May 1 startup day Air Georgian

[Fanblade]

I believe that Jazz needs to sit down with AC and work out a deal that will protect both sides but increase efficiency with the future fleet renewal. Jazz is already doing an excellent job with the fleet they have, so more Q's and CR7s will increase this potential.

What form do you think that fleet renewal will take? Just look at the analyst report as well as practical realities.

The US operators have already determined that operating the 50 seat jet is for the most part a money loser (due to stubbornly high and likely permanent prevailing fuel prices). The trend in the US is up-gauging to large regional aircraft. And as the analyst stated - subbing this work out away from Jazz creates a temporary honeymoon on labour expense (which is a fraction of total operating expense) but comes at the cost of operational performance and flexibility. It has already been demonstrated that the new entrant CPA carriers with their micro-fleets have almost no ability to implement a recovery plan during major IRROPS events. So there are a number of reasons that the replacement program for the 50 seat jet at Jazz will continue with the predictable candidates being the Q400 and some version of 75 seat jet on a less than 1:1 basis. This can all happen within the existing terms of the ACPA collective agreement but not without mutual consent under the CHR CPA.

Due to the replacement of 50 seat jets by Q400's that has transpired over the past 36 months, the mainstay of the CHR CPA fleet has become the aging D8 fleet. Many airframes are fast approaching the end of their useful life absent a major retrofit at great capital expense. Such an investment would need to be amortized over a greater time frame that that which remains under the current CPA. At the end of the day - will these airframes even serve a purpose 10 years from now? The marketplace is dictating change as routes that for 20+ years have been supported by older D8's operated by either AC and its regional partners or the former CDN regional partners are now being increasingly populated by Q400's in Porter and Encore livery. Will there really be a need for a fleet of 62 D8's or is it not a more likely outcome that the real need be just a handful in small and remote markets?

One can easily see a CHR CPA fleet comprised of 30-40 Q400's and 30-40 75 seat jets, but if the limit is 75 seats then it is not a stretch to see a much smaller CHR CPA fleet coming, particularly if the likes of GGN and SKY continue to participate in the future tender process. My bet is the next piece of AC news will be a small D8 tender. AC will want to continue the exercise of setting new entry level low wage bars for all of the CPA fleet types.

Fleet renewal and replacement should happen within the term of the current CHR CPA. The simple math is that larger gauge with neutral ASM's will require less airframes and less block hours flown. In addition, increased gauge, stage length, and block speed significantly reduces CASM. Therefore, a future at Jazz operating smaller regional gauge aircraft seems unlikely.

Another excellent post.

Question though. Is Chorus receptive to less block hours? Less block hours equals less revenue. I am wondering if Chorus may see the most value for shareholders, as just running the current CPA to its conclusion?

Again I'm asking your opinion. I am not suggesting this is an issue. Just wondering. Three way agreements can be tough.

[rudder]

Question though. Is Chorus receptive to less block hours? Less block hours equals less revenue. I am wondering if Chorus may see the most value for shareholders, as just running the current CPA to its conclusion?

Again I'm asking your opinion. I am not suggesting this is an issue. Just wondering. Three way agreements can be tough.

CHR want to extend the term of the CPA. They have not hidden that fact in any comments made publicly during the quarterly analyst conference calls.

The block hour revenue derived from a larger gauge aircraft exceeds that of the smaller gauge therefore the potential for revenue reduction is not as severe as might be suggested with a prevailing fleet mix of 75 seat aircraft (or greater i.e. a CRJ900 airframe which is identical to a CRJ705 airframe but could hold up to 86 seats in an all economy class configuration or potentially the stretched Q400 that is being contemplated by Bombardier).

CHR also must acknowledge that the 'markup' is under pressure and that there will be no discussion of CPA extension absent a meaningful discussion about the current and future markup. CHR has set a priority of maintaining the current dividend rate and policy. However, maintaining an 'off limits' position on discussing the current markup will come at the expense of a future commercial relationship with AC beyond 2020 which will have a corresponding negative impact on CHR share price as that reality reveals itself.

So, there is most certainly motivation on the part of CHR to participate in not only a negotiation about CPA extension, but also about current fleet renewal and replacement which will necessitate further modifications to airframe guarantees, block hour guarantees, and markup.

Whether this is doable will be a factor of how aggressive a position that AC takes in these discussions and how confident AC is that it has a Plan B available that will achieve a similar or superior result. What is not going to happen is for status quo to prevail. One would hope that CHR is working on a Plan B as well given that recent history indicates that AC is prepared to take drastic steps to achieve corporate cost reduction objectives (CTP).

Common sense would dictate that a multilateral agreement will result in greater efficiency than a bilateral or trilateral agreement or even unilateral action by AC. But once again, that result is yet to present itself and I am not aware of any such multilateral discussions that are ongoing.

[Fanblade]

Question though. Is Chorus receptive to less block hours? Less block hours equals less revenue. I am wondering if Chorus may see the most value for shareholders, as just running the current CPA to its conclusion?

Again I'm asking your opinion. I am not suggesting this is an issue. Just wondering. Three way agreements can be tough.

CHR want to extend the term of the CPA. They have not hidden that fact in any comments made publicly during the quarterly analyst conference calls.

The block hour revenue derived from a larger gauge aircraft exceeds that of the smaller gauge therefore the potential for revenue reduction is not as severe as might be suggested with a prevailing fleet mix of 75 seat aircraft (or greater i.e. a CRJ900 airframe which is identical to a CRJ705 airframe but could hold up to 86 seats in an all economy class configuration or potentially the stretched Q400 that is being contemplated by Bombardier).

CHR also must acknowledge that the 'markup' is under pressure and that there will be no discussion of CPA extension absent a meaningful discussion about the current and future markup. CHR has set a priority of maintaining the current dividend rate and policy. However, maintaining an 'off limits' position on discussing the current markup will come at the expense of a future commercial relationship with AC beyond 2020 which will have a corresponding negative impact on CHR share price as that reality reveals itself.

So, there is most certainly motivation on the part of CHR to participate in not only a negotiation about CPA extension, but also about current fleet renewal and replacement which will necessitate further modifications to airframe guarantees, block hour guarantees, and markup.

Whether this is doable will be a factor of how aggressive a position that AC takes in these discussions and how confident AC is that it has a Plan B available that will achieve a similar or superior result. What is not going to happen is for status quo to prevail. One would hope that CHR is working on a Plan B as well given that recent history indicates that AC is prepared to take drastic steps to achieve corporate cost reduction objectives (CTP).

Common sense would dictate that a multilateral agreement will result in greater efficiency than a bilateral or trilateral agreement or even unilateral action by AC. But once again, that result is yet to present itself and I am not aware of any such multilateral discussions that are ongoing.

Thanks Rudder,

That all makes perfect sense. I think those discussions will be happening soon enough. I think the first step for AC is to acquire more sub 76 seat ASM's from ACPA. Likely a wide body purchase in exchange.

Step two is to dangle refleeting in exchange for cost reduction. I personally wouldn't take ACPA releasing more sub 76 seat jets to tier 2, or even the 190 for that matter, as good news. AC is intent on using the frames as leverage over Chorus.

However as you have indicated that cost reduction is far more complex than just wages.

I know you don't buy in to my idea. However I really think a flow through is in everyone's best interest during these discussions. It lowers Chorus's costs. Creates stability for those who stay at Chorus. Advancement for those who want that. A single AC CPA pilot list with flow through to AC and flow between tier two operators creates further stability and will restore order to career aspirations.

Of course I think we should all be ALPA too, which on my side of the fence makes me a whack job.

[dukepoint]

I've said in once, and I'll say it again, if the Negotiating Team tables an offer that trades low end Scope for metal at the top, it will be defeated immediately. No "snow job" of a sales tactic like TA1 will be able to pull the wool over the Memberships eyes. An offer tabled like that would instantly be seen as concessionary, and those Negotiators will be sent packing.

We're mid-contract, if you'll allow me to give FOS that much credibility, and any form of concessionary bargaining will be seen as collusion, nothing more. The perpetrators will be dealt with harshly.

A tier two merger with ACPA as the bargaining agent, with a no-bump, no-flush fleet transfer might be palatable, at a cost, or perhaps expanding Rouge with a commensurate wage uplift, with Mainline guarantees PRIOR to any fin transfer, of course.

DP.

[rudder]

I didn't see anywhere that Teacher was asking for special treatment as a ACPA pilot. 1) Who AC hires is none of ACPA's business. 2) If Jazz pilots manage a severance deal from their former employer it is none of ACPA's business.

Not that simple.

Pay/Pension/Benefits/Pass travel - as per the ACPA collective agreement? Might be of some interest to a Jazz pilot under 40 and probably not yet able to hold a sustainable left seat position. However, unless you are removing pilots from the top of the pile then you are not going to make a serious dent in the average tenure at Jazz. Over 80% of Jazz Capt are top scale (17 years+) and average age close to 50 (not that different than the Capt demographic at AC). #1 at Jazz was hired in 1973!

The current severance arrangement at Jazz has been 2 weeks pay per year of service to a max accrual of 52 weeks of severance pay (1 year of regular wages). For a senior Capt that equates to one time non-recurring severance payment of approximately $120K. The company justifies this program vs the costs of dislocation/training, not necessarily tenure mitigation as the company has effectively been shrinking for the past 18 months. For those that remain - with overtime a top scale Capt can earn up to 25% more than that on an annual basis (similar to what has been going on at Rouge).

Contrast that to new-hire pay at AC (Rouge). Over the span of 10 years, the Jazz top scale Capt would be down over $500K in earnings. And what would be the attraction given that this same pilot would likely be at the mandatory retirement age before significant pay rate uplift manifested itself at AC (Rouge). This is exactly what happened to many of the senior/older CRA pilots in the CDN flowthrough arrangement.

No, it will take a much more complex and comprehensive solution that may or may not include flowthrough if in fact the goal is to reduce average tenure at Jazz and therefore lower payroll expense. The million dollar question is where is AC going to find the 1000+ new pilots to staff the existing operation and planned international growth over the next 10 years as attrition due to mandatory retirement manifests itself and new ATP pilots are few and far between. dukepoint's suggestion is not a bad template - nobody should care how many paint jobs or O/C's that are required to deal with the other labour groups so long as the pilots have their own seniority and bidding issues resolved in advance and on a long term basis.

This is not just a Jazz/ALPA issue. It is also an AC issue, therefore it is an ACPA issue. Time for the parties to stop talking at each other and instead start talking to each other. 28 years of dysfunction is long enough. The enemy is not flying the airplane with Air Canada (or Air Canada Express) painted on the side.

[teacher]

Again, why is the only solution you guys see a solution that only benefits Jazz guys???

That's great that there is savings for AC, but please do tell me what incentive this has for all junior AC guys hired in last 5 years? I'm not asking in a condescending manner. Maybe there are factors I'm not seeing but I don't see how this is a benefit to any junior AC pilot, especially one that came from Jazz.

The reason it needs to benefit Jazz pilots is because without meaningful career progression Jazz is it for many guys. That means that folks "stuck" here are more willing to take concessions to continue earning a living. Bad for ACPA as that puts wage pressure on them especially the bottom guys flying smaller equipment. Worse case scenario for ACPA is Jazz competing against AC which as mentioned before would make for some REALLY motivated employees.

A flow through to ROUGE might be the best scenario with some kind of wage top up as with socialized bidding quality of life issues might be more easily mitigated.

Labour peace and stability I think would not only be worth a lot to AC but ACPA as well. Again, do you want the regional pilots with you or against you?

[Fanblade]

I've said in once, and I'll say it again, if the Negotiating Team tables an offer that trades low end Scope for metal at the top, it will be defeated immediately. No "snow job" of a sales tactic like TA1 will be able to pull the wool over the Memberships eyes. An offer tabled like that would instantly be seen as concessionary, and those Negotiators will be sent packing.

We're mid-contract, if you'll allow me to give FOS that much credibility, and any form of concessionary bargaining will be seen as collusion, nothing more. The perpetrators will be dealt with harshly.

DP.

Concessionary is when you give without recieving. Giving in one area and receiving in another is not concessionary. Its called negotiating.

We just need to decide if the horse trade is worth it. IOW the gauranties need to be there. What I sence is that some ACPA pilots are willing to shoot themselves in the foot in order to stall tier 2. Teir 2 feeds Widebodies. End O' story. You don't have one without the other. Look up why Pan AM failed.

Look at how the Delta pilots responded to this very same ask from DL. Look how everyone is prospering.

There is absolutely no reason we can't all benefit from growth.

[Fanblade]

Rudder and teacher,

Thanks for the response. I get the situation better now. Problem is I don't see ACPA allowing different levels of new hire entry. My understanding is that the last time ACPA offered a new hire uplift to Jazz pilots it created a lot of animosity in the ranks. I've been told never again.

Sounds like the flow through idea simply won't be palatable then?

Rudder I get the pay issue for those that are older and completely understand why they would stay rather than leave. Unfortunately instability has them in particular at heighten risk. What about those who will lose their left seat based on your 80 ish fins projection? How many years of service could get demoted? How many CA under 40?

They are the target I speak of for cost savings.

[teacher]

What if the pay uplift came from Jazz AND AC as a form of VSP kinda thing.

1) Pay uplift to dull the financial hit
2) Carry your pension over
3) Something else to sweeten the pot perhaps

People move on from Jazz, mark up can be lowered, AC saves money and retains a quality product, Jazz continues to exist with a lower mark up BUT lower costs.

[tdp19]

I have still not flown with a Captain (jazz) that thinks flow through is a good idea nor will any of them want to shift over to AC and take a massive pay cut as mentioned by many above.

Junior FO's, with not many YOS would be the ones flowing over to AC IMO, i thought the whole point of flow was to reduce the top end salaries?

[Radiocaster]

I just want to thank rudder, fanblade and teacher for there intelligent and constructive posts. I am, a long time reader, never posted. I am not a troll.

I just want to know your opinion, supposed you take a top scale capt at jazz and you give them a bridge top scale at Rouge. Of course there would be a sizable amount of ACPA guys below at Rouge, but the idea is that the flow through guy would never get ahead of anybody at mainline. I suppose that anybody at Rouge right now just want to go back to mainline as soon as possible, and all of that will become a reality as soon as the retirements spool up and the 787 deliveries take off.

My idea is that a flow trough guy would get a mainline seniority number only when he starts at Rouge, and would probably be frozen also on type at the low cost for an x number of years. I guess that would be a solution.

[DH772]

The reason it needs to benefit Jazz pilots is because without meaningful career progression Jazz is it for many guys. That means that folks "stuck" here are more willing to take concessions to continue earning a living. Bad for ACPA as that puts wage pressure on them especially the bottom guys flying smaller equipment. Worse case scenario for ACPA is Jazz competing against AC which as mentioned before would make for some REALLY motivated employees.

A flow through to ROUGE might be the best scenario with some kind of wage top up as with socialized bidding quality of life issues might be more easily mitigated.

Labour peace and stability I think would not only be worth a lot to AC but ACPA as well. Again, do you want the regional pilots with you or against you?

I'm not saying regional pilots should be against mainline pilots. What I'm saying is you can't expect Jazz pilots to get special treatment just to further their career. Lots of pilots have left Jazz to start back at AC. Just because some might feel they have too much pay,seniority, and pension to start back at the bottom doesn't qualify as a solution in my book to jump over to AC while taking pay and pension with you. Jazz pilots with +10 years are at Jazz by their choice.

For a jazz pilot with lots of seniority, did you expect a further career progression beyond the regional level? The regionals have never done mainline flying. So why after 10 years of service at Jazz, all of a sudden we need further career progression? Hence why tons of pilots have left Jazz and moved on to other airlines. For that exact problem.

NOW, if Jazz pays this bridge gap, then by all means go for it. That has absolutely nothing to do with AC nor ACPA. However, I could not see Jazz paying a cent towards this.

I completely agree there needs to be something better in place. Flow through would be great but it should not come at the expensive of the junior ACPA pilot who took the extra steps to further his/her career.

[Fanblade]

What if the pay uplift came from Jazz AND AC as a form of VSP kinda thing.

1) Pay uplift to dull the financial hit
2) Carry your pension over
3) Something else to sweeten the pot perhaps

People move on from Jazz, mark up can be lowered, AC saves money and retains a quality product, Jazz continues to exist with a lower mark up BUT lower costs.

Teacher,

I think anything above and beyond what new hires get from AC is a non starter. If you get it? Then all new hires get it. New hires have a DC pension. I think DH777 speaks pretty close to how the group would respond.

The $$$$ would need to come from Jazz. You already have a three way negotiation. Making demands that require a change in the ACPA CA will turn it into a 4 way negotes. Very little chance of success. You and Chorus are going to have a tough enough time with each other and AC.

Quite frankly I wasn't expecting such steep demands. That looks to me to be over playing your bargaining position.

[Fanblade]

I have still not flown with a Captain (jazz) that thinks flow through is a good idea nor will any of them want to shift over to AC and take a massive pay cut as mentioned by many above.

Junior FO's, with not many YOS would be the ones flowing over to AC IMO, i thought the whole point of flow was to reduce the top end salaries?

If Rudders predictions are correct of 80ish fins at the end of the day for Jazz. How many Junior CA will be taking pay cuts anyway?

Obviously I don't know your demographics very well. But all CA aren't over 40 are they?

[Localizer]

AC has roughly $700 million reasons to bargain with Chorus/ALPA.

[tdp19]

I have still not flown with a Captain (jazz) that thinks flow through is a good idea nor will any of them want to shift over to AC and take a massive pay cut as mentioned by many above.

Junior FO's, with not many YOS would be the ones flowing over to AC IMO, i thought the whole point of flow was to reduce the top end salaries?

If Rudders predictions are correct of 80ish fins at the end of the day for Jazz. How many Junior CA will be taking pay cuts anyway?

Obviously I don't know your demographics very well. But all CA aren't over 40 are they?

I only know of two captains under 40, but I don't know other bases/equipment. I would say a handful of guys are under 40. My guess, the avg age is late 40's. Early 50's.

[rudder]

If Rudders predictions are correct of 80ish fins at the end of the day for Jazz. How many Junior CA will be taking pay cuts anyway?

Obviously I don't know your demographics very well. But all CA aren't over 40 are they?

That prediction would be "end state" and therefore we are talking about a potential outcome that would fully manifest itself over a time frame of 2-5 years (aircraft must be ordered/delivered). That result prior to December 2020 would only come with CHR consent to modify the existing CPA. Given that there would be significant costs associated with the reduction, there would have to be compensation to CHR as is articulated in the current CPA.

A fleet of 85 aircraft at a high daily utilization rate vs the current CPA fleet of 122 aircraft would require approximately 400 less Jazz pilots (-200 Capt/-200 FO). VSP packages would cover most of the Capt surplus spread over 5 years. Natural attrition would cover the surplus FO's. So, likelihood is no involuntary downgrades nor layoffs in a phased in fleet reduction although stagnation in progression is a given. This of course would do nothing to mitigate the costs associated with tenure at Jazz (although the increase in average fleet gauge would reduce the crew cost component of CASM).

So as you have discovered, flowthrough does not in and of itself solve anything for CHR, ALPA, or AC. There is a much bigger picture that has to be addressed and flowthrough could potentially play a role but is not a panacea for the issues that must also be examined and resolved. The suggestion that ACPA will not participate in such discussions merely reinforces that the pilot vs pilot era will not end any time soon.

[dukepoint]

I've said in once, and I'll say it again, if the Negotiating Team tables an offer that trades low end Scope for metal at the top, it will be defeated immediately. No "snow job" of a sales tactic like TA1 will be able to pull the wool over the Memberships eyes. An offer tabled like that would instantly be seen as concessionary, and those Negotiators will be sent packing.

We're mid-contract, if you'll allow me to give FOS that much credibility, and any form of concessionary bargaining will be seen as collusion, nothing more. The perpetrators will be dealt with harshly.

DP.

Concessionary is when you give without recieving. Giving in one area and receiving in another is not concessionary. Its called negotiating.

We just need to decide if the horse trade is worth it. IOW the gauranties need to be there. What I sence is that some ACPA pilots are willing to shoot themselves in the foot in order to stall tier 2. Teir 2 feeds Widebodies. End O' story. You don't have one without the other. Look up why Pan AM failed.

Look at how the Delta pilots responded to this very same ask from DL. Look how everyone is prospering.

There is absolutely no reason we can't all benefit from growth.

Let's both watch and see what happens. If the Negots team brings changes to Scope to the table, there will be hell to pay. We're not in FOS, and we're all still reeling over the Sky Regional 175 fiasco. There are plenty of pilots, both junior and senior that still see red whenever a 175 painted in Express taxis by. Sorry, but don't hold your breath. If it's our downfall, which I seriously doubt, so be it. But how could it be? Our "contract" isn't open, all changes tabled will be subject to the whim of the Membership. Change of any sort had better be super compelling, with ironclad scope provisions.

Like I mentioned many times before, if there is a marketing case for wide bodies, we'll get them. It will depend little on what happens at the Tier 2 level.

DP.

[Fanblade]

Like I mentioned many times before, if there is a marketing case for wide bodies, we'll get them. It will depend little on what happens at the Tier 2 level.

DP.

You may have mentioned it many times. Still doesn't make your comment correct. Feed is required to fill WB's. If you don't supply the feed it will go elsewhere. WJ will start picking it up for example.

In all likelihood a marketing case would be based on both “extra feed" and more WB. One not happening without the other.

I get your still pissed with FOS. Like I have said many times. Completely TA2's and the MEC's fault.

YOU CAN NOT START OVER AFTER AN MOA.

Now let's get back making things better. Voting no out of anger is an emotional response.

[rudder]

"I want it all".

Same mantra that resulted in the CCAA CRJ debacle and the non-compensated EMB175 transfer.

Look around - no mainline airline operates 75 seat aircraft. AAL/USAirways are the only operator of sub-100 seat aircraft and that hangover from the merger will eventually result in the elimination of the E190 fleet at AAL. Others predicted and recognized the evolution and achieved superior outcomes for their constituents. ACPA is not in that group.

So, let history repeat itself or learn a lesson from the past.

[Localizer]

Correct me if i'm wrong fella's .. but I believe both MEC's have the ability to ratify agreements without a membership vote so long as its in the best interest of the entire pilot group they represent?! Which would mean pilots from both camps would have no choice but to suck it up and accept the will of the elected. I'm sure an issue as contentious as this would be sent out to the membership, but the reality is that might be the wrong decision if people like Dukepoint vote with their heart instead of their brain. (No offense Dukepoint, just using you as the example since your views are so strong toward the negative. We need to quit repeating the mistakes of the past.)

[rudder]

Correct me if i'm wrong fella's .. but I believe both MEC's have the ability to ratify agreements without a membership vote.........

That would be a BAD idea........

[rudder]

By AC's own admission, guess what CASM reduction was achieved on the E175 fleet by transferring them to SKY using new-hire pilots, FA's with no unions? Drum roll please....................11%. That's it. And every day that passes and the SKY employees go up the tenure ladder or (god forbid) get a union that cost saving will DECREASE.

Page 18:

http://www.aircanada.com/en/about/media ... 4-2014.pdf

Guess what AC's overall CTP goal is for mainline/Rouge CASM reduction? 15%. Most of that cost saving is going to be achieved via Rouge, fleet renewal, higher density seating configurations, and up gauging (reference page 24).

So, was picking SKY the wisest decision considering the macro issues? What about creating a sub-fleet of 5 Q400's at SKY and 5 CRJ's at GGN? And don't forget that all of the debt associated with these CPA sub-fleets remains on the AC balance sheet (GGN CRJ100's excepted). Clearly there is another agenda being implemented and it is not about transfer of work as these carriers are overwhelmed with what has been handed to them already.

There is a Plan B. Waiting for it to fully reveal itself.

[Fanblade]

Rudder,

Page 16 shows rouge with a 21% CASM reduction on the 319 and the 767 29%.

An 11% CASM reduction coming from just two cost buckets ( pilots & FAs), no seating increase, is quite significant.

Of course there is another agenda. CR loves burning platforms.

http://www.theglobeandmail.com/report-o ... /?page=all

CALIN ROVINESCU

Sometimes you have to reinvent the wheel

Calin Rovinescu, the gung-ho chief restructuring officer (CRO) at Air Canada for 12 drama-packed months in 2003 and 2004, seems to get an extra hit of adrenalin when the pressure in a crisis reaches a climax. "The expression we would use is a 'burning platform,'" he says. A favourite adage of his: "Nothing focuses the mind like a hanging in the morning."

Rovinescu, 52, is refreshingly immodest about the turbulent journey that began for Air Canada after CEO Robert Milton fought off a takeover bid by Gerry Schwartz's Onex Corp. in 1999. The old model of a full-service airline "was broken," says Rovinescu, "and we were among the first--if not the first--in North America to recognize that."

Often, only external catalysts will put a company's feet to the fire and force it to make massive changes. As Rovinescu recalls, Air Canada soon had no less than five major headaches to contend with. "It's a ridiculous expression that's been used many, many times, but in this industry, it was absolutely true: This was the perfect storm," he says.

First, there was the bust of the tech industry bubble in 2000. Companies like Nortel and JDS Uniphase were no longer flying flocks of lawyers and consultants around the continent. It was also the year that Air Canada made what Rovinescu calls its "highly politicized" acquisition of rival Canadian Airlines, which overloaded Air Canada with debt. Then came 9/11 the following September, damaging no industry more deeply than the airlines. Fourth, there was the SARS epidemic, which clobbered Toronto--the hub of Air Canada's operations--harder than any city in the world. Finally, WestJet, a low-cost discount airline, was stealing customers.

Rovinescu had been a managing partner with the law firm Stikeman Elliott in Montreal and a key adviser to Air Canada since the 1980s. When he signed on with the airline as executive vice-president of corporate development and strategy in 2000, he considered himself both an outsider and an insider. "I came in largely seen as being an agent of change," he says. But he also "had some history with the industry and some attachment to the previous team."

Rovinescu spearheaded three major initiatives over the next four years. One was to ratchet down costs. This included squeezing $1.1 billion worth of concessions from unions, cutting off incentives to travel agents and pressuring aircraft leasing companies for lower rates. Rovinescu became the proverbial lightning rod. "Frankly, I enjoyed that role," he says. "It didn't bother me at all."

There was also a flurry of organizational changes. The airline created new discount sub-carriers--Zip, Tango and Jazz--that bewildered many customers at first. Rovinescu said it was important to have a carrier in each niche of the market. "You had to re-educate the travelling public to segment the travel experience," he says--meaning that many customers hadn't realized that they didn't want to pay for meals. He also wanted to spin off the Aeroplan customer rewards program, which he figured would have a value of $1 billion. Other executives "thought I was crazy," he says. (Aeroplan was finally spun off in 2005, post-Rovinescu; it now has a stock market value of about $4.5 billion.)

Despite all these efforts, in April, 2003, Air Canada had to file for temporary bankruptcy protection, and Rovinescu was appointed CRO. In this period, the airline received two takeover bids, but neither was consummated. Many analysts thought the future looked bleak, and Rovinescu stepped down in April, 2004, joining investment banker David Kassie to co-found Genuity Capital Markets. "Rovinescu should hold the door for Milton," read one newspaper headline. But Rovinescu says his job was largely done at that point. The only unresolved question was, who would own the airline?

Air Canada emerged from bankruptcy protection in September, 2004, under the wing of its new, widely held parent company, ACE Aviation Holdings. ACE's share price has roughly doubled since then, to $28 recently. (He adds, "and with distributions of Aeroplan and Jazz [units] nearly $50 per share of value has been delivered.") Who could have predicted that Milton and Rovinescu's plan would have been so successful? Rovinescu, for one: "Yes, it could have been predicted," he says. "That was the vision we had in 2000 when we started."

[zulutime]

Nice to see he is pleased with taking on his role of "axeman". Unfortunately he does it on the backs of others and claims "need" as his advocate. All while he enjoys his gross yearly sallary and even bigger year end bonuses. I would respect this man a whole lot more if he gave up his bonus and demanded all other executives do the same. It wouldn't make any difference to the bottom line but it might make a difference to those on the front line who clearly see a serious diconnect between them and those in the white tower.