Wings Magazine

Air Transat announces new leader, cuts

April 26, 2013, Montreal - Air Transat cut 47 positions Thursday in an administrative restructuring, part of its three-year plan to restore profitability amid increased competition.

April 26, 2013  By The Canadian Press

Tour operator Transat A.T., which runs the airline, said 39 mostly non-union administrative staff lost their jobs while the remaining positions were vacant.

Thirty-two people cut were in Montreal, six in Toronto and one in Vancouver.

The cuts did not involve flight attendants, pilots or mechanics who recently agreed to concessions.

"The restructuring that is announced today involves mainly administrative positions that have not been affected thus far,''
spokeswoman Debbie Cabana said.


The reorganization is part of Transat's effort to cut costs by running all the human resources, financial and IT functions out of
its headquarters.

"It was already partially integrated to Transat, we're now just completing the process but it's something that we've been doing a long time,'' she said in an interview.

The annual cost savings expected are $4 million.

The job cuts were the first since Transat eliminated 143 positions in October 2011. Transat employs 6,000 workers, including
2,125 at the airline.

The restructuring Thursday also saw the appointment of a new leader for Air Transat.

Jean-Francois Lemay was named general manager and will run the airline when president Allen Graham, 64, retires June 30.

Graham joined Air Transat in 2000, following a career that included stints managing flight operations at Air Canada.

Transat founder and CEO Jean-Marc Eustache will also assume the title of Air Transat president in July, even though the operations will be run by Lemay.

In addition to running the airline, Lemay, 53, will remain vice-president of human resources and talent management at the
parent company.

Lemay joined Transat as a contract employee in human resources in 1987 and joined the executive team in 2011.

He has worked closely with Graham and negotiated union contracts.

"He's really the one who was working with our unions and he knows the company inside out,'' added Cabana.

Analyst David Tyerman of Canaccord Genuity said the cost savings aren't incremental to what Transat has already announced.

He said Transat's results are already feeling the ill effects of increased competition that will only get worse with Air Canada's
decision to launch its low-cost airline Rouge.

"That is potentially a giant challenge for Transat because if Air Canada follows through with the full breadth of what they have
the ability to do with their new union agreements, they would have many more aircraft than Transat,'' the analyst said in an interview.

Rouge is expected to ramp up to 50 aircraft, including 20 wide-body planes and 30 narrow-body aircraft used in sun destinations.

Air Transat's total permanent fleet is expected to be 21 planes by 2015, including five narrow-bodies and 16 wide-body planes.

Several additional aircraft could be contracted during peak seasons.


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