Renegotiating with Air Canada

[rudder]

The way to get more cost competitive is to stop flying a fleet largely populated by antiques from the 80's and 90's. What Jazz is doing is akin to AC still flying gas guzzling DC-9's and 727's arguing that they have low ownership costs (paid for) but high operating costs (fuel consumption).

The era of the 50 seater is fast coming to a close. Time to get on with it. In 10 years most of the current Jazz fleet will be parked in the desert somewhere.

[JoeyBarton]

But what's the solution? Flying q4's is smaller markets is hardly a good option...Newer ATR's ?

[rudder]

But what's the solution? Flying q4's is smaller markets is hardly a good option...Newer ATR's ?

The domestic and transborder marketplace is changing. Low gauge/high frequency will give way to higher gauge/lower frequency. This results in lower CASM. It is already happening and that trend will continue.

[Localizer]

Saabguy,

I realize AC reported a loss, but most of that loss is due to currency exchange (strength of the American dollar) then operation, AC has more than enough tools that make the "operation" profitable.

I was trying to (unsuccessfully) find the article about airline executives .. it was interesting because AC has more executives than AMR, United, and US Airways combined with a fleet 1/3 the size. I have an idea where more savings could be found, don't you?

Its amazing how private companies today continue to loss money, and how employees are expected "donate" to help raise the bottom line to keep their employment while executive compensation continues to sky rocket at an astounding rate.

The public sector gravy train seems to have plenty of steam! 15% pay increase, work less hours!

http://www.cbc.ca/news/canada/windsor/w ... -1.2252453

[hithere]

Brace yourself ALLCLUTCH. Wish I could see your face when you find out what's actually happening!

So "Ewequia" do you still stand by the above statement? Or did the AC announcement about keeping the E190 take the wind out of your sails?

[AllClutch]

My face when.....

[volez]

Interesting topic, but when do you guys think that we will see the future shape of Jazz, by the end of this Summer ? A friend of mine told me that there could be no bid again this upcoming August. Any thoughts on that ?

[Fanblade]

Fanblade,

Los Angeles, Las Vegas, Anchorage, Phoenix, and San Diego where mainline routes .. now Rouge routes. It looks to me CR is playing silly bugger with the scope of the Rouge operation at the cost of mainline jobs, those are not leisure sun destinations served by the likes of Sunwing and Transat.

You forgot WJ. The rouge 319 operation was intended to mainly compete with them. All those destinations are mostly leisure out of YYC and YVR. ANC is seasonal cruise ship. LAX is Disney. Lots of kids sporting mouse ears on the return flights. Vegas is obvious. PHX is the cold winter escape. Essentially Arizona and California are the West coasts Florida.

“Share the pain" .. What pain is Air Canada feeling these days? The stock is up 300%, the pension deficit evaporated overnight (or after the arbitrated settlement .. conveniently), they have a low cost leisure division, 2 bottom of the barrel regional feeders to keep nipping at the toes of anyone with better wawcon .. So again, what pain??

Anyone who has been paying attention knows what's coming from the head shed. Get cost competitive or else they will find someone else.

[Stinky]

This Embraer announcement is huge news for Jazz, just what my high level connections were telling me. ACPA should open up the scope in the next couple of weeks in exchange for some other goodies. Jazz needs to decide on the new contract, 10% wage cut across the board for the E190's and the classic Dash's go to a new low cost. Say no and the Embraers go to Sky and the CPA gets slaughtered in 2020.
Did I nail it?

[Fanblade]

This Embraer announcement is huge news for Jazz, just what my high level connections were telling me. ACPA should open up the scope in the next couple of weeks in exchange for some other goodies. Jazz needs to decide on the new contract, 10% wage cut across the board for the E190's and the classic Dash's go to a new low cost. Say no and the Embraers go to Sky and the CPA gets slaughtered in 2020.
Did I nail it?

These aircraft are not being replaced with anything. How many job losses do you think ACPA would be willing to entertain?

Again. I have asked. I have been reassured AC has no intention of breaking the 76 seat benchmark.

Your high level intel doesn't appear to be coming from the holder of the keys. My guess is it is coming from someone hoping to sway the holder of the keys.

[YYZSaabGuy]

Saabguy,

I realize AC reported a loss, but most of that loss is due to currency exchange (strength of the American dollar) then operation, AC has more than enough tools that make the "operation" profitable.

I was trying to (unsuccessfully) find the article about airline executives .. it was interesting because AC has more executives than AMR, United, and US Airways combined with a fleet 1/3 the size. I have an idea where more savings could be found, don't you?

Its amazing how private companies today continue to loss money, and how employees are expected "donate" to help raise the bottom line to keep their employment while executive compensation continues to sky rocket at an astounding rate.

The public sector gravy train seems to have plenty of steam! 15% pay increase, work less hours!

http://www.cbc.ca/news/canada/windsor/w ... -1.2252453

Localizer, the foreign exchange impact noted in AC's release was $161 million of the $341 million net loss, or about 47%: hardly "most". And that's actually beside the point: so long as AC needs to swap its (primarily) Canadian dollar revenue stream to purchase US dollars to pay for Jet A and other US dollar-denominated expenses, FX has a very real P&L and cash impact. You can't just dismiss it as "non operating" and therefore somehow irrelevant, unless somebody figures out a way to make transport category aircraft run on pixie dust. AC's operating loss for Q1, by the way, was $61 million: I'm pretty sure that if AC had "more than enough tools that make the "operation" profitable"", they would've used them. No management team enjoys starting the year with a first-quarter loss.

To your point on AC's executive team, I've seen similar comments ad nauseum on other threads here, and unfortunately, those comments are just wrong. AC has 24 executives profiled on its Investor Relations site, United Continental has 23, and yes, AMR has 9. That doesn't mean AMR only has 9 executives: I can guarantee you that AMR has executives running its legal department, its maintenance and engineering group, its network planning team, its marketing department, cargo, corporate strategy, financial planning & analysis, etc. etc. etc.: all the functions Air Canada has. Just because they're not on the AMR website doesn't mean they don't exist and that they aren't compensated.

A more appropriate measure might be to look at the compensation of the top 5 Named Executive Officers in each of the companies you mentioned, which is required to be disclosed under securities laws. Air Canada's NEOs collectively earned $15.1 million in 2013. The United Continental NEOs earned $20.0 million in 2013. And the AMR NEOs earned $57.2 million in 2013, during which the airline was in bankruptcy! A better measure than looking at compensation against fleet size would be to compare it against the returns generated and the actual results achieved - the factors reviewed by the Compensation Committee of the Board of Directors of each of the airlines you mentioned are outlined in exhaustive (and exhausting) detail on SEDAR and EDGAR - it just takes a bit of digging to find them and read them.

Bottom line, of course, is that it's all about supply and demand. Many pilots seem not to understand this, but there just aren't that many people in the business qualified to be the CEO of a major international airline. Or CFO, or CIO, for that matter, or many of the other top executive positions. There are, by contrast, a boat-load of folks running around with ATPLs. If you'd like to make more money, feel free to spend several years of your life in graduate school studying law, or economics, or taking your MBA, and then spend the next 20-30 years of your career working your way through multiple management positions, as a solo agent (no seniority or CALPA protection for you!), with the risks, responsibilities, the 80+ hour weeks, and the profile (particularly in the event of failure) entailed by that career choice. Alternately, you might consider the Windsor Fire Department - I hear from reliable sources they just got a pretty sweet deal.

[AllClutch]

25 EMB to replace 64 dash-8, better tell the lower third of the Jazz Seniority list to dust off the old resumes.

[teacher]

Anyone who has been paying attention knows what's coming from the head shed. Get cost competitive or else they will find someone else.

......to work for garbage wages? We've seen how well that's worked out for AC in the last year.

I doubt anyone at Jazz will be willing to take a cut in wages unless management takes the same of bigger.

[Fanblade]

Tax Payers will end up paying for that....makes me wonder why they still have the Federal Government running an Airline.

???????

Air Canada has been a private company for over 25 years.

[truedude]

......to work for garbage wages? We've seen how well that's worked out for AC in the last year.

If it is up to me, or if I had any say in the matter (last time I checked nobody seems to care what I think) I would sooner see them shut down the airline than offer up a single dime. I will not contribute, or otherwise be a part of the destruction of this industry any longer.

Someone mentioned supply and demand earlier with regards to ATPL's: There maybe a fair supply of them, but there are no longer a lot that are willing to work for poverty wages--just ask Encore how that is going. Despite DP's insistence that all is fine, I can assure you that all is not fine.

[Indanao]

Air Canada has been a private company for over 25 years.[/quote]

Tax Payers will end up paying for that....makes me wonder why they still have the Federal Government running an Airline.

???????

Air Canada has been a private company for over 25 years.

It is a Political toy. Next time they Buy new Airplanes the then Prime Minister will be getting some money for their Offshore Accounts. It amazes me how all of the AC cronies come out of the woodwork and shout...Oh but, " Air Canada has been a private company for over 25 years." What B.S.. A Private Company can go broke -
AC cannot.Hence the holding company ACE Aviation Holdings.Everything AC has, or ever will have, came from the Tax Payers with NO repayment.

It's a money pit, with the only people prospering by it being the people that work, " in " it.
I spoke to a lady today who has worked at YVR for 20 years. She was talking to an Airline Engineer today, and asked what Airline he worked for, he said, " there is only one Airline in Canada ".

[Fanblade]

Sorry dude.

AC went broke in 2003. Filed for bankruptcy protection like any other public company. Your right to a point. The vulture corporation that came to AC's rescue gutted any and all worth that tax payers had created. Your government watched it happen. Did nothing. Why? It was a public company. In 2009, oil at $150 / barrel and a recession, the federal government loaned AC money at something like 13%. Loaned.......as in had to pay back. As in already paid back. Do public companies pay back?

I totally get your cynicism about government interference. It has never stopped. Although the government calls AC private. They treat AC ........well as you put it, like a political toy.

[Indanao]

They will forever be broke or going broke. We all know the entire history of Air Canada.
One would expect their employees, and families, to rise to their defense. ( Nobody wants to bite the hand that feeds them. )

[Localizer]

Saabguy,

Thanks for the info .. I honestly have a hard time digesting anything AC puts in print, their fancy accounting team seems to make numbers work in whatever favour they require that day. I still shake my head how a 3 billion dollar pension deficit vanished overnight?! Also, your right in regards to the number of "executives", all the articles you read seem to show different numbers and don't qualify what makes them an executive.

I think the supply of ATPL's are on the decline, so that should translate a shift in the supply and demand of pilots .. unfortunately the retirement age continues to rise in this country slowing the exodus at the top. I could believe the constant pressure to drive down wawcon in this country is a preemptive strike by management because they know what's coming down the road?!

CALPA?? .. The new Westjet union name? I think your brother would slap you for bringing that word to light!

[TheStig]

Sorry if it seemed like thread drift MiG but "sharing our pain" is the topic. Localizer, I agree coming from a multi-millionaire CEO who's company had a record year it comes across as hollow. However, to any Jazz pilot reading this, and I'm having a hard time putting my opinion into the right words so please don't take this the wrong way, please carefully consider the message Fanblade has presented. Their is no schadenfreude intended, just experience and perspective.

As a mainline pilot I'm fully aware of the animosity present between the pilot groups, the reality is, we are absolutely no different, you could take any pilot at either airline, run them through a transition coarse, change their hat and they'd be indistinguishable.

Being disgusted with executive compensation and corporate profits is easy and taking the "high road" and claiming you will not be part of the race to the bottom is noble, but the fact is, it's already taking place whether you partake or not. Pilot compensation is very personal to us, it affects our lifestyle tremendously and should reflect the unique skills and experience we bring to our airlines. To executives, our salaries are simply data that gets imputed into a spreadsheet, and their job is to find ways to bring costs down in negotiations.

We all know Jazz provides Air Canada with excellent service and plays a key role in the airlines network, but it is no longer cost competitive. All this angst seems to exist between pilots with Maple Leafs painted on the tails, but the reality is that Encore and Porter are the rivals here. How can Air Canada compete with Encore and Porter using Jazz? I'm not just talking about wages, benefits and pensions, but routes and types being flown. Air Canada has identified its regional market development as a key component of its continued cost transformation, what does this mean to you? What needs to be discussed is how can Jazz provide a cost competitive product in the sub 76 seat market (the E190's aren't being transferred). Nobody wants to see Jazz turned into the next Calmair or American Eagle, putting emotions aside how is this achieved?

[truedude]

Sorry if it seemed like thread drift MiG but "sharing our pain" is the topic. Localizer, I agree coming from a multi-millionaire CEO who's company had a record year it comes across as hollow. However, to any Jazz pilot reading this, and I'm having a hard time putting my opinion into the right words so please don't take this the wrong way, please carefully consider the message Fanblade has presented. Their is no schadenfreude intended, just experience and perspective.

As a mainline pilot I'm fully aware of the animosity present between the pilot groups, the reality is, we are absolutely no different, you could take any pilot at either airline, run them through a transition coarse, change their hat and they'd be indistinguishable.

Being disgusted with executive compensation and corporate profits is easy and taking the "high road" and claiming you will not be part of the race to the bottom is noble, but the fact is, it's already taking place whether you partake or not. Pilot compensation is very personal to us, it affects our lifestyle tremendously and should reflect the unique skills and experience we bring to our airlines. To executives, our salaries are simply data that gets imputed into a spreadsheet, and their job is to find ways to bring costs down in negotiations.

We all know Jazz provides Air Canada with excellent service and plays a key role in the airlines network, but it is no longer cost competitive. All this angst seems to exist between pilots with Maple Leafs painted on the tails, but the reality is that Encore and Porter are the rivals here. How can Air Canada compete with Encore and Porter using Jazz? I'm not just talking about wages, benefits and pensions, but routes and types being flown. Air Canada has identified its regional market development as a key component of its continued cost transformation, what does this mean to you? What needs to be discussed is how can Jazz provide a cost competitive product in the sub 76 seat market (the E190's aren't being transferred). Nobody wants to see Jazz turned into the next Calmair or American Eagle, putting emotions aside how is this achieved?

The answer to your question is, you can't. But I think it is really important to understand that if our salary gets lowered, yours will be lower yet again next time as well. We all rise or fall together. The idea that one group can rise while others fall is a fallacy. So if management comes to us (Jazz) asking for concessions, my position will be (and I hope others agree) that we might as well simply close the doors. My voice may not be able to make that happen, but what I personally can do is spend the next few years re-educating myself (i am thankfully still young enough to do so) and simply walk away from this god forsaken mess.

[JoeyBarton]

25 EMB to replace 64 dash-8, better tell the lower third of the Jazz Seniority list to dust off the old resumes.

Source?

[TheStig]

The answer to your question is, you can't. But I think it is really important to understand that if our salary gets lowered, yours will be lower yet again next time as well. We all rise or fall together. The idea that one group can rise while others fall is a fallacy. So if management comes to us (Jazz) asking for concessions, my position will be (and I hope others agree) that we might as well simply close the doors. My voice may not be able to make that happen, but what I personally can do is spend the next few years re-educating myself (i am thankfully still young enough to do so) and simply walk away from this god forsaken mess.

This isn't really the dialog I was hoping to further, as I don't believe that Jazz can't be competitive. Simply encouraging all you're peers to burn the house down while you make other plans hardly seems like good advice for them to follow. Call me naive, but, sorry this industry isn't a "god forsaken mess" this business has the ability to earn everyone a lot of money.

I'd humbly also like to suggest that mainline pilots have already taken a haircut or two; rouge wages matching it's targeted competitors, loss of the RJ's and more recently the E175's at the hands of arbitrators electing to follow (in 2005 and 2011) industry standards, changes to pension plans (for new hires and existing pilots), modifications to productivity, equipment bidding, wage roll backs, loss of vacation days...I could go on. I'm not saying that executives aren't going to ever ask for more (they have already). I understand and agree with your point about the tides effecting all the boats in harbour, but maybe this isn't exactly the case in this instance as the mainline contract (at this point) is closer to other airlines benchmarks than Jazz's is?

Like I've mentioned, I believe Jazz has a future as a competive company and I think the Board and CEO do as well, but as has been mentioned everyone is going to be expected to come to the table or risk being shut out. There aren't any White Knights here, the E190's aren't going to be transferred, Encore is expanding, Porter isn't going away, ACPA (and it's pilot group) is/are completely focused on its/their own self interests and the College seems to be loosing momentum not gaining.

[AllClutch]

25 EMB to replace 64 dash-8, better tell the lower third of the Jazz Seniority list to dust off the old resumes.

Source?

I am not claiming that at all and do not believe that is what's happening.I was pointing out one of the flaws in stinkys claim.

[truedude]

The answer to your question is, you can't. But I think it is really important to understand that if our salary gets lowered, yours will be lower yet again next time as well. We all rise or fall together. The idea that one group can rise while others fall is a fallacy. So if management comes to us (Jazz) asking for concessions, my position will be (and I hope others agree) that we might as well simply close the doors. My voice may not be able to make that happen, but what I personally can do is spend the next few years re-educating myself (i am thankfully still young enough to do so) and simply walk away from this god forsaken mess.

This isn't really the dialog I was hoping to further, as I don't believe that Jazz can't be competitive. Simply encouraging all you're peers to burn the house down while you make other plans hardly seems like good advice for them to follow. Call me naive, but, sorry this industry isn't a "god forsaken mess" this business has the ability to earn everyone a lot of money.

I'd humbly also like to suggest that mainline pilots have already taken a haircut or two; rouge wages matching it's targeted competitors, loss of the RJ's and more recently the E175's at the hands of arbitrators electing to follow (in 2005 and 2011) industry standards, changes to pension plans (for new hires and existing pilots), modifications to productivity, equipment bidding, wage roll backs, loss of vacation days...I could go on. I'm not saying that executives aren't going to ever ask for more (they have already). I understand and agree with your point about the tides effecting all the boats in harbour, but maybe this isn't exactly the case in this instance as the mainline contract (at this point) is closer to other airlines benchmarks than Jazz's is?

Like I've mentioned, I believe Jazz has a future as a competive company and I think the Board and CEO do as well, but as has been mentioned everyone is going to be expected to come to the table or risk being shut out. There aren't any White Knights here, the E190's aren't going to be transferred, Encore is expanding, Porter isn't going away, ACPA (and it's pilot group) is/are completely focused on its/their own self interests and the College seems to be loosing momentum not gaining.

I'm not sure I understand you; but if your suggesting Jazz remain competitive by the pilot group accepting roll backs in our compinsation or working conditions, then with all due respect, you can go f$%# yourself. I am fairly compensated for what I do and will not give anything up because some of my fellow pilots are prepared to whore out their present at the expense of their future. "Not one more inch" is my motto. I can't stop my government from shoving a contract down my throat, but I doubt that will be an issue come 2015, as I think we will see our country return to a minority government.

And as far as this industry not being god forsaken, where have you been for the last 15 years? Because clearly you haven't been paying attention.