Posts: 4413
Joined: Sun Jun 25, 2000 11:25 am

Air Canada's Version Of The Facts

Thu May 20, 2004 8:01 am

Through the daily

"Last May, Air Canada reached agreements with all of its unions which were intended to result in $1.1 billion in annual labour savings. Each union was given a specific dollar target, based on the needs of the new business plan. As we now know, unfortunately the savings were not fully realized and Air Canada was left with a $200 million gap. Deutsche Bank’s Standby Purchase Agreement required that this gap be filled.

After over two weeks of very difficult marathon negotiations, agreements were reached with ACPA, CUPE, the IAMAW and CALDA at Air Canada, and ALPA, the Teamsters and CALDA at Jazz. Unfortunately, despite intense negotiations over the past few days, earlier this afternoon Air Canada announced that it had reached an impasse with the CAW in negotiations and was unable to achieve the cost savings target needed from the leadership of the CAW.

While none of the details of the tentative agreements have been disclosed, there have been a lot of rumours over the past few days about what the Company has asked for and we felt it was important to outline the approach taken with each union.

As was the case last spring, the Company and each union have looked at a combination of productivity improvements (achieved through work rule changes, increased usage of part-time workers where applicable, technology, etc.) and monetary items (such as reductions in wages, allowances, premiums, etc.). To help mitigate the lay-offs, VSPs have also been offered to give the more senior workers the opportunity to make lifestyle changes. While each union had a different target and each found a different solution, the approach with all unions including the CAW remained the same. The only difference was in the makeup of the elements used to meet their specific targets.

The leadership of the CAW has been asked to find $45 million dollars in labor savings as their contribution to the $200 million goal. While we normally would not comment on what has been discussed, we believe it is important to set the record straight on two rumours about the Company’s proposals which are circulating. First, the wage reduction proposals are equitable with what was agreed to by the other unions, and come nowhere close to $10,000 per employee. In fact, the Company has put other proposals on the table that would minimize the wage cut required, as was done with the other bargaining units. Secondly, the Company did not table a proposal to outsource the Call Centres. The overall objective was the same as with other unions—how do we work together to find a solution to close the gap through a combination of productivity improvements, monetary items and job reductions.

Employees have also been querying the contribution of Air Canada’s non-unionized staff. In her letter of July 4, 2003 to all of the unions, Sue Welscheid, Vice President of People, outlined the salary and job reductions, and work rule changes that constituted the non-unionized employees’ share to the required cost reductions. The letter is posted on Aeronet and

We will keep you updated as news develops."

Posts: 8777
Joined: Thu May 30, 2002 6:54 am

RE: Air Canada's Version Of The Facts

Thu May 20, 2004 8:08 am

Robert Milton statement to employees
(aka Declaration of war on Buzz Hargrove)

"Hello, it’s Wednesday, May 19 and this is Robert.
Over two weeks ago, teams representing our unions and management started serious discussions to find $200 million a year in cost savings in order to fully meet our commitment of last year’s 1.1 billion dollars in labour cost reductions.

All but one of our unions have reached agreements that achieve the required savings. I congratulate the Air Canada unions of ACPA, CUPE, the IAMAW, CALDA, and the Jazz unions: ALPA, the Teamsters, and CALDA for their tremendous determination and resolve to work together for the future of this airline. They exercised the toughest kind of leadership in making very difficult decisions on behalf of their members.

I also want to recognize the management team, the Monitor and Justice Warren Winkler, who have recognized from the start that compromise would be the only way to make this process a success.

Ultimately, seven of our unions recognized that only a cost-competitive Air Canada would be able to sustain their members’ jobs. Each union had a different target and each one found a different solution. Management will also be participating fully in meeting the labour cost target. Unfortunately the CAW leadership, to this stage, has not reached the same conclusions.

There are many myths being floated about what is on the table with the CAW and who might be willing to step in and invest in Air Canada. Let’s all understand that the proposal to the CAW takes an identical approach to that which has been successfully negotiated with the other unions. We are fully aware of the investors who may be interested in Air Canada and are actively pursuing all reasonable possible equity partners.

One does not have to think too deeply to realize that in this age of terrorism, sky high fuel prices and low cost carriers, investors willing to separate themselves from hundreds of millions of dollars for the privilege of owning a piece of a legacy carrier - albeit a great one like ours - are few and far between. In fact, all of the potentially interested investors speculated on in today’s press have categorically declined to participate in the equity process

Air Canada’s future does not rest in the leadership of one union’s hands. We have come too far and achieved too much to let that happen, when others have committed to the necessary measures to lower our costs and get us on the road to competitiveness, growth and profitability.

Many of you have given your entire working lives to this company. You know that we have been through crisis before and that we’ll find the path to survival. Our efforts will stay focused on capitalizing on the momentum of the past few weeks.

We are within reach of meeting the conditions for an $850 million rights offering backed by Deutsche Bank. We have a funding agreement with OSFI and we have an active ongoing dialogue with the Government on leveling the domestic playing field.

Our summer bookings are strong, with every indication that our schedule and aircraft deployment decisions are the right ones. Over 60 per cent of our domestic revenue is now booked on the Internet – by far our most cost effective distribution channel, and every department is actively working on aspects of the business plan that will redefine us as a model legacy carrier.

As always, we will find a solution to this impasse and put this latest round of hurdles behind us and when we do, the end of our restructuring will be in sight.

We’ve made dramatic progress in the past few weeks and I am grateful for your patience, understanding and support. As we move forward please keep safety and security as your top priorities and continue to give our customers your very best at every opportunity.

Thanks for calling and I’ll talk to you again soon.

"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada

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