CAW head 'not optimistic' about reaching crucial labour deal with AC

[TO Kid]

TORONTO (CP) - Air Canada CEO Robert Milton and the head of the country's largest private-sector union met face-to-face Thursday morning, with union leader Buzz Hargrove sounding pessimistic that a last-minute deal could be reached to save the struggling airline.

"I'm not optimistic. I haven't been, through this whole thing," Hargrove, president of the Canadian Auto Workers union, said before entering a meeting with Milton in to discuss a potential agreement on cost cuts seen as crucial to the company's restructuring hopes.

http://www.canada.com/national/nationalpost/news/story.html?id=dae49c2a-0717-4dd5-a82b-7a555bf5485c


:wtf: I really don't know what this guy expects to gain from this. The possible outcomes if no deal is made:

1. Bailout by Ottawa- not bloody likely. The feds have an election to deal with and most voters are prepared to accept the demise of Air Canada. Any bailout would not go over well and Martin has a close fight coming.

2. New investors- any new investor waiting in the wings will probably demand even greater concessions, and will have more bargaining power because two will have already walked away.

3. Liquidation- Westjet, jetsgo and SkyService would rush in to fill the void and hire some of the AC employees, at much lower wages. The jobs would probably be non-union.

It would appear that Buzz Hargrove is setting himself up for a lose-lose scenario. Just whose interests is he pretending to represent?

[American Renaissance]

1. Liquidate,

Air Canada took an insane gamble when they launched their suicide attack on Canadian Airlines.

The whole post-privatization business plan for Air Canada was to destroy Canadian Airlines at all costs so they could have a monopoly. This attack destroyed Canadian Airlines, but it also left Air Canada mortally wounded.

With the rise of WestJet, the mortally wounded Air Canada couldn't recouperate and this brings us to where we are today. Air Canada is billions in debt, they have virtually no hard assets, they sold off all their airplanes and leased them back. They way over-extended themselves into the US market, awaiting a european style liberal open-skies agreement, that isn't going to happen.

A case could be made for a small government owned airlines that would only fly overseas, ala PanAm. But there is no reason to save Air Canada. Air Canada is too deep in debt and too weak to survive in the long-run.

Canada IS the textbook example of how NOT to privatize aviation.

Look no further than NavCan and the private airport authorities, they combine the best of Soviet management with the best of Mafia extortion priniples.

[TO Kid]

2. A bit of agreement there

No question the Takeover of Canadian is what did them in but they didn't initiate it- the bid was a response to Onex's attempt to buy both airlines. The result would have been the same either way because nobody at Onex had any experience with the industry.

As for the airport authorities the results are a mixed bag. Some did OK while others (especially Pearson) are squeezing the carriers. Even before privatization the feds only ran a handful of airports. The biggest source of grief for the privatized airports is that they are still owned by the government, and the airport authorities are paying unreasonably high rental fees.

I have no complaints about NavCan myself- service is still good and after they were privatized the employees got their first raise in nearly a decade. What did vex me, though, is that even though they introduced user fees (fair enough), they continued to collect the fuel and passenger taxes that were originally levied to cover the cost of the navigation system. So we are now paying twice for essentially the same level of service.

[American Renaissance]

3. --

Most of the damage to Air Canada was done before the take-over of Canadian, it was the prolonged suicidal war between the two that did all the damage.

The merger made things worse, but most of the damage was done, and by that point.

Air Canada wouldn't be much better off today,

As for Onex, I'm not sure their lack of an aviation background was much of a problem. Clive Beddoe was a real estate developer, Herb Kelleher was a lawyer. Some would say not comming from an aviation background means you didn't already learn how to do everything wrong.

The problem with NavCan and the Airport Authorities is that they are supposed to be non-profit and low cost. The GTAA and NavCan are spending billions on worthless stuff unrelated to their mandate and passing the buck to airlines.

[TO Kid]

4. I doubt that it was the fare wars

I think what happened is that Air Canada squandered the huge competitive advantage they had for so long. The government assumed all of their debt after privatization, a benefit not extended to the other carriers. Even post-911 only one airline here went under, a good outfit that made the mistake of borrowing heavily for a major expansion just before the attacks. Westjet has done well under all market conditions, primarily due to the fundamentals- good service, reasonable fares and courteous staff.

On edit: Gotta agree about GTAA, the new terminal may be pretty but far too ambitious. I can't say the same about NavCan- I'm sure there's waste (a fact of life in any monopoly), but the navigation system has been in need of modernization for a long time.