Air Canada pleads for 'survival' Airline's crucial week: New proposal would have EI cover 20% of labour costs
National Post (Canada) October 1, 2001 Sandra Rubin, National Post, with files from Ian Jack and Luiza Chwialkowska, and The Canadian Press National Post; The Canadian Press Air Canada says it is "engaged in an unprecedented struggle for its survival" as it emerged the airline's revenues have dropped 60% since the Sept. 11 terrorist attacks in the United States. Air Canada faces a critical week as it tries to negotiate a job-cutting deal with its largest unions while waiting for the federal Cabinet to approve an aid package that would help the dominant carrier deal with its problems. David Collenette, the Minister of Transport, confirmed some Cabinet ministers have expressed the view that the airline be restored to its former status as a Crown corporation while others would "like us to take a piece of it and, say, have members on the board. These are options people are talking about." Mr. Collenette said he felt, however, that Cabinet in general would prefer a private-sector solution. In a document filed with the Canadian Industrial Labour Relations Board that was released last night, Air Canada said: "The conditions of business travel and work have been fundamentally altered. Air Canada, like other airlines in North America, is engaged in an unprecedented struggle for its survival. Air Canada does not have the luxury of time." During talks yesterday with the International Association of Machinists and Aerospace Workers -- its largest union -- the airline agreed that a tentative four-day-workweek deal be presented to the government that would effectively transfer part of Air Canada's payroll to taxpayers by putting 15,000 machinists, mechanics, baggage handlers and cabin cleaners on Employment Insurance one day a week. The arrangement, which the union says could avert roughly 1,250 layoffs, requires federal government approval. "The employer said to us they must reduce overall costs by 20%," said Dave Ritchie, Canadian general vice-president of the machinists' union. "If you take out one day's pay that is a 20% savings. So really, we have accomplished what they needed." Mr. Ritchie said the idea is to offer the union members -- who are spread throughout the airports where they work -- special training in security matters one day a week. He added that Air Canada has agreed to postpone issuing layoff notices to IAM members until Wednesday to see whether Jane Stewart, the Minister of Human Resources Development, supports the plan. The airline had said it needed to issue layoff notices immediately in light of the severe downturn the industry has suffered since the terrorist attacks. Mr. Ritchie said Air Canada and the unions will meet with Ms. Stewart's deputy minister today to lay the groundwork to pitch the proposal. The company has cut operations by 20% in the past three weeks, attempting to stem the losses. Air Canada's chief executive revealed over the weekend that he had already appealed to the federal government for financial assistance before the attacks on New York and Washington. Airline executives and union leaders representing flight attendants met late last night in an attempt to avoid having to lay off almost a quarter of the airline's 8,000 flight attendants. The airline is not prepared to disclose the amount it is seeking or anything to do with layoff, Nicole Couture-Simard, an Air Canada spokeswoman, said in Montreal. Some union members privately say they believe Air Canada is using the tragedies of Sept. 11 as an excuse to cut jobs. Air Canada has backed down from its initial demand of $3-billion to $4-billion in compensation following the Sept. 11 terrorist attacks, a demand some people perceived as opportunistic. It is believed to be asking for about half of that now. The carrier announced a further 5,000 job cuts last week on top of 4,000 announced in August. Mr. Collenette strongly rejected suggestions that the federal government bears some responsibility for the carrier's ongoing financial distress because of conditions on service and staffing levels imposed as part of its takeover of Canadian Airlines less than two years ago. "There is a myth going around that I get quite annoyed at, that we somehow held a gun to Air Canada's head," he said. "The board of directors took a business decision to take over Canadian and they were in the driver's seat when it came to the conditions." Mr. Collenette conceded that "it's been a tough go in the last 18 months. But there are questions about whether or not they followed the right strategy, and there is no question that before Sept. 11 there were problems." The federal Cabinet is expected to debate a compensation package for the airline industry at its regular meeting tomorrow. HRDC is expected to be cautious about granting Air Canada employees special treatment because of worry that thousands of Canadian workers who have been laid off, including those at the General Motors plant in Ste-Therese, Que., will demand equal treatment, government and industry sources say. A survey released yesterday suggests nearly half of Canadians are more apprehensive about flying since the Sept. 11 terrorist hijackings. The Leger Marketing survey found 47.6% of people who have flown in the last five years are more frightened now to travel by plane, compared with 46.4% whose feelings are unchanged. Leger surveyed 1,346 people between Sept. 18 and 23. For some questions, the results were analyzed in comparison with a similar survey of 1,508 people that the company conducted between Sept. 5 and 11, before the attacks. The margin of error for the recent survey is plus or minus 2.8 percentage points, 19 times out of 20. Tom Walker Bowen Island, BC 604 947 2213
