Whats up C3's sleeve?

[Orca strait]

5 November, 2001

Urgent bulletin – Canada 3000 files application to close down Royal Aviation


Late on Sunday, November 4th, Canada 3000 filed an emergency application with the Canada Industrial Relations Board (CIRB), asking the Board to allow Canada 3000 to close down operations at the former Royal Aviation. Specifically, the company has asked that Royal not be found to have common employer status with Canada 3000. The company is seeking permission to completely sever the operation of Royal from the operation of Canada 3000, allowing it to fire all pilots and flight attendants from the former Royal Aviation.

A quasi-hearing with the CIRB was held by teleconference call today, from 10h00 to 14h00. Representatives from RAPA and their lawyers were present on the call, as were several other unions, and management representatives including Angus Kinnear. The company argued that the CIRB should issue a ruling on the application during the conference call. RAPA and other unions argued that this matter was of such importance that a formal hearing should be called. The CIRB did order an oral hearing for tomorrow, November 6th, at 13h00 in Toronto. At that time, all concerned parties will make full submissions, evidence will be submitted, and testimony will be heard.
:eek:

[Rollingthunder]

Nothing left up their sleeve. They apparently want to turn back time to pre-purchase of Royal and not have to deal with lay-offs from merged seniority lists. 1,400 jobs at Royal.

[Orca strait]

The plot thickens! Angus Kinear (CEO of C3) claims the entire operation is in jeopardy if the Royal aviation side of the airline is not shutdown and all Royal Pilots and F/A’s fired. Now Michel LeBlanc (former CEO and majority shareholder of Royal) wants to buy the Royal aviation division back!

Could it be that A.K.s shiny new airbus fleet is getting more expensive by the day with the falling of the Canadian dollar?

Only in Canada eh…..
Breaking News (http://www.globeinvestor.com/)

[AIRLIFT]

They said on the news today that Royal is the most unionised of the 3 companies that C3 bought in the last year. Canjet pilots are not unionised..... conicidence or just bad luck for the boys at Royal :eek: :confused:

AL

[Willie Everlearn]

Interesting days ahead for the boys in the land of the Beaver. ;)
Indeed, if I were at Can Jet I'd be concerned about this latest round of C3 management 'waffling'. :eek:
From what we've seen and read in recent days AK is having a tough time sorting things out :(
It must have been a very interesting meeting between C3 management and the Canadian Government for them to surface with a $75M handshake and the prospect of 'a few more tomorrows' :p
...I suspect their intensions with Royal would have had to have been in their 'proposal' to the Cdn Gov't to stave off bankruptcy and receive the backing they received.
C3 may not have that promising a future after all :confused:

[Willie Everlearn]

:eek:
...and this just in.

Canada 3000 says it may go under
Company's board holding crucial meeting at midday: Says it will become insolvent unless it can get rid of Royal Airlines and its 1,400 jobs


Peter Fitzpatrick
National Post

Canada 3000 Inc., the country's second largest airline, could seek court protection from its creditors as early as noon today unless it gets permission to shut down its Royal Airlines division, the company's president said yesterday.

Angus Kinnear told a Canada Industrial Relations Board hearing last night that the airline must be able to immediately cut costs 30% by closing Royal or it will no longer be viable in the face of the downturn in the airline industry brought on by the Sept. 11 terrorist attacks.

"I would suggest to you, following another [Canada 3000] board meeting at 12 noon tomorrow, if we are unable to resolve this issue the board will probably have to request a filing under the Company Creditors Arrangement Act," Mr. Kinnear told a hushed hearing room crammed with about 150 uniformed Royal Airlines employees.

The CCAA gives insolvent companies an opportunity to restructure under court supervision. In such cases shareholders usually get little or nothing.

Canada 3000 is asking the CIRB for permission to sever Royal from its common employer certificate. That would effectively hive off Royal from Canada 3000's other operations and allow the parent company to close it and terminate 1,400 employees without triggering union bumping and other complications.

The hearing is to continue this morning. It was not clear last night whether the board will make its ruling today.

Mr. Kinnear said a favourable ruling is imperative, otherwise laid-off Royal employees will be able to displace less senior employees in other parts of the company. The airline says that would be prohibitively time-consuming and expensive because people would have to be retrained, which could take up to a year in the case of pilots.

"Unless the CIRB provides a decision which avoids the cost and time delay of retraining resulting from bumping the company will be unable to continue a viable business plan that would sustain the employment of two-thirds of its 4,800 workforce, leading to a cessation of operations of Canada 3000," he said.

Mr. Kinnear painted a grim picture. By Friday, he said, Canada 3000 expects to have only $5-million in the bank -- provided it gets an expected $3.5-million GST credit from the government this week -- while losses are $700,000 a day and climbing.

Canada 3000 has stopped paying aircraft leases on its fleet for October and is looking for deferrals of 50% on its annual $200-million leasing costs for the next three months.

Last month, Ottawa agreed to give Canada 3000 a $75-million loan guarantee. However, Canada 3000 cannot get the money until it produces a viable business plan and cuts its costs.

Industry sources said the federal government was scrambling last night to find a way to support the carrier after learning it would not be able to meet the conditions of the loan guarantee.

Compounding the airline's difficulties is that Air Canada's new low-cost Tango brand overlaps virtually all of its network, Mr. Kinnear said.

As a result, the airline has been forced to run a costly seat sale in which, for example, a one-way Toronto-Calgary flight that costs the airline $314 per passenger is being sold for $169.

The situation will likely worsen as news of the airline's dire situation comes out and passengers, afraid of seeing flights cancelled or of being stranded, book on other airlines, Mr. Kinnear admitted.

Even if Canada 3000 wins its case and is able to lay off Royal employees, he is uncertain the company will find the estimated $6.5- million it needs for severance.

As an indication of how difficult business is, Mr. Kinnear said he cannot be certain there will be a turnaround until 2003 or 2004.

Union officials greeted Mr. Kinnear's warning with some skepticism.

"We've seen these figures fluctuate from day to day. I don't mean to appear cynical, but we've been exposed to this from the outset," said Humberto DaSilva, president of the Royal division of the Canadian Union of Public Employees.

The union has been in talks with the company for weeks about ways to mitigate layoffs through such means as job sharing.

Dave Ritchie, Canadian vice-president of the International Association of Machinists and Aerospace Workers, said the company may be in trouble but it must obey the law.

"They've just tried to put the CIRB between a rock and a hard place. What they've said is, 'If we don't get what we want, you've just put this entire operation into jeopardy,' " he said.

But Neil Sharp, president of Royal's pilots association, said the risks of threatening to go out of business are so great, it seems unlikely the company is bluffing. He thinks the best option is for Canada 3000 to consider an offer to buy Royal that is expected to come today from Michel Leblanc, the former chairman, president and chief executive.

Lawyers for the two affected unions, the pilots association and the Canadian Union of Public Employees, urged the board to deny Canada 3000's request, arguing that as recently as last week, both sides were moving co-operatively to finalize the common employer status, but now the company wants to renege.

During cross-examination, Steve Waller, a lawyer for the pilots union, produced an agreement signed by the company on Nov. 1 that showed the airline wanted to lay off only 50 pilots. He expressed skepticism the situation could have deteriorated so quickly.

"The board doesn't have the jurisdiction to grant this request by the company and even if it did ... this application is a fundamental attack on the statute and processes of this board," said Denis Ellickson, a lawyer for CUPE.

Air Canada, meanwhile, is to lay off 171 pilots, after their union, the pilots association, failed in a bid to block the cuts at the CIRB yesterday. The Montreal-based carrier, which has about 3,200 pilots, wants to cut labour costs by $500-million and plans to trim its workforce by 9,000 jobs.

What a difference a day makes?

[Orca strait]

CBC radio news just announced (15:30 UTC) that the Canadian Industrial Relations Board has ruled against C3’s application to drop former Royal employees from the common employer status.

I think AK’s really stepped in it this time. He claims that C3 is losing $750,000 CAD a day and that shutting the Royal division would cut their cost by 30 percent. Would this not cut revenue by 30 percent as well? Now they would be losing only $500,000Cad a day (according to AK’s math they could operate for an additional 3 days).

Lets see, they just took delivery of a brand new A340 and are operating Toronto to Delhi with 30 percent load factors. Suppose there’s any dollars to be recovered by abandoning that operation?

AK’s ability to serve as CEO is finished. If they truly hope to fend off bankruptcy they better get some credible and experienced talent at the helm of this rudderless ship…
:rolleyes:

[Willie Everlearn]

the plot thickens :eek:

Canada 3000 proposal rejected






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By RICHARD BLOOM and KEITH McARTHUR
Globe and Mail Update


The Canadian Industrial Relations Board rejected an application Wednesday morning from Canada 3000 Inc. to shut down its Royal Aviation subsidiary.

The decision means Canada 3000's board of directors may now hold a vote to file for bankruptcy protection, a move president Angus Kinnear warned the CIRB about Tuesday night.

But Mr. Kinnear would not say Wednesday if he will follow through on his earlier threat to file for bankruptcy protection.

"I won't be asking the board anything. I will be reporting to the board on [Wednesday's] proceedings and we'll take it from there."

Neil Sharp, president of the Royal Airlines Pilots Association, said he is still worried about the company's threat that it could close down the entire airline.

But he said the board made the right decision.

"What this means right now is that the company doesn't have any legal right right now to lay off just the Royal group of pilots. It will have to come to some other arrangement with its various unions as to how to handle the situation which has now changed as of a few minutes ago."

Mr. Kinnear said Tuesday that unless it can shut down Royal, an airline it acquired earlier this year, Canada 3000 will be out of cash to finance its operations by Friday.

Canada 3000 also asked the Toronto Stock Exchange Tuesday to suspend trading in its shares so it can openly discuss its dire financial position. The airline said it was down to less than $1.5-million in cash on Sunday and is losing about $700,000 a day.

Whatever shall we do???

[Willie Everlearn]

Orca

I'd say NOTHING's up their sleeve mate. Wouldn't you :confused:

[Orca strait]

Willie -
Not only are the sleeves empty but it appears the arms are now bare. :(

Unfortunate for a bunch of hard working folks. All they can do now is go along for the wild ride on board the AK train of magalomania. :confused:

AK still refuses to address the real issues of their cash flow problems - to many expensive leases and a couple of high cost, low revenue routes. :mad:

[Rollingthunder]

A couple of things going on in parallel with all this...

The Can$75 million loan guarantee from the Federal gov't is off the table at the moment due to lack of a viable business plan and Michel Leblanc, former CEO of Royal has put forward a "serious" bid to C3 to buy back Royal for Can$25 million plus Can$24 million of debt assumption. He is waiting for a response.