Player4keeps
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Air Canada And Robert Milton And The Future

Sat Oct 06, 2001 10:31 pm

Here again are examples of how to make poor business decisions: A look at the past and predicting the future of Air Canada.
_____________________
Source The Toronto Star
October 5th 2001

Milton hamstrung by history
Old decisions return to haunt Air Canada
Susan Pigg
BUSINESS REPORTER

Air Canada president Robert Milton may have regrets - may have a slew - but if he does, he isn't talking.

``At this stage we're operating through the perfect storm,'' Milton told reporters recently as he announced 5,000 new job cuts at the financially troubled national airline, bringing the total this year to 12,500.

``I am comfortable with everything we've done; we've done it with conviction and we just fight on.''

But the fight to right Air Canada has proved especially difficult for Milton, a man who prefers to focus on the future but finds himself hamstrung by history.

Air Canada, like most other major North American airlines, already was teetering, having lost $276 million in the first two quarters of this year, when the Sept. 11 terrorist attacks on New York and Washington, D.C., put major airlines around the world into a deadly tailspin.

But decisions Air Canada made in good times are also coming back to haunt it, thanks in large part to skyrocketing fuel prices and collapsing business travel that have conspired to compound problems that had been mounting at the airline for years.

There are some who argue that to understand Air Canada's plight today, you have to go back to the Mulroney government's decision in the late 1980s to deregulate the country's airline industry. As government restrictions on what domestic routes airlines could fly - and how often - were slowly abandoned, Air Canada and its chief rival, Canadian Airlines, engaged in a deadly fight for dominance of Canada's airways.

By the recession-plagued early '90s, both airlines were in trouble, cutting jobs or working hours to reduce costs. As Canadian continued to struggle, Air Canada continued to climb slowly until, in 1999, it offered to buy the lucrative international routes controlled by financially crippled Canadian, setting the stage for profound changes in the airline industry.


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`(Air Canada) came into this merger with virtually empty pockets and when you have the downturn in business travel, combined with the events of Sept. 11, they are two knockout blows that Air Canada is having trouble withstanding.'- Captain Rob McInnis, Chair of former pilots' merger committee

--------------------------------------------------------------------------------


Within weeks, millionaire financier Gerry Schwartz, supported by American Airlines, would announce a hostile $5.7 billion - $8.25 a share - takeover bid for Air Canada and Canadian, vowing to merge the airlines and shave 5,000 jobs.

It would be more than two months before Onex would bail out of the intense boardroom and courtroom battle, but not before Air Canada - already more than $5 billion in debt - had decided to buy back 35 per cent of its stock at $16 a share, adding $1.2 billion more to its debt load.

It would add $3 billion more, post-merger, by assuming the debt amassed by Canadian during its almost decade-long fight for survival.

``The myth that's out there that Air Canada is doing poorly because it acquired Canadian is totally wrong,'' says Captain Rob McInnis, chair of the former Canadian pilots' merger committee.

``They wanted to acquire Canadian as a good business decision because it would give them world-wide access (key international routes, especially lucrative business travel into Asia) and it would give them a virtual monopoly domestically.

``But they came into this merger with virtually empty pockets and when you have the downturn in business travel, combined with the events of Sept. 11, they are two knockout blows that Air Canada is having trouble withstanding.''

Yesterday, Schwartz said not acquiring Air Canada ``was the luckiest thing that ever happened to us.''

By January, 2000, Ottawa had approved Air Canada's takeover of Canadian with strict conditions that also would eventually add to Air Canada's woes. Air Canada was required to maintain routes to smaller communities served by Canadian, whether or not they were profitable.

Air Canada also agreed to Ottawa's demands that no workers be laid off until after March, 2002, a commitment Transport Minister David Collenette finally waived last week after the terrorist attacks scared off so many air passengers that Air Canada was forced to ground 84 aircraft indefinitely.

If Air Canada made one tactical mistake to win approval for the merger, it was volunteering to hold the line on fares until after January, 2001, to allay fears it would use its near-monopoly position to gouge Canadian travellers.

That commitment proved onerous for Air Canada, which didn't lock in its fuel prices like some other airlines, and was hit in 2000 with $400 million in extra fuel costs and almost no way to recoup them.

It's only this past January - as fuel prices continued to hammer the airline's bottom line - that Air Canada was able to institute fare increases and fuel surcharges, although not enough to cover costs.

Shortly after the merger, Milton stunned a crowd of some 500 former Canadian Airlines workers during an information session in the airline's Vancouver hangar when he said he intended to run the two airlines separately. That left Air Canada workers convinced their lives would go on unchanged, and made the Canadian workers - many of whom had been through at least three mergers - rolling their eyes in disbelief.

That, many observers say, was a critical mistake. By not rationalizing the two different aircraft fleets and moving unionized workers toward common contracts quicker - allowing them to do each other's jobs - the airline was hit with higher than necessary costs, experts say.

``In effect, what he's been doing is running two inefficient airlines instead of what he should have been doing, running one efficient airline,'' said Joseph D'Cruz, a finance professor at the University of Toronto's Rotman School of Management.

Not long after the merger, it became clear to Air Canada executives that they had an unforeseen problem. Travellers - especially frequent fliers amassing points - were still so fearful about Canadian's future, they were flooding to Air Canada.

``Suddenly there were long lineups of travellers at Air Canada ticket counters and almost no one at Canadian's counters,'' said one long-time Air Canada staffer.

Air Canada was forced to reverse engines and started pushing hard for integration of the two workforces, along with a common computer system. But as that difficult process was just getting underway, the good-news-bad-news summer of 2000 arrived.

Suddenly air travel escalated out of control and thousands of people converged on a post-merger Air Canada ill-prepared to deal with the sudden and unexpected takeoff in traffic. Customer complaints abounded.

Because the two airlines' customer service staff, both represented by different locals of the Canadian Auto Workers union, didn't have a common contract, they refused to do each other's work. Air Canada hired 2,000 employees, at a cost of about $600,000 a year, to handle the extra Air Canada load.

Many of those workers are still on the payroll, but expect to be laid off when 9,000 job cuts take place in three phases this month.

In a further effort to boost integration, Milton offered a tradeoff to his airline's five major unions - the pilots, flight attendants, machinists, customer service representatives and dispatchers.

In order to ensure labour peace long enough to finish the difficult integration process, Milton offered long-term contracts with the guarantee of no layoffs until 2004.

In exchange, the airline agreed to pay $178 million in ``merger loyalty bonuses'' over three years to Air Canada employees who signed the long-term contracts - both as a reward for helping with the merger, and as compensation for the fact Canadian Airlines employees got a salary boost averaging 20 per cent post merger to bring them up to Air Canada's higher salary scale.

Those bonuses - the pilot payouts reportedly averaged more than $15,000 each - are often referred to by former Canadian workers as the ``Judas bonuses'' because they only added to animosities and feelings of betrayal between the two groups.

The financially strapped airline is on the hook to pay out about $37 million in bonuses this month to Air Canada machinists, mechanics, baggage handlers and cabin cleaners alone.

While many of these decisions and commitments may been small stepping stones along the way to financial instability for Air Canada, the airline could do virtually nothing to avoid the cliff that was looming large as early as December, 2000.

That's when the airline issued a profit warning, signalling that lucrative business travel - until then accounting for 71 per cent of Air Canada's revenues - was taking a sharp and unexpected downturn.

By the second quarter of this year, Air Canada was reporting a $200 million drop in revenues as major clients like Nortel Networks Corp. - which had accounted for about $100 million in revenues in 2000 - cut its travel by 60 per cent. At the same time Air Canada was determined to continue being all things to all passengers, aggressively taking on rival discount carrier WestJet in western and eastern Canada and moving forward with plans to start up its own long-talked-about discount carrier.

Then the truly unspeakable happened: Terrorists hijacked four U.S. planes and turned them into deadly missiles - at the same time destroying confidence in flying.

The ensuing three-day shutdown of North American airspace cost Air Canada $100 million and revenue at the airline fell 60 per cent in the days after the attacks.

While traffic is slowly picking up, advance bookings, until recently, were still off 30 per cent, with no sign that business will return to normal soon.

One U.S. analyst predicted this week that major airlines will lose a combined $6.5 billion this year, almost triple the $2.2 billion forecast before Sept. 11.

Merrill Lynch & Co. analyst Michael Linenberg said he expects it could be years before air traffic returns to normal, meaning losses of $3.5 billion for major carriers in 2002, up from the $500 million he previously forecast.

One Canadian analyst predicted last month that Air Canada was on track to lose $545 million this year, but that is likely conservative.

``Robert Milton's had just about everything go bad that could go bad - although there's still more that could go bad (depending on U.S. retaliation),'' says York University business professor Fred Lazar who, despite it all, considers Milton one of the top three airline chief executives in North America.

``But if he can't do it (turn ailing Air Canada around), you might as well shut it down and hand over the keys to some foreign company.''

There's no doubt the U.S.-born Milton - renowned for his arrogance - has annoyed at lot of politicians on Parliament Hill who hold the key to his airline's future.

The $160 million aid package to Canada's air carriers, announced by Ottawa this week - about $100 million of which will go to Air Canada - won't even cover the fallout from the Sept. 11 airspace shutdown, let alone get Canada's airline industry back on a solid footing.

And it's unclear how far Ottawa is prepared to go toward the more than $2 billion that Milton has requested.

Despite persistent rumours that Air Canada's chief executive has sold his Montreal home and is preparing to head back to the States, Milton conceded last week that he has ``too much Irish blood'' to run away from a fight.

But this brawl will be unlike any other for Milton - less about who wins and loses, and more about who survives.


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Anybody agree or disagree, add your comments.
 
Player4keeps
Topic Author
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 1:59 am

this article just illustrates the greed I have always seen in the airline.

any comments?
 
chepos
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 2:06 am

Well they have always wanted to be the biggest in Canada, well now they now what it takes to be the biggest. Bigger is not necesarilly better.
Chepos
Fly the Flag!!!!
 
spyderz
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 3:02 am

All I need to say is that Mr. Milton should go for the product has put out has decreased drastically. Yesterday I waited an hour in the check-in in Pearson then, had my flight cancelled, then the next flight was delayed two hours, and then two hours more because the tire was burst. Thats soemthing I expect from Air Transat! Worse off for Mr. Milton though, is that he's got a bunch of employees who are not only afraid about their job, but hate him. The employee I was talking to about getting my baggage back (they lost my bags) was just saying how his bosses suck and there's nothing he can do. Air Canada seriously needs to look at the direction its heading in!
 
Player4keeps
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RE: Spyderz

Sun Oct 07, 2001 3:16 am

I hear u man, don't worry, things cannot continue like this with AC. Your not alone with your frustration towards this poorly managed Airline. Something needs to be done, there only worth 287million and loosing more each day. I don't want tax payers $$$$$$$$$ going into this failing company, they ate enough tax payers money only to let us down over and over and over again.
 
Marrty
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Player4keeps

Sun Oct 07, 2001 3:28 am

Airtransam. Oops! I mean Player4keeps,

The government cannot let AC fail. They are an essential service to Canada and an integral part of our economy. Due to their size, the government has no choice but to give them cash if they need it. If AC fails, the other carriers combined cannot pick up the slack without at least 150-200 extra aircraft and several hundred trained pilots. And no, AC will not let any other carrier use their aircraft or pilots. You don't have to like it, but it is the truth!

Oh yeah, here's that website you should use:

www.dictionary.com

 
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yyz717
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RE: Player4keeps

Sun Oct 07, 2001 5:53 am

Marrty, AC is not an essential service. They are a competitor like any other...unfortunately a dominant, aggressive & politically connected competitor.

If AC was to fail, there would be a short term vacuum in the market. However, the most lucrative parts of the airline could restart as a slimmed down new AC (just like Swissair this week) if a bank saw fit to lend some bridge loans.

If AC is so short of cash, they can sell off some of their route authority to the highest bidders...for example, I'm sure YYZ-LHR could be sold for C$100M.

An advantage to AC failing would be that the Air Canada Act passed by parliament would be null and void...one of the provisions of which is that AC MUST be based in Montreal.....what ridiculous discrimination against English Canada.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Mark_D.
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 6:11 am

Yyz 717--AC is not an essential service. They are a competitor like any other

Maybe so you wish, Yyz717!  Big grin (Looka, you know how it is. As much part of the political and labour-market and transportation social fabric, as the transcontinental railway was decades ago. It`d be nice to pretend you could sweep all that away and de-politicise everything but.. not gonna happen, not anytime soon at least. And no matter which major party was heading the government)

Having said that though, it is a pretty precarious state of affairs at the moment, for the company and even for Milty ( wouldn't surprise me if he departed, as this is way more than he ever bargained for when he first took the helm a couple years ago). But the same old `solution' is going to be sought for these ills, can't see other realistic outcome to it.
 
AF002
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 6:55 am

Yyz717 said: AC MUST be based in Montreal.....what ridiculous discrimination against English Canada.

You're probably also aware that AC has been condemned for not having enough french-speaking personnel, not doing the in-flight announces in the 2 languages as required by canadian laws.. So much for the discrimination against english, eh?
Nothing new regarding this topic, btw:
http://groups.google.com/groups?q=air+canada+francophone&hl=fr&rnum=2&selm=ERFg6.5638%24vs2.680927%40carnaval.risq.qc.ca
 
JAT
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 7:41 am

They are an essential service, yes. But if the government is going to be pumping tax payers' money into the airline then the government should have a say in how it is run. The government should have a member on the board of directors that speaks for the government. If they pump all that money into AC then it should be to buy shares of the company. If that means part-nationalizing it then so be it.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 8:53 am

No way JAT. Govt can never (and has never) been as efficient as the private sector. How could any govt minister or appointee possibly be able to advise AC in a business-like manner? Why should the taxes paid by C3 and WJ employees and customers go to support AC?

Well AF002...let the market decide....let AC be based in its largest city (Toronto) instead of mandating a Montreal HQ, and let French-speaking personnel on routes where French is warranted. You will find there will be very few French speaking personnel needed. Those so-called complaints about the lack of French announcements etc were based on a govt study looking for evidence of bilingualism across Canada, not based on customer complaints.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
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VirginFlyer
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 10:05 am

If AC is so short of cash, they can sell off some of their route authority to the highest bidders...for example, I'm sure YYZ-LHR could be sold for C$100M.

Can you say PanAm, anyone?
"So powerful is the light of unity that it can illuminate the whole earth." - Bahá'u'lláh
 
AF002
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 12:06 pm

Yyz717, I flew on AC from YUL to YYC. One may think that F/As would speak french.. Nope! Security annoucements barely understandable. Who cares?
The problem is to determine where french is warranted. Do you plan to do a survey before each flight?
About AC HQ moving to YYZ, I have nothing against that, we may switch back to YMX for international by then.

Back on topic, I don't think the gov. will let AC go under, whatever the price.. The same happens for SN and SR. That's the problem with flag carriers, they rely a bit too much on their status.
 
Marrty
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 12:53 pm

Yyz717,

Due to AC's market share, and air transportation being an essential service, AC is therefore an essential service. As I said above, you don't have to like it, but it is an economic fact of our country.

The government will not let Air Canada fail, because they can't.

Milton had two choices when he took over Canadian, either streamline the company using the best assets of both companies, or expand. As any CEO's main objective is to maximize shareholder value, he chose to expand - not a bad gamble. However, throw in the restrictions the government placed on AC, an economic downturn, and September 11th in to the works and you have a company requiring government assistance.

Milton might take the fall for the situation at AC, but he likely won't need to work again to support his family.
 
SafeFlyer
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 1:06 pm

Yyz 717, there is not enough AC planes in T.O that you would like to see ir based there. And yes, they should have more french-speeking FA. Perhaps it is not important for people in T.O, but people in Montréal and Ottawa deserve services in French. It is one of the rare time that I agree with Québec separatists (I'm not one of those), why are people of English Canada so self-centered? I always thought that you were open guys! When you go to Montreal or Quebec City, would you like I'f the receptionist at the hotel told you, oh sorry sir, we don't speek English, it's not important, you know English is a ridiculous language... Even I'f you tried, you couldn't understand what it is to be the only people to speek French in North America.
What a foolish post.
I would like to remind you that Montreal is a 3 million people city, there is place for the airline business, and AC's got a very, very big engineering facilitie in Montreal.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 3:48 pm

Nothing against Montreal, just don't like the sheer politics of insisting that AC must remain based in Montreal...nonsensical political interference to protect Quebec jobs.

Toronto happens to have twice as many daily AC flights as YUL...Toronto is the AC's hub.....perhaps Toronto deserves the HQ as well.

It's silly to insist on French-speaking flight attendants on a YOW-YYC flight....if you can't understand English on a flight bound for YYC, you won't get very far when you land in YYC.

Let the market rule.....and stop making AC pander to Quebec.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
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RE: Air Canada And Robert Milton And The Future

Sun Oct 07, 2001 11:49 pm

JAT wrote: "But if the government is going to be pumping tax payers' money into the airline then the government should have a say in how it is run. The government should have a member on the board of directors that speaks for the government."

If they are going to provide any further funds, I'd much sooner see the government provide the funds through a third party, such as one of the major banks. In other words, the funds would be provided as an emergency loan, repayable with interest, with the job of collecting those payments over 25 years (or more) contracted out to a bank or other financial services company. If need be, arrange for the first repayments to start in 2006, by which time the company will have had five years to get its affairs in order.

If it involves a seat on the board of directors, I'd sooner see that delegated out as well so that at least AC will be getting professional advice instead of having to deal with a patronage appointee.

Direct government ownership, in whole or in part, isn't a satisfying alternative. Take the federal government's other foray into intercity transport, VIA Rail, as an example. It can't get the financing to upgrade its aging stock. It suffers from lousy marketing. It offers a product that I've almost never heard anyone speak cheerfully about. It can't be sold because it's effectively worthless and can't be shut down because of political considerations.

We surely don't want that for Air Canada, too.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 1:23 am

Well said McDougald. I concur totally.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Marrty
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RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 2:15 am

Very good points, McDougald!
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 8:14 am

Well said McDougald.

I believe that Air Canada is an escential service. Without it many towns would be further isolated. Then there is the fact that there is no airline capable of replacing Air Canada, both in routes and type of aircraft needed. Other than Air Canada the smallest plane used by another large carrier in Canada is the 737-200. Which i don't think you'll see flying into a town like Lethbridge!
Mark McWhirter...Contrails Photography
 
yow
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RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 9:36 am

Places like Lethbridge will see 732s as soon as WestJet starts flying there and the 25 other cities of about 50,000 in Canada. Heck, back in the days of regulation, most small Canadian cities had jet service.

As for AC, somehow they will eventually get back on track, but I think Milton has to go. Maybe it's time again to have a Canadian as AC's CEO or maybe try and get Hollis Harris back. Hollis sure turned things around at AC in a hurry after the last recession.
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 10:36 am

I agree that at some point cities like Lethbridge will get jet service from Westjet. Westjet actually has an impact in Lethbridge as I have seen their billboards around the city.

In MacLean's Milton was quoted as calling Westjet irrelevant, and having their 25 or so little 737's hoping around domestically. They don't even fly across the border. Then that Air Canada needs a stabilization and not a bailout!

Time to say bye-bye Milton in my opinion.

Mark McWhirter...Contrails Photography
 
Guest

RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 10:50 am

YYZ717, Marrty and Fallingeese: Thank you.  Smile

On the same note as YOW's post, Allan Fotheringham was recently the guest speaker at a Canadian Club luncheon here in Winnipeg. After his speech, there was a Q & A session. During the session, a woman asked for his thoughts on the airline industry in Canada. Fotheringham's opinion was that AC should "get rid of the guy at the top." He added, "And that's guy's name is Milton, Robert Milton."
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 12:43 pm

His airline goes into a coma and he takes a small wage cut, then it takes a turn for the worst and he's screaming NO WAY!!! I already gave up a penny? He's making too much money at a time when he wanted 4 billion dollars? This just doesn't work for me!
Mark McWhirter...Contrails Photography
 
Guest

RE: Air Canada And Robert Milton And The Future

Mon Oct 08, 2001 6:45 pm

>>Even I'f you tried, you couldn't understand what it is to be the only people to speek French in North America.<<

There are now several million people in Louisiana and MSY who are pissed that they are not part of N.A. anymore. Yes, they speak a dialect of French, but so do you guys. Yet, unlike Canada, they don't require every flight into the LA airports have French announcements.
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Tue Oct 09, 2001 3:43 am

Has anybody ever realized that the french announcements on Westjet 737-200's are the same as on Air Canada?
Mark McWhirter...Contrails Photography
 
AC183
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RE: Air Canada And Robert Milton And The Future

Tue Oct 09, 2001 9:33 am

Nice analysis, McDougald. A few things to add...

First off, I want to address all the anti-Milty rhetoric that's been floating around in the last 18 months in government, the press, and the public. I think it should be noted that some of this is simply because of the job he's in, and some of it's because he's become an easy target. He does have his weaknesses, however, as he comes off too blunt/abrasive/arrogant. There's some other weaknesses, too, but to be fair to the guy I don't think he deserves the rap he's taking, and in a way I sort of feel sorry for the guy. That said, I think Milton should go, however, for several reasons: (1) because he's been tainted by all this mess, (2) a change at the top might help morale, and (3) management needs refocusing.

As far as AC's problems, I don't think "greed" is so much an issue as their ambitions are. Okay, that's my opinion, because they haven't really aimed at profitability as much as trying to build a megacarrier. I guess ambition is a sort of greed, but it's a bit different animal. If you look at the way everything works, that whether it's service or pricing or whatever, that they've taken existing passengers for granted in their efforts to find more passengers to carry. The problem is that they've been so focused on trying to be "world class" that they've forgotten that it's the journey, not the destination that will get them there. (and when I say world class, I think the whole problem is that current management thinks of that as meaning bigger, not better)

Second of AC's problems is consistancy. I've had great flights with them, and I've had marginal ones. It's not a consistant product, and it's been getting more inconsistant in the last 18 months. And sinking morale isn't helping now, either.

Finally, one of the big thing AC has failed at is planning. They should have had a plan for the drop in market share. Instead of trying to grow after merging with CP, they should have gradually added new international routes as competition grew domestically, and also used the reduced market share as an opportunity to re-fleet. Instead they wanted to grow internationally right away, added more planes, and ended up without a plan for capacity use as they lost market share. They need to figure out what they're doing with mainline/regional operations. I think they need to look at trying to negotiate a new scope arrangement with the pilots. And they need to ditch the LCC idea, which seems to be a real hangup for Milty.


One other comment to add to the assumptions about government involvement, especially in the past. The history of AC, and indeed all the airlines in Canada, is a lot more grey and less black and white than some would make it out to be. There's a lot of political/economic/public pressure/other forces that were in play, and these would at times benefit or cause detriment to all players. In fact, it's somewhat ironic that the government's shotgun AC/CP marriage bears some resemblance to the railway competition mess 80 years ago - a lesson we've forgotten, and have thus been doomed to repeat.

As far as government money going to AC: as little as possible. Again, I like McDougald's ideas on that...
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Tue Oct 09, 2001 12:03 pm

AC183 - well spoken and I'd have to agree on almost all of your points.

The Canadian government is going to have to seriously look at what approach it takes into helping Air Canada's problems, since they can only get worse. Air Canada made some bad moves financially in the last few years, not to mention some poor assumtions. I believe a Swissair type bailout should be in the books rather than just throwing a ton of money at the struggling carrier.
Mark McWhirter...Contrails Photography
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Tue Oct 09, 2001 12:58 pm

Good comments AC183, although you're more charitable to Robert Milton than I would ever be.

I think Milton must go, simply because of the poor financial results that AC has been putting in the last few years. Canada is at the tail end of a 9-year economic expansion...AC should be profitable. Alot of AC mistakes have been management mistakes (AC could have let CP fail and then pick up the remnants).

AC shareholders expect profits, not market share, not a world class mega carrier....it all comes down to profit. AC has failed....and Milty must pay the price. He no longer has the confidence (at least of AC employees & much of the travelling public) to turn AC around.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
AC183
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 11:48 am

I agree Flyingeese. Chucking money at a problem doesn't fix it. Any solution involving the government will have to be sustainable.

I'm a little less harsh on Milton than others because I think the whole takeover battle was bound to stain whoever was in the job. I also think he deserves some credit for the some improvements AC made when he was in operations prior to his being made president. I still say he should go, but there is some credit due him, at least that he's an airplane enthusiast if nothing else...

Yyz717, I very much agree with your comment that "AC could have let CP fail and then pick up the remnants" except that IMO while they should have, they weren't allowed to... No doubt the industry would have been better served by CP failing, and either restructuring/reemerging or other competitors picking up the slack, but politically this wasn't going to happen. Simply put, I see blame for the AC buyout squarely due to the government. Basically I seem them as having said 'take over CP or we'll delivery you to Onex.' In fact, if you look back at some quotes from the government at the time, there were several that basically said that. I'm struck by one, and I can't remember who said it, but it was along the lines of "if AC lets CP die we'll make new rules that will not be kind to AC at all."
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 11:51 am

It's time to change the direction of Air Canada. It's time to stop going down,a nd time to go up. In my humble opinion Milton should step down and let somebody new lead the turn around into a successful carrier. Something is obviously wrong when a plane goes into get the Air Canada Tango scheme painted on it, then half way through get them to take it off and put back on the original scheme? Just doesn't click for me.
Mark McWhirter...Contrails Photography
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 12:09 pm

Good comments AC183. However, Milty had a fiduciary responsibility to AC's shareholders to make the right decision regarding CP. He made the wrong decision, despite some vaguely worded threats by the Cdn govt. There was no financial argument to support taking over Canadian. For this, he must pay the price and be booted.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 1:59 pm


Yes with Sept 11. happening, Milty's in tougher than maybe anyone could've dreamed, having to still adjust for the Canadian takeover, which even at the time he got blindsided by, a new sorta hot-shot and American CEO, stepping right into very political --and fairly historic as well-- Canadian transportation waters.

But oh well, his fault or not, it may just be that Sept. 11 is the final straw from which it'll be too much for his continued tenure. Personally he'll still be okay. And long-term anyway, so will the airline, whatever form or dimension it may take.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 2:04 pm

AC should be based in Toronto, its operational hub. The Air Canada Act was discriminatory in requiring AC to be based in Montreal after privatization.

Neil/Toronto.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Mark_D.
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 2:25 pm

Yyz717--AC should be based in Toronto

As the Common Man says --to his wife, as it turns out-- in A Man for All Seasons, "I wish rainwater was beer, I wish we had wings...but we DON'T!"

Look it's just not gonna happen, or even get considered, for many years to come at the very least.
 
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 2:31 pm

If Torontonians walked with their feet (and stopped flying AC) since the AC HQ can't be in Toronto, AC would sink overnight.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Mark_D.
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 2:35 pm


Yyz717--If Torontonians walked with their feet

Who's askin' 'em to. Sheesh.

(now who's maybe taking things personally..)

Anyway, way too late already for me to still be up. 'Nite Neil.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 3:44 pm

Air Transat should be based in Toronto as well. YYZ is their biggest operational base.

Good night Mark.

 Big grin

Neil

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
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RE: Air Canada And Robert Milton And The Future

Wed Oct 10, 2001 9:19 pm

Didn't Don Carty raise the issue of moving AC's headquarters to Toronto when the airline was trying to interest him in the top job back in the early '90s?

The idea isn't a bad one, but I doubt that a Liberal government, eager to hold on to its marginal Quebec seats, would ever make the legislative changes to see it through no matter what the merits.


 
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RE: Air Canada And Robert Milton And The Future

Thu Oct 11, 2001 3:14 am

AC would be able to attract more senior airline management from Canada & the US if they were based in Toronto. Quebec's language laws limit the willingness of Execs to move to Montreal.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
flygirl
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RE: Air Canada And Robert Milton And The Future

Thu Oct 11, 2001 6:45 am

I've read this thread with interest and throw in my appreciation along with many others for the postings by McDougald and AC183.

As an employee here is my two cents.

AC an essential service? Yes - as the airline structure exists today in Canada. If AC was yanked out of the skies overnight there would be economic chaos with the ripple effect. Too many subindustries and related industries are dependant on the traffic moved around by AC today. Working within Canada, no other Canadian based airline existing right now would have this impact if they dropped off the radar screen. Obvious sufferers would be all the international airlines that depend on AC for local maintenance. They would be caught in limbo. NavCan would lose it's biggest customer and the stability of that company would be jepordized. Airport authorities would lose a bundle on landing and gate fees. Caters would fold up. Travel agencies would choke. There are many many more.

Non-direct industries affected would be car rental agencies, hotels, local resturants and bars to name a few. You can probably come up with a lot more on your own. This is a case where size does matter.

AC closing shop wouldn't cause any other country to do more than blink but it would be devastating for Canada. Yes other carriers could pick up the slack eventually, but how many businesses and industries would fall victim to failure before these carriers could spool up their operations, grab aircraft, train personnel and obtain an extended operating license and build a support system/inventory for these expanded fleets?

Now that I've got your juices going bear with me a little longer before hitting the send button in retailiation. I do not condone, nor in any way believe in, a government handout. Covering the losses directly incurred by 9/11 events is understandable but trying to excise the disease that was infecting AC before 9/11 with further cash is wrong.

The government can ease the burden for the entire industry all at once by instituting a fuel tax rebate, guaranteeing loans or lines of credit to the airlines that need such and by taking over the cost and management of the security system in airports across Canada. Airlines are taxpayers too and they should get breaks directly and not from the pockets of the general population.

AC has to restructure and downsize. That is the only option left in todays environment. Whether it is done by self initiative or under CCAA protection is yet to be determined. The end result will be the same. AC will survive. What it will look like rising from the ashes is anyone's guess but rise it will.

As for Milton? I have a hunch he will be around for a while yet. Personally I would like to hear him just once admit he, or his management, made a mistake in judgement or by decision instead of constantly blaming everyone and everything else for AC's poor condition. Also if he gave more consideration to employee and passenger satisfaction instead of constantly stroking the shareholders he might find that pleasing the former will automatically please the latter by default.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Thu Oct 11, 2001 8:11 am

AC is NOT an essential service!!! How arrogant!

The Canadian airline industry IS essential. But AC is not. Ultimately, as long as Canadians have air service, the specific airlines that comprise the airline industry does not matter over the long term. AC does not have a devine right to dominate or even participate in the Canadian airline industry. There are several Canadian airlines who, over time, could replicate the AC service worldwide....hence AC should focus on profit....if it must downsize to achieve the required level of profitability, then so be it.

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
flygirl
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RE: Air Canada And Robert Milton And The Future

Thu Oct 11, 2001 8:35 am

Yikes, settle down! You must have missed some of the wording of my post.

Let me try and explain it this way. Take a pie graph and allocate the percentage each operating airline in Canada holds TODAY. If you removed AC from the pie (assuming you gave it the biggest slot) there would be a horrendous backlash to Canadian economy.

Sure, the other carriers would EVENTUALLY, in your words "over time" fill the gap but in the meantime a lot of damage would be done. If AC did not encompass such a large portion of national air traffic then the impact of it's loss would be much less.

I agree the industry IS essential but AC happens to be a very big player in that industry.

Downsize? Look to my second last paragraph. That's exactly what I said too.

My post was not meant to be arrogant. It was made to express my opinion for the purpose of debate not abuse.
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Thu Oct 11, 2001 8:43 am

I apologize Flygirl, I didn't mean to jump all over you.

Having observed this industry for decades, and the federal $ that used to be thrown at AC when it was govt-owned, the last thing I expected was Robert Milton demanding cash from the govt.....$4B! That's money out of MY pocket.....when many of the losses are due to poor management decisions by Air Canada.

Ansett just went out of business in Australia...they had about a 40% market share...yes, there was short term chaos, but a short 3 weeks later, the Aussie market has kinda stabilized with QANTAS and Virgin Blue adding alot of capacity to cover.

It might be in Canadians's interests to deliberately fly WJ, C3 etc domestically to force down the AC market share.....Canadians should not be so dependent on one airline (which happens to be AC).

My apologies again! But Robert Milton reeks arrogance in his press conferences...and that reflects rightly or wrongly on all AC employees.

Neil/Toronto
I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
flygirl
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RE: Air Canada And Robert Milton And The Future

Fri Oct 12, 2001 1:33 am

No need to apoligize.

Your reference to Ansett leads me to ask. Are you aware that 3-767s from AC are working down under on a 3 month wet lease to Quantas? That is what has helped get internal traffic back on it's feet so quickly.

Reeks of arrogance? Absolutely. Speaking of pies, Milton could benefit from ingesting a very large piece from the humble one.
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Fri Oct 12, 2001 4:19 am

Yyz717 - Air Canada is an essential service to many smaller Canadian towns, those without any other scheduled air service. International routes would have to be handed over to foreign carriers to cover the slack of a departed airline, Air Canada. Many tens-of-thousands of employees would be laid off not only at Air Canada but as Flygirl stated, other area's that need Air Canada's passengers. Without Air Canada the smallest aircraft operated by a decently sized carrier is a 737, I don't think you are going to see these flying into small towns on a regular basis.

And remember all this is comming from a diehard Westjet passenger!
Mark McWhirter...Contrails Photography
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Fri Oct 12, 2001 4:30 am

Flygirl.....you are correct, QANTAS damp-leased 3 767-300's from AC (flight crew only) to help keep up w demand following the Ansett collapse. The AN unions were annoyed that QF didn't lease some idle AN 767's and flight crew...but QF couldn't get a good deal from the liquidators...so they got the best deal they could...from AC using surplus AC equipment. This was a good management decision by AC to lease out these aircraft and generate addl revenue.

Fallingeese.....perhaps we're smoking from opposite ends of the same pipe...once again, I agree that "air service" is essential to many small Canadian cities, but "AC air service" is not. If AC vacated, an entrepreneur would move in. Recent examples include WJ service to Sudbury, Sault Ste Marie, Thompson, Brandon, Hamilton. Bearskin from Toronto/Buttonville, C3/WJ development of Abbotsford as a YVR alternative. Have faith in the entrepreneurial zeal of the private sector! Vacuums never last for long!

I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.
 
Player4keeps
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RE: Air Canada And Robert Milton And The Future

Sat Oct 13, 2001 11:50 pm

Milton better start making some good moves
 
fallingeese
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RE: Air Canada And Robert Milton And The Future

Sun Oct 14, 2001 1:17 pm

Yyz717 - Although I agree with you that air service into small towns is an essential service, and that doesn't necissarily make Air Canada an essential service. But who would necissarily want to step into a possibly unprofitable situation and the hassel of all the needs of a new airline in a short time period.
Mark McWhirter...Contrails Photography
 
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yyz717
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RE: Air Canada And Robert Milton And The Future

Sun Oct 14, 2001 1:20 pm

Fallingeese, WJ seems to have no trouble opening service to small markets.

Neil/Toronto
I dumped at the gybe mark in strong winds when I looked up at a Porter Q400 on finals. Can't stop spotting.

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