For Neo

[Arctic Ace]

"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!"

Neo

You're completely off the mark on this one. The "hit" the creditors will take in exhange for shares is for money owed for past goods and services. While they were extending their goods and services to Air Canada on credit, you were still being paid on a regular basis. If you had to give back the salary you were paid during the past couple of years in exchange for shares, then your argument would make sense. Many of these creditors are still "working for nothing" while you continue to be paid. (eg.the a/c lessors) Collectively, these creditors are owed between 12 and 13 billion, most of which will be swapped for shares valued at an extremely small fraction of that value. How would you like that deal instead of the salary you've been paid over the past few years? Thats where their shares will come from - money owed from the past.

Going forward, many of them will take a haircut in the form of reduced payment for goods and services and some will be cut loose altogether. Sound familiar? I don't believe shares are part of this equation.

Having been paid regularly, your deal is much better than most of the creditors and your lucky Air Canada is still afloat. Having been through three shutdowns since '98 I can honestly say you really don't "get it"

All that being said, ESP's, stock options, profit share, etc. is a good plan and contributes to a healthier company as it does align the employees with the interests of the corporation, but don't forget had you been on such a plan in the past, like the creditors you would now be taking a haircut for past services. Going forward, such a deal would be good for Air Canada and its employees, but your arguments for such a deal are weak and without merit.

The Ace

[Guest rance]

save your time trying to explain things to neo.He's off in some other world.

[Guest neo]

I think you make reasonable arguments, it's just that they do not stand up to scrutiny.

As I have pointed out to others, the money that creditors are owed for past goods and services deserves EXACTLY ZERO premium to the money that the employees will give back in the future. The only worth that the creditors will receive for what's owed from past goods and services is 100% dependent on the employees giving back in the future. The only value the creditors get, is what the employees give them.

Now, of course it works both ways. The employees are in the same position, vis-a-vis the creditors. And that simply reinforces the argument that we should be receiving a portion of ownership in AC, just as they are.

Furthermore, only past debts (prior to April 1, 2003) have not been paid. All goods and services going forward are paid at the discretion of the court overseeing the CCAA.

As has been repeatedly posted here, the creditors are NOT owed between 12 and 13 billion. The actual debt owed to creditors is a small fraction of that. The rest is lease obligations and the like.

A few questions, if you don't mind?

Tell me, A/A... When someone says to you, "You deserve more for your sacrifice..." is it your habit to say, "No I don't, no I don't."?

Of the three shutdowns you've been a part of since '98, how many of them were at airlines where employees were significant owners?

I ask the first question because it's not a requisite of professionalism that one unnecessarily sacrifice one's prosperity.

I ask the second question because employee ownership is such a sound idea for an enterprise that is labor-intensive and competitive. Why would you argue that AC's employees do not deserve such a mode of compensation in return for the very substantial sacrifice they have made?

If you like, forget the whole creditor/employee comparison thing if you're in disagreement with it, and simply look at the only possible consequence of my recommendation: it's that at some future point, and through future negotiations, that Air Canada's employees consider taking an ownership position in the enterprise they have worked and sacrificed for.

That's the only recommendation in this regard I've made. Do you have some objection to it?

neo

[DEFCON]

Neo

Employee ownership is a disaster waiting to happen. Ask yourself, who rules? ACPA?

[Guest jazzplayer]

Hi RR

How can you suggest that the proportion of the reduction of your wages should equal an equal percentage equity stake in the company. If this were the case then I should own a big chunk of the Bank Of Montreal whom were instrumental in de-investing me of mutual fund value in past years. Your lower wages are a direct result of a multitude of uncontrolable and unpredictable factors that negatively affected AC's tenuous bottom line and thus yours, primarily a bankruptcy protection filing, numerous disasters (SARS, 9-11 and media hysteria) and foremost, a huge amount of rock bottom competition that has forever changed our division of labour and reduced the demand for our product and thence, through market forces, changed our concept of normative remuneration. I am not sure why you choose to compare yourself with the creditors all the time, it is like comparing apples to oranges and not entirely logical.

"the money that creditors are owed for past goods and services deserves EXACTLY ZERO premium to the money that employess will give back in the future"

How are you giving back money in the future exactly? And why are you not giving the company back money for their past losses?

You seem to be taking this crisis personally and it reflects in your posts. Granted, you are just not worth as much as you were 5 years ago and the company is now in the drivers seat, it is a sellers market. You are an employee, not an owner, and the company owes you nothing other than the wages you receive. The company isn't out to get you, they are simply here to provide a service to make money and they haven't done that for a very long time. In fact they have been losing money for years and I don't hear you trying to take some corporate responsibility for that. You still got paid (quite well) while they were losing money, that won't happen at some airlines that are using profit sharing. Your current wages, are now being paid to you at what the current market will bear, until such a time as the airline model changes again or the economy catches on fire. (maybe you haven't noticed the stock market for the past three years?) I then suggest that you sit back and enjoy the fact that you still have a very desirable and sought after position. If not humble, be grateful.

[Arctic Ace]

Neo

"Tell me, A/A... When someone says to you, "You deserve more for your sacrifice..." is it your habit to say, "No I don't, no I don't."? "

I feel I deserve $1,000,000/yr for what I do.

I also realize the company I work for can't afford to pay us aviation heroes that amount.

Therefore I have to be a realist and work for what I feel is fair compensation.

You on the other hand seem to be an idealist. You feel you should be paid according to what you were paid in the past. Unfortunately Air Canada has been living beyond its means far too long. It couldn't afford to pay you what it was paying you. Your compensation has been adjusted by market forces. Get over it. You can either be a realist and accept it, or an idealist and quit.

If you care to take the time to re-read what I posted I think you will see I agree with employee ownership. Its your employee/creditor comparison that doesn't wash. That answers your second question.

Here is what I wrote.

"All that being said, ESP's, stock options, profit share, etc. is a good plan and contributes to a healthier company as it does align the employees with the interests of the corporation, but don't forget had you been on such a plan in the past, like the creditors you would now be taking a haircut for past services. Going forward, such a deal would be good for Air Canada and its employees, but your arguments for such a deal are weak and without merit."

[Guest rance]

great post jazzplayer.

The company pays us for providing a service.Take airplane at point a and fly it to point be b and i will pay you x amount of dollars for doing it.Will also give you medical and dental benefits,travel privilages and a pension.

If neo feels he is not being fairly compensated for his services than he should go somewhere where they pay him what he feels he deserves.Unfortunately for him there is no airport on fantasy island.

[Guest neo]

So we're in agreement that employee ownership is a good thing and that AC's employees should consider it in their future relationship with the employer.

We're not in agreement about what the creditors and employees are owed for their respective contributions to AC's ongoing existence, but that disagreement is irrelevant to the main point above.

Neither are we in agreement about what each of us feels we're worth for what we do. But it's a subjective issue. As you correctly point out, one has to be a realist about what the employer can afford. Your employer may be able to pay one way, and another employer able to pay another. If you have any sense of self-interest, you would welcome employees elsewhere making more than you, because if that level is sustainable, it will eventually pull your own wages up.

Decrying others' attempts to improve their working conditions is a self-defeating act.

There are a good many forces at work that have adjusted our compensation. If you believe that only "the market" has been involved, then you are dead wrong.

But let's just go with your thinking for the moment. What you're saying is that Air Canada's employees will put in excess of $6 billion dollars back into their employer and they deserve to receive EXACTLY NOTHING for that money. Well, to my way of thinking, that's an extreme point of view, and not one that stands up to any rational notion of "the market" let alone fairness.

You appear to have bought into the fiction that employees so often succumb to: that they're just helpless victims of some nebulous market force and that other issues don't come into play when it comes time to negotiate compensation. Well, you will be if you aren't as smart, fast and tough as the people who have a better idea of what the market is all about.

neo

[Guest neo]

If you had a contract with the BOM that stated that your mutual fund value would be such and such in the future, and then your fund came in at less than that, then the BOM should compensate you in some way for the shortfall. Should they not?

But your mutual fund wasn't purchased with any such guarantee. Was it? You bought it and assumed the risk that it could be higher and it could be lower. Therefore, the BOM owes you nothing for it's current loss of value.

In the case of employees, creditors and the like, we had contracts that stated we would provide goods, services and so forth at agreed upon rates. Air Canada has defaulted on the terms of those contracts. OK, so &%$@! happens. What I'm pointing out to AC employees is that whereas the creditors have received something concrete in return for their sacrifice, the employees have received nothing.

That's the bottom line, jazzplayer. You can dress it up any way you like, you can talk about market forces, you can talk about any number of influences on the situation. But at the end of the day, AC employees took a $6 billion dollar hit to their wages and received EXACTLY NOTHING for it.

You may think that's the way it ought to be, but I don't.

neo

[Guest neo]

That's not a correct way to think of the issue, DEFCON.

Employee ownership does not refer to employees having complete control of a company. There may be times when that's appropriate, but not in this case and in any event would be contrary to the Air Canada Act as I understand it.

Employee ownership simply describes a situation where employees acquire in some way a significant level of ownership in their employer. This could be 5%, 10%, whatever, but it would not be the case that the employees have CONTROL of the company.

There are over 10,000 large and medium size companies in North America ALONE where the employees have a significant amount of ownership in their employer. If employee ownership were a disaster waiting to happen, then don't you think we'd be seeing the effects of that on a much larger scale?

In particular, employee ownership is an ideal situation for a LABOR-INTENSIVE enterprise that operates in a HIGHLY COMPETITIVE environment, and which requires a HIGHLY-SKILLED workforce. The people who prove that paradigm are the employees of Microsoft.

Learn and prosper, or ignore and flounder.

neo

[DEFCON]

From a labour perspective I’m bothered by one part of the new deal.

Should the corporation get into trouble again it will come to the employee looking for lets etc from the current contract. In the alternative, should load factors suddenly go through the roof and average 99% with a huge yield, I believe we’ll have one hell of a time convincing management to reopen the existing agreement.

[DEFCON]

As long as the unions aren't bickering over BOD seats etc I have no problem. Where employees have a say in the day to day ops etc I do have a problem.

Would we be in agreement with this example?

[DEFCON]

PS:

In the airline world I believe pilots generally have a much better grasp of the operational world than does internal management. On the other hand internal management should have a better handle on running the "book" end of the business than pilots.

Bad management has apparently ignored line generated suggestions for improvement etc and that's one of the reasons we're here today.

[Guest neo]

One needs to think about this issue very carefully indeed.

If you have a very significant stake in an enterprise that a seat on the board of directors is appropriate, then you should have one, or as many as is reflected in the amount of your ownership. You do this because you have such a large stake in the business that keeping an eye on its operation and decisions is only sensible.

BUT! Employee owners must make a shift in their thinking, away from simply being worker bees and towards being an owner. This shift in thinking is ESSENTIAL, whether or not you have seats on the board.

In a very notable case of failure in this regard, the employees of United Airlines took a major ownership position years ago. They DID NOT receive representation on the BOD appropriate to their ownership, and perhaps as a consequence of that they did not make the shift in consciousness from that of an employee to that of an owner. United and its employees did not prosper.

If AC's employees become owners, they will have to be careful not to fall into the same trap.

B/W,

neo

[Guest neo]

That's a big "No duh!" there, good buddy.

Keep thinking. You're beginning to see why I voted no.

neo

[Guest neo]

One needs to think about this issue very carefully indeed.

If you have a very significant stake in an enterprise such that a seat on the board of directors is appropriate, then you should have one, or as many as is reflected in the amount of your ownership. You do this because you have such a large stake in the business that keeping an eye on its operation and decisions is only sensible.

BUT! Employee owners must make a shift in their thinking, away from simply being worker bees and towards being an owner. This shift in thinking is ESSENTIAL, whether or not you have seats on the board.

In a very notable case of failure in this regard, the employees of United Airlines took a major ownership position years ago. They DID NOT receive representation on the BOD appropriate to their ownership, and perhaps as a consequence of that they did not make the shift in consciousness from that of an employee to that of an owner. United and its employees did not prosper.

If AC's employees become owners, they will have to be careful not to fall into the same trap.

B/W,

neo

[DEFCON]

Employee don't / can't generally think like owners. Unions are dysfunctional for many reasons.

Imagine a BOD with a seat for each union head and a debate over a groups wages and working conditions. Can you imagine the bickering that would go on. Pilots would tell everyone they should rule becasuse they're the smartest, the F/A's would press their number advantage etc, and what do ya have...failure.

Employee groups do have a vested interest however & IMO, they shouldn't have day to day control over the operation.

[Guest neo]

Employees don't think like owners because in most cases they aren't.

But employees prove every day that they can make the necessary shift to thinking as an owner as well as a wage earner: and that includes excellent examples of same in our own industry.

I can only imagine that the hypothetical example you give would indeed be a disaster, but of course it's never going to happen. Ownership can be at any level, most of which do not entitle one to a seat on the Board of Directors. But more to the point, if employees do have a seat on the BOD it MUST be under the realization that they are there to represent the interests of their particular shareholders and the value of the shares they own, NOT to represent the interests of the employees as wage earners.

Keep that issue straight, and all should be well.

neo

[DEFCON]

"Keep that issue straight, and all should be well."

...and that's exactly where all the trouble starts. Even with profit sharing the ugly issues surface. Back when we made a fortune for the parent corp and enjoyed profit sharing I recall overhearing some F/A's discussing the negative consequences to profit sharing vis a vis double cupping a pilot's coffee!

[Guest Philip Aubin]

Richard,

The issue of board membership has been debated ad nauseum. The fact is that a union memeber on the board has the obligation to act the same as any other member of the board . . . in the best interests of the shareholders. Also, on issues of percieved conflict, the conflicted board member will absent himself.

Philip Aubin

AC Pilot

[Guest neo]

What is ugly about that? I applaud the F/A's for thinking about the issue. Profit isn't something you think about when the going is tough, and then in good years you just burn money as though it didn't matter.

Is double-cupping a coffee going to make a difference? Probably not: but the point is those F/A's were THINKING about it. They had a self-interested stake in the employer bringing in black ink below the bottom line. When you get all the employees thinking about ways to save a little, the advantages start to multiply into something very meaningful.

Furthermore, if you create a situation where the employee has both a profit-sharing return AND a share value return, then he or she becomes even more motivated to keep costs under control and keep the customer satisfied.

This simple motivational arrangement helps to re-align the interests of the employees and the employer. Naturally, it does not completely eliminate the tension between those two groups, however it does lessen it. Reduction of that tension becomes both dollars and energy that can again be returned to the owners and the employees. It's a benefit that compounds its advantages.

I don't blame anyone for being skeptical of my analysis of this topic. However, one can observe reality, rather than the theoretical, if one requires further confirmation of the value of employee ownership. Our main competitor in Canada has never failed to turn in a profitable QUARTER, (let alone a profitable year) and is currently growing at a rate of 50% per year. Employee ownership is an important PART of that success. LIkewise, in the U.S.A. Southwest Airlines has recently turned in a profit that is double the previous years. All this in the most competitive and excruciatingly bad industrial circumstances airlines have ever faced. Employee ownership is an important PART of that success.

Doubting is good. Questioning is good. Challenging assumptions is good. Willful blindness is bad. Our successful competitors do a lot of things right, and employee ownership is one of them. If we want to compete with them, if we want to be as successful as them, then we will have to do things just as right as they do. If we don't have an element of employee ownership working for us too, then we will have to compensate for that deficiency in some other way. But why would we want to? Employee ownership is a Win-Win situation for everyone that wants to do well in a HIGHLY COMPETITIVE, LABOR-INTENSIVE, SKILLED WORKFORCE industry. To not have it is like trying to win a race with only one shoe. You're at a disadvantage to your competitors who are not missing the necessary equipment.

Best,

neo

[Guest neo]

What is ugly about that? I applaud the F/A's for thinking about the issue. Profit isn't something you think about when the going is tough, and then in good years you just burn money as though it didn't matter.

Is double-cupping a coffee going to make a difference? Probably not: but the point is those F/A's were THINKING about it. They had a self-interested stake in the employer bringing in black ink below the bottom line. When you get all the employees thinking about ways to save a little, the advantages start to multiply into something very meaningful.

Furthermore, if you create a situation where the employee has both a profit-sharing return AND a share value return, then he or she becomes even more motivated to keep costs under control and keep the customer satisfied.

This simple motivational arrangement helps to re-align the interests of the employees and the employer. Naturally, it does not completely eliminate the tension between those two groups, however it does lessen it. Reduction of that tension becomes both dollars and energy that can again be returned to the owners and the employees. It's a benefit that compounds its advantages.

I don't blame anyone for being skeptical of my analysis of this topic. However, one can observe reality, rather than the theoretical, if one requires further confirmation of the value of employee ownership. Our main competitor in Canada has never failed to turn in a profitable QUARTER, (let alone a profitable year) and is currently growing at a rate of 50% per year. Employee ownership is an important PART of that success. LIkewise, in the U.S.A. Southwest Airlines has recently turned in a profit that is double the previous years. All this in the most competitive and excruciatingly bad industrial circumstances airlines have ever faced. Employee ownership is an important PART of that success.

Doubting is good. Questioning is good. Challenging assumptions is good. Willful blindness is bad. Our successful competitors do a lot of things right, and employee ownership is one of them. If we want to compete with them, if we want to be as successful as them, then we will have to do things just as right as they do. If we don't have an element of employee ownership working for us too, then we will have to compensate for that deficiency in some other way. But why would we want to? Employee ownership is a Win-Win situation for everyone that wants to do well in a HIGHLY COMPETITIVE, LABOR-INTENSIVE, SKILLED WORKFORCE industry. To not have it is like trying to win a race with only one shoe. You're at a disadvantage to your competitors who are not missing the necessary equipment.

Best,

neo

[DEFCON]

Neo

I really don't have any arguement to the contrary.

My point is that all is fine and dandy until some issue comes up that some find important and others find petty. Being witness to the coffee cup issue and the disputes and hard feelings that followed leads me to question the wisdom of taking the idea forward with an employee run corp. Who sits on the BOD? Should it be a rep from each union? Who's interests will be deemed most important. If the F/A's are in contract talks does the F/A member excuse themself from the decision making process and allow the others to decide what's best? Can you imagine the ACPA rep being excused while the other labour BOD members decide what's good for pilots?

Responsible thinking and acting employees with or without shares in the corp is good however, BOD level representation is bad, IMHO.

Cheers

[Guest M. McRae]

Did it work for UAL???? If not what needed to be changed to make it work???? How can an employee rep on the BOD perform their corporate duties and ignore their union alliance????

[Guest GDR]

I have to agree with Neo on this one. Just because you have a high rate of employee ownership doesn't mean that you have someone on the board. To the best of my knowledge WestJet doesn't have an employee rep on the board.

The airlines that are making money are the one's that are following the low cost model. In the future I tend to believe that the only way that we will regain the salaries that we have enjoyed in the past is through some form of profit sharing and I think that employee ownership should play a major role.

Greg