Is Air Canada dead?

[Longtimer]

Air Canada to Pursue Alternatives to Trinity Investment; Business as Usual for Air Canada's Customers
MONTREAL, April 2 /CNW Telbec/ - Air Canada said today that while it
regrets today's decision by Trinity Time Investments Limited to not seek
extension of its Investment Agreement beyond April 30, 2004, it remains
focused on completing its restructuring and emerging successfully from CCAA
protection as soon as possible. As a result of Trinity's announcement, Air
Canada is free to pursue alternative equity financing arrangements and is
doing so. In that regard, Air Canada has contacted General Electric Capital
Corporation and Deutsche Bank Securities, both of whom have substantial
financing commitments to the Corporation to discuss alternatives resulting
from Trinity's announcement.
"Our restructuring has become more challenging as a result of record high
fuel prices, increased domestic capacity by our low cost competitors and the
geopolitical issues faced by the airline industry as a whole," said Robert
Milton, President and Chief Executive Officer. "However, our 2004 revenues are
tracking in line with what we projected in our business plan last October
during the equity solicitation process. We are seeing year over year unit cost
declines in the range of 14 per cent. Our cash balances are healthy with over
$900 million in cash on hand and close to another $500 million of additional
credit available. We have made major progress on important aspects of our
restructuring, including a significant fleet, debt and lease restructuring,
major reductions in supplier arrangements and changes to our fare structures
and distribution channels.
"Trinity's announcement expressly states that investment in Air Canada
remains a possibility if circumstances change sufficiently to meet the
concerns identified by Trinity, especially relating to arrangements with Air
Canada's labour unions. We are well positioned to carry on business
effectively while considering the concerns raised by Trinity as well as
alternative equity arrangements. We trust that our unions and other
stakeholders will recognize the urgency of resolving the remaining obstacles
to our exit from CCAA, particularly since the arrangements with GE and
Deutsche Bank also expire at the end of April, unless extended by agreement.
"I want to reassure our customers and employees that it's business as
usual at Air Canada as it has been throughout our restructuring, especially as
we go into our strongest travel period of the year, with very strong liquidity
levels.
"The stakeholders in Air Canada's restructuring, including our largest
creditors have reconfirmed their support in ensuring the airline's survival.
The progress achieved in Air Canada's restructuring to date clearly justifies
our continued resolve to overcome this latest challenge."
The Air Canada Ad Hoc Unsecured Creditors Committee has indicated that it
is disappointed with the adverse developments in the Trinity equity
initiative. At the same time, the UCC confirmed its desire to continue to work
with Air Canada management and the Monitor to establish an appropriate new
equity solicitation process as a component of a successful restructuring and
emergence from CCAA, subject to the satisfactory resolution of the fundamental
issues that adversely affected the Trinity Time initiative.
In addition, GE, the corporation's largest aircraft lessor and exit
financing lendor, has indicated that given the dynamic competitive environment
in the airline industry, its priority remains the successful completion of the
CCAA process as soon as possible. GE has indicated that it is supportive of
management's efforts to find constructive solutions and is committed to
working with Air Canada and to maintain an open dialogue with all stakeholders
to find an urgent resolution.
"When we announced our restructuring one year ago, we predicted that the
task before us would be painful and the challenges daunting. We have clearly
reached the point where our unions and the employees they represent need to
voice loudly and clearly that there is a will and a way to ensure our cost
competitiveness and convince Victor Li or any other investor that Air Canada's
people accept that the world has changed.
"The year has been particularly difficult for our employees and I thank
them for their hard work and dedication in taking care of our customers whose
continued support has been heartening.
"The remaining hurdles are surmountable and with goodwill and cooperation
on the part of all parties, I remain convinced Air Canada will emerge from
CCAA protection a much stronger airline," concluded Mr. Milton.

[Runway 31]

I note that Air Canada also announced that they had posted a loss of $1.9billion for the year. How long can they keep going making losses of this magnitude?. I cannot see anyone wanting to invest with losses like this. I also note that some large debt are coming up for repayment soon and unless they can get agreement on restructuring these, things could get messy.


It might be a better option to let them fall and allow smaller, leaner operations to come to the fore. This might be a painful option for Canada and the Canadian people but it might be the best option in the long run.

[rotornut]

Li walks from plan to rescue Air Canada

By JOHN PARTRIDGE,PAUL WALDIE, ANDREW WILLIS,SIMON TUCK
From Saturday's Globe and Mail


POSTED AT 12:28 AM EST Saturday, Apr. 3, 2004

Air Canada's long, troubled rescue began unravelling Friday as Hong Kong businessman Victor Li signalled that he is walking away from his planned $650-million investment because of the insolvent airline's uncertain financial prospects and a confrontation with labour unions.

As Canada's biggest airline began looking for another investor, both it and its unions reassured travellers that operations would not be affected and they would not be left stranded.

Observers, however, warned that liquidation of the airline is a possibility after Friday's developments.

As the restructuring deal came undone — a year and a day after Air Canada was granted court protection from its creditors — the betting on the sidelines was that any new investor would demand a far steeper price than Mr. Li, and any new deal could cost chief executive officer Robert Milton and chief restructuring officer Calin Rovinescu their jobs, as well as the contentious $21-million in bonuses each was in line to receive.

But there was also widespread speculation among Air Canada's unions and elsewhere that Mr. Li's Trinity Time Investments Ltd. may just be posturing and threatening to walk away simply in an effort to pressure the unions into making more concessions.

Trinity said it would not seek to extend its agreement with Air Canada beyond its April 30 expiry date and Air Canada was no longer obliged to deal with it exclusively.

"We are, of course, disappointed in this outcome," Trinity director and adviser Harold (Sonny) Gordon said in a statement released late Friday.

Labour cost and productivity savings promised by the unions are not being fully achieved, Mr. Gordon said, while the airline's financial outlook is not as good as expected because of record-high fuel costs and more competition.

The unions made concessions valued at about $850-million a year in restructuring negotiations last year, making up the bulk of $1.1-billion in annual cost savings Air Canada pledged to achieve.

As well, citing the unions' refusal to agree to changes Trinity wanted to make in the Air Canada pension plan, Mr. Gordon added: "We have concluded from this that without a change in the manner in which Air Canada's employees are organized and their interests [are] represented, Air Canada will not likely achieve a sufficient fresh start to prosper and grow in the competitive environment which it faces."

Mr. Gordon appeared to keep the door open a crack, saying Trinity has not ruled out "a continued participation if circumstances change sufficiently."

The announcement came as Air Canada disclosed that it had an operating loss of $684-million last year, and a final loss, including reorganization and restructuring charges, of more than $1.86-billion.

However, the company insisted it is business as usual, saying it has $900-million in cash on hand and nearly $500-million in additional credit available. "I want to reassure our customers and employees that it's business as usual at Air Canada as it has been throughout our restructuring," Mr. Milton said.

Air Canada said that as a result of Trinity's announcement, it is "free to pursue alternative equity financing arrangements and is doing so."

April 30 is also the expiry date for a pact under which GE Capital Aviation Services agreed to lend Air Canada $1.8-billion. A spokesman for the U.S. firm said that, although this deadline remains, its deal is "absolutely not" tied to Trinity's. "Our priority remains the successful emergence of Air Canada from this bankruptcy process and we're going to continue to support management's efforts," he said.

Federal Transport Minister Tony Valeri gave no hint that Ottawa is prepared to bail out Air Canada if another rescuer cannot be found.

"Today's developments underscore the need for the unions, the company and the investors to re-examine their positions and redouble their efforts," he said. "They all have a vested interest in seeing Air Canada succeed. We continue to have confidence that Air Canada will be able to serve Canadians now and find a long-term private-sector solution."

Meanwhile, some labour officials and industry observers speculated that Mr. Li may be threatening to walk as a bargaining tactic to get Air Canada's unions to agree to changes he is demanding be made to the company's pension plan but which they have refused to discuss.

"That doesn't say they pulled out, that just says they are not going to extend," said Gary Fane, national director for the transportation industry of the Canadian Auto Workers union. "It sounds like if all the unions got on their knees and said, 'Please let me give you more concessions,' then they may not leave.

"I'm not suggesting it's not serious," he said. "I'm suggesting that it doesn't surprise me. The end of the world is not coming yet."

The CAW represents about 7,500 of Air Canada's approximately 30,000 employees.

Douglas Reid, strategy professor at Queen's University in Kingston, Ont., agreed Trinity's statement leaves plenty of room for a deal with Air Canada. "I don't interpret this as a walkaway story."

Mr. Milton did not rule out a deal with Mr. Li's firm, saying in an e-mail to Air Canada employees that he "will be seeking a meeting with all our union leaders to determine if the willingness exists among our unions to try to convince Trinity to pursue their investment."

However, other sources said Mr. Li, the eldest son of Hong Kong billionaire Li Ka-shing, is going and will not be back.

"This is not posturing — it's real," said one person familiar with Trinity's thinking.

One investment banker who has worked with Air Canada for a number of years concurred. "Trinity can't really back down," he said. "You can't say we want X, Y and Z by April 30 or we walk, then let April 30 come and go and not walk. We're into the endgame."

A source close to Air Canada said it would take a "miracle" to get a deal with Trinity at this point.

The source added that Mr. Li felt personally insulted by remarks made by some labour leaders. He cited a March 5 meeting at which a union official told a Trinity negotiator: "You tell your Hong Kong billionaire to take his money back on the boat to China."

The source added: "That's just not the type of thing you say to a Chinese businessperson."

Among the potential substitutes for Trinity that Air Canada will likely approach are New York investment bank Cerberus Capital Management LP, which lost out to Mr. Li's company Trinity last year in the bidding to become the airline's major shareholder, and Texas Pacific Group (TPG) of Fort Worth, Tex. TPG made a joint proposal with Toronto-based Onex Corp. that did not make the short list.

Neither Cerberus nor TPG would comment on Friday.

[Airbubba]

Air Canada is 'toast'

analyst: Financial backer Trinity reopens bidding, still interested only if 'circumstances change'

Paul Vieira
Financial Post

Saturday, April 03, 2004

The collapse of Air Canada edged closer to reality yesterday after Victor Li, the insolvent company's prospective investor, said he has lost interest in the airline -- due to a poorer-than-expected balance sheet and intransigent unions -- and has freed the carrier to pursue another deal with a different equity partner.

The stunning statement from the Hong Kong-based businessman caps a wild day that saw the airline report its largest annual loss yet, of $1.86-billion or $15.53 a share for the 2003 fiscal year, more than double what it lost last year. Also, the national leadership of Air Canada's largest union took control of a local authority and suspended its executive team after that team negotiated a pension deal with the company.

The result of Mr. Li's latest threat means Air Canada has days to get its restructuring on track or face liquidation. The airline's stay under bankruptcy protection will expire on April 15, and the Ontario court wanted to see "significant progress" on the file before giving another extension.

One industry analyst said it's too late.

"The company is toast. It's finished," said Jacques Kavafian, an airline specialist at Octagon Capital, adding there's likely no other investor in the offing given the porous state of the airline's books...

...One union leader dismissed Trinity's statement, saying it was another round of brinkmanship.

"This is not going to prompt us to get on our knees and beg and give more money back," said Gary Fane, director of transportation for the Canadian Auto Workers, which represents ticket agents and call-centre employees...



http://www.canada.com/national/nationalpost/financialpost/story.html?id=5327e63d-0800-4bc2-bb68-a16df9c9367c

_________________________________________


Li and Air Canada unions inhabit different planets


By ERIC REGULY
Saturday, April 3, 2004 - Page B2

Air Canada took a big step toward oblivion last night when Victor Li's Trinity Time Investments said it's ready to walk away from the airline. The announcement was a threat, of course, but it was a real one because Mr. Li and most of the unions evidently inhabit different planets. "Air Canada's organized labour structures impair its ability to succeed," Trinity said.

Trinity was referring mostly to Air Canada's pension plan. The Canadian Auto Workers and other unions might not believe this, but unless the pension plan is fixed, the airline is dead, dead, dead. Think of it this way. When the airline emerges from bankruptcy protection -- no certainty now that Mr. Li's proposed $650-million investment is highly doubtful -- it will have about $7-billion of assets. The pension plan will have about $9-billion, less the $1-billion or so Air Canada owes it. So the pension plan will be bigger than the airline.

So what? The point is a plan of that relative size, whether fully funded or not, will always hang like Damocles' sword over the airline. It is no exaggeration to say the pension hole made Air Canada's crash landing in bankruptcy court a year ago inevitable. It is equally no exaggeration to say that, unfixed, the plan could come back to destroy Air Canada again and again...

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040403/RREGULY03/TPBusiness/Columnists

[Airbubba]

>>If they book AC via travel agent in Ireland, direct via phone or online, what will happen if AC folds as regards refunds?<<

Here's a FAQ about bankrupt airline ticket refunds in Canada:

http://www.cbc.ca/news/indepth/background/canada3000_refunds.html

It looks like in most cases people who purchase tickets join a long line of unsecured creditors. They may get some money back or if lucky, another airline may honor the tickets on a standby basis.

It is possible that the government will continue to support endless political airline bailouts. Canadian Airlines unions gambled and won on this a couple of years ago. Surely they wouldn't let Air Canada, the flag carrier and a former Crown corporation, go under? Or would they?

I wouldn't worry until they start using the phrase "business as usual"...

[skidcanuck]

Looks like the unions have destroyed this airline finally......

[pigboat]

It's gonna become a political football any day now. This country will be having a general election either early this summer or in the early fall. The current government won't let 'em go under, too many votes to lose in Montreal, Toronto and Winnipeg.

[ziva]

just to tell you that the unions have finally destroyed the airline... banch of STUPID guys that beleive they are untouchable!!!
guess what,..... we will see what will happen april 15th!
but in the meantime,..... with the election coming soon... they won't let the airline going under! too much to lose!
I can't see the country loosing around 200 000 jobs, .... Cara, fuel, the great Toronto airport... going bankrupt? I don't think so Tim!!! but they deserve... to receive a big kick in the butt!!

I'm just fade up!

ciao!
so they may be saved again ... but they desurve

[PaperTiger]

11 days is a long time in the negotiation business. What we're seeing here is the end game, none of AC, Trinity or CUAW have yet to lay their cards on the table. No doubt they all have their agendas pretty much set, but aren't going to be the first to reveal them. Nor for that matter will the government. A number of scenarios are possible, some of which have been aired and others only the principals have formulated. I have my own ideas but I'm no guru so I'll keep quiet, but I would bet (modestly) that there will be an Air Canada in some form this time next year.

[ziva]

HI pagetiger,

so you think that they won't make it.... and something will emerge next year!?
why not I think everything is possible!
but with the election on the go... and the number of jobless person.... this going to be devastator for the canadian economy....
but will see 11 days to go!

cheers!:cool:

[YYC F/A]

Looks like the unions have destroyed this airline finally......

just to tell you that the unions have finally destroyed the airline... banch of STUPID guys that beleive they are untouchable!!!

When a Reservation Sales Agent is getting $60,000+ a year at AC, and yet over at WestJet et al, it's barely half that, yes, I can see that (certainly in the case of a carrier stuggling to make a profit like AC) there needs to be some change.

But I don't think it's fair or reasonable to automatically blame the unions (and the unions alone) for the fall of AC.

Quite aside from the arguement that the Union's have already agreed to (collectively) billions of dollars in cuts, ultimately the real concern here is Air Canada's ability to deliver up a realistic and deliverable business plan for the future, and the total lack of trust, respect and confidence the workforce has in AC's leadership.

Revenues are down, passenger loads are down, millions of dollars of investment went into initiatives such as Tango which has now been scrapped, some are questioning the effectiveness of low cost carrier Zip which has been running with load factors heavily below that of WestJet....

AC has turned to labour cuts and layoffs, they've cut so deep in some cases that they have been desperately short of ground staff, huge lines for check-in, not enough ramp personnel to go around leading to delays, customer dissatisfaction....

There is no doubt that in today's climate, airlines need to be 'streamlined' and cost-efficient.

Union's have a vital role to play in bringing (often outdated) contracts into some form of line so that the gap between the Low Costs, New Entrant and Charter carriers and the established former flag carriers like AC is more realistic.

Worker's have a vital role to play, realising and accepting that as painful as it is, the $$$ need to be honed in somewhat, that work rules need to be changed, all to ensure the continued survival of their employer, and their longevity of employment.

But it's all to no avail if the airline management have no trust or respect from the workforce. And when you have a shaky business plan, a lack of direction AND a total breakdown in relations between workforce and top management, you have a model that (excuse the pun) just won't fly. No matter how deep you slash and burn the contracts and pensions.

British Airway's has risen from it's quarter's of losses, and is now turning to the future with a robust business plan, cost's down, and real results already showing through. They've got a long way to go yet. But BA is a prime example of how an airline can still be succesful despite operating in a heavily unionised (and higher cost) environment than it's competitiors.

[Airbubba]

Yet another analysis:

Sun, April 4, 2004

AirCan headwind 'unnerving'

Expert warns airline's uncertain financial footing could hurt business

By MICHELLE MARK, CALGARY SUN

Faith in the immediate future of Air Canada is plummeting fast as the beleaguered airline faces more turbulence. Barry Prentice, director of the University of Manitoba-based Transportation Institute, says consumers will be reluctant to fly Air Canada anytime soon for fear of being stranded if the airline goes belly up.

"This is unnerving for consumers," he said.

"It's certainly possible people will be worried about booking with Air Canada due to the possibility of being stranded someplace."

Trinity Time Investments, the airline's current proposed major investor, said Friday it will not extend an April 30 deadline for the airline to emerge from creditor protection and plans to walk away from its $650-million investment.

The company, headed by Hong Kong businessman Victor Li, said it was also releasing Air Canada from the exclusivity obligations of their investment deal -- a move that will allow the airline to seek out another investor willing to fill the void left by Trinity.

"It's hard to say at this point if this is just hard-nosed tactics in trying to get the best deal, but it could be a fundamental tipping point in the story," Prentice said, adding if Li pulls his support, it could mean the end of Air Canada.

"If Mr. Li walks away at this point, I can't see anybody else walking in and offering them more money," he said.

But Air Canada's woes could be good news for Canada's other growing airlines such as Jetsgo and WestJet.

"This couldn't be happening at a more opportune time for them," he said.

"They have airplanes that they have to fill and if people are more uncertain, they may start looking at these airlines as an alternative."

Meanwhile, the monitor overseeing Air Canada's restructuring says the bankruptcy court should extend the airline's creditor protection to give it more time to find a new investor.

Air Canada has said it has enough cash in its bank accounts and through its credit facilities to continue operating as usual while it seeks alternative partners. Air Canada has been under creditor protection since April 1 last year.

http://www.canoe.ca/NewsStand/CalgarySun/News/2004/04/04/408089.html

[ziva]

ok, YYC... look I'm involve in this probleme... I may lose my job the same as you... but You know regarding the pension ... Idon,t think you will lose a lot... what I have understood... nobody will lose ! but because the union have decided not to talk about it... they'd rather losing there job... then losing a little bit of money!!!! excuse me but I have seen that in France already... with Air Lib and AOM.... with Air littoral riviera... the union didn't beleive that the company will shut down.... and for just a little bit of sacrifices... they all lost their jobs.... that's clever!!!!! really clever!
sorry but I don,t trust the union anymore!!! they are fare away from the reality and they fighting ONLY for their own prospective!!!!... so beleive it ! I'm blaming the management too....bad decisions have been taken... and Robert Milton is definitelly a bad boss.... he doesn't have any guts! to stand in front of the pilots group and tell them to shut the F...ck up! and this is way we are here today!!!! I'm sad about it because I know that there is a lot of good guys working with us.... and we don't deserve that! but this is the life!

:mad: :E :*

[skidcanuck]

It isn't the recent union decisions that have created the problem - it was many years of greedy union actions that had baggage handlers making $70,000/year and thus slowly and eventually resulting in an airline with an uncompetitive cost structure that could not deal with the industry downturn.

Oh yeah, don't forget the management's aggressive purchase of debt-ridden Canadian Airlines.

The airline had already been fatally flawed, and these recent pension negotiations are akin to which bandaid to put on a ruptured aorta.

_____________________________________________________

Air Canada unions plot strategy after Trinity pulls out
Last Updated Sun, 04 Apr 2004 19:59:51
TORONTO - The leaders of Air Canada's main unions wrapped up a meeting Sunday refusing to grant more concessions to an airline they say is not on the brink of liquidation.


INDEPTH: Air Canada

"This is not an issue of concessions right now," said Pamela Sachs of the Canadian Union of Public Employees, which represents flight attendants.
"We want to see the new business plan. Then we will look at it really carefully and make some decisions. Then we will go forward," Sachs said. "Air Canada will survive. Air Canada will come out of this, and it will come out of it much stronger."

Workers have already given up more than a billion dollars in salaries and benefits, Sachs said, and it's time other options were explored – such as finding another investor willing to keep the money-losing airline aloft during restructuring.

On Friday, Hong Kong billionaire Victor Li's company, Trinity Time Investments, said it was walking away from a tentative agreement to pour $650-million into Air Canada. Trinity cited several problems, including rising fuel prices and high labour costs – especially the unions' refusal to water down their pension plans.


FROM APRIL 2, 2004: Trinity Time decision puts Air Canada future in doubt
On Sunday, union leaders once again ruled out bending on pension reform. Instead, they emphasized that Air Canada has plenty of cash on hand to keep operating while looking for another investor to replace Li's company.

"We want to make sure that that customers are not worried that the end of the world is coming," said Gary Fane of the Canadian Autoworkers Union, which represents thousands of Air Canada ticket agents.

"There's over $900 million in cash reserves sitting there, and the place is not going bankrupt."

The three-hour meeting was held behind closed doors in Toronto. Union leaders refused to divulge any of their strategy, including whether they've talked to other investors themselves.

'Pension from unemployment insurance?'

Although union leaders say they're united in their refusal to make any more concessions, cracks are appearing within the membership.

Some workers are afraid they will wind up with nothing if the airline goes bankrupt. In a few internet discussion forums, these employees are telling their unions to canvass membership on the latest offer.

"I'm angry about it," said an Ontario aircraft mechanic who wants union leaders to put Air Canada's latest pension plan proposals to a vote.

"What kind of pension can I expect from unemployment insurance? I think they're torpedoing our jobs, in essence, and I'd like to look into the possibility of legal action," he told CBC News.

Even if another investor is found to replace Trinity, industry analysts predict the unions will be asked to make additional concessions – perhaps even larger ones than Li's company demanded.


FROM APRIL 3, 2004: Give Air Canada more time, bankruptcy court told
Air Canada, meanwhile, is expected to ask a judge to extend its protection from creditors, which is set to expire April 15. On Saturday, court-appointed monitor Ernst and Young recommended the airline be given more time to restructure and find a new investor.



Written by CBC News Online staff

[ziva]

yes I will agree with you to say that baggage handler making 70.000$ up to 90.000$ per year is absolutly a non sens!
but hey you know what they are all big kids beleiving that they have all the right! well.... I still don't think that the government will AC going bankrupt!!!... too much to lose for Martin!!! the election are coming soon....
lucky them!...... but we nerver know! I just hope I will be able to keep flying... for couple of weeks!!!
:(

[goates]

I hope that the government doesn't bail them out again. It would create a great chance for someone to come in, buy the name and take over the profitable routes, especially the international ones. Westjet, Jetsgo and the others can take over the bulk of the internal routes. I don't see how they can survive for long even with a bail out with the current management and union attitudes. Southwest is heavily unionized, but they don't have trouble making money.

Why Air Canada is Doomed and Westjet is Ready to Soar (http://www.canada.com/calgary/calgaryherald/news/business/story.html?id=435e78d9-ea93-4299-8472-1125e646c434)

goates

[Airbubba]

From the 'Why Air Canada is Doomed and Westjet is Ready to Soar' link above:

>>Michael Roach knows airlines. He was a top adviser to U.S. presidents Gerry Ford and Jimmy Carter on the Airline Deregulation Act...and was a founding member and president of America West Airlines, the only surviving U.S. airline of the immediate post-deregulation era.

As a consultant, he now advises airlines, airports and governments around the world.<<

I wouldn't call that exactly a scintillating track record if he advised on deregulation and the only "immediate post-deregulation era" survivor was America West <g>.

Still, he may be right. Air Canada employees expect the government to bail them out no matter what. After all, they are God's Gift to Aviation, just like United, Pan Am and a lot of other Once Great Airlines. A year ago I would say there is no way a socialist welfare state like Canada would let them go under. But, times are changing...

[YYC F/A]

I hope that the government doesn't bail them out again. It would create a great chance for someone to come in, buy the name and take over the profitable routes, especially the international ones. Westjet, Jetsgo and the others can take over the bulk of the internal routes

If you look at the highest $$ profit return alone, then you will see Air Service in many Canadian markets shrink drastically or even evaporate totally. The WestJet's and Jetsgo's of the world follow the bottom line and (depsite the happy smiley corporate speak) don't give a rat's ass about providing any form of community service if the $$ return is greater elsewhere. Just look at WestJet's withdrawal from most of MB - Sudbury, Brandon, Thomson, Ste St Marie (apologies for spelling).

We're getting off topic somewhat, but the fact is that WestJet and Jetsgo have no interest in taking over many of the internal routes. They want to fly where there is the highest possible return on investment, and will quickly ditch even a profitable route if other 'grass is greener' opportunities exist elsewhere that offer a higher rate of return for the aircraft useage.

Canada is unique. We're the second largest country in the world geographically, so air service is vital. Yet turning a healthy profit on service to small isolated towns and communities can be challenging. It is vital that carriers such as Calm Air, Air Creebec, and of course AC's Jazz all have the ability to 'feed' into a unified central carrier.

There is no other carrier in Canada that is able to fill the void of AC. SkyService, HMY, Air Transat - they might pick up some slack. But the likelihood is that the bulk of the profitable routes referred to would be picked up by foreign carriers. Carriers who have no desire to become involved in marginal connecting service to regional destinations in Canada. Carriers who will be essentially taking what was once Canadian jobs, with the likelihood that the majority of those jobs will be gone forever.

In any event, WestJet follows the WN model closely. Like WN they fly one aircraft type, have no desire to invest in widebody aircraft, or fly intercontinental or longhaul international routes.

Quite aside from the fact that I find it sits somewhat queasily in my stomach that anyone could be 'hoping' that 30,000 people lose their jobs, I think that the ramifications for Canada would be far more profound than many might initially think.

Do I think that the goverment should 'bail' them out. Probably not. Although as already mentioned, Canada's reliance on air service could come into play, leaving the goverment forced to offer incentives and financial subsidy to other independant carriers to maintain service to many rural and isolated communities. It's a complex situation, there's no easy answers. What is clear is that AC is in a grave situation, and needs now more than ever strong leadership, a united and determined to succeed workforce, a strong and robust business plan, and not just another slash at the wage bill.

They seem to be pretty far off the mark on all counts right now. But it can be done. United ousted CEO Jim Goodwin who had become immensely unpopular with the workforce, and the trip into Chapter 11 finally got everyone to take a reality check and realise that this was not posturing - failure was real. But a strong leader in Glenn Tilton, a (so far) robust business plan, and a real step change in the workforce attitude mean that UA (while still a long way to go) is in a far better shape to emerge into profitability again.

[fatbus]

no one hopes AC fails but noway to the government bailing them out. 30000+ votes from AC employees is nothing compared to the millons of tax payers votes that would at risk. AC has had it good to long. Sorry, they have to do it on their own this time.

[goates]

I'm not hoping that 30000+ people lose their jobs. I also recognise that we do have a rather unique situation for air travel in this country. And I was definitely not trying to say that we let some foreign airline take over either. What I was trying to say was that the government should let the current Air Canada go. The company could kick out the current management and bring in new management and a new business plan that will work.

Right now they are trying to be everything to everyone, and end up doing it all poorly. They are also trying to beat everyone else at their game, instead of focusing on where they have the advantage. No one else in this country have any international routes, except for the tourist operators and no one else has a full service business class either. If they stuck to those areas, they could do pretty well. Jazz and the other regional airlines could take over the smaller routes and still feed into the larger cities.

True, Westjet and the others will drop a route if it isn't profitable, but they wouldn't be in business for long if they didn't. If there is a demand, someone will pick up the route. Probably with better sized aircraft to do the job. Why should someone fly half empty 737s if a 70 seat regional jet or a smaller turbo prop fits better? Maybe that's why Westjet has said that they are taking an initial look at regional jets.

I do hope Air Canada survives, just not in the current form. It's always nice to see the maple leaf amongst the tails at LAX and elsewhere.

goates

[skibeagle]

fatbus, you said "no one hopes AC fails"

What a load of cr@p ! Just ask the fifty year old ex C3 guy who has just been hired into the right seat of a West Jet B737-200 at CAD40k per annum, I'll bet he'd be delighted at the huge growth spurt that would result in AC's demise ! Or David Ho, nail biting at the prospect of winding up HMY with a CAD $80 million loss.

There has been over capacity in Canada for the past twenty five years. I don't think it would be any great shakes for there to be some under capacity for a change. As to the element of unprofitable rural routes needing an air service, well, it is like this, either it makes money or it doesn't. Simple, if it is profitable, someone will operate it, believe me, the CMA's and Calm Air's of Canada will turn a buck on the routes that WJ wouldn't or couldn't afford to fly. As for routes that just can't make money, well I'm sorry, but that has to be a subsidy environment. Why on earth should I or anyone else operate a route where I am losing money. An airline isn't a charity, and since it is the government that heaped the dereguated environment onto the airline industry in the first place (to reduce the need for large subsidies to the likes of the then Air Canada elephants of the world), it is up to the governments (Federal and Provincial) to decide whether they should help isolated communities.

As for YYC F/A's comments regarding the need to have a centralised carrier into which to feed, well, I live in a rural community, I have to drive to my nearest airport, (no bus or cabs available in my town), which has one route to one destination. If I cannot interline through on that carrier or one of it's partners to my final destination, then I have to check in again at the larger hub. It is something called an inconvenience. Because I choose to live in the back end of beyond, I accept that it is unreasonable to expect to have an intermodal international transport system on my doorstep. The people of Podunk, NWT know that too.

As for international routes in and out of Canada, they are all subject to bilateral agreements. It limits the number of Canadian and Foreign carriers on a particular route. Lets take YVR-LHR for instance, suppose AC had to pull of the route due to bankruptcy, sure BA would be able to pick up some slack, but they couldn't increase capacity beyond the agreed limits. That scenario would also open up prized slots at LHR for a Canadian carrier, there would be people like Richard Branson (or David Li) falling over themsleves to get the 25% max. foreign stake in a Canadian International carrier (which would likely be increased by the patriotic Feds to help get additional capacity going). And the Canadian secret weapon - our airline labour costs (excluding Air Canada's) are cheaper than anyone else's in the Western World.

From where I'm sitting, Ac's failure wouldn't be any great shakes.

Oh, and another thing, their staff are damn rude and the aeroplan scheme is a rip off.

[Airbubba]

Looks like the pilots are getting somewhat concerned even if "there is no panic"...

_________________________________________


Air Canada Pilots Open to Cuts

April 05, 2004 6:09:00 PM ET

By Charles Grandmont

MONTREAL (Reuters) - Air Canada (AC) pilots broke ranks with other unions at the insolvent carrier on Monday, saying they would be open to discuss further cost cuts to save the airline's restructuring plan from falling apart.

The Air Canada Pilots Association also said it would begin its own search for an new equity investor following the withdrawal of a $500 million equity offer from Trinity Time Investments, the personal company of Hong Kong magnate Victor Li.

Li's firm said it would walk away from taking a 31 percent stake in the airline because of its unexpectedly large losses and the unions' opposition to further cuts in labor costs.

``It's not true that there is not a willingness to negotiate,'' a spokesman for the pilots union, Jean-Marc Belanger, said.

``The pilots are disappointed by the possible departure of Trinity, but there is no panic. We will try to keep him on board or we will start looking for someone else.''

The overture from the pilots union comes only a day after Air Canada's five main unions, including the pilots, closed ranks against further cutbacks, leaving little hope of seeing Li extend his offer past its April 30 deadline.

Air Canada said it has already begun its search for a new financial backer. The company would not comment on reports it has approached large Canadian pension funds such as the Caisse de depot et placement du Quebec or the Ontario Teachers' Pension Plan Board.

Spokeswomen for both the Caisse and Teachers declined to comment.

AIR CANADA IN GREATER RISK

Airline experts says the withdrawal of Li has reduced the odds of a successful restructuring of Canada's largest airline and world No. 11, especially since most of the unions remain opposed to changes to their pension plans

``I don't think people realize how close to midnight we are,'' said Jacques Roy, an airline specialist at Ecole des Hautes Etudes Commerciales in Montreal.

``Why would someone invest in a company that can't fly people profitably, even under bankruptcy protection? The operating loss was C$650 million ($500 million) last year, that's even more than what Li wanted to put in,'' he said.

Any new investor is likely to be even more demanding than Li, given Air Canada's skyrocketing fuel costs and mounting competition from low-cost rivals, said Douglas Reid, an airline economist at Queen's University School of Business in Kingston, Ontario.

``Since Li was signed, conditions have deteriorated so fast that no one will give as good a deal,'' Reid said.

``I don't think the airline is doomed, but I think that its chances of survival have taken a very serious turn for the worse,'' he said.

Prime Minister Paul Martin said on Monday that Transport Minister Tony Valeri was closely involved in the file, but still hoped Air Canada would not need government help to sort out its woes.

``You know, it's very, very important that all of the parties redouble our efforts to find a settlement,'' Martin said during a trip north of Toronto.

With a federal election expected this year, many analysts say it is highly unlikely Ottawa would allow the collapse of the airline that carries two-thirds of domestic traffic.

[Tan]

AC has one billion dollars in cash at the present time. I don't think we are going to see the demise of AC anytime soon.

[skibeagle]

Tan

1 Billion(cash)/1.887 Billion(annual loss) = 6 months 11 days.

That would certainly qualify as soon in my opinion

[YYC F/A]

From where I'm sitting, Ac's failure wouldn't be any great shakes.

Oh, and another thing, their staff are damn rude and the aeroplan scheme is a rip off.

I suppose that's why in an annual survey of the world's most
frequent air travellers, Aeroplan has been voted the world's Best Frequent Flyer Program for the second consecutive year. :hmm:

And as for all staff being damn rude, I think that's a bit of a sweeping generalisation. There's rude staff at every airline, and at every large company. Is it acceptable? No. Does it mean that everyone is rude and doesn't give a toss? No.

I totally agree with your reply about government subsidy for certain unprofitable routes to rural communities (should the goverment feel that service is neccesary and commercial carriers can't make it work etc) - isn't that what I said earlier?

I'm not getting into a p1ssing match here. Just don't feel that some of your anti air canada statements are particularly founded.

[Tan]

skibeagle

The actual operating loss was approximately in the order of $600 million, which was approximately the average operating loss of the major NA carriers.

The rest of the loss was due to one-time write-downs, which is standard in situations like this.

[PaperTiger]

Can someone enumerate these subsidised 'social' routes flown by mainline AC ? Even Jazz have no presence in the North, none in much of the Prairies and have just dropped some Newfie points.

AC is not losing money serving the boondocks, because they simply don't fly there. Obviously where they are bleeding worst is a closely guarded secret, but I'd take a long look at those RJs flying to minor US cities.

And is now the right time to expand to S. America ? Can't see any profit there myself.

[skibeagle]

YYC FA,

Just whom exactly voted Aeroplan the "best" frequent flyer program? In Canada maybe ! Wow, competition is stiff there isn't it ! It was probably something like "Business Traveller" magazine, oh yes, right on top of things in that periodical. I'll bet the new booking fee will see that heady award vanish from aeroplan's clutches.

You can never get a seat when you want, ever, so I have always redeemed my miles with United. Now there is a booking fee that they have introduced which wasn't there when I opened my account. So you see, just like the employees expecting their pensions to be there for them when they retire, we customers get duped into thinking there is something there when there isn't - like a flight somewhere on our points.

If you are an AC FA, then I doubt you have ever tried to book an aeroplan seat anywhere. However, may I recommend Alaska Airlines Mileage Plan, should you ever find yourself in the non Z fare or ID90 category.

As for rude staff, generalisation maybe, but that has been my experience of travelling with AC, at best they appear "inert"and usually: "get out of my face, Im not getting into a p1ssing [sic] match with you, I'm right, you're just a fare paying ('cos you can't redeem your aeroplan points) inconvenience to me".

As for sweeping comments, how's this, Air Canada are unpopular with the Canadian public, they have been gouged by that firm ever since true competition disappered after 9/11.

[goates]

My experience with AC staff has been much the same as skibeagle's. The result is that unless AC is the only way to get to my destination, I will fly with someone else. Even if it costs a little more. Many of my friends, family and other people I have talked to generally agree about the quality of service. More often than not I feel like I am an inconvenience on AC, when other airlines make you feel more than welcome. There are probably many different reasons for this, but when it happens so consistently, I am going to steer clear of it.

I suspect this is probably having an effect on AC's passenger levels, which will make it even harder to turn the airline around as you now have to earn the passenger's trust all over again.

goates

PS - I first heard of Pprune on an AC flight while coming back from the Cook Islands, so good things do happen with AC. Just not often enough.

[YYC F/A]

Just whom exactly voted Aeroplan the "best" frequent flyer program? In Canada maybe ! Wow, competition is stiff there isn't it ! It was probably something like "Business Traveller" magazine, oh yes, right on top of things in that periodical.

Not quite.

"In an annual survey of the world's most frequent air travellers, Aeroplan has been voted the world's Best Frequent Flyer Program for the second consecutive year. Recipients of the prestigious "OAG" ("Official Airline Guide") "Airline of the Year Awards" were announced at a gala ceremony in London yesterday evening. Aeroplan competed for this award alongside prominent industry leaders, including the frequent flyer programs of British Airways, Continental, Southwest Airlines and Lufthansa.

Aeroplan is known as one of the most rewarding loyalty programs in the industry. In 2002, over 1.4 million round-trips were redeemed for travel on Air Canada and its worldwide Star Alliance partners."

The full article can be read at http://www.newswire.ca/en/releases/archive/April2003/11/c0319.html


If you are an AC FA, then I doubt you have ever tried to book an aeroplan seat anywhere. However, may I recommend Alaska Airlines Mileage Plan, should you ever find yourself in the non Z fare or ID90 category.

No, I'm not an AC FA. No, I don't belong to Aeroplan. I prefer WorldPerks (I'm Gold Elite and the free upgrades on both NW and Alaska Airlines are very nice, ta very much!).

I'm sorry you've had such negative experiences with Air Canada. I personally know a lot of great people that work at AC, and whom are trying their best to continue to deliver great service and keep positive in a very difficult situation. I hope for them that they don't lose their jobs.

And if some people at AC might seem a bit bitter and jaded, it might be that they've had more than their fair share of preverbial crappola slung at them over the last few years, went through a painful merger of CP and AC (and all the controversy and infighting that this brought), have suffered cutbacks, and (particularly for CSA's and Ground staff) have had to deal with huge numbers of unhappy customers all day due to severe staff shortages. 4 check in agent's total one busy weekend afternoon at Vancouver for entire AC operation, lines out the door. Should they take it out on the customer - no. Do I condone it - not for a moment. Just trying to maybe give you some idea as to why some people at AC are a little bit frayed right now.

The 'p1ssing' comment (sic). Well, I thought that 'pissing' as a word wouldn't work on Pprune with some of the language filters, but I guess it does. So we'll piss to that. ;)

Cheers.

[Wiggum75]

Hi,

Recently had the 2 of best AC cabin crews of my life to and from LHR - professional, courteous, and friendly. And I've heard the same from friends who recently travelled YYZ-YYC. So maybe it's "make the best of the last 2 weeks" time. ;)

I've personally always had a bit of an anti-union bias, but now have close friends whose families will be severely affected if AC liquidates at a time in their lives they should be enjoying. So how to make the company profitable AND change company culture to get rid of employee-manangement friction? I'm sure someone could get rich with that answer. But it would be nice to see it happen without a whole number of good people loosing their shirts.

[Globaliser]

YYC F/A:
Not quite.

"In an annual survey of the world's most frequent air travellers, Aeroplan has been voted the world's Best Frequent Flyer Program for the second consecutive year. Recipients of the prestigious "OAG" ("Official Airline Guide") "Airline of the Year Awards" were announced at a gala ceremony in London yesterday evening. Aeroplan competed for this award alongside prominent industry leaders, including the frequent flyer programs of British Airways, Continental, Southwest Airlines and Lufthansa.

Aeroplan is known as one of the most rewarding loyalty programs in the industry. In 2002, over 1.4 million round-trips were redeemed for travel on Air Canada and its worldwide Star Alliance partners."

The full article can be read at http://www.newswire.ca/en/releases/...3/11/c0319.htmlThe words "has been" may be a little misleading, in context. That press release is dated 11 April 2003. The current 2004 OAG awards shortlist doesn't seem to have a Best Frequent Flyer plan category - see http://www.oag.com/graphics/shortlist04.pdf - for the awards which are due to be announced/presented on 20 May 2004

And FWIW, Aeroplan doesn't seem ever to have featured as program of the year at the Freddie Awards (http://www.freddieawards.com). What either of these awards can boast in the way of reliability must, presumably, depend on how the results are calculated.

[Airbubba]

From the "If you can't beat them, sue them" department:

BREAKING NEWS

UPDATED AT 6:28 PM EDT Tuesday, Apr. 6, 2004

Air Canada suing WestJet

Canadian Press

Air Canada sued WestJet Airlines and two of its employees on Tuesday, alleging the discount carrier used information on a private Air Canada website to plan its expansion.

Air Canada alleges WestJet used the personal identification number of Jeffrey Lafond, a former Canadian Airlines employee hired by WestJet as a financial analyst, to access the website and find out detailed information about Air Canada's routes and market conditions.

The private website is used by Air Canada employees to book personal travel.

In its statement of claim filed in Ontario Superior Court, Air Canada alleges WestJet, Lafond, and Mark Hill — the airline's vice-president of strategic planning — used the information to identify Air Canada's most profitable flights and times.

Using that confidential information, WestJet adjusted its own schedule, planned its expansion into new routes and adopted pricing strategies to force its larger competitor out of certain markets, Air Canada alleges.

"Its abuse of the plaintiffs' confidential information has enabled WestJet to expand its service, its revenue and its profitability at a more rapid pace than it would without the plaintiffs' confidential information," Air Canada said.

As part of his separation package when Lafond left Canadian Airlines in October 2000, he received two space-available airline tickets per year for five years. These tickets are booked through the private website.

The airline alleges Lafond's identification number was used 243,630 times between May 15, 2003, and March 19, 2004, to access the website.

"The continuous and massive use of Lafond's employee ID number and PIN to access the employee website could not be done by one individual and far exceeds any possible potential use by Lafond," Air Canada said.

"Such massive access to the employee website through one employee ID number could only be accomplished through automated technology."

Air Canada is seeking $5-million in punitive damages, as well as damages for lost revenues and profits.

The airline also asked that any WestJet profits earned from use of the information be held in trust and that all the data be returned to Air Canada.

Officials at Calgary-based WestJet were not immediately available for comment.

The lawsuit comes as WestJet prepares to move its eastern hub from Hamilton to Toronto and increase flights out of Canada's largest city.

WestJet, which has been eating up domestic market share at Air Canada's expense, is stepping up the pressure, with plans to more than double its flights in and out of Toronto to 365 per week, up from 146, beginning April 18.

Air Canada is searching for a new investor to replace Hong Kong businessman Victor Li and his Trinity Time Investments, which has announced plans to walk away from a $650-million investment in the airline unless significant changes are made.

"The issue for us and for our employees in particular is to find the right investor," chief executive Robert Milton said Tuesday in his first public comments since Trinity announced its plans.

"A person that is just going to write a cheque to potentially rip the company apart is not what the employees need, or what I want."

Some of Canada's largest pension funds as well as Toronto conglomerate Onex Corp. and several U.S. vulture funds have been mentioned as possible replacement investors in the airline.

Michael Carney, a business professor at Concordia University, said the pieces of Air Canada may be worth more than the airline as a whole and an investor like Onex might look to sell off units such as its Aeroplan loyalty program, its Jazz regional subsidiary, and its maintenance division.

"I don't think he necessarily wants that, probably because he likes his little empire that he runs," Carney said of Milton.

An earlier bid by Onex, together with the Texas Pacific Group — a U.S. firm experienced in the turning around airlines — was rejected by the airline's board of directors in favour of Trinity.

Carney, who teaches aviation management, said that had the Texas Pacific bid been selected, Milton would have almost certainly been removed as head of the airline.

"He would be in a very hot seat if those owners came in and it didn't surprise me when they didn't select Texas," Carney said.

Air Canada also filed a motion with the court overseeing its restructuring Tuesday to have its creditor protection, currently set to expire on April 15, extended one month until May 14.

The airline said it needed the time to stabilize the current situation, develop a process to find a new equity sponsor and finalize a timeline to exit from creditor protection.

The bankruptcy monitor overseeing the airline has recommended the extension be approved.

http://www.theglobeandmail.com/servlet/story/RTGAM.20040406.waircan0406/BNStory/Business/

[Tan]

Airbubba

Gee this lawsuit speaks volumes about the corporate ethics of West Jet doesn’t it? By the way this is not the first time that West Jet has being caught with dirty hands…

[canuck slf]

Surely AC has better things to do with their resources and money right now than start a lawsuit. Just prior to the demise of C3 they also started a lawsuit against the previous owner of Royal, and we all know what happened to C3. Perhaps this is a characteristic of an airline in its death throes, the legal dept. builds themselves some short term job security by starting to sue people?
This also smacks of diversionary news. Does the phrase "Rearranging the deck chairs on the Titanic" come to mind.

[Tan]

canuck slf

Actually the lawsuit is a little more serious then that and could very easily escalate into criminal charges been laid. It appears that AC was aware of the intrusion and set up a sting operation as the number of hits (1500) per day was too obvious. Most likely the espionage was set up as an automated operation with results been analyzed frequently.

It’s easy to have a successful business plan when part of your “business smarts” is obtained via espionage.

Next you’ll be trying to tell us that Clive knew nothing about it…

[PaperTiger]

Yes, and it's easy to look real stupid if you

a) Give ex-employees access to 'sensitive' information :hmm:

b) Let it go on for 10 months :oh:

Globe and Mail:The website contains confidential information about the number of passengers booked on all flights at Air Canada and its subsidiary Zip for up to 352 days in the future, the suit claims.

The information on the site, the carrier claims, could also give competitors “detailed and accurate information” on Air Canada's routes and market conditions that they wouldn't otherwise have.As does any CRS, and/or public web booking sites (OK so you have to subtract, as only 'available' seats are shown. But it ain't rocket science).

[c150driver]

Just a few points I'd like to make...

1) Aeroplan SUCKS! I've tried many times to use my points, but I was always told "you have to book a year in advance for a warm destination during the winter months"...what a load of :mad: !! I watched an empty AC 767 come into Barbados...loaded with employees, and family affair, and all that other bull:mad: !

2) My heart sure won't be broken WHEN AC bites the big one...the only problem that concerns me is that the salary structure in the rest of the country may drop...

3) I just can't understand how a company can lose so much money with over 90% market share....maybe it's those $70000 baggage chuckers...or maybe the Canadian DC10 drivers who have been sitting at home with pay since Canadian was "taken over"....

Just my opinion...bash it if you want...

[Tan]

Paper Tiger

All present and former AC employees are covered by a confidential information clause. You break it at your own peril.

Most likely AC Internet security picked up on the intrusion early on from the abnormally high number of hits and planned a sting operation from that point on. It just wasn’t dumb luck..

By the way one of the defendants is Mark Hill co-founder of WJ so it starts at the top.
-----------------------------------------------------------------------------------

c150driver

1) Stop the exaggeration.

2) The salary structure will definitely head south

3) Get your facts straight.

[skyhawk1]

While it doesn't speak well for Westjet by introducing questionable ethics (People are still innocent untill proven guilty) - I think AC is trying to stretch this a little to far. The public website does not have the most acurate info, and it is only updated 2 or 3 times a day, even then it's not highly accurate. All Air Canada employees know the most accurate (real time) info for flightloads is on the Spetre (?) system, and that info can only be accessed in house

[dareya]

Wow - where to begin. 150driver - yeah and I can't wait until you can't feed your family (what a dumb-ass thing to say). . You are probably bang on about the pay structure in Canada if AC goes Tango Uniform. Does that mean a new FO at WestJet will go to the Food Bank Twice a month(?) - I kid you not - it is deplorable. Oh and since you are "in the know" about who was on the Barbados aircraft - you too must be privy to that info (via the folks at WJ???). That is confidential information - you don't know. I know guys like you though that just hate AC because you dont work for them.

[Tan]

skyhawk1

WJ accessed a private employee web site not a public one and it is updated in real time.

Personally I'm starting to have trouble with folks that think whatever business does is ok, damn the morality and ethics, full steam ahead because the bottom line is king.

Then we wonder why the youth of today don't understand the difference between right and wrong.

[dareya]

Tan - it is true - immoral is immoral. I know from first hand experience that if AC sneezes the media is all over it with any kind of negative spin possible. WJ can do whatever they like and the media puts a positive slant on it. WJ knows that. I know from first hand experience that you are just as likely to be treated like crap at WJ as you are AC. There employees are human too. They do not have a secret recipe on how to hire perfectly. There have been a number of mechanical problems that have failed to hit the media at all. I am all for competition and job creation in Canada - but call a spade a spade. Oh and on the other topic of going into small communities. The government mandates that AC goes into certain communities whether they are profitable or not. They also mandated that flight attendants speak French - at ACs expense. If any of this were forced on WJ how long would they survive? They wouldn't. They playing field should be even first.

[goates]

Westjet should be held accountable for this if it's true, but they are still innocent until proven guilty in a court of law. It would be nice to know though why Air Canada took so long to bring this up. You would think they would have shut this down much sooner.

Air Canada itself hasn't been much better towards Westjet, or any other competitors. Westjet was almost given gates to the new terminal in Toronto as Air Canada had said it would only need some of them. Then someone at AC found out that the remaining gates were going to be given to Westjet. All of a sudden they needed all of the gates. Not to mention trying to undercut prices on routes that competitors were flying to run them out of business.

It would be great if all corporations were held accountable and actually punished, but that might be wishing too much.

goates

[PaperTiger]

dareya writes "The government mandates that AC goes into certain communities whether they are profitable or not."

To which I repeat the same question. Which communities/routes are those ? Specifically, please.

Tan I'm not defending WJ 'mining' the family site, just pointing out that there is probably nothing on there which couldn't be gleaned through other means. Both parties look dumb here - AC letting it go on and WJ thinking they wouldn't eventually be sussed.

[©hris]

Air Canada Announces Resignation Of Calin Rovinescu....Read the full story (http://www.jetthrust.com/news/)

MONTREAL, April 7 /CNW Telbec/ - Air Canada announced the resignation of Calin Rovinescu, Executive Vice President and Chief Restructuring Officer. While the resignation is effective today, Mr. Rovinescu will remain available as an advisor to the Company for several weeks to ensure an orderly transition.

[Airbubba]

Does he get to keep his computer password?

[MarkD]

I think AC had to serve some routes as part of the Canadian Airlines takeover, but those lapsed last year IIRC.

[Globaliser]

PaperTiger: I'm not defending WJ 'mining' the family site, just pointing out that there is probably nothing on there which couldn't be gleaned through other means.If WestJet was getting the number of sold seats/unsold seats on particular flights through this website, which I understand non-revs can do (if not always through a website), that would be information not available publicly and definitely not available through a normal CRS. Public CRS displays will only tell you that at least x seats are available in a particular cabin, and x is no more than 9 - often as few as 7 or 4 depending on airline. Access to the number of seats actually sold would be access to a goldmine of data - all confidential to the airline.

[sanket_patel]

Why not? Air Canada has a new source of revenue off those passwords ;)

[Airbubba]

Timing of Air Canada lawsuit against WestJet 'suspect,' WestJet says

Canadian Press

Wednesday, April 07, 2004

CALGARY (CP) - The timing and motivation of an Air Canada lawsuit against WestJet that alleges the Calgary-based carrier stole confidential business information from its larger competitor is "suspect," WestJet said Wednesday.

In a carefully worded but terse statement, WestJet said it will conduct a "thorough investigation" of its own to the allegations that it used the personal identification number of a former employee of Canadian Airlines - which was bought by Air Canada four years ago - to access information about Air Canada's most profitable routes and schedules.

But WestJet said its review will seek "to identify further information which may serve to portray a more accurate representation of the facts."

WestJet also said that two of its employees named in the suit - Jeffrey Lafond, the former Canadian Airlines employee who now works at WestJet as a financial analyst, and Mark Hill, WestJet's vice-president of strategic planning - have accepted a company request to take a leave of absence while the review is conducted.

"WestJet is suspect of both the timing and motivation of the legal action, but does take the allegations very seriously nonetheless," WestJet said in its statement.

As for Lafond and Hill, WestJet said the leaves of absence granted the employees "does not in any way reflect the company's opinion of the conduct of these individuals, but does ensure that the internal investigation can be conducted in the most appropriate environment."

...The lawsuit also comes at a time when WestJet is expanding its routes and eating away more of Air Canada's once-dominant market share. The suit was also filed less than two weeks before WestJet will begin doubling its flights in and out of Toronto to 365 per week, up from 146, beginning April 18.

...WestJet said it is still reviewing the statement of claim and supporting documents filed by Air Canada, but added that it is "deeply concerned that there has been a challenge to the integrity of our company and our employees.

"We take very seriously our business code of conduct and have worked hard to entrench it into our corporate culture."...

http://www.canada.com/businesscentre/story.html?id=C0E54C54-82F7-478E-A43A-857B0223037E

[Tan]

Quote from another site..

"The individual who did this was given a 'package' from Air Canada when he left. A few company travel passes every year. To book flights on a company pass, you have to use the online booking system. So AC gave him a username and password to the Personal Travel Booking Website.

243,630 hits over a 10 month period. Approx 300 days in this time span, this equates to around 800 hits per day.
Guess how many flights Air Canada has per day? Thats right!
The computer program was checking AC loads, for each flight, everyday!

Makes it easy to bail from routes that aren't being filled by the competitor (which isn't allowed to abandon cities!), and pick up routes that AC is filling their planes on."

[theflyinggreek]

It brings back memories of Canadian before the end.

It is simple yet complicated. The airline needs to change in attitude and infrastructure.
I think I had better get my log book up to date....:\
Does anyone have openings for a 330/340 instructor??:ok:

[Dockjock]

Sounds pretty damning. If true that would have to rank as one of the all-time STUPIDEST corporate espionage tactics.
Using a password of an ex-employee now on your team- did nobody at WJ see how obvious it would be once they got caught?! Ouch.

[Tan]

theflyinggreek

The person involved was also ex-Canadian. Is this a ex-Canadian employee trend, try to do in your present employer?

[PaperTiger]

Has all the makings of a typical Canadian Scandal. Silly, petulant, inconsequential and laughable to the rest of the world. :p

First the gates nonsense at YYZ (gategate ?) and now theft of 'confidential' information. I don't have access to the website in question, but if it's used just to book non-rev tickets then it ought only to show space available on that basis. AC is probably hoping to get a dumb jurist (lots of them) to swallow their claims of just how useful the information was/is. If the website does indeed show 'profitabilty' as alleged then I don't think corporate naïveté is much of a sustainable argument in court.

And at the very least those two at WJ need their heads banging together.

Quite, quite silly. :ouch:

[Tan]

Air Canada links WestJet success to 'tap'
Lawsuit documents filed: Accusation that Web site data gave carrier unfair edge

Paul Vieira
Financial Post
Thursday, April 08, 2004

Senior Air Canada executives claim the remarkable success of WestJet Airlines Ltd., compared with the struggles and failures of other domestic low-cost carriers like CanJet and Roots Air, and its recent shift in corporate strategy are tied to its ability to tap unlawfully into the insolvent company's secrets.

The allegation comes in a series of affidavits filed by airline executives, technology staff and security managers in a support of an Air Canada lawsuit against its rival and two of its employees. The documents, which contain allegations yet to be proven in court, spin a tale that suggest many of the recent moves by the Calgary discounter -- from shifting its eastern hub from Hamilton to Toronto, to changing flight times on certain routes -- were done based on illegal access to Air Canada data.

The Montreal airline alleges WestJet was able, between May of last year and last March 19, to gain access to an Air Canada Web site on at least 240,000 occasions to acquire secret data -- namely passenger traffic and load factors on flights -- by using the personal I.D. of Jeffrey Laffond, a WestJet financial analyst, a former Canadian Airlines employee who was given a log-in password in order to book two free Air Canada flights a year until 2005 as part of his severance package.

Air Canada hinted WestJet may have tapped into the computer before May, 2003, but a change in software prevents Air Canada from tracking back that far.

Air Canada was first tipped off last December by a WestJet employee that the low-cost carrier's executives had access to its rival's secrets.

The whistle-blower decided to spill the beans to Stephen Smith, head of Air Canada's Zip discount subsidiary, because he "was upset, disgusted and concerned about unfair business practices ... in a vicious business."

Air Canada executives argued in the affidavits that WestJet's having access to this confidential information helps explain many of the company's recent moves and a change in corporate direction.

Montie Brewer, Air Canada's vice-president of commercial operations, cited as an example a change in scheduling on WestJet's Vancouver-Montreal route.

Six months after it started, WestJet "made a dramatic scheduling change, moving its only flight on that route from the evening to the early morning -- which coincides with Air Canada's most profitable time for this route," Mr. Brewer said in his affidavit, adding that was likely done with secret data in hand.

He also cites the recent announcement that WestJet is abandoning Hamilton as its eastern Canadian hub in favour of Toronto.

"By observing that Air Canada's loads out of Toronto to Montreal and Ottawa remained steady despite WestJet's presence in Hamilton, WestJet was able to determine that its Hamilton-based flights were not attracting Air Canada's Toronto customers," Mr. Brewer said, "and therefore, moved to Toronto."

The filings also note that as of January 2000, WestJet has skyrocketed from a 10% market share to 30%.

"It has done this at a time when other low-fare airlines who do not have access to Air Canada's confidential information have tried through trial and error to establish viable combinations of routes and fares," Mr. Brewer said, noting Canada 3000 and Roots Air collapsed, while CanJet and Jetsgo struggle.

Ben Smith, Air Canada's senior director of planning, said part of his job is to monitor WestJet's routes. "It has become apparent to me that there has been a marked change in WestJet's recent strategy," he said. "Formerly, it was very conservative about adding new routes -- generally one at a time, and staying within Canada.

"By contrast," Mr. Smith said, "its record on new routes over the past 18 months has been very good. It has added routes for which there is strong demand, and it has become apparently risk aggressive in its expansion."

WestJet has said it will respond to the allegations once it has reviewed all the court materials filed by Air Canada.

© National Post 2004

[PaperTiger]

Six months after it started, WestJet "made a dramatic scheduling change, moving its only flight on that route from the evening to the early morning -- which coincides with Air Canada's most profitable time for this route," Mr. Brewer said in his affidavit, adding that was likely done with secret data in hand.You need secret data to figure out that most people would prefer to arrive in Montreal mid-afternoon instead of the wee hours of the morning ? :hmm:

GMAFB :\

[goates]

"By observing that Air Canada's loads out of Toronto to Montreal and Ottawa remained steady despite WestJet's presence in Hamilton, WestJet was able to determine that its Hamilton-based flights were not attracting Air Canada's Toronto customers," Mr. Brewer said, "and therefore, moved to Toronto."

Isn't Westjet also setting up a code-sharing or similar agreement with Air Transat? If so, wouldn't it make sense to operate out of a larger airport that can accomodate both? Wasn't another part of the reason they weren't operating out of Toronto previously because Air Canada had virtually all of the gates to itself?

generally one at a time, and staying within Canada.

Are they not allowed to expand outside of Canada? Without Canada 3000, there must somewhat of a market for charter type flights. They had even started looking at outfitting 737s for flying to Cuba in 2002.

This still doesn't excuse stealing confidential data (why would you have it accessible over the internet doesn't make sense either), but the reasons given above seem pretty weak.

goates

[Tan]

Obviously WJ thought they did which speaks volumes about their business sense.
Being a thief is being a thief there is no nice way to put it.

The Canadian press treat WJ as the golden boy that can do no wrong. Perhaps if an investigator reporter were to talk to some of the AC folks in Calgary where WJ’s main base is they would get a surprise.

[palebird]

Pretty sure they are referring to the resIII system and not the employee booking site. ResIII is available to most employees and gives you access to a huge amount of data. By the way if any AC employees thinks that by kicking Li out there are better offers on the way think again. It only gets uglier from here on in. You will be lucky to have a job at all, never mind benefits, pension and good wages. I have been laid off for 6 months now and have no aspirations of going back. Just move on with your life.

[DW11]

Can someone confirm the following two points for me, just in case I’m being a bit thick.

1. Air Canada gives all employees access to information which could potentially bankrupt the company.

2. Air Canada routinely allows ex-employees access to this information.

[YYC F/A]

I don't think anyone is saying that the information could 'bankrupt' an airline per se. However, as with all companies, as an employee you often have access to a lot of privileged or commercially sensitive information.

The system used at many airlines internally that allows employees to list for space available leisure travel shows a lot of company confidential information, and it is bound by strict rules of conduct and confidentiality which it would appear have been breached in this instance.

At United, employees have the opportunity to check loads for any flight systemwide on any given date. The system will show aircraft type, aircraft configuration by cabin, number of revenue passengers in each cabin, and number of 'non-revs' listed in each class of service. Therefore, one can find out extremely accurately how many pax UA is booking in each class on each route on each day, and pick out trends etc. A similar system at AC would offer the same information, all of which is commercially sensitive.

It remains to be seen what the 'real' facts actually are, but if AC's claims are correct then this should be seen as a seriously bad managment decision by some of WestJets top personnel, and unethical and bad corporate practice by WestJet.

And yes, I would agree with some of the views already expressed here. If it would have been WJ making the complaint against AC doing that to them, there would have been an outpouring of sympathy to WestJet, 'the underdog' smiley touchy feely airline. But the fact that WestJet is the alleged villain here does nothing more than to make most people smile and say "WestJet - those cheeky guys, what will they think of next!" and chuckle away.

[Airbubba]

>>By the way if any AC employees thinks that by kicking Li out there are better offers on the way think again. It only gets uglier from here on in. You will be lucky to have a job at all, never mind benefits, pension and good wages.<<

Here come some more "white knights" with more calls for cuts as well:

_________________________________________


Apr. 9, 2004. 09:16 AM

Onex kicking tires at Air Canada

Schwartz's buyout firm talking to partners, sources say
Airline seeks another $200 million in wage, benefit cuts


RICK WESTHEAD
BUSINESS REPORTER

Canadian buyout firm Onex Corp., which has failed twice in the past five years to buy Air Canada, is weighing another offer for the cash-strapped carrier.

Days after Hong Kong financier Victor Li moved closer to scuttling his deal to invest $650 million in Air Canada and become the airline's controlling partner, Onex has held talks with two other prospective suitors and could mount a joint bid in coming weeks, said a person familiar with the matter.

A specialist in acquiring undervalued businesses, boosting revenue and selling them, Onex has been in contact with New York hedge fund Cerberus Capital Management LP and San Francisco-based Texas Pacific Group, which has a history of investing in distressed airlines, the source said.

Onex has separately approached at least one of Air Canada's unions to advise it of the company's interest, a union official said yesterday.

Separately, Air Canada met with unions yesterday in Montreal and advised them they need to make a further $200 million in wage and benefits concessions — nearly a year after the company's nine unions surrendered $1.1 billion in annual wage and benefits.

The Canadian Auto Workers union, representing about 7,000 customer service officers at Air Canada, said it isn't prepared to give up more than it has already agreed, said Sari Sairanen, president of the Canadian Auto Workers ' airline division, Local 2002.

"Our members gave last year, and we are certainly not looking to give any more concessions," Sairanen said...

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1081462212548&call_pageid=968350072197&col=969048863851

_____________________________________________

Cerberus wants new shot at Air Canada

U.S. fund would like 'handcuffs removed,' lawyer confirms

By JOHN PARTRIDGE
Friday, April 9, 2004 - Page B3

TORONTO -- Cerberus Capital Management LP wants at least the chance to take another run at becoming Air Canada's major shareholder now that Victor Li has apparently walked away.

The first public acknowledgment that the powerful $8-billion (U.S.), New York vulture fund may gear up for a new bid came yesterday as, separately, Air Canada union officials said the company has told them that cost savings are currently running $200-million a year less than projected.

Derrick Tay, a Toronto lawyer who acts for Cerberus said yesterday that he will talk with Air Canada's court-appointed monitor to devise a process for the removal of an injunction and a confidentiality agreement that currently preclude the fund from talking to any of the stakeholders in the insolvent airline.

"You can assume from this that our client wants the handcuffs removed," he said when asked whether Cerberus plans to re-enter the fray, after losing out in December to Mr. Li's Trinity Time Investments Ltd.

"We have been watching recent events with interest."

Mr. Tay made his remarks following an Ontario Superior Court hearing in Toronto at which Mr. Justice James Farley granted Air Canada an extension of its bankruptcy protection to May 21 from April 15...

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040409/RAIRCANADACOURT09/TPBusiness/Canadian

[Tan]

quote: Here come some more "white knights" with more calls for cuts as well:

Yeb your right, I wonder if any of the world's majors are going to have deep enough pockets to ride out the onslaught of the LCC's. However I see cracks developing in the low fares approach as safety is being compromised in some instances by some LCC's. Then unionism is on the horizon so it's going to be interesting times ahead for the LCC's.

[ziva]

I just find out in the national post....

"Air Canada unions reject call for more concessions
Two of Air Canada's unions say they will not agree to an additional $200-million in wage and job concessions that the airline has asked for in order to succeed in its restructuring effort"

so here is the end of AC..... they 'd rather be out of jobs.... instead of a little more concessions..... don't get the pictures! do they know that they on their way to go bankrupt?
sometimes I wondering why I am part of this familly..... in fact I don't, but feel bad for the good guys!

hope they are playing cards well this time.... but they have to remember that life is not a game.... and gambling is not the best way to get a better life!

ciao!:*

[Ralph Cramden]

Can't begin to remember how may airlines have been put under by their unions. they never get it until it's too late! RIP.

[theflyinggreek]

It' s hard to compete when competitors like West Jet have labour costs that are 30 to 40% less than Air Canada's.

The unions know this and it boggles my mind that they act the way they do; as if nothing is wrong.

The balance is gone, job value is not matching with what is being paid.

For example; I just heard that on the crew bus, a baggage handler was boasting to a pilot that he made over 104,000 last year. Even after six years with the company a pilot doesn't make that kind of money. Balance...Balance..

Do I need to say any more?

[Airbubba]

As is the custom, the government claims that there will be no bailout this time.

But surely the world can't do without Air Canada in an election year...
_______________________________________________

BREAKING NEWS
UPDATED AT 7:24 PM EDT Tuesday, Apr. 13, 2004

Air Canada flying solo, Valeri says

By MURRAY BREWSTER
Canadian Press

Halifax — Ottawa is considering initiatives to help the country's struggling airline industry, but it will not bail out Air Canada, federal Transport Minister Tony Valeri told a Halifax business audience Tuesday.

The federal government is facing mounting pressure to intervene as the country's national air carrier struggles to restructure after almost five years of losses totalling $4-billion.

But the airline shouldn't expect a rescue package from Ottawa, Mr. Valeri told reporters after his speech.

“Parties around the table need to resolve this,” he said. “It's a private sector solution I'm looking for.”

Mr. Valeri's comments come as Air Canada and its unions remain deadlocked over the company's apparent demand for $200-million in concessions.

The unions, led by International Association of Machinists and Aerospace Workers — with 11,000 members at Air Canada — say they've already given $1-billion a year in concessions.

While Mr. Valeri suggested both sides need to work harder to find a solution, he signalled Ottawa might be willing to lower some fees, which industry observers say are crippling the industry.

He insisted such a move would not be aimed at helping Air Canada in particular.

“The policies I'm considering are policies that are broader in nature and would impact the air sector generally.”

The federal government's wildly unpopular air security charge — imposed after the Sept. 11, 2001 terrorist attacks — is one fee Mr. Valeri said could be reduced even further.

“I can't tell you today that it will be completely eliminated, but it's something I'm committed to reviewing,” he told members of the Halifax Chamber of Commerce.

Last month's federal budget reduced the security charge by approximately $203-million a year.

Mr. Valeri hinted the rent airlines pay at airports might come down, but he said those measures need the approval of the Finance Minister.

Air Canada entered bankruptcy protection April 1, and an Ontario court recently extended the deadline for restructuring until May 21.

[Airbubba]

If the unions play hardball assuming a government bailout, they are rolling for high stakes...

__________________________________________


Air Canada liquidation offers entrepreneurial opportunities, observers say

STEVE ERWIN
Canadian Press

Wednesday, April 14, 2004

TORONTO (CP) - A liquidation of Air Canada would present an excellent opportunity for an entrepreneur to start up a new airline with a substantially lower cost base, say observers growing more pessimistic that the insolvent carrier can avoid bankruptcy.

There's plenty of speculation but no confirmation that a new investor will replace the $650-million equity investment that Hong Kong businessman Victor Li's Trinity Time Investments is pulling off the table. And the closer the airline veers towards the May 21 expiry of its bankruptcy protection, the greater the chance it will fall into receivership.

A liquidation would attract entrepreneurs who could pick over its assets and start a new business serving displaced Air Canada passengers, and operate it under a vastly improved cost structure.

"The idea of actually starting something from zero rather than repairing something . . . has a lot of attractiveness to it," said Douglas Reid, an economics professor at Queen's University in Kingston, Ont.

If speculation proves true and an offer is presented by New York restructuring fund Cerberus Capital Management, in tandem with Texas Pacific and Toronto conglomerate Onex Corp., it will be worth less than Li's proposal, say Reid and others.

Also, Cerberus would demand the same, if not more, concessions from unions, whose "intransigence," Trinity says, is forcing it to walk away.

Unless the unions back down from their refusal to negotiate changes to pension plans, creditors may decide they'll get more money back in a liquidation. Enter the entrepreneurs.

"If the worst were to happen with Air Canada, within two weeks you would hear the announcement of some entrepreneurial group that would form another airline," Reid said.

"There are probably people somewhere, now, working on start-up plans, assuming the worst for Air Canada."

A new airline wouldn't face the near $10 billion in liabilities handcuffing Air Canada. It also wouldn't have to honour existing labour contracts, allowing it to compete better against non-union, lower-cost competitor WestJet, Reid said.

"It allows you to establish a different market price for aviation labour."

... A motion to approve a new process to assess investment offers in Air Canada is tentatively scheduled to be filed in court on April 27.

Erickson predicts that even if Cerberus makes an offer, it would also require union concessions on pension plan changes and other matters. Continued union resistance could leave Air Canada where Canada 3000 was in 2001 - bankrupt before unions could agree on concessions.

"I don't believe that anybody coming to the investment altar anywhere between now and May 21 is going to ask any less of the unions than what Mr. Li has asked," Erickson said.

He also doubts that the federal government will be willing to take on billions of dollars in obligations to rescue the country's largest airline, especially given recent statements by Transport Minister Tony Valeri that the feds are looking for a private-sector solution.

"If you're a union hand thinking the federal government is not going to let Air Canada fail, and is going to step up to the plate with some money, you are confused," he said.

"This is not the 1970s and that is not going to happen."

http://www.canada.com/national/nationalpost/news/story.html?id=b00140d4-5fba-48f2-8802-52c16eb74b5f

[Tan]

WestJet warned by judge not to use any confidential Air Canada information

Last Updated Thu, 15 Apr 2004 17:02:41
TORONTO - An Ontario court judge on Thursday directed WestJet not to use any confidential information the discount carrier may have on Air Canada.

Ontario Superior Court Justice Ian Nordheimer issued his warning on the first day of court proceedings in Air Canada's industrial espionage lawsuit against WestJet. Calgary-based WestJet agreed to the judge's request.

Air Canada did suffer a setback when Nordheimer declined to force WestJet to immediately turn over some documents.

The judge said an interim order forcing WestJet to turn over the documents was not necessary. A hearing on the issue will take place in June.

Meanwhile, lawyers for Calgary-based WestJet argued that the case should be heard in Alberta, even though Air Canada filed the suit in Ontario. Nordheimer will decide in late May where the case will be heard.

Air Canada filed the lawsuit against WestJet Airlines and two employees earlier this month, charging that the discount carrier obtained information about Air Canada using a private web site.

[airship]

Very serious thread this is. In an effort to introduce a small amount of levity and pose a serious question...could something like Canada allowing the largest seal cull in 50 years (http://news.bbc.co.uk/2/hi/americas/3618901.stm) have a seious impact on Air Canada? Apart from the obvious implication about not following BA in calling Business Class "Club"?!

(OK I'm goin'...)

[Tan]

Airship

Gee if I recall correctly wasn’t it AF that bugged all their business seats in an effort to collect industry data for the French Government…But I digress

[canuck slf]

Reuters
"Judge orders Air Canada to postpone some layoffs
Friday April 16, 5:40 pm ET


MONTREAL, April 16 (Reuters) - An Ontario judge ordered Air Canada (Toronto:AC.TO - News) on Friday to postpone layoffs of 51 service agents until their case can be heard by an arbitrator, another setback in the national carrier's efforts to emerge from bankruptcy protection.

Air Canada, which is six months late in restructuring under protection from creditors, admitted last month it fell short on its goal to achieve C$1.1 billion ($815 million) in labor cost savings.

The Canadian Auto Workers union contested the service agent cuts, saying the affected employees are not at the bottom of seniority lists.

Air Canada argued it could not follow regular layoff rules because its recently hired customer service agents were fluent in more languages.

"We are retaining a number of customer service agents at Toronto airport and call centers with specific language capabilities in order to provide appropriate service levels to our customers on our Asian, South American and some European routes," Air Canada spokeswoman Isabelle Arthur said.

"The layoffs will happen anyway, its just a matter of deciding who will be affected," she said.

The union said labor arbitrator Martin Teplitsky will hear the case on a "expedited basis."

Air Canada has been under bankruptcy protection since April 2003."

[EuroATC]

Just a few comments:

I am a Canadian air traffic controller, I have worked in Europe and the Middle East over the past 3 1/2 years. I will be returning to Canada before the end of the year and reading this thread about Air Canada makes me sick.. here are some comments/suggestions.

1. It is disgusting that a baggage handler can potentially make 70.000 to 90.000 when a starting air traffic controller in Toronto ACC starts just above 80.000. I am not demeaning anyones jobs but the responsibility on my back as a controller is a little more serious than that of a baggage handler. I have a friend that was murdered in Zurich a short time ago for being involved in an air disaster a few years ago..it was the husband of someone on the airplane that went down that is being charged for the murder.... that is a pretty heavy burden of responsibility.

2. Over the past 2 years, I have been on over 60 flights. Not one Air Canada. Previous I had flown Air Canada many many times. The service on board is disgraceful. I was always made to feel as if the FA was doing me a favor by pouring me a drink. That is not an attitude to keep people coming back. Take a flight on Virgin or Virgin Blue.. you'll see how happy and cheerful the FA's are... a huge difference. Because of these past experiences, I try to avoid flying Air Canada. Maybe I am a small fish but there are many like me.

3. This company is too heavy at the top, too many people making too much money. How do you even begin fixing this? This is a similar problem as Swissair. Relatively small market, recent unsucessful takeovers and investments into other airlines and huge operating costs.. What is neeeded??? A WHITE PAPER STRATEGY. Start from scratch. This is the only way to save it, re-evaluate everything. It's not by scheduling less ground staff that you save money. It's by making sure a baggage handler doesn't make 70.000 and that a reservation agent doesn't make 60.000.. Adjust your salaries to the industry norm.

4. There is talk about an election and Martin not letting AC go under because he doesn't wanna lose votes. Well let me tell you this and I do not stand alone. Martin and Co. will NOT get my vote if they bail out AC once again. My tax dollars are certainly not going to subsidise an inefficient company with an overpaid workforce (referring to baggagehandlers and reservation agents.. there might be more?)

5, I read that AC signed deals with Bombardier and Embraer to purchase aircrafts. Now why purchase 2 types that compete with each other? Did they get such a good deal? It's proven that operating the fewest amount of aircraft types is more profitable so why add a whole new type to the airline? This upsets me for a different reason. Bombardier is Canadian, a great company and a great airplane... an airplane which was hugely responsible for Air Canada's sucess in the early to mid 90's. Let's keep the money in Canada.... order only Bombardier! Why send Canadian dollars to Brazil?... actually Canadian TAX DOLLARS!.. I want my TAX DOLLARS supporting Canadians.. not supporting jobs in Brazil.

I do not want AC to go under, I want them to fix their problems and become a profitable airline. The industry has drastically changed and companies now have to become fiscally responsible. Good luck AC

[727200er]

While I have to agree that the unions are being foolish here, the simple fact is that employee concessions alone will not save AC. The legacy of debt and lack of a good business case are also killing this once great airline. The time has come for the cord to be cut, the protection to end, and the airline allowed to sink or swim on it's own. In the current marketplace it will sink. This is unfortunate but it is time for Canadians to move on. Believe me something will rise in it's place. A properly run airline with a good business plan, and sound management will become our flag carrier. The time has come people.

RIP Air Canada

[ea340]

One of Air Canada's major costs is the ACPP act of which I have seen no dicussion. You can not run a public company and make money with the above restrictions. Another of AC problems is the very low wage scales in Canada. Captains on MD 80's and 737,s earning 27,000 pounds sterling and you pay for your rating no pension plan and few benefits. An Air Canada Captain will earn from 45,000 pounds sterling to around 95,000 pounds sterling .The death of Air Canada started with the forced purchase of Canadian Airlines which has turned out to be a disaster . When Air Canada goes having an airline job in Canada will no be worth having . There will be a flood (4500) including Jazz of highly qualified pilots flooding the market driving wages down.

[6000PIC]

When I was learning to fly some 16 years ago , Air Canada was the end game , the brass ring , wow , if I could only get there...
My buddy who works there told me the other day , " ..it`s a s**t company..." what a tragedy of mismanagement , greed and incompetence.

[canuck slf]

Press Release Source: AIR CANADA; AIR CANADA - CORPORATE - FINANCIAL


Air Canada Announces Appointments and Realignment of Organizational Structure
Friday April 23, 6:30 am ET


MONTREAL, April 23 /CNW Telbec/ - Air Canada today announced the following appointments and changes to its organizational structure, effective immediately.
"In order to place a stronger focus on our customer and operational performance, I have decided to split our operational world into two groups, Customer Experience and Operations. In addition, certain responsibilities within the Commercial and Corporate Affairs branches are being reassigned," said Robert Milton President and Chief Executive Officer.

Customer Experience

Steve Smith, formerly President, ZIP Air Inc., assumes responsibility for the Customer Service group as Senior Vice President, Customer Experience. Norbert Manger, Vice President, Airports and Brad Moore, Vice President, Customer Service (responsible for In-Flight Service, Call Centres, Customer Solutions and Service Strategy) will report directly to Mr. Smith.

Operations

Rob Reid, Acting President and Chief Executive Officer, Air Canada Technical Services (ACTS) and Vice President System Operations Control (SOC), is appointed Senior Vice President, Operations with responsibility for ACTS, SOC, Flight Operations, Air Canada Maintenance and Flight Safety. Captain Rob Giguere, formerly Executive Vice President, Operations is currently considering various future options.

Commercial

Bill Bredt, formerly Vice President, Network and Revenue Management is appointed to the position of President, ZIP, Ben Smith, formerly Senior Director Network Planning, is appointed Vice President, Planning. Both report directly to Montie Brewer, Executive Vice President, Commercial.

Corporate Affairs

Duncan Dee, formerly Vice President, Corporate Affairs is appointed Senior Vice President, Corporate Affairs. In addition to his current responsibilities, Mr. Dee will assume responsibility for Corporate Security & Risk Management and Safety & the Environment.

Yves Dufresne, formerly Senior Director, International Affairs, is appointed Vice President, International and Regulatory Affairs with responsibility for Air Canada's international and alliance activities. Mr. Dufresne will report to Mr. Dee.

In addition, Lise Fournel, CIO and President, Destina, will also report to Mr. Dee.

John Baker, Senior Vice President and General Counsel and Paul Letourneau, Vice President and Corporate Secretary will now report directly to the President and CEO.

[Tan]

So Sorry ...

With WJ's $400M plus $1B in reserve I think AC will be around a while longer...

Carrier to seek millions
By Paul WaldieThursday,
April 22, 2004 – The Globe and Mail Page 8

Air Canada is expected to seek hundreds of millions of dollars in damages from WestJet Airlines Ltd. in a lawsuit over allegations involving stolen computer files, sources said.

"We are not talking peanuts here, we are talking big money," a source close to the airline said.

Another source said he had heard that Montreal-based Air Canada will be seeking damages in the range of $400-million.

The airline is suing WestJet and two of its officials in Ontario over allegations they illegally accessed an employee website to obtain confidential information about flights on Air Canada and its subsidiary Zip.

Calgary-based WestJet has not responded to the allegations but it has put the employees, including a company co-founder, on paid leave of absence while it investigates. None of the allegations have been proven in court.

Air Canada did not specify damages when it filed the lawsuit on April 6, but it said it would be seeking compensation for "loss of revenue and profits."

The airline has alleged that WestJet used the information to triple its market share in the past three years.

A source said Air Canada has hired a team of experts to calculate the damages.

"Air Canada will say that you don't look at its profits to determine what it lost, you look at the incremental revenue it lost," the source said.

Revenue allegedly earned by WestJet as a result of the information will also be part of the overall damage calculation, the source added

© Copyright 2004 Bell Globemedia Publishing Inc. All Rights Reserved.

[palebird]

AC will not be around for much longer if the creditors pull the plug. Their cash situation is great if there are no substantial debts. But that is Air Canada's problem. And $1 billion will not make it go away. There is no way out except for a major investment by someone. Li has walked away and GE is looking at pulling their backing out by month end. Once it starts the domino effect takes over. Look out. Major players at the top of AC are jumping ship. They see the writing on the wall. VP of maint walked as did the man under him. VP of Ops is going to walk. Miltons right hand man walked.

[Tan]

Palebird

Don't believe everything that the media says as more then often they form their opinions on speculation..

"The union advisors have saids that a large complex international restructuring will usually take up to two years. Their best estimate now is "before the end of the year". As the Air Canada restructuring is one of the largest and most complex in Canadian history, even this time line may be optimistic.

AC has confirmed that the forward bookings pattern is steady. We are informed that, "...things look fine. There's no melt down". Air Canada has about $900 million of cash on hand, available debt financing of about $500 million and is now operating with positive cash flow from operations. This will enable it to operate normally for as long as it takes to complete the new equity financing and exit from CCAA.

The key creditors, Deutsche Bank and GE Capital, have accepted there will be a new equity process and they will continue in the respective roles they had before. There appears to be no panic or great concern among key players including Justice Farley and that there will be a further stabilizing as the new equity process develops."

[skyhawk1]

What's your point Tan? Everything you just posted was what media and union groups are saying. And you said at the top of your post - that kind of stuff is their own kind of speculation.

You keep living in your little deamworld, but A/C is finished once GECAS walks. And they ARE going to walk. (unless some mirical happens and A/c finds an investor by April 30)

[Tan]

skyhawk1

Sorry but AC has been around for 67 years and will probably be around for quite a few years yet. I didn’t realize that you had the inside track as who was going to walk maybe you also have some good stock tips. Leasing companies don’t walk easily nowadays when there’s over 1000 jets parked in the desert most of them wide body. Besides which I chose to believe the experts who do have the inside track..

[palebird]

All I can say is I hope you are right. But my gut feeling is you are wrong. I am on layoff status and from what I have seen at AC they should go under in order to clean out all the bottomfeeders that drag that company down.

[Ralph Cramden]

Sorry Tan
AC has been around for 67 years on tax payers backs. I think this is unlikely to continue. Unions have to back off or it's lights out. RIP.

[fatbus]

The summer is coming and anyone can fill airplanes in the summer even AC. Nothing will happen until end of summer when the money stops coming in. My guess is big changes in the fall. AC has just posted their summer shed and they are hitting the big cash routes.I think that shed takes effect May 1.

[Well thats Me]

Out of the ashes something will arise,you only have to look at posts like below to know the entire things run as a state owned club and it goes to show what happens when a badly run airline takes over a better one,reminds me a bit of BA and BCAL, now theres a thing!.



"Customer Experience

Steve Smith, formerly President, ZIP Air Inc., assumes responsibility for the Customer Service group as Senior Vice President, Customer Experience. Norbert Manger, Vice President, Airports and Brad Moore, Vice President, Customer Service (responsible for In-Flight Service, Call Centres, Customer Solutions and Service Strategy) will report directly to Mr. Smith.

Operations

Rob Reid, Acting President and Chief Executive Officer, Air Canada Technical Services (ACTS) and Vice President System Operations Control (SOC), is appointed Senior Vice President, Operations with responsibility for ACTS, SOC, Flight Operations, Air Canada Maintenance and Flight Safety. Captain Rob Giguere, formerly Executive Vice President, Operations is currently considering various future options.

Commercial

Bill Bredt, formerly Vice President, Network and Revenue Management is appointed to the position of President, ZIP, Ben Smith, formerly Senior Director Network Planning, is appointed Vice President, Planning. Both report directly to Montie Brewer, Executive Vice President, Commercial.

Corporate Affairs

Duncan Dee, formerly Vice President, Corporate Affairs is appointed Senior Vice President, Corporate Affairs. In addition to his current responsibilities, Mr. Dee will assume responsibility for Corporate Security & Risk Management and Safety & the Environment.

Yves Dufresne, formerly Senior Director, International Affairs, is appointed Vice President, International and Regulatory Affairs with responsibility for Air Canada's international and alliance activities. Mr. Dufresne will report to Mr. Dee.

In addition, Lise Fournel, CIO and President, Destina, will also report to Mr. Dee.

John Baker, Senior Vice President and General Counsel and Paul Letourneau, Vice President and Corporate Secretary will now report directly to the President and CEO.

[Tan]

Ralph Cramden

Your quote:
"AC has been around for 67 years on tax payers backs"

Sorry Ralph but that myth has been around a long time, despite the fact AC returned a profit to the treasury the majority of the time. This is in spite of AC been forced to carry out disastrous government policy which is the major reason for the crisis today..

[STC]

The only way Air Canada can turn a profit is if it has an unfair competitive edge and a near monopoly. This was the case when Air Canada was a Crown corporation. The "profit to the treasury" mentioned was on the backs of the rest of the industry and the public at large, so the "myth" isn't too far from the truth.

Is Air Canada on its last legs? I certainly hope so. Air Canada is singularily responsible for the destruction of the Canadian airline industry and it just needs to go away.

[Tan]

STC

These are the facts unlike your myth:

Air Canada
A financing and profit history
· Air Canada has not received subsidies from any government since 1962
· Air Canada received government subsidies between the years 1937 and 1962. These subsidies totaled $25.6 million and were provided to cover shortfalls in the company's operating surplus account.
· During these years, the airline generated operating surpluses of $11.2 million, which was returned to the government.
· From 1963 to 1977 Air Canada returned $2.75 million to the government as dividends. At the same time, $38.7 million was accumulated as retained earnings.
· In 1974, the government committed to building a hangar in Winnipeg as part of an election promise. The government paid the $14 million capital cost and the operating costs of the hangar until Air Canada put it into full operation at which time the airline assumed the full operating costs of the building.
· In 1978, the government converted $24 million of outstanding loans to Air Canada, into equity, which eventually was repaid to the government, (the taxpayers) during privatization.
· The remaining $311 million of debt owed to the Federal government has been largely repaid, ($16.6 million was outstanding as of 1993), including interest charges on outstanding balances at market rates.
· In 1988, the Federal government, under Brian Mulroney, completed the first phase of the privatization of Air Canada. Air Canada received the proceeds of the first offering, which was $246 million.
· In 1989, the final 57% of Air Canada was privatized. A total of $493 million was raised and went to the government. That money not only paid off the government's 1978 equity investment in Air Canada, but also provided the government with an additional $164 million.
· Over Air Canada's 55 year, history, it has received a total of $679 million in loans and equity from the government but has returned $986 million to the government, (the Canadian taxpayer) in dividends, interest and capital repayments.
· The only outstanding loan to Air Canada from the Federal government was paid back in full as of April 1993.
· When Air Canada privatized it re-structured. Employee numbers went from just under 24,000 to just over 27,000. It bought new Airbus aircraft, making it the youngest, quietest fleet of any major carrier. Air Canada dealt with money-losing routes and pursued lucrative markets on a timely basis, especially the US. It has since grown to almost 33,000 employees again.

Note - The relatively small amount of debt that remained in 1993 was repaid soon afterwards.

[skyhawk1]

Hey Tan,
I got an iceberg to sell you...............

[PaperTiger]

Air Canada is singularily responsible for the destruction of the Canadian airline industryI appreciate that it is hard to be dispassionate when you're personally affected, and recent history tends to obscure the bigger picture. Seems to me the Canadian airline industry pretty much self-destructed.

Not so long ago, it was in reasonable shape - EPA, Quebecair, Nordair, Transair, PWA and of course the transcons. No-one was making money hand-over-fist but all appeared comfortable in their markets. Then Max Ward decided to be a player too. CP's response was a frenzy of acquisition/meger culminating in the disastrous over-priced buyout of Wardair itself. Then to top it all they decided to challenge AC's deep pockets in a no holds barred fare war. Did AC match the fares ? You bet - that's Airline Economy 101.

I may be old with a flawed memory, but I don't recall AC wanting to absorb CP. Didn't Cullinette make them ? Smart (but painful) thing to have done would be let PWA Corp go under, then AC would still have got the benefit of a 'monopoly' but without the baggage of a takeover. Just MHO.

[Tan]

PaperTiger

That's a pretty accurate historical account of what went on..

I'm always amazed at how the "myths" in life tend to be believed rather then the facts.

[29chev]

Air Canada Announces Revised Agreement With Deutsche Bank For $850 Million Rights Offering
MONTREAL, April 26 /CNW Telbec/ - Air Canada announced today that it has
reached an agreement in principle with Deutsche Bank AG to amend the Stand-By
Purchase Agreement to extend and increase the rights offering available to
creditors from $450 million to $850 million. The $850 million rights offering
is greater than the $700 million originally sought by the Company at the start
of the equity solicitation process in July 2003. The agreement is subject to
completion of appropriate documentation and Court approval.
"Air Canada's restructuring regains its momentum today with a vote of
confidence in our restructuring business plan from a major global financial
institution," said Air Canada CEO Robert Milton. "The agreement with Deutsche
Bank will provide a solid foundation for Air Canada's restructuring and the
flexibility to pursue an equity partner as we work towards a successful
completion of the restructuring in the coming months.
"Air Canada is well positioned to carry on business effectively and it is
business as usual for our customers. We have made significant progress in
revenue, fleet and cost restructuring over the past year and our 2004 revenues
are tracking in line with what we projected in our business plan. We are now
entering our strongest travel period of the year, with positive cash flow and
approximately $1 billion in cash on hand as of the close of business last week
in addition to $500 million in available credit lines unchanged from the most
recent update.
"Our stakeholders, including our largest creditors, have reaffirmed their
support in ensuring the airline's successful restructuring and will continue
to work with us to ensure Air Canada emerges from CCAA protection a much
stronger airline," said Mr. Milton.
Under the proposed amendments, the previously announced $450 million
rights offering to creditors will be expanded to $850 million at the same
$925 million pre-investment valuation of Air Canada as had been provided in
the Trinity Agreement thus preserving and expanding a key element of potential
creditor recovery in Air Canada's restructuring plan.
Deutsche Bank as Stand-by Purchaser will acquire any equity not purchased
by creditors at a premium price of 107.5% thus ensuring that AC will have the
full $850 million available to fund its restructuring plan.
Air Canada will pursue an equity solicitation process. However, as a
result of the funding that the proposed amendments will secure, Air Canada
will be seeking only $250 million instead of the $650 million provided for in
the Trinity Agreement. This equity will be used in part to retire the GE
convertible notes and warrants if appropriate arrangements can be negotiated
with GE similar to those formerly negotiated by Trinity. However, successful
completion of the proposed equity investment will no longer be a condition
precedent to Air Canada's successful emergence from CCAA.
In addition to documentation and Court approval, the proposed amendments
contain two significant conditions regarding labour and pension matters which
must be satisfied by May 15, 2004. The labour condition requires that Air
Canada obtain $200 million in annual cost reductions to realize the labour
cost savings of approximately $1.1 billion agreed to by the various Air Canada
unions last year. In addition, the agreement requires that Air Canada's labour
unions provide "clean slate" assurances that all material disputes or claims
will be compromised or waived upon emergence. The pension conditions require
Air Canada to reach satisfactory arrangements with the Office of the
Superintendent of Financial Institutions (OSFI) to implement the February 18,
2004 agreement between Air Canada and its pension beneficiaries regarding
funding over 10 years of the solvency deficit in Air Canada's pension plans.
The proposed amendments do not require pension design changes as had
previously been required by equity plan sponsors.
In addition, the agreement requires satisfactory assurances from the
Government of Canada that, upon emergence, Air Canada will be able to compete
on a level playing field with all Canadian carriers in regards to the
regulatory environment.
The timeline for the equity solicitation process remains under discussion
and will be subject to approval by the Court. However, the amended agreement
will provide for Air Canada to emerge from CCAA protection no later than
September 30, 2004.

:ok:

[colegate]

Canada has been a graveyard for airlines for the last decade. It remain thus until the capacity in the market has been cut drastically.

In customer service terms Canada had produced some excellent airlines. Wardair, to my mind, was very highly related. But it expanded far too rapidly towards its end.

Air Canada cannot possible comptetre with all comers in Canada. It should surely retrench around hubs in YTO, YUL and YVR. Good hub scheduling with good long haul connections at all three. Forget the rest. It is being dragged down by domestic point to point competition which it can never match on cost or ticket prices.

[STC]

Tan,

Here is the brutal reality. No matter how many twisted stats you write, there is no arguing that since privatization, Air Canada has been transformed from a debt free, asset rich corporation to bankruptcy protection, while maintaining the majority share of the market.

Their multi-billion dollar debt wouldn't be tolerated in most economies where they would have been put out of their misery long ago.

Furthermore, Air Canada used predatory pricing to kill off other airlines. Remember, predatory pricing is offering service below cost in an effort to drive competitors into the red. Predatory pricing is a poor business practice that has effectively injured Air Canada and the rest of the industry.

And please, let’s let go of that whole “Air Canada was forced to absorb Canadian” crap. In absorbing Canadian, Air Canada got exactly what it wanted. A near monopoly and lucrative Pacific Rim routes.

This theory is just as flawed as the one about how “poor” Air Canada is forced to maintain service into small cities. A quick look at the current schedule should reveal the myth….

[PaperTiger]

In absorbing Canadian, Air Canada got exactly what it wanted. A near monopoly and lucrative Pacific Rim routes.Not quite exactly what it wanted. Several thousand unnnecessary employees for example. And AC was free to fly to Asia without needing to absord CP (although the 744s did come in handy). Look up the definition of deregulation.

[STC]

I'm quite aware of what deregulation entails. Now you can look up the word "monopoly" Paper Tiger.

Although Air Canada could have infiltrated the PacRim, its much easier if there is no competition.