Air Canada Pilots

[trags]

Amidst all the uncertainty of the airlines future and talk of things being ok at least until the end of the summer rush.
Where do all you guys at AC see yourselves in 5 0r 6 months time? Is there going to be hundreds of guys and gals walking the streets looking for anything at all to pole? Will there be a flood of pilots jetting off to all the traditional expat areas of the globe looking for something to tide them over until the grass gets green again back home? Something on the home front perhaps? WJ or another form of rescue in a new airline?
What will be the impact of all this on the global pilot market? Will this be another Ansett debacle whereby the market will be flooded for the next few years with very ably qualified guys looking for anything?
I'm sure we all have ideas, theories, conjectures... it would be interesting to see how we all think from our different perspectives in different corners of the globe...

[Airbubba]

Don't worry son, the government won't let Air Canada (or Pan Am, United etc...) go out of business...

[GOLF-INDIA BRAVO]

How about Air Canada(2004) with debt wiped out and a fresh start but having to stand up for themselves?

Lower wages for staff, non union or at least reigned in union
Thats how I see it panning out because the government cannot allow the major airline to go to the wall, it would be a disaster for the economy if there was nobody to fill their shoes

Golf India Bravo

[extreme P]

Didn't Air Canada(1991 or so) already have their debt wiped out and have to stand up for themselves?

[North Shore]

Nice try, GIB, but I don't think so. Back in the '80's (I'm lost for an exact date) the government divested itself of AC. Set them off, debt free, into the world to sink or swim. Since then, a disastrous series of management decisions, and here we are, circling the drainpipe. Shall we invest my hard-earned tax dollars , and watch negative returns for the next 20ish years?
No Blo*dy Way!

[trags]

crew

Lots of speculation as can be expected...
What are the crew up to at present? Looking about feversishly for another ship to jump on to or just biding time to see how the war zone looks tomorrow or the next day....

I have heard a couple have left but is that just the standard turnover of any airline or the beginning of a period of mass movement??

[oldebloke]

With the initial layoff some o'the guys went to the Charter market with their endorsements 767.320..at the moment some of the guys/girls looking to the Mid/FarEast for jobs(some have had interviews but not gone)..Word is out that the layoff canx,and Leaves o' absence discontinued.Rumour has it that with the 'normal'retirements AC will have to 'HIRE'next year.In the meantime we have this year to get through first....
Does anyone,of the senior group of PPruners have the details of the BA 'rebirth years ago....
cheers.....

[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.

[Airbubba]

>>...and it is business as usual for our customers...<<

This phrase "usually" means it's time to look for another job in my limited experience with failing Once Great Airlines...

[Tan]

Cabinet fault lines appear over Air Canada
Quebec, western camps said forming
By SIMON TUCK
Tuesday, April 27, 2004 –The Globe and Mail Page B1

OTTAWA -- The federal cabinet is showing signs of a regional split over what to do about troubled Air Canada, increasing the chances that the insolvent airline's problems will cause political turbulence for Paul Martin's government.

Government sources say two camps have emerged within cabinet over how -- or whether -- to respond to the airline's formidable problems, which led to a feisty discussion last week during a cabinet subcommittee meeting.

"This thing has a chance to become huge," said a government source. "There's no way these two groups are ever going to agree on this."

One group, which includes key ministers from Quebec, believes Ottawa shouldn't be shy about trying to save the country's flagship airline, which is based in Montreal. They don't want an old-fashioned bailout, but they would support a range of moves that would help Air Canada by easing the financial load for the entire industry.

One government source said Health Minister Pierre Pettigrew has been among those expressing this view.

The other camp, led by senior western ministers such as Finance Minister Ralph Goodale, has argued against any move that could be seen as the government favouring a particular company, especially one that is widely blamed for many of its own problems. They believe the government should let the market shape the industry. Air Canada's chief rival, WestJet Airlines Ltd., is based in Calgary.

Mr. Goodale said all of Canada's airlines -- not just Air Canada -- are important. "I would really take issue with those that sometimes draw a distinction between regional and national interests," he said during an interview. "I see WestJet in the national interests."

There is widespread agreement within the government, however, that the government should only make moves that affect the entire industry, not just Air Canada.

One senior official said the key question for the government is whether or not WestJet and other smaller airlines can quickly fill in the service gaps, if Air Canada were to go out of business.

The government's response to Air Canada's plight could be the sort of issue that inspires different responses in different regions, Mr. Goodale acknowledged. "I suppose there could be different perspectives depending on which region of the country you come from."

This particular situation is an especially sensitive one for westerners because WestJet has in recent years been outperforming its larger rival.

And Ottawa's involvement in the aerospace industry has been a touchy subject in the West for some time. In 1986, Brian Mulroney's Conservative government lit a political firestorm when it awarded a $1.4-billion contract to maintain CF-18s fighter jets to Bombardier, instead of accepting a cheaper bid from Winnipeg's Bristol Aerospace Ltd.

That decision helped fuel the rise of the Reform Party. Mr. Martin, who has vowed to sooth western alienation, will want to do what he can to avoid reopening one of Western Canada's most sensitive political sores.

But Air Canada's financial problems pose further potential problems for the federal government. Mr. Justice James Farley of the Ontario Superior Court, who is overseeing the company's restructuring, recently extended Air Canada's protection under the Companies' Creditors Arrangement Act to May 21 from April 15.

That raises the possibility that the company would have to make dramatic cuts -- likely including massive layoffs and the elimination of service to many smaller communities -- during the coming election campaign. Many believe the election will be called this spring, perhaps for mid-June.

Even if the situation doesn't flare up into a full crisis during the election campaign, Air Canada has put the Martin government in a no-win situation. It doesn't want to be seen to do nothing, as jobs and services are cut. But it also doesn't want to do a bailout, particularly one that props up a struggling Montreal-based company at the expense of a fast-rising Calgary-based rival.

Ottawa will likely take a key step towards developing its Air Canada strategy this week, as Transport Minister Tony Valeri lays out a series of policy options for the federal cabinet. Those options include raising -- or even moving toward eliminating -- foreign ownership limits in the airline industry.

The limits on foreign ownership could be raised as high as 49 per cent without much difficulty, which would provide Air Canada and its smaller domestic rivals with greater access to capital. Foreign ownership limits on airlines now stand at 25 per cent.

But one senior Liberal said the total elimination of foreign ownership restrictions will also be up for debate when Mr. Valeri appears before cabinet. "I think it has to be part of the discussion."

But that source also said that such a dramatic and complicated move would more likely occur over the longer term, not in the coming weeks or months.

A more likely short-term option to help Air Canada would be for Ottawa to slash airport rents. The airline industry has long lobbied for lower rental fees, believing that it pays large sums for little in return.

If it were to drop those fees, however, the government would want assurances that those savings would be passed on to Air Canada and the other airlines, not simply gobbled up by airports.
"We've got to do the measured thing, which is something for the industry," a senior Liberal said.

Mr. Valeri has said little on the matter, other than the government is hoping for a private sector solution. Ottawa doesn't want to give the impression that it will bail out the airline, thereby removing incentives for the stakeholders to do whatever they must to make it financially viable.

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

[Mostly Harmless]

Our government has been treating the airline business as a cash cow for too many years. The cow is dry and people are suddenly surprised.

The government has no business bailing Air Canada out with money, but I am completely in favour of them lowering the tax and service fees that are imposed on the industry. However, that is for the whole industry, not just the airlines. They can’t just download the costs on to the smaller operators, or that will be a fatal wound to an already lame industry. Air Canada tends to be a little short sighted when it comes to anyone but themselves; not thinking where the next generation of high time, experienced pilots will come from if there is no general aviation industry in Canada.

Best of luck to all in our industry.

[Flexable]

First off Air Canada was not forgiven any debt when it was privatized. That is an urban myth.

The first part of this post is from company material put out in 1993.

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 17,000. 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 23,000 employees again.


The following numbers are taken from Air Canada's annual reports.

In the years 1993 to 1999 Air Canada’s operating income, (operating revenue – operating expenses), was 1,422 million.

The long term debt plus the perpetual debt at the end of 1993 was 3,571 million. By the end of 1999 the total debt was 275 million LESS or a total of 3,296 million.

The total profit in those years was 711 million.

These are the facts.

[Tree]

It is also fact that they lost money 5 years out of 9!

Summary Financial Results for the Canadian Airline Industry:
1990 - 1998 (in millions)
Panel A: Air Canada
Line 1: Operating Revenue
Line 2: Operating Income
Line 3: Operating Margin
Line 4: Net Income (Loss)
Line 5: Earnings per Share
Line 6: Profit Margin
Line 7: Total Assets
Line 8: Total Long-Term Debt
Line 9: Total Shareholders Equity
Line 10: Total Capital Expenditures
Line 11: Net Investment Cash Flows

Line 12: Debt
Line 13: Equity

1990 1991 1992 1993 1994 1995 1996 1997 1998 Avg
$3,899 $3,485 $3,501 $3,598 $4,024 $4,507 $4,880 $5,572 $5,932 $4,378
($11) ($200) ($197) $1 $244 $275 $215 $368 $144 $93
-0.28% -5.74% -5.63% 0.03% 6.06% 6.10% 4.41% 6.60% 2.43% 1.55%
($74) ($218) ($454) ($326) $129 $62 $149 $427 ($16) ($36)
($1.01) ($2.94)($6.13) ($4.23) $0.97 $0.36 $0.82 $2.37 ($0.10) ($9.89)
-1.90% -6.26% -12.97% -9.06 3.21% 1.38% 3.05% 7.66% -0.27% -1.68%
$4,579 $4,921 $4,810 $5,039 $4,997 $5,397 $5,441 $5,991 $6,422 $5,289
$2,194 $2,970 $3,330 $3,435 $3,340 $2,813 $3,033 $2,940 $2,917 $2,997
$988 $770 $316 $230 $365 $662 $799 $1,234 $1,457 $758
$673 $993 $598 $395 $410 $326 $607 $439 $730 $575
($583) ($829) $287 $126 $69 ($263) ($166) $95 ($640) ($212)

69.89% 79.69% 91.45% 93.96% 90.30% 84.18% 80.31% 70.93% 69.12% 81.09%
30.11% 20.31% 8.55% 6.04% 9.70% 15.82% 19.69% 29.07% 30.80% 18.25%

[340dog]

to all those who bash Air Canada, look at the Air Canada Public Participation Act in the internet and see how the Government still has their slimy hands on us and why we are in the shape we are in. In the Act...the head quarters MUST remain in Montreal, we MUST remain fully bilingual( that means that every item that is put in print or said must also be in FRENCH), operation and overhaul centers MUST remain in Winnipeg, Toronto, and Montreal. If we would be free of government interference and allowed to compete as the Westjets and Jetsgo etc, then I'm sure the results would be different....WE ARE NOT A CROWN CORPORATION , yet we are still regulated the them

[unmanned transport]

For the betterment of the airline industry and Canada as a whole, the 49 parallel should be removed and the two countries, America and Canada become one.

Canada is living under a dictatorship of big government patterned after England's old system of subjugation and suppression of their 'subjects'. This socialist system shrinks the human spirit and the people, 'subjects' become too dependent on their government. Socialism has retarded Canada's development since it's inception.

The English parliamentary system did not provide Canada with the democracy that she deserves. America's incredible success is a direct result of it's constitution. Canada's failure is also a direct result of it's constitution and it's failed parliamentary system. In a republic the supreme power is with the people.

[trags]

back to the subject

I know this is a highly emotive topic.
The way AC conducts its business and indeed the manner in which it appears to conduct its business effects many people directly and indirectly all over the world.
I posted this topic in order for all the AC Employees to outline how they see THEIR FUTURE at AC; not why the airline is where it is or how certain politicians have failed the country or the airline or the individuals.
I'm sure it's a useless gesture given the nature of these open forums but if at all possible lets stick to the point of this thread without letting it become a AC/Canadian Govt slanging match.

To reiterate: Where do all the guys and gals who are directly affected by this sag plan on laying their roots for the next few years. Is there a possibility of things rectifying at home or is it time to pack the bags and move to 'greener pastures'??
In the meantime, fingers crossed for you all here.
sincerely
Trags

[Tree]

Trags,
Thanks for your concern. My observations so far:

Some pilots have already left for employment in the sandbox, Asia, charter/freighter operators etc. Some are on LOA and some have resigned or are on furlough and may not return if recalled. Some have returned to or joined the military (the military is short of pilots here).

There is a large retirement factor over the next 5 years (about 100 per year mostly from the CDN pilot group). Assuming that the wings don't fall off it again then there is a good upside for the recall of furloughed pilots. A downside to that is that AC hired a considerable number of older pilots (even up to age 45+ at date of hire) so the recovery window is not there for them.

Cheers, Tree

[Apollo99]

I have the answer!!!! 340 Dog, you are really close.

Stop printing everyhting twice, except of coarse in Quebec.
Now all that ink used for french, it must weigh something. So, all the ink that the airline has wasted money on printing, what would that equal in fuel savings if All Air Canada A/C did not have that extra ink (weight) on board? ( Except of coarse the A/C going to Quebec.)

Voila!! They may just save enough to bring up their bottom line.
Save on ink, save on gas. Two birds with one stone.

[Koyo]

An interesting article from National Post suggested that investors may just wait for the entire thing to implode and then pick up the assets at low cost and start another company. At any rate, foreign investors are basically scared off by the recent row between Lee and the AC unions. Some members (don't know how many) are really upset about Lee leaving and some internal cracks had form within the unions. Could some of the pilots hold on long enough for new airlines to form?

Personally, I think the union is kind of silly not to accept Lee's last offer regarding pension. If Air Canada can't even pay off its pension dues now what makes everyone think they will in the future with no investment? Sure the pension would be cut but at least you will still get some money instead of no money. Why risk losting what little it's left because of emotions? Assuming most people can be hired by the newly formed airlines, their pension would have to start from zero or worst no pension like West Jet.

*Oops I meant Li not Lee...same last name got 2 spelling in english.

[CaptW5]

I suppose that you mean Victor Li when you are writing about Lee.