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Aveos workforce likely to be cut in bankruptcy protection

March 20, 2012, Winnipeg - Aveos Fleet Performance Inc.'s filing for protection from creditors Monday apparently eliminates 1,600 of its 2,620 aircraft repair jobs permanently across Canada.


March 20, 2012
By The Ottawa Citizen

The 1,000 surviving jobs appear to be in Montreal. But the Aveos workforce here has also been hammered and stands to lose nearly half of its 1,800 employees.

In the court filing, Aveos laid the blame for its troubles squarely on Air Canada, which it accuses of refusing to deliver planes for repairs and of soliciting undercutting bids from rivals for work. Air Canada provides more than 85 per cent of Aveos' revenues and has a contract with the MRO – aircraft maintenance, repair and overhaul firm – that runs to 2013.

The airline did not respond to the claim by Aveos that it is seeking amounts owed by the airline for various contracts.

But late in the day, the airline formally extended to Aveos a $15-million lifeline in the form of a debtor-in-possession (DIP) financing.

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That amount, the airline said, "is substantially similar to an offer extended by Air Canada over the weekend (and) is intended to assist in stabilizing Aveos for the benefit of its stakeholders and employees, so that it can proceed with a more orderly restructuring."

It should also "permit Aveos to reopen certain of its facilities and recall certain of its employees, which should in turn allow Air Canada to induct some additional maintenance work with greater confidence over the coming days and weeks."

Aveos told its shift workers in Montreal, Winnipeg and other employees countrywide at about 5: 30 p.m. on Sunday to vacate the premises and take their tools and belongings with them.

The initial request for creditor protection is for 15 days, running through April 3, with "possible extensions" to follow.

Lawyer Guy Paul Allard of Montreal law firm Fraser Milner that filed the petition refused to make any comment on the situation Monday.

Marcel St. Jean, though, said he fears there will be one constant in the filing – demands for pay and benefits cuts "with a gun to the temple – your money or your job."

"We've seen this movie too often in the last 10 years," said the president of local 1751 of the International Association of Machinists and Aerospace Workers, which represents Montreal's 1,800 Aveos employees.

The company has not returned calls for the past week and has not put out a news release explaining its moves.

Court documents, however, relate a downward spiral of the company's finances and abysmal relations with its principal client, Air Canada, which accounts for nearly the totality of its revenues.

Revenues for Aveos and its U.S. division, Aero Technical U.S. Inc., slumped by $16 million in "less than two calendar months" this year as a result of the airline that has "reduced, cancelled and deferred maintenance work with Aveos" since the start of 2012.

"The loss of such work has been devastating for Aveos's financial position," the request states.

The filing also raises questions of compliance with the 1988 Air Canada Public Participation Act.

Under the Act of Parliament, Air Canada's fleet maintenance must be done mainly at three centres, in Montreal, Mississauga and Winnipeg, as well as in Vancouver.

Liberal MP and longtime airline passenger rights advocate Gerry Byrne of Newfoundland riding Humber- St. Barbe-Baie Verte called The Gazette to say he couldn't see how Air Canada could shift repair and maintenance work to The U.S. and still be in compliance with the Air Canada Act.

"There's very specific, precise language in the act about this work being done at the three main centres."