Canuck woes

[Abbeville]

Standby for a gloomy announcement from Air Canada

[The Guvnor]

Indeed so - 6,000 jobs (some sources say 10,000+) and 60 aircraft to go.

Air Canada to slash 6,000 jobs, cut fleet in bid to save $500M
'Industry in freefall'


Peter Fitzpatrick, with files from Ian Jack and Robert Gibbens
Financial Post

Air Canada is expected to announce today it is seeking to eliminate as many as 6,000 more jobs and to ground up to 60 of its 243 mainline aircraft, sources have told the Financial Post.

The airline will meet with its unions in Montreal today to discuss ways of saving 20% of its labour costs, or $500-million, as it strives for stability after the terrorist attacks in the United States.

"The problem now is the sheer size and scope of the crisis. To put it bluntly, this industry is in freefall. We are reeling from a month of madness. Costs are staggering but the revenue fall off is much more dramatic," Robert Milton, president and chief executive, said in a speech in Montreal yesterday. Sources said today's cuts are in keeping with the carrier's decision earlier this month to reduce transborder capacity 20%.

The layoffs come in addition to 4,000 job reductions announced earlier this year and due to take full effect by April. Air Canada had cut 3,500 positions in late 2000 as well. Savings will also come from grounding the older DC-9s and Boeing 737s that fly domestic and transborder routes.

"It looks to me like after this downsizing we're going to be about the same size as we were when we acquired Canadian Airlines," said Raymond Hall, chair of the master executive council of the Air Canada Pilots Association. "Where are we after that? Two years of turmoil, a balance sheet that is terrible, dissatisfied employees and an industry that is no better off."

Laura Cooke, company spokeswoman, declined to comment. "We are in discussions with the unions to determine how we can reduce labour costs by $500-million. I'm not going to speculate about the outcome," she said.

Union officials will present proposals for savings today.

"Nobody will be spared and they're going to be parking airplanes," said Mr. Hall.

Although pilots have job guarantees to 2004, he said the union would put forward a proposal to reduce monthly flying hours.

Gary Fane, transportation director for the Canadian Auto Workers, whose members also have job guarantees, said the union has ideas for voluntary reductions. These include a pension supplement for senior staff, job sharing through the Employment Insurance program and informal arrangements and voluntary severance packages.

Mr. Milton said during his Montreal speech that the federal government must move quickly to provide support, especially after the U.S. government approved a US$15-billion package last week that included US$5-billion in direct aid.

"We're seeking stabilization ... relief from the worst-ever business downturn and assurance so we can get access to finance and move on towards creating a better airline," he said. "But we're facing an aggressive U.S.industry."

Calin Rovinescu, vice-president corporate development and strategy, said Air Canada is negotiating a new airline industry strategy with the government, but "they're not moving fast enough."

One of Air Canada's demands is that it be released from a no layoffs commitment it made to the federal government prior to buying Canadian in late 1999.

In Ottawa, David Collenette, the federal Transport Minister, acknowledged talks are underway over its job commitment, which runs to March. But Mr. Collenette seemed resigned to layoffs in the industry such as yesterday's 1,300 cuts at Transat AT Inc.

"I hope we can minimize these actions, but I think it's probable in the climate we're in there will be other job losses," he said, adding he expects airlines to decide "in the next few days" what to do about job reductions.

Most observers expect Ottawa will make demands for any help it extends Air Canada. This would include having unions, shareholders and bondholders bear some of the pain and perhaps require Air Canada to abandon its plan to start up a discount airline.

Since the Sept. 11 terrorist attack, traffic at all the world's airlines has declined sharply.

"Even under the most optimistic scenario, the carriers do not expect to be back to normal until the second half of next year and even then [they] may be operating only 80% of the pre-Sept. 11 schedule," Ray Neidl, an analyst at ABN-Amro wrote in a report.

The World Travel & Tourism Council said yesterday annualized over the next twelve months, the decrease of travel and tourism demand is currently expected to total 10%-20% in the United States and less in the rest of the world, including Europe and Asia.

and the lates news from the Globe and Mail

[b]Collenette opens way for Air Canada layoffs

Globe and Mail Update

Transport Minister David Collenette opened the way for Air Canada to slash jobs Tuesday, saying that it was a double standard that other airlines could take cost saving measures.

Under bill C-26, ostensibly aimed at preventing Air Canada from abusing its monopoly after it merged with Canadian Airlines, the airline was not allowed to slash jobs until March, 2002.

"We cannot hold Air Canada to one standard and the rest of the industry to another," Mr. Collenette said outside the House on Tuesday.

The airline industry has suffered since the Sept. 11 attacks in the United States. U.S. airlines have cut more than 100,000 jobs, and on Monday Montreal-based travel company Transat A.T. Inc. announced 1,300 layoffs at its airline and other operations.

"Mainly that at this time layoffs would be due to the events which occurred on the 11th of September and not because of the merger with Canadian Airlines," Mr. Collenette said.

Air Canada employees have said that they are bracing for another round of layoff announcements as the beleaguered airline struggles to recover from the impact of the terrorist attacks in the United States.

Meanwhile, a union local posted a note on its Web site Monday saying the country's biggest airline wants to slash another 10,000 jobs in a major cost-cutting effort.

In Montreal, Air Canada chief executive officer Robert Milton warned Monday that the airline's woes will be far greater than most people realize if there is no financial package from Ottawa to help it recover from the dramatic impact of the attacks.

Air Canada's stock value - like most airline shares - is taking a pummelling in heavy trade. On Bay Street, there are whispers of impending bankruptcy if the situation isn't resolved quickly and the government provides aubstantial bail-out funds.

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