Global Solutions

Brick Head · Post by **Brick Head** » Tue Jul 17, 2007 10:54 am

piggy wrote:Of course alpa is going to try and get more flying-it has always been the case and always will as long as there is 2 groups.

Piggy,

Pre CPA, when ALPA had ownership of its flying, the 1 group idea would have worked. Today however, without the Jazz pilots owning their flying, ACPA/ALPA can not create 1 group. There is nothing stopping AC in the future from having a CPA with another carrier or a multiple of carriers for that matter and creating the same issues all over again with them.

In other words we missed the boat.

As for Jazz having 2000 pilots in the future. That will completely depend on how competitive Jazz's business model is in comparison with other companies doing the same work. If you can make money and out bid the competition you have massive potential into the future. For example I believe it is skywest that has a CPA with both Delta and United.

There is a tonne of transboarder work being done through CPA's. There is nothing stopping Jazz from bidding on that work as the renewals take place.

As for specifically going after ACPA work in 2009? You can try. But I am telling you, if you go into negots in 2009 with that attitude you going to get out flanked at the table by Jazz. Your management is in transition to a business model that relies on CPA's with major airlines. They care not about what flying they do. Competitiveness with other CPA providers will be key to profitability and growth.

socrates · Post by **socrates** » Tue Jul 17, 2007 4:21 pm

Is it even legal for a Canadian company to do CPA work for an American company or the other way around? I don't think so.

Just my opinion.

Brick Head · Post by **Brick Head** » Tue Jul 17, 2007 8:00 pm

socrates wrote:Is it even legal for a Canadian company to do CPA work for an American company or the other way around? I don't think so.

Just my opinion.

I believe they can as long as it is transboarder flying and the aircraft originates in its home country.

During the US airways Chapter 11 (part II) Air Canada, as part of their 200 million investment, tried to snag maintenance and CPA work for ACTS and Jazz. It didn't happen as the company doing the CPA became a large creditor and in turn negotiated the retention of the CPA and a guaranteed extension. Very few of the CPA's in the states have come up for renewal recently or will soon because of so many bankruptcies.

Somewhere in the Jazz prospectus (I don't have time to find it) it states basically the same thing. Something a long the lines of CPA work for airlines in the states is a possible growth opportunity for the future. At the moment the CPA's are all locked in due to the recent industry turmoil.

As for specifically knowing the legality of transboarder flying for an American carrier? I must admit I have made the assumption that Jazz knows what they are talking about on the matter.

prop2jet · Post by **prop2jet** » Tue Jul 17, 2007 8:01 pm

I think the CPA negotiated with a U.S. carrier would take the form of a code share agreement, or at least that might be the way around it. Besides, even if the framework does not exist now, it eventually will.

Traf · Post by **Traf** » Wed Jul 18, 2007 6:59 am

Who really owns their flying? What does that mean to "OWN" it? Why couldn't they threaten to CPA mainline flying? Did they not have an outside source hauling doing mainline cargo flying?

Brick Head · Post by **Brick Head** » Wed Jul 18, 2007 8:45 am

Traf wrote:Who really owns their flying? What does that mean to "OWN" it? Why couldn't they threaten to CPA mainline flying? Did they not have an outside source hauling doing mainline cargo flying?

C'mon Traf,

Air Canada owns the flying. We scope Air Canada and you scope Jazz.

Under the old structure one of the groups ALPA Jazz/ACPA had contractual claim to everything down to 30 seats? ( not totally familiar with your scope clause) And of course we fought over the dividing line between us which at this point is around 75 seats.

Today however only one group has a contract with Air Canada ( the owner of the work). That is ACPA and our scope of work ends at 75 seats. Everything else falls outside of what is protected. Today ALPA Jazz still has a scope clause with Jazz but the change is that Jazz does not own the flying.

Pre CPA ALPA Jazz pilots contractually had ownership of all flying between xx seats and xx seats.

Now ALPA Jazz pilots contractually have ownership of flying between xx seats and xx seats if Jazz retains the CPA.

This takes us to the crux of the issue over GS. ACPA can not bargain for Jazz pilots at the bargaining table to protect flying. We have no right. It would be illegal. Air Canada would no doubt claim we were bargaining in bad faith if we tried to . The only way around this is a merge. Unfortunately Air Canada, Jazz and ACE would have to agree to it, to make it happen since we are all separate now. They said no.

So the only group that can negotiate scope with the owner of the flying, Air Canada, is ACPA, but they have no legal standing to negotiate for those that they do not represent.

We missed the boat. As a group we have lost control over flying that falls outside ACPA's scope agreement.

As for Cargo. ACPA struck a Cargo LOU with Air Canada during CCAA. The LOU gave a temporary exemption to our scope, for a cargo only operation, with limited hours, so AC could test the cargo market. The LOU expired July 02/07 and AC has decided that they will not pursue a heavy lift operation.

This spring ACPA and Air Canada struck another LOU because Air Canada felt there was a business case to protect the Toronto-Frankfurt operation until they had enough 777 lift on the route. So a new LOU, that exempts for one year on specific routes, Air Canada from our scope.

With the exception of going over the hours prescribed in the first LOU Air Canada has been fully compliant. Compensation for the overage in hours during the first LOU and as a condition of the current 1 year extension is being paid by AC to ACPA at this time.

The fact that AC is paying ACPA almost 10 million over the next year in compensation is a pretty clear picture of how AC views their commitment under our scope language.

Looking back I can not come up with an instance where AC just arbitrarily outsource work in violation of our collective agreement. There has been lots of saber rattling during negotiations of course but no actual instances I can think of. Ultimately in all cases, that I can think of, where scope changes have taken place AC has gained the legal right to do so through negotiation, mediation or arbitration.

The one possible exception might be the F-28 flying right after the merge. But as you know it is pretty hard to call that a clear willfully violation of our collective agreement since the violation came with the purchase of Canadian. However, in the end we were compensated for that too.

piggy · Post by **piggy** » Wed Jul 18, 2007 10:50 am

I personally believe the odds of a us regional replacing Jazz exceedingly remote. The reasons, where do i start. French qualified F/A. All the income tax going towards the usa government instead of the Canadian government. A usa airline is not allowed to fly point to point within canada.
What about all those connections, YYZ-TQB, YYZ-YFC/YQM, YYC-YLW, YYC-YXE, etc, etc. What about burning the shareholders of the jazz income trust
I believe the CPa is ineffect to 2014 or something like that, with an extension beyond that (it is a long term contract)-i cant remember
if anything , a us airline regional will fill the role of degrading our profession at JAzz and AC (indirectly).

AH WELL , soon all the airlines around the world, will be so short of experienced pilots , (as will almost all professions), there will be pilots quitting the all mighty AC.

Brick Head · Post by **Brick Head** » Wed Jul 18, 2007 2:45 pm

Piggy,

The remarks I made envisioned you replacing them. Not the other way around. You made the remark about 2000 pilots at Jazz didn't you? That is the only place I can see that much growth opportunity for Jazz. Unless of course it was just a thinly veiled attempt at suggesting Jazz is getting the 190?

Of course AC can not have a CPA with a US feeder to fly domestically.

Competition for the AC CPA domestically will likely develop slowly and come from companies such as CMA or Georgian.

The CPA is in effect longer actually. Dec. 31 2015. However the CPA was amended just prior to the Jazz IPO. Among other things the guarantees beyond this date were removed. Jazz's lock on the AC CPA is for about 130 aircraft until Dec. 2015. Outside those parameters AC is free to use anyone they want if they need more lift.

Why would AC care about the Jazz income trust?

piggy · Post by **piggy** » Wed Jul 18, 2007 7:14 pm

Fair enough. However given Jazz management style which involves very little imagination or incentive to aquire additional flying, I doubt they will ever fly for anyone else.
It says that 99 % (or something like that) of Jazz reason to exist is AC and given the fact they would be paid in US $, and operate in canadian $(just like ontario manufacturers-250000 layoffs), I find it hard to believe flying for a us airline would be profitable. I am not an econimist or CEo, just trying to stay alive, haha.

I look at history with the growth of the regionals in canada and usa, the fact that airline analysts say that AC 's costs are still too high, increased growth in passengers overall predicted for the future. As AC's intl. traffic grows JAzz will grow in concert respecting the ASM restiction of 12 %(?). It is almost a certainty that Jazz will get more RJ (probably 705/700/900/1000). If there is a cyclical economic downturn which there will be , the reasoning for Jazz growth will only make more sense.

I also think that now ACE has divided up the companies into isolated units, it will be easier to push the limits of scope. the 190 will never be at Jazz unless the is a major stressor like CCAA. However, growth of 705/900/1000 crj is a strong possibility. If CMA/Porter, etc get Jazz flying the why would Jazz not get EMB flying or growth in Large CRJ-it is a lose lose situation, IMO, for pilots in Canada

Also , Jazz could absorb CMA flying as a B scale as well (suggested in CCAA neg.)
I suppose 50 more aircraft at jazz (500 pilots)would be far fetched if the emb stayed at AC.

Brick Head · Post by **Brick Head** » Wed Jul 18, 2007 8:15 pm

piggy wrote:Fair enough. However given Jazz management style which involves very little imagination or incentive to acquire additional flying, I doubt they will ever fly for anyone else.

Piggy,

I don't know about that. I would put beer on the line that says the opposite. And I like beer.

Think of it this way. The AC CPA and the Jazz IPO were and are an in-term step in the direction Jazz is heading.

If there was one group out of the old AC that I thought would be dead in the water it would have been ACGHS. I figured there is no way they would ever compete with the likes of Hudson General and Globe ground.

Wrong.

Contracts in the last few months.

-Cathay YVR
-Globespan Air YVR/YYC/YHM
-Royal Jordanian YUL
-Air Jamaica YYZ
-Express Jet YVR
-American eagle YOW
-Jet Airways YYZ India.....never heard of them

If I am coming across as down on Jazz ignore it. That is not my intent. My only intent is to illustrate that the world as we know it has changed. What it will look like a few years from now is unclear except to say it will be drastically different than it was prior to CCAA.

Not necessarily bad just different.

Brick Head · Post by **Brick Head** » Fri Jul 20, 2007 8:35 am

piggy wrote:Fair enough. However given Jazz management style which involves very little imagination or incentive to acquire additional flying, I doubt they will ever fly for anyone else.

As an aside I think that is a little bit of an unfair comment about your management. And before you come through my computer screen and kick my ass let me explain.

In a way the CPA with Air Canada is a double edged sword for Jazz. On the one hand the very lucrative deal is providing good profitability and did provide for a successful IPO for investors. On the other hand it has tied the hands of management preventing them from going after other work.

The CPA says that if Jazz finds other CPA work Air Canada can remove aircraft from the present CPA on a one for one basis. Jazz as we speak is being paid the equivalent of about 27.4 cents CA per ASM. It is highly unlikely any other carrier will pay that kind of money for feed. So if Jazz goes after other work at say 19cents/ASM for example they risk loosing the 27 cents/ASM that AC pays. That would not be in the best interest of investors so management can not pursue it.

So this brings us back to CPA negotiations next year which are supposed to be rate renewal only. Both Jazz and AC need something from each other. Because of this I suspect there will be more on the table than just renewal rates.

Amazing how this was set up........no? IMO there are no coincidences taking place.

It is a well orchestrated musical. The conductor is ACE and we can't see the music sheet.

Brick Head · Post by **Brick Head** » Fri Jul 20, 2007 9:11 am

piggy wrote: I look at history with the growth of the regionals in Canada and USA, the fact that airline analysts say that AC 's costs are still too high, increased growth in passengers overall predicted for the future.

Piggy,

Check Jazz's quarterly and annual results.

You are correct Air Canada's consolidated cost are too high. One of those costs however is the Jazz CPA. The Jazz CPA is costing Air Canada the equivalent of 27.4 cents CA/ASM for 5.5 billion ASM's (approximately 16% of the North American lift.)

The cost of the CPA is not broken out of the Air Canada results. So when Air Canada pays approximately 10 cents/ASM more than the competition for 16% of its NA lift you are right. Air Canada's costs are too high.

tonysoprano · Post by **tonysoprano** » Fri Jul 20, 2007 11:22 am

This is like beating a dead horse. AC will not return to profit until the present arrangement, including the present management, is changed. The frustrating part is that it's making money but losing it to other interests.

piggy · Post by **piggy** » Sat Jul 21, 2007 1:52 am

OK . I do not follow the tech. bull sh*t becuase it is bull Sh*t, I simple follow the macro economic view point by anaylsts and figure evrything out from there. The reason, i am not an economist specializing in aviatiion. I just listen to what they have to say.

Jazz is set up as a n income trust and as such is tax friendly for now. This may be the reason the the setbup betweeen AC and Jazz. Never get fooled by the accountant...

Really you think I have an unfair view point of the mangement of jazz eh. Prove me wrong...where have they got more flying, more work for jazz other than AC------no where. When will they ..........?
I say a long time-why bother????

tonysoprano · Post by **tonysoprano** » Sat Jul 21, 2007 6:20 am

Here's a partial list:
yow-lga, yow-bos, yyz-yqr,yyz-yqt,yow-ywg.

Traf · Post by **Traf** » Sat Jul 21, 2007 6:54 am

Tony, that list is just flying that AC transfered to Jazz while at the same time is taking routes away. All AC is doing is putting the correct sized plane on the routes.

By extra flying, I think everyone is talking about outside of the AC regional/feeder routes. Stuff like Cargo and maybe delivery service for Bombardier etc...

Dark Helmet · Post by **Dark Helmet** » Sat Jul 21, 2007 7:38 am

All this global solution thread are the same it starts

with...........

.........................Then

.......................and

then ...........

.......follwed by...........

.......and then

some more...........

Followed by more

all because

of.........

.........and

.........I think we should all

just.......

...........beacuse I am

and:

and

.......I am going to

......because

if I read anymore of this I am going to

.........

tonysoprano · Post by **tonysoprano** » Sat Jul 21, 2007 8:17 am

Dh. Nice art work.

Traf.
All I know is those routes I mentioned were routes done by AC mainline when we had RJ's and some of those routes were even 320. The right plane on the right route is great in theory but still takes something away from one group and I have not seen any of those routes replaced with additional flying for the mainline. In fact as you know, we don't even do our own cargo. I am not aware of any route that mainline took away from Jazz. Can you recall any of those routes?. I'm not current on this stuff as good as you guys are. In the end it will all work itself out or at least that's what GS will attempt to resolve.Keep the faith.

piggy · Post by **piggy** » Sat Jul 21, 2007 8:45 am

route from jazz, yyz-iah- probably was AC originally. the routes will always be fluctuating between companies.
what i find interesting is global travel is forcast to increase. So is canadian travellers. this means that flights like yyc-ylw or yyz-yfc/yqm, etc currently served by 50 seat crj that are generally full will need more a/c. more likely a bigger crj to fit the larger amt of people flying. traded- in crj -100 to bombardier for crj705 is likely.
i have been told by chainsaw at jazz that the only reason more 705 are not at jazz yet is because of all the money went to the 777 order, but they are coming for sure.
crj1000 is available in 2009 as well(a further stretched cr900) with an undisclosed buyer . funny how the crj1000 is aviable in 2009

tonysoprano · Post by **tonysoprano** » Sat Jul 21, 2007 10:33 am