel you are not being adequately componsated for the service you provide then go somewhere else that will pay you for what you feel you deserve.

A big part of why this airline is in trouble is because every employee group wants more and more and before you know it we have baggage handlers and ticket agents making over 60k a year while other airlines pay 25k for the same service and it still isn't enough.

I don't see waiters at a restaurant demanding ownership in their places of employment simply because they work there and feel they deserve more.

Neo you act like you've invested so much into this company, i'm sure you have, and you were compensated for that investment with a paycheque, a pension, medical and dental insurance and travel privilages.Not a bad return seeing you didn't have an initial investment to lose, like the creditors do.

[Guest neo]

Hi Greg,

Actually, I thought you'd be one to see the issue at stake more clearly than most.

"First off we chopped our salaries by a billion because our jobs at reduced pay are better than no jobs at all."

Hello? This is the precise situation the creditors are in. They will take however-many-cents on the dollar because reduced return is better than no return at all. THERE IS NO DIFFERENCE BETWEEN THE TWO ISSUES. DOLLARS ARE DOLLARS. My dollar is worth just as much as a creditor's dollar, unless I choose to throw it away. And that's exactly what we did on the collective level: we threw our dollars away.

"Whereas the bondholder will give up a hundred dollar bond to get $25 in stock, you and I will be able to buy it on the open market for $25."

The bondholder, the leaseholder, the creditor... whoever is changing AC debt into equity is converting their dollars that AC owes them into stock. Well, Air Canada owed YOU money too. You had a legal contract with them that said if you performed your job, you would be paid for it at a certain rate. When you agreed to accept less money, you should have received something back for that, JUST AS THE CREDITORS RECEIVED SOMETHING FOR THEIR SACRIFICE. Furthermore, you can no longer buy $25 worth of AC debt on the open market. You can only afford to buy $25 of AC debt less the percentage that you gave back to AC for nothing. That difference is the amount of ownership that AC employees should have taken in their company.

What is so difficult to understand about that?

There is no difference between an employee's dollar and a creditor's dollar. Each one is worth precisely the same amount. UNLESS! one of those parties is willing to say that their dollars don't count as much. In effect that's what we did, we did it unnecessarily, and I hope we don't make the same mistake twice.

Best,

Richard

[Guest neo]

"Unfortunately, our goose is cooked, figuratively speaking with no pun intended, until 2009 for all intent and purpose, is it not?"

There are some possibilities...

1) There is a clause in the new contract specifically addressing the possibility of new cost-saving measures and that further negotiations can be initiated over them.

2) The new contract has an 'opener' clause in the fourth year to address pay scales.

3) The company may find itself in a financial situation similar to this in the future and return to the employees for assistance.

4) Nothing precludes the employer and employee group from renegotiating a new contract provision once we're out from under CCAA. Of course, we moved the base line in the company's favor for nothing, so that's the new starting point. However, if we wished we could start from there.

Best,

neo

[Guest neo]

There's a big difference between you and me, rance. You're willing to throw away money that's owed to you FOR NOTHING so that CARA and the like can have ownership in Air Canada. I'm not.

You must LOVE airline food. I don't.

neo

[pictues]

Well Neo, 87% of Air Canada pilots voted and 87% voted yes. The way I see it that is a strong majority (the biggest of ALL Air Canada Unions) accepted the deal. Seems you have sour grapes because you didn't get what you wanted, that's my opinion.

[Guest Philip Aubin]

Richard,

The process is far from over my friend. So far what we have done is given up concessions. Now those concessions have to be valued and will be lumped in with the unsecured creditors. My understanding is that this will also include the purely monetary value of outstanding policy grievances up to April 1st, 2003 (such as wet lease credits for Air Canada cargo for instance) but not the value of new grievances nor the value of existing grievances that has accured since April 1st, 2003.

This value could be as high as 2-3 billion for the pilots alone (257 million a year of recognized concessions, millions more in unrecognized concessions (April 1st 2003 2.5% pay raise for one), big grievances/concessions like the fleet guarantee >100 million per year), and a host of smaller issues)

Unsecured creditors are said to be in line to pick up 45% of the Company. The employees will have a piece of that.

Philip Aubin

[Guest rance]

Neo;

I guess you don't have an answer to any of the questions I posed to you in my previous post.

Also your cara example is a poor one because they have provided goods and services to ac and have not been paid for those services.If you have not received a paycheque for your services than you better call payroll because the rest of us employees are being paid.

Your views of take take take and how much more the company owes you do nothing to help turn this company around. why don't you go somewhere else where you feel they pay you for what you're worth and give you the ownership in the company you are looking for.

[UpperDeck]

Don't agree. The creditor's dollar is NOT the same as your dollar. Wage concessions are future dollars invested with no cost. The creditors are losing past dollars. You are not a creditor of the company; your greatest potential loss is notional and is incurred when you are no longer able to sell your services. Your "stock in trade" is your time and expertise. You have received compensation for that which you have provided in the past. You will continue to do so (potentially with some diminuation) in the future and for so long as you have a purchaser for your "stock in trade" .

[John S.]

In keeping with this "cooking the goose" idiom, may I draw your attention to what may be the most important meeting this summer. On July 22nd OSFI and Air Canada are going to meet. With the pension deficit approaching a horrendous two billion dollars, the temperature in the meeting room ought to be almost high enough to stew a goose, if not cook it.

For information look up the link to the letter I posted. It's to Ms. Susan Welscheid (Vice President - People, Air Canada) from Ms. Karen Badgerow-Croteay (Managing Director OSFI)

Here's a bold prediction - all the concessions by all the unions and non-union employees will not be enough for Air Canada to recover from CCAA with the current pensions all intact. I'll bet that there will be AT LEAST one more round of talks coming.

[Guest GDR]

Hi Philip

I'll be up front. You aren't dealing with the sharpest knife in the drawer here. I'll paraphrase what I think you're saying so that I can understand it.

Are you saying that the 15 to 25% that we gave to the company as concessions on our contract is considered as unsecured debt, and that we are in line to receive part of that unsecured debt back in new AC stock?

Thanks

Greg Robinson

[Guest GDR]

OK I agree to a point but it seems to me that the creditor is getting $25 dollars in stock and nothing else for his $100 dollars.

We're getting $75 cash and whatever we get from profit sharing for our $100 dollars.

In addition if I read what Phil Aubin says below correctly, we amy receive stock as well.

[Guest V1V2Vgo]

Oh Hi Richard,

Rance is absolutely correct. You should bail, go work where you are compensated to your standards, for your exceptional skill. This will allow the rest of us to concentrate on rebuilding the airline, without your counterproductive, continuous outflow of negativity. It is getting OLD.

[Guest neo]

Good point, John.

[Guest neo]

The difference between a 'past' dollar and a 'future' dollar is irrelevant in this case. If there are no 'future' dollars to be earned, the creditors 'past' dollars turn into dust. Therefore, the ONLY thing that gives the creditors dollars any value whatsoever is that a) he will allow AC to continue doing business, and that the employees will continue to make AC work. All of which are in the notional future to which you refer. If you eliminate that future, the creditors have nothing, or thereabouts.

And your objection takes no notion of how and when ownership should be allocated, anyway. The creditors will be provided with ownership on exit from CCAA. There is nothing to say that employees must receive ownership at the same time. However, by the time new contracts expire, the money that the employees have put back into the company (and into the creditors pockets) should have afforded them proportional ownership in Air Canada.

That ownership could be allocated via stock on a semi-yearly or yearly basis.

Thanks for your reply.

neo

[Guest neo]

The 13% of AC pilots that voted against the new contract are ACPA's "Dignity Squad." At least one in ten of us won't go down to a severe boning without a fight.

And I'd love to do a survey of the 87%, at six, twelve, 24 and 36 months. Will they still be happy with their choice? And that will just be half way through the new contract.

A propos of all that, my comments are not about what happened in the past, and only for future reference. There may be a future opportunity that we can take advantage of. I hope our group will be a little better prepared to do so, next time.

neo

[Guest neo]

I think your accusation of constant negativity is lame. Why, without even scrolling the page of topics you can read posts of mine extolling the virtues of AC's safety, for example.

So as usual, your criticisms completely miss the mark. They do so because you have nothing but your personal dislike of me to counter a rational argument. Perhaps that's what's really getting old, don't you think?

[Guest neo]

As near as I can tell, you posed one question: "Why do employees feel they are owed more and should have ownership in the company they work for?" It made little sense and I so no point in drawing attention to that.

However, as you insist on an answer, here it is. All employees at AC just gave up a substantial amount of their wages and benefits. If you don't care about that, if you're happy to give that up without another thought about it, then I guess you got what makes you happy and what you deserve. But I'm confident that you are not amongst a majority of employees.

There are over 10,000 large and medium enterprises in North America alone that have a substantial amount of employee ownership. Once again, rance, you appear to be in the minority.

[Guest neo]

As near as I can tell, you posed one question: "Why do employees feel they are owed more and should have ownership in the company they work for?" It made little sense and I saw no point in drawing attention to that.

However, as you insist on an answer, here it is. All employees at AC just gave up a substantial amount of their wages and benefits. If you don't care about that, if you're happy to give that up without another thought about it, then I guess you got what makes you happy and what you deserve. But I'm confident that you are not amongst a majority of employees.

There are over 10,000 large and medium enterprises in North America alone that have a substantial amount of employee ownership. Once again, rance, you appear to be in the minority.

[Guest neo]

If your comments are correct, Phil, I'd say that's excellent news.

Was the scenario you refer to specifically discussed during negotiations, and has provision for this exchange of employee 'assets' for ownership been directly addressed? Or is there some automatic mechanism in the CCAA process which drives this exchange?

Thanks for your comments.

Richard