Air Canada Axes 4,000 jobs

[The Guvnor]

From today's Telegraph:

Air Canada axes 4,000 jobs
(Filed: 01/01/2001)

AIR CANADA said today that it plans to shed 4,000 jobs, in a cost-cutting exercise prompted by the economic slowdown.

The cuts follow 3,500 staff reductions announced late last year. Robert Milton, president and chief executive officer, said: "While we saw the economic downturn coming and adjusted our business plan last December, we warned earlier this year that if economic conditions worsened we would need to take further action."

He added Air Canada had been hit by a "dramatic drop" in business travel demand, along with high fuel prices.

Air Canada serves around 150 destinations direct and through the Star Alliance reaches more than 800 destinations in 130 countries.

[LoveGod]

Incompetent management!

[Den_Dennis]

incompetent economy more like...

: DD :

[newswatcher]

From CBC:

Air Canada's (TSE:AC) dominant position in the Canadian airline industry wasn't enough to keep it from losing $108 million due to a "dramatic fall-off in business" in the second quarter.

The weak financial results prompted the company to announce another round of layoffs – 4,000 jobs will be cut starting Nov. 22 with 1,800 people hired after Dec. 23, 1999 who were not covered by a job-protection agreement made when Air Canada acquired Canadian Airlines. The carrier currently employs 38,300 people.

The remaining 2,200 jobs will be eliminated starting in April 2002. In December, 2000, Air Canada announced 3,500 jobs would be cut through voluntary buyouts. The job cuts are expected to save the airline roughly $1235 million a year.

The layoffs may not be done, as the airline said it plans to approach its unions to discuss "further cost reduction and productivity improvement opportunities."

Air Canada's president and chief executive Robert Milton blamed the economic downturn for the carrier's declining fortunes.

"The ongoing and increased severity of the current economy's impact on the North American airline industry demands an increasingly decisive and aggressive action plan to improve our performance in the shortest possible time span," Milton said in a statement.

Air Canada executives are taking pay cuts of 5 per cent, with Milton taking a 10 per cent cut. In 2000, Milton was paid a base salary of $1 million.

On the financial front, Air Canada's revenues rose 28 per cent to $2.56 billion. However, the airline posted an operating loss of $71 million, compared with an operating earnings of $234 million in the same quarter last year.

The $108-million net loss translated into a loss of 90 cents per share, compared with a profit of $124 million, or 88 cents a share, from Q2 a year ago.

The carrier's loss of the quarter was much worse than market watchers had been expecting. Analysts polled by First Call/Thomson Financial had been forecasting a loss of 52 cents a shares.

Jet fuel cost increases hurt the company's bottom line. A litre of fuel cost an average of 39.6 cents in the quarter, up from 33.4 cents a year earlier. Air Canada's consumption of fuel also increased to 948 million litres from 622 million.

Despite the higher fuel costs, the airline flew with more empty seats. The proportion of seats filled on the airline's flights declined to 74.2 per cent from 76.8 per cent, while yield per revenue passenger mile slipped to 17.7 cents from 21 cents.

While the outlook for the remainder of 2001 is bleak, Milton is hoping the airline will be profitable again in 2002.

"I don't, frankly, have much optimism about a recovery before the second half of next year," Milton said during a morning conference call with analysts.

"The key for us is cost focus, stabilization, and being able to profit even with a weakened revenue base, and we are confident that we're going to get there in 2002," he said.

Besides cutting staff, Air Canada is also shuffling its fleet of aircraft. Nine Boeing 767s, one 747 and two Airbus 340s will withdrawn from service by next spring. Twenty of Air Canada's 43 737s will be moved to the planned discount carrier by the end of 2002.

Meanwhile, the company is taking delivery of 28 new Airbus jets between this month and May 2003.

As fewer business-class travellers fly during the economic slowdown, Air Canada said it will cut its capacity by 2 per cent, with fewer business-class seats and more economy-class seats."

[acb4u]

It's Collinette's fault, period.

[Spenda]

Surprise, surprise. When will the Canadian airline industry learn that the way forward is NOT to buyout a competitor that is nearly bankrupt and consequently assume loads of debt? I was, and still am, so bitter about the takeover of Canadian Airlines. To see Air Canada screwing it all up with losses and layoffs is just rubbing salt into the wound.

Indeed Colenette should take the fall for this. How can he have thought that an unhealthy Air Canada would be a better alternative for the Canadian public, and all the employees of Air Canada and Canadian, than a healthier Canadian Airlines as a result of foreign investment from CP's oneworld allies? Hindsight might be 20/20, but surely foresight only involves a little common sense.

I read in Flight International this week that Air Canada has pulled out of its deal with Skyservice. Not content with ruining Canadian, Air Canada had to buy out and destroy Skyservice before the fledgling carrier had a chance to establish itself. Surely that isn't in the interest of fair competition.

Why don't you go manage a McDonald's outlet Milton? That might be more your pace.

Angry in the UK cos there ain't any work back home.

[AOG-YYZ]

"Bitter Spender"
The alternative to AC rescuing CP was to allow Gerry Schwartz (alias American Airlines) to purchase both carriers with a view to the Millicanization of both carriers and turning them into a feeder for American Airline.
But yes, i do agree that Collinette should take the fall, but realisticly, can you see that happening? And what should happen to the original architect of Canada's present air chaos, Brian Mulroney?

And it's not over yet, the Montreal based airline consultant, Jacques Kafavian has predicted that come next March when the promise of no lay-offs expires we will see another lay-off in the magnitude of 8,000 to 11,000 or more, mostly from the ranks of the hitherto protected Canadian Airlines employees. :(

[Kubota]

Air Canada's present management couldn't make money if it owned the mint. So bogged down in their own bureaucratic incompetence and blind following of Robert M's bu11**** theories on "airline strategy - Canada" that they won't get themselves solvent - ever - until they are thrown into a free market, open skies N America...with no bailout from Ottawa when the dogs are at the door.

A shareholder (regrettably).

[Spenda]

AOG-YYZ. I appreciate that the alternative to the existing situation involved a substantial amount of American moola. I pondered this at length at the time as I believe one of the things Canada as a nation needs to achieve is to invest more money in its own businesses. However, I would rather have seen American money support a large number of Canadian jobs rather than see many thousands of jobs lost. Apart from the city itself, Canadian Airlines was the largest employer in the city of Calgary. I agree with your prediction that many more job losses are to come and I don't understand how the Canadian Government could have been so short sighted as to allow this. Having said that I can't remember a Canadian Government that did Calgary any favours anyway.

As for the airline chaos situation you describe. I think you'll find it started a long long time ago with a fellow called C. D. Howe. I hope he rolls in his grave when AC goes TU.

Meantime I need to get home in the summer and there is only one major airline that serves Calgary from the UK and I'll be damned if I fly on them. How's that for competition Mr. Colenette? I guess it is knees behind ears time on C3. Ahhh if only Canadian Pacific still had passenger trains and ships.

[Lazlo]

I agree totally with Spenda with regard to the management of the Canadian airline industry as a whole. Brian Mulroney was not the start of the downfall, he was merely just a link in the chain which started pretty much at the time commercial aviation began in Canada. The Canadian government, using their airline Air Canada systematically destroyed any and all competition that they faced. Just ask Max Ward about the problems he had. Now Air Canada is getting its come-uppance and the only problem is that since Air Canada is really the only game in town many people will lose their jobs, with nowhere else to turn. There are no real alternatives for the pilots. Where will they go? This is really very, very sad.

It is time to allow more foreign investment into Canadian Airlines. The current system obviously does not, and cannot work, as has been demonstrated in crisis after crisis in the joke of an aviation industry in Canada, and I think Spenda is right when he says that it would be better to have more jobs with foreign money rather than less jobs with so-called Canadian inward-investment.

I read on another website today that the management is thinking of asking for concessions from those who are on probationary contracts. I hope that this information is incorrect, as these pilots are paid an absolute pittance - less than half of the starting wage of all flag carriers in all the other countries in the developed world.

I, like Spenda, would love to be able to return home some day. But I doubt this could ever happen because who in their right mind would ever want to leave what is a relatively healthy industry (jobs-a-plenty) to this utter disgrace that is occurring in Canada. Will it ever get better? I hope so but in my lifetime it has gone from bad to seriously dismal.

Lazlo

[AOG-YYZ]

Spenda & Lazlo

Having worked for both CP and AC at one time or another I think I have a little bit better insight than most partisan observers.

When the Canadian airline industry was privatized by the Mulroney Tories, AC was given no new domestic and only one new major international route to fly, that was YYZ-YMX-MAD. CP and Wardair were given access to LGA, LAX, FRA, ZRH, CDG and LHR for CP, LGW for Wardair. Air Canada was restricted from flying trans-Pacific until their shareholders (mostly tory bankers) bitched so much that they were allowed to fly to Osaka six times a week and to Hong Kong four times a week and to Seoul, Korea with daily flights.

Remember Gerry Schwartz is a bossom buddy of Liberal minister David Collinette). Now to Gerry (and the job breakers) Schwartz, his past exploits leave, even the casual observer, little doubt as to what his intentions were. Any company Gerry or for that matter Heather Reismann his wife have aquired (look at Chapters) is broken up and sold off in pieces, at a profit. The plan for CP/AC was to sell as much of the intangables as possible. Items like gates and slots at La Guardia, Hong Kong, Heathrow, Paris and Frankfurt. Valuable real estate in Calgary, Vancouver, Toronto and Montreal were also on the block. AMR/Sabre would not only have the financial, booking and airport check-in contract for Canadian but would also do the same for Air Canada eliminating the Air Canada RES III system with it's thousands of Canadian jobs. All financial activity of both airlines and not just Canadian would be conducted from Dallas. This would have dealt a double blow to Winnipeg which houses the Air Canada financial headquarters. All of the above was disclosed by the CAW (Canadian Auto Workers Union) after Air Canada had aquired Canadian. Remember CAW had endorsed the Schwartz ONEX/AMR takeover after receiving job guarantees for it's membership from ONEX/AMR.

I still believe Air Canada was the lesser of the two evils and that more jobs were saved by it's takeover than would have been the case if the ONEX/AMR bid would have been succesful. Alas, with Canada now being a benign (not so benign?) dictatorship of the liberal party for the foreseable future, I really can't see anything changing. However, like the Air Canada takeover of Canadian, a benign Liberal dictatorship is more preferable than if the extremist Reform/Alliance was in power.

Well that's the way I see it but i'm receptive to others views.

[Squawk 8888]

In many ways it's starting to look like AC could be adopting the style of 80s CP management. CP's assets were strip-mined in the 80s to finance the Wardair takeover, with the execs counting on the classic Canadian business tactic of blackmailing Ottawa with the prospect of massive layoffs unless a taxpayer-funded bailout is forthcoming. Once Ottawa refused to write the cheque (the only sensible decision ever made by the morally bankrupt Liberal gang), the only alternatives were (a) a merger of some sort or (b) letting foreigners into the market. Since it's politically incorrect to let Americans get involved in so-called "flag idustries" such as newspapers, broadcasting and transport, that left us with a choice between AC and Onex. IMHO neither option was acceptable but Onex would probably have been far worse.

I find it interesting that Mulroney-bashing still goes on more than a decade later- most of this country's problems are a direct result of Liberal policies going back to the 30s. The master of corruption at that time was Mackenzie King, who destroyed a successful private airline so that he could start Trans-Canada (later AC) and appoint his friends to the board of directors. Throw in the horrific national debt and foreign investment roadblocks that are Trudeau's legacy and the current situation was inevitable.

At this point I think the only way out is to follow the EU route- let any carrier from a NAFTA (or the future FTAA) state fly anywhere in the region and tell Milton to sink or swim.

[Spenda]

AOG-YYZ. Points taken. I cannot claim to have worked for either Canadian or Air Canada, and I appreciate your insider input. I should like to make a couple of points though as I think perhaps you have drawn some conclusions from my previous posts.

Indeed it sounds as though many jobs would have been lost in Canada had the Onex deal worked out. I was opposed to any merger of Canadian and Air Canada regardless of the party doing the taking over. I should have liked to have seen the Canadian Government relaxed the laws regarding foreign ownership of Canadian air carriers such that Canadian Airlines might have been saved by investment from its oneworld allies. As I mentioned earlier I think Canada as a nation needs to invest in itself to a greater extent and I certainly didn't see the answer in selling out the entire industry to American Airlines.

Though in latter years Canadian Airlines may have benefited from route approval from the Canadian Government, for many years this was not the case. Decades of previous preferential treatment to the, at the time, state owned Air Canada/TCA resulted in Candian's predecessors (mainly Canadian Pacific) being given the leftovers. The reason Canadian had a presence in the Pacific at all was because these were the only routes Mr. Howe allowed CP to serve when he divided up the world between TCA and CP in the 1940s. For years CP struggled to make these routes profitable and I found it a particularly bitter pill to swallow when Air Canada began whinging and bitching in the late 1980s when it realised that after years of little traffic, suddenly there were profits to be made over the Pacific. Remember that all the while AC had had a virtual monopoly on the profitable North Atlantic market despite CP's efforts to obtain the rights to compete. Also, I think you'll find that Canadian was not given route approval until long after they had the rights to fly to LGW as a result of their purchase of Wardair. This perhaps was the only jewel in Wardair's crown.

Finally, please do not assume that because I am from Calgary I am some sh*t kicking cowboy neo-nazi Reformer/Alliance freak. I am on this forum to discuss my views on the airline industry, not to enter into party politics. In the meantime I'll avoid stooping to the same level by not making wild assumptions about Torontonians.

Cheers.

[Squawk 8888]

Spenda, you're bang on about Canadians needing to invest more in themselves. Unfortunately the Liberals have spent three generations cultivating an inferiority complex that is now so deeply ingrained in our national psyche that we won't do anything without government involvement. The web of favours, subsidies and preferential treatment for investors with friends in the right places is so tangled that nothing will ever be resolved unless we ditch everything and start from scratch.

The preferential treatment for TCA went far beyond locking CP out of the Atlantic routes. Back in the 20s and 30s there were several privately-owned regional carriers, the most successful of which was Canadian Airways based in northern Ontario (the Soo, I think). The owner wanted to get licenced as a national carrier, but Ottawa rejected his proposal then used taxpayer money to form TCA. Once TCA started operating with a Liberal bagman at the helm, Ottawa systematically barred Canadian Airways from its best routes until that firm went bankrupt. CP Air did moderately better because its parent company, the railway, had full-time lobbyists who were adept at topping up party coffers. CP got a few bones thrown its way, and kept fairly quiet about the regulators because they, like TCA, wanted Ottawa to keep Max Ward out of the picture. Even as recently as the 1970s CP was restricted by the regulators to just one transcontinental flight per day, but that was better than Wardair, which had some good routes but was required by law to book passengers a minimum of 60 days in advance. Also, remember that ubiquitous disclamer "fares subject to government approval" on every seat sale ad in the 70s?

BTW LGW wasn't the only Wardair jewel- their reputation for service was legendary, yet another asset squandered by CP management.

Even though I'm an evil Torontonian I can understand why Calgarians are frustrated- the pattern of that city being screwed over by Ottawa for refusing to vote Liberal is too obvious to ignore. I remember reading about the CBC operation there- apparently CBC Calgary was drawing large audiences (a rarity for the CBC) and making money while CBC Edmonton was a money pit that was ignored by viewers. When the CBC had a round of budget cuts they closed Calgary because Edmonton elected a couple of Liberal MPs. Let's hope Chrétien doesn't get vindictive enough to bring in another NEP.

[AOG-YYZ]

Spenda

I, as a person who believes Guy Fawkes to be the only honest man ever to enter parliament and as one who having not participated in any electoral process (federal/provincial/municipal) for 23 years and having no allegiance to any political party, right or left, i'm at a loss to see where you would take offence at me reference to Reform/Alliance. Could it be I touched a raw nerve? ;)

[Squawk 8888]

Well, AOG, that reference to Reform/Alliance "Nazis" is typical of what we're continuously bombarded with in the leftist/statist-dominated media here and it's more than a little bit tiresome. What's particularly galling about it is that the only parties here with Nazi-like tendencies are the Liberals and the NDP- they are the ones who advocate cradle-to-grave socialism, state control of industry and assignmet of privilege by race, not the Alliance. And let's not forget that it was a Liberal regime (Trudeau's) that gave Cabinet the authority to seize property without warrant and put citizens into concentration camps (er, "Civilian internment camps" was the official term) without a hearing (Emergency Planning Order, 1982).

That rant finished, gotta agree with you that politicians of every stripe are nothing but oxygen thieves.

[Dropp the Pilot]

Recent IMF reports say that Canada's economy is uncompetetive and "unlikely" to recover. Prime reason? "unrealistic" and "over-empowered" organized labour.

What I can't understand is why they would go on to say the country has no export industry. Look what Canada's proud and intelligent socialist goons are doing at Cathay!!

[Squawk 8888]

Actually, drop, we do have one very healthy export industry: skilled, well-educated professionals. Pilots, programmers, researchers- convincing us to leave is like shooting fish in a barrel.

[AOG-YYZ]

Hi Squawk

That is the "War Measures Act" and I fully agree with you. That one piece of legislation reduced us to joining every other state in the Americas of using our own armed forces against the population. No different than Galtieri, Pinochet or Kent State. And if you remember the excuse was that there was an "Imminent danger of insurection" in Quebec. One (crooked) Quebec politician was murdered and one foreign diplomat was kidnapped.

As to your reference to the NDP, well the federal branch of that party enjoys less national support than even Reform/Alliance. The last time they wielded any influence was under the leadership of David Lewiss who, if you remember, kept Trudeau in power. And Gary Doer of Manitoba is the only provincial premier from the NDP, thanks to the preceeding totally corrupt Tory administration.

As to the reference by "Dropp the Pilot" about organized labour I can tell you, having sat across the table from CUPE, IAM and CAW, they are not the ogre you think they are. ACPA and CALPA are, due to their thinking they are not a union and akin to a management association, the biggest pushovers. In fact, like the "Gulf of Tonkin" incident, "Big Labour" was/is a convenient whipping boy and a cover for inept corrupt management, at both airlines. And Air Canada was only slightly better managed than Canadian Airlines.

I hate politcal party supporters, bag men, camp followers and party workers more than I hate politicians. :D

[ 04 August 2001: Message edited by: AOG-YYZ ]

[PUKKA GEN]

Usually someone hi-jacks the Guv's posts to attack his proposed L1011 airline! But this time we have been given a lesson in Canadian politics/history and business!

Unfortunately, Canadian aviation has been poorly served by politics and politicians. Too many important decisions have been made by politicians for purely political reasons.
This latetest buyout (guess who I work for!)
is just the last in a long string of political interference. The purchase was approved by Ottawa on many conditions, not the least of which was a guarantee of jobs , for a specific period. That period, for managment and other non union employees, ends
Mar.31 2002. I will up the estimate of job losses after Mar. 2002 to 10000 ,plus.
No airline, or any other business, can survive when forced to carry thousands of unproductive employees.

The above posters have also displayed typical Canajun,Eh! attitudes...bring in the
foreigners to run our routes, and refuse to fly Air Canada, but will endure the veal stalls of C3 et al in protest. Does anyone
really think American will operate Halifax to
Stephanville at charter rates?

[Squawk 8888]

Pukka, the big problem with Canadians is that they expect to be flown from Halifax to Stephenville at charter rates. They want somebody to provide free medical care, cheap transport, cheap energy, cheap phone service and now cheap broadband internet access as though they could be produced by some form of magic, they kick and scream about the GST and 50% income tax rates as if there were no connection. As long as nobody here is going to have the b@lls to invest in anything without the help of Ottawa and/or foreigners we'll continue to see our sharpest citizens ditch the place while those who stay watch their standard of living slide ever closer to third-world conditions. As the old comic strip says, we have seen the enemy and it is us.

[Dockjock]

I almost can't contain my frustration at Canadians as a population regarding your point, Squawk. Free medical care! Cheap phones! Cheap travel! Hey my taxes are too high wah wah. It makes me sick, and it can only get worse, as I am currently in the bottom bracket with nowhere to go but up.

Fortunately for me, I have recently grabbed a decent flying job with an American-based company, and plan to take full advantage of the "intra-company transfer" rule to gain my green card and move out of this socialist purgatory when the time comes.

There was a time where I felt all Canadians had a conflict- stay home and live in the "world's greatest country" but endure a government-suffocated economy, or sell your soul to Uncle Sam to pursue the American Dream. Unfortunately the former doesn't seem to hold water anymore for a pilot and Canada's greatest export (as above) has become intelligent and qualified professionals from many fields. :(

[Steepturn]

I realize this isn't a political forum and normally I wouldn't bother to comment but AOG-YYZ your facetious comments regarding the FLQ crisis are quite wrong. The FLQ was bombing military and government buildings and had been doing so since 1963 after changing their name from Comite de la Liberation National (CLN). They were stealing weapons from armouries, and had organized cells in order to 'liberate' Quebec. They were organized terrorists, some members having trained with the PLO, and had attempted to bomb two PMs. In short, they were entering the armed resistance phase of Maoist revolutionary doctrine that was quite successful in Cuba and Algeria. Therein lies the "excuse" you mention. This has nothing to do with any particular party but I felt the need to comment.

[Squawk 8888]

Steepturn, you're absolutely correct that the FLQ but the trouble with indiscriminate roundups like October 1970 is that they *never* catch the people who are causing the trouble. Nearly all of the people who were jailed (without warrant or charges BTW) had absolutely nothing to do with the violence. Doing so merely plays into the terrorists' hands; the strategy of all terrorist cells of that era (Baader-Meinhof, Red Brigades et al) was to provoke governments into violating civil liberties in the (mistaken) belief that it would generate an anti-government backlash among the general population. The first mistake with the FLQ was the mass arrests but the pièce de résistance was welcoming the killers back from Cuba with open arms.

[Apollo]

Stockwell Day for Prime Minister. :D Or how about......Joe clark Who???? :eek:

[Snake Hips]

I don't claim to know too much about AC/CP politics, but we all work in a global industry that charges customers less (in real terms) than 20 years ago. This is depressing.

[penguin]

I have been spending the last hour trying to buy a ticket from AC over the internet. It's going nowhere. I tried to call the reservation office but was put on hold. Fifteen minutes later, the line was disconnected and I had to redial again. I was put on hold for another 15 minutes and still no one picked up the phone. Finally, I gave up and called my wife's travel agent to book the ticket for me. I was trying to save AC the commissions. My cousin buys Westjet tickets over the internet all the time and he told me it is a piece cake. I think AC has a lot to learn from some of these newer carriers that make good use of the technology.

Robert, are you really the right guy to do the job?

[ 08 August 2001: Message edited by: penguin ]