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11th Feb 2011, 00:12
Air Canada in black, workers to get shares
BRENT JANG — TRANSPORTATION REPORTER
From Friday's Globe and Mail
Published Thursday, Feb. 10, 2011 8:35AM EST
Last updated Thursday, Feb. 10, 2011 6:33PM EST
After posting its first annual profit since 2007, Air Canada (AC.B-T (http://www.theglobeandmail.com/globe-investor/air-canada-in-black-workers-to-get-shares/article1901767/)3.39-0.03-0.88%) is awarding employees with $500 worth of shares each – half this year and the rest in 2014 – in a move that rankled union leaders on the eve of labour talks opening Friday.
The country’s largest airline, which lost $1-billion in 2008 and spilled another $24-million in red ink in 2009, bounced back with a $107-million profit last year as travellers returned to the skies amid the economic upturn. Montreal-based Air Canada’s revenue climbed 11 per cent to $10.8-billion for 2010.
The $14-million stock payout, valued at an estimated $500 individually, will be tax-free for employees. Half of the stock will be paid upfront and remainder is slated to be disbursed in 2014. While 84 per cent of workers at rival WestJet Airlines Ltd. own shares in the Calgary-based carrier, Air Canada employees have tended to shun owning stock in their company.
"The share distribution is new, but you can guess our reaction,” said Leslie Dias, national representative for the Canadian Auto Workers (CAW) union. In an interview Thursday, she described the planned equity payout as “meagre,” especially after CAW members took wage cuts and accepted concessions from 2003 to 2005, followed by slender increases from 2006 to 2008 and wage freezes over the past two years.
The CAW, which represents 3,800 airport customer service agents and call centre staff, calculates that its members are collecting an average of $24.58 an hour, or a 4.5-per-cent increase since 2003. If wages had kept pace with inflation, CAW members would have averaged $26.77 an hour in 2010, or nearly 14 per cent higher than the hourly rate of $23.51 in 2003.
CAW president Ken Lewenza said he’s seeking a “fair deal” as contract negotiations begin Friday in Toronto. “Our members’ wages have not even kept pace with half the rate of inflation since 2002,” Mr. Lewenza said in a statement. “This is deplorable. We’ve taken hits in the areas of vacation and break times, while delivering tremendous productivity increases in an effort to keep the company afloat.”
During a conference call with analysts, Air Canada chief executive officer Calin Rovinescu said the airline’s “special equity grant” to staff strives to “reward all employees for the outstanding performance in 2010. You have to remember where we were just one year or 18 months before.”
In mid-2009, Air Canada persuaded unions and retirees to back a pension funding moratorium, won Ottawa’s support for the pension relief and talked lenders into injecting $1-billion in financing into the carrier to withstand a cash crunch.
Aided by foreign-exchange gains and rebounding premium-cabin travel, Air Canada flew to a $134-million profit in the fourth quarter, a sharp turnaround from its $56-million loss in the same period in 2009. The airline’s quarterly adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) doubled to $334-million, exceeding the $301-million forecasted by National Bank Financial Inc. analyst Cameron Doerksen.
In April, 2003, Air Canada entered 18 months of bankruptcy protection, finally exiting in October of 2004. The carrier narrowly averted another filing for creditor protection in mid-2009, reaching labour and pension pacts with its unions.
Local 2002 of the CAW has a 21-month contract that expires Feb. 28, while collective agreements at four other Air Canada unions will lapse March 31.
Mr. Rovinescu cautioned that the economic revival is fragile and jet fuel prices have been rising this year.
Analysts said Air Canada has a better handle on controlling expenses, noting that its cost per available seat mile fell 3.4 per cent to 17 cents in the fourth quarter.
BRENT JANG — TRANSPORTATION REPORTER
From Friday's Globe and Mail
Published Thursday, Feb. 10, 2011 8:35AM EST
Last updated Thursday, Feb. 10, 2011 6:33PM EST
After posting its first annual profit since 2007, Air Canada (AC.B-T (http://www.theglobeandmail.com/globe-investor/air-canada-in-black-workers-to-get-shares/article1901767/)3.39-0.03-0.88%) is awarding employees with $500 worth of shares each – half this year and the rest in 2014 – in a move that rankled union leaders on the eve of labour talks opening Friday.
The country’s largest airline, which lost $1-billion in 2008 and spilled another $24-million in red ink in 2009, bounced back with a $107-million profit last year as travellers returned to the skies amid the economic upturn. Montreal-based Air Canada’s revenue climbed 11 per cent to $10.8-billion for 2010.
The $14-million stock payout, valued at an estimated $500 individually, will be tax-free for employees. Half of the stock will be paid upfront and remainder is slated to be disbursed in 2014. While 84 per cent of workers at rival WestJet Airlines Ltd. own shares in the Calgary-based carrier, Air Canada employees have tended to shun owning stock in their company.
"The share distribution is new, but you can guess our reaction,” said Leslie Dias, national representative for the Canadian Auto Workers (CAW) union. In an interview Thursday, she described the planned equity payout as “meagre,” especially after CAW members took wage cuts and accepted concessions from 2003 to 2005, followed by slender increases from 2006 to 2008 and wage freezes over the past two years.
The CAW, which represents 3,800 airport customer service agents and call centre staff, calculates that its members are collecting an average of $24.58 an hour, or a 4.5-per-cent increase since 2003. If wages had kept pace with inflation, CAW members would have averaged $26.77 an hour in 2010, or nearly 14 per cent higher than the hourly rate of $23.51 in 2003.
CAW president Ken Lewenza said he’s seeking a “fair deal” as contract negotiations begin Friday in Toronto. “Our members’ wages have not even kept pace with half the rate of inflation since 2002,” Mr. Lewenza said in a statement. “This is deplorable. We’ve taken hits in the areas of vacation and break times, while delivering tremendous productivity increases in an effort to keep the company afloat.”
During a conference call with analysts, Air Canada chief executive officer Calin Rovinescu said the airline’s “special equity grant” to staff strives to “reward all employees for the outstanding performance in 2010. You have to remember where we were just one year or 18 months before.”
In mid-2009, Air Canada persuaded unions and retirees to back a pension funding moratorium, won Ottawa’s support for the pension relief and talked lenders into injecting $1-billion in financing into the carrier to withstand a cash crunch.
Aided by foreign-exchange gains and rebounding premium-cabin travel, Air Canada flew to a $134-million profit in the fourth quarter, a sharp turnaround from its $56-million loss in the same period in 2009. The airline’s quarterly adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) doubled to $334-million, exceeding the $301-million forecasted by National Bank Financial Inc. analyst Cameron Doerksen.
In April, 2003, Air Canada entered 18 months of bankruptcy protection, finally exiting in October of 2004. The carrier narrowly averted another filing for creditor protection in mid-2009, reaching labour and pension pacts with its unions.
Local 2002 of the CAW has a 21-month contract that expires Feb. 28, while collective agreements at four other Air Canada unions will lapse March 31.
Mr. Rovinescu cautioned that the economic revival is fragile and jet fuel prices have been rising this year.
Analysts said Air Canada has a better handle on controlling expenses, noting that its cost per available seat mile fell 3.4 per cent to 17 cents in the fourth quarter.