Flight Operations: Trickle-Down Effect
October 2, 2007 By John Scott
In March, I was preparing to write this column to meet the publication
deadline. At that time, based upon various reports and information
acquired from resource centres, I suggested the probability that
bankruptcy of Air Canada would be declared as of January 31,
2004.However, the declaration of application for bankruptcy protection
by the company in early April this year made me pause and reflect about
what ‘trickle-down effect’ would likely ensue as the airline undergoes
change. Why had 01/31/04 been chosen as a probable date? According to
the ‘takeover rules’ of Canadian, Air Canada’s debridement of the
‘merged’ personnel from Canadian, in particular pilots, would have
shown a positive change in profitability due to significant reduction
in personnel costs. But I had projected that the share value had
plummeted down to $1 and hovered there. Bankruptcy was the only option.
The question that was left to the observer was: Could this situation
have been avoided?
Pundits and analysts of today’s markets are severely questioning what
is going on in the head offices of Canada’s ‘national flag carrier’.
First, it was dogged with taking on the debt load and personnel of the
moribund Canadian Airlines. It had to assume all the aged fleet of
737-200s, otherwise the costs involved with retraining flight crews to
Air Canada’s expanding Airbus fleet would have been prohibitive. By
keeping the 737s, Air Canada at least had cockpit positions for these
‘add-ons’, otherwise there would be nothing for them to do. Either that
or have all the Air Canada pilots fly as little as 20 hours a month at
full salary – a cost-prohibitive process. It could be said that this
situation was foisted upon Air Canada management by the Chrétien
puppets. No one could be furloughed, cashed out or let go just because
there weren’t enough cockpits. But now that bankruptcy protection has
occurred, the unions literally have no power to negotiate. It will be
the creditors who dictate the rules. Does ACPA want 25% less salary or
100% fewer jobs?