Business History Books » Business Plans » AC wants a government baliout too…
AC wants a government baliout too…
Question:
> CP employees kept their jobs, now it’s time for the Feds to save mine.
Considering that AC pilots managed to negotiate a 3 for 1 seniority list merger, I suspect that the first pilots to go will be CP pilots. How did other employees get merged ? was it 1-1 ? Sam, no offense meant, but your reaction is a bit "civil service" in attitude. Your company fought hard to kill CP and then to buy its remains including employees. Those are now merged and you should regard them as one family of employees. The pilots did negotiate a 3-1 seniority merger, so pilots of AC heritage are probably safe from layoffs. It was up to the othe employee unions to negotiate similar deals to give ex-AC employees an edge when layoffs occur. And it was up to AC employees to fight very hard AGAINST AC wasting itself by buying the CP leftovers as a whole unit and forcing AC to buy just the tidbits (like AA did with TWA). The biggest subsidy was to the Royal bank. Had CP been allowed to go belly up, the bank would have absorbed all the losses, and then AC could have bought individual assets and hired only as many employees as were needed. AC played the political games as much as CP/ONEX did.
Response:
> The Feds forced this Shotgun marrige, now it’s time they pay for the > reception.
But the Feds are not the ones who had predatory practices that killed CP. AC initiated and continued its predatory practices intil CP almost went belly up. Sam, I don’t like to see layoffs. I wouldn’t mind working in the airline industry, but I guess that right now, that would be next to impossible. But I have no sympathy for AC as a corporation because AC got exactly what it wanted. It is its own fault because it was AC that actively drove CP into the ground, taking advantage of the CP mistake (Wardair – also pulled down by AC). Perhaps if AC employees had offered a salary cut in exchange for AC shares and a voice on the board (as was the case with CP), then AC employees could have helped AC steer away from that policy. But such was not the case and the AC board engaged in that dangerous direction without the employees doing anything about it. Another thing. IF AC announces layoffs as a result of the WTC disaster, they will in fact only be layoffs that would have occured later as part of the elimination of the fat due to the indigestion of CP. AC will only be taking advantage of the situation to quicken the laying off of excess staff. You should note that unions had blocked the first attempt of the UA-US merger. AC unions could have blocked the CP buyout as well.
Response:
> As for C3000, if they are indeed in real trouble, I have already said I > would support credit guarantees.
CP had higher service standards (for the most part) than Air Canada. So the presence of CP on the market did put a bit of pressure on AC to improve service or at least not cut it back. But Canada3000 doesn’t provide any incentive for Air Canada to improve service quality since I don’t think that there are any areas where C3000 has better service quality (except perhaps the use of T3 at Toronto instead of T2 and T1 for AC) Canada, like New Zealand, is a small country, and to stand out in the world, it must compete with better service because it can’t compete against the really big guys like UA, AF, BA etc. But Air Canada doesn’t strive to improve service quality, it strives to cut corners , cut costs because it doesn’t feel any pressure to improve service quality. (lack of competition is probably a big factor).
Response:
- Hide quoted text — Show quoted text -> I thought Canada was the second largest country in the world? > Canada, like New Zealand, is a small country, and to stand out in the world, > it must compete with better service because it can’t compete against the > really big guys like UA, AF, BA etc. But Air Canada doesn’t strive to improve > service quality, it strives to cut corners , cut costs because it doesn’t feel > any pressure to improve service quality. (lack of competition is probably a > big factor).
Response:
> You are way off base on this one. Collenette came out and said, along > with some other major points, "the solution must save all the jobs at > CP"
Early in the saga, I wrote a letter to Collenette, and his response was that he wasn’t going to do anything and that he was going to let provate industry find a private industry solution and only one private industry had found a solution would he step in to approve or disapprove. Remember that the Royal Bank threw in the towel in december 1998, CP began to talk to AC in january 1999, and the whole thing became public in summer 1999 when CP made that request for immunity from competition laws so it could talk to AC. (even though they had been talking for at least 6 months by that time already). Collenette could have stepped in in december 1998, he could have stepped in well before that when CP was mildly complaining about AC’s predatory practices etc etc. Collenette didn’t do anything. (whether by design or though incompetence, I suspect the later). > If you think that AC was bloated, then I wonder what you would think > about CP.
AC was bloated in many ways. But it was understaffed in many areas. Bloated with its fleet. Bloated at head office. But understaffed for reservations and as you said, probably ground personel. The point is that AC had gotten a HUGE gift from the government when it was privatized and its actions have resulted in that huge edge in being wasted and now AC is starting to get worse and worse.
Response:
><snip> >In the not-so-recent past I can remember 100s of sign waving AC employees >staging protest rallies all over the country against the federal governments >support given to Canadi>n Airlines. >Where are they now?
What is that old saying. "In for a penny, in for a pound" CP employees kept their jobs, now it’s time for the Feds to save mine.
Response:
>> Did anyone really believe AC’s claims that they would be growing like mad and > wouldn’t have to do any layoffs and would be buying new planes left and right ? >Well, I suspect they themselves did. >Actually, their fleet acquisition plan was not particularly >spectacular. Mostly repalcenet of aging 767s and a fraction of CP’s >737s. >A good chunk was to be leased. And I understand part of it has already >been postponed.
Actually, Yes. A lot of people at X-CP did. In recent Arbitration hearings to determine the thorny seniority issues amongst the unionized employees, that was a big part of the CP union’s case. They are convinced that there was going to be nothing but blue skies. And they also belive (honestly believe) that if it wasn’t Air Canada, it would’ve been some other group that would have saved them. Someone forgot to read the fact that they (CP EXECS) were ready to close up shop the Friday before Christmas.
Response:
>I have nothing against the government paying for the week and a half of mayhem >that they caused by closing the airways. >But the government shouldn’t be paying for Air Canada’s indigestion of CP.
Yes JF, they should. I read in the newspaper, not too long ago a reporter saying the following. The Feds forced this Shotgun marrige, now it’s time they pay for the reception. I believe that 110 %
Response:
- Hide quoted text — Show quoted text ->> Presidence has been set by the Liberals. They didn’t let 16000 CP >> emps loose their jobs, so now its time to save the other 24,000 AC >> emps too. >Sorry. The feds did help CP twice in various ways, but in the last episode of >"as CP nears bankrupcy", the government decided to kaep its hands off and let >the industry restructure itself with the govt just acting once an industry >"restructuring" plan was approved. > JF, > You are way off base on this one. Collenette came out and said, along > with some other major points, "the solution must save all the jobs at > CP"
More like, "in order to get your hands on CP as you wanted, you’ll have to accept certain conditions." Which AC did accept. They wanted to kill CP bad enough. Let’s not overdo the government role. This was the very least they could have done. Actually, they should have maintained competition by letting CP go bankrupt and reselling the pieces and routes to some guy with deep pockets, while wiping off all debts. Doing whatever would be needed to make it attractive, such as changing foreign ownership rules, promising routes etc. So, AC had to accept some conditions. But surely *they* wanted to grap CP so *they* accepted the conditions. Which seemed reasonable then. And now it’s because of this ineffectual Collenette? And if some people have to lose their job, because they are not needed, too bad. You have my sympathy. But that’s life, shit happens. And I don’t see what’s so special about AC for the folks there to be guaranteed a job which as a matter of fact does no longer exist.
Response:
Max Ward was a crook anyways.. Hell he though worldways was trying to force him out of flying… I remember the old slogan "BETTER DEAD THEN RED" .. too bad they didnt get their wish… What benefits when they privitized??? they were loaded with millions of dollars of debt.. they were giving 1.5 million in debt they were forced to carry on behalf of VIA rail…..
Response:
>> Presidence has been set by the Liberals. They didn’t let 16000 CP > emps loose their jobs, so now its time to save the other 24,000 AC > emps too. >Sorry. The feds did help CP twice in various ways, but in the last episode of >"as CP nears bankrupcy", the government decided to kaep its hands off and let >the industry restructure itself with the govt just acting once an industry >"restructuring" plan was approved.
JF, You are way off base on this one. Collenette came out and said, along with some other major points, "the solution must save all the jobs at CP" That is not "Hands off" First Liberals in bed with Schwartz/AA/CP then when they were embarrassed by that not going through, then he came up with the above statement. >The fact is that Air Canada whcih was bloated to begin with, bloated itself >even more with its purchase of a dying CP. They started to get rid of >employees as soon as their promise ran out and this will last for quite some >time. The current events will only accelerate this inevitable process. Should >the government really waste money to save jobs that will go away as soon as >the help stops ?
JF, If you think that AC was bloated, then I wonder what you would think about CP. Having been around for the years leading upto the Takeover, I could tell you for a fact, that in YYZ we were very, very lean. And in speaking with my colleauges at other stations, they were in the same boat. Maybe the Exec. offices were bloated, but the Airports certainly weren’t. >The feds did NOTHING to save the 900 jobs that were lost at Inter Canadien.
Nor did the Feds do anything to help the 1000’s of jobs that were lost a Eatons at about the same time.
Response:
> If I recall, the bleeding hearted goverment for many many years helped > suport canadian.. I recall millions of our tax dollars going to them..
But far less went into CP than went into AC when the later was privatised. I suggest you read MAx Ward’s book (The max ward story) as it outlines a lot of the historical advantages that AC had been given. When you look at the quick actions the competition bureau took as soon as it was formed to investigate complaints against AC after the death of CP, imagine what went on before the CP-AC debacle when AC was really going after CP. I am sorry to say, but AC got what it asked for: a dead CP on a platter. Instead of focusing on making AC a better airline, they spent tons of money trying to drive CP out of business. > what??? so they could buy 20 yr old planes,
While there is no way that I will support CP’s purchase of pesky F28s, the planes that CP purchased after it was formed in the late 1980s were pretty new (767-300s, 747-400 and A320s.). The exception were the DC-10s. And in the end, its older 737-200 had individual air vents while AC’s brand new planes don’t. AC served meals in real china, AC served them in sealed plastic containers. And the interiors of CP’s planes were generally very new looking so to the passenger, the older planes weren’t all that bad. > at a loss.. Most of ac’s secure lines of credit have gone to reducing cails > debt load..
Why did AC buy CP ? They could have just hired its employees and gotted the leases on the planes that AC wanted and let the rest fall. Consider who didn’t complain: Royal Bank. Not only did they pull the plug on CP, not only did they sponsor the Onex debacle, but in the end, I suspect that AC paid off all of the bad debts CP had with its main banker. So while the Royal lost a lot of credit card business, it probably was able to cleanly wipe off a lot of debt without losing any money. > ARE ALL HURTING.. and as for canada3000 hurting, its their fault for > wanting to buy royal and canjet…
Yep, and they may get what they are asking for. I have nothing against the government paying for the week and a half of mayhem that they caused by closing the airways. But the government shouldn’t be paying for Air Canada’s indigestion of CP.
Response:
>I am sorry to say, but AC got what it asked for: a dead CP on a platter. >Instead of focusing on making AC a better airline, they spent tons of money >trying to drive CP out of business.
Could not have said it better myself! Right on JF!
Response:
> Did anyone really believe AC’s claims that they would be growing like mad and > wouldn’t have to do any layoffs and would be buying new planes left and right ?
Well, I suspect they themselves did. Actually, their fleet acquisition plan was not particularly spectacular. Mostly repalcenet of aging 767s and a fraction of CP’s 737s. A good chunk was to be leased. And I understand part of it has already been postponed.
Response:
> If I recall, the bleeding hearted goverment for many many years helped > suport canadian.. I recall millions of our tax dollars going to them.. for > what??? so they could buy 20 yr old planes,, then sell them to someone else > at a loss.. Most of ac’s secure lines of credit have gone to reducing cails > debt load.. I’ll assume by your whining and crying you are saome sort of > specialist in the airline field.. cause only half involved analysts would > cry about a/c wanting a little financial help for ALL the carriers.. THEY > ARE ALL HURTING.. and as for canada3000 hurting, its their fault for > wanting to buy royal and canjet…
I don’t believe what you say on AC’s credit lines. some have, yes. But they still have a quite substantial cushion, don’t they? As for C3000, if they are indeed in real trouble, I have already said I would support credit guarantees. (You sound like you own shares and you don’t want to lose your bet…)
Response:
> Presidence has been set by the Liberals. They didn’t let 16000 CP > emps loose their jobs, so now its time to save the other 24,000 AC > emps too.
Sorry. The feds did help CP twice in various ways, but in the last episode of "as CP nears bankrupcy", the government decided to kaep its hands off and let the industry restructure itself with the govt just acting once an industry "restructuring" plan was approved. The fact is that Air Canada whcih was bloated to begin with, bloated itself even more with its purchase of a dying CP. They started to get rid of employees as soon as their promise ran out and this will last for quite some time. The current events will only accelerate this inevitable process. Should the government really waste money to save jobs that will go away as soon as the help stops ? The feds did NOTHING to save the 900 jobs that were lost at Inter Canadien. Also, remember that Air Canada got a SIZEABLE subsidy from the government when it was privatized since its debt was wiped out. I would tolerate tax concessions, but I don’t think that the government should spend money to preserve jobs that will be going away anyways. Just save what is sustainable.
Response:
If I recall, the bleeding hearted goverment for many many years helped suport canadian.. I recall millions of our tax dollars going to them.. for what??? so they could buy 20 yr old planes,, then sell them to someone else at a loss.. Most of ac’s secure lines of credit have gone to reducing cails debt load.. I’ll assume by your whining and crying you are saome sort of specialist in the airline field.. cause only half involved analysts would cry about a/c wanting a little financial help for ALL the carriers.. THEY ARE ALL HURTING.. and as for canada3000 hurting, its their fault for wanting to buy royal and canjet…
Response:
<snip> In the not-so-recent past I can remember 100s of sign waving AC employees staging protest rallies all over the country against the federal governments support given to Canadi>n Airlines. Where are they now?
Response:
- Hide quoted text — Show quoted text -> Air Canada is asking for money for the WHOLE airline industry NOT just Air > Canada. When the news anchor from the CBC Nationa asked is this for the > whole industry he said "Yes". So this WOULD INCLUDE Westjet, Canada 3000, > and others. THIS IS NOT A BAILOUT IT IS FOR STABILIZING THE AIRLINE > INDUSTRY LIKE THE AMERICAN GOVERNMENT IS GOING TO DO IN THE US. > Thank you > > Not that they are anywhere close to bankruptcy apparently. But if their > > competitors get support in the US, they feel they should be entitled to > > support too… > > No Sir, we don’t believe in free enterprise. Our shareholders qualify > > for public welfare. :-( >Well, then, it probably should be a bailout for everyone except AC… >They sure didn’t believe in government bailout when CP went down.
Presidence has been set by the Liberals. They didn’t let 16000 CP emps loose their jobs, so now its time to save the other 24,000 AC emps too. Saying goes, "If you play with fire, you get burned". Liberals just got burned. GOOD!
Response:
> The goverment should back our airline for a change..look at the way they > bungled the whole caniadian/onex thing..
But canadian airlines went belly up because the stupid government stayed blind to the AC predatory tactics, even though it had acknowledge they were a problem and had promised to take actions to control capacity abuses in Canada (after CP’s second "we’re almost bankrupt" episode). Sorry, but AC brought this upon itself. And they are the ones who made all sorts of promises. So now they are straddled with promises they made, surplus planes they bought and suprlus employees at a time where the business is way down. Consider that it isn’t just Air Canada. Consider the airports. Dorval was close to declaring bankrupcy last winter. Work on its white elephant wing has progressed at snails pace for the last 3-4 years (at least part of it has a roof now). Their unrealistic explansion plans was not blocked by the government (who still owns the facilities). Will they have to raise their airport fees to $100 to make up for lost revenus ? Consider Toronto with their grandiose plans that make their airport permanently under construction. Will they also get mighty close to bankrupcy ? > to the yanks..then they keep handcuffing AC.. by forcing them to merge, not > buy out or take over, but to merge with cail..
Sorry, but Air Canada worked hard to bankrupt CP for a decade. They only reaped the rewards for their hard work. They should have known BEFORE bankrupting CP that if they succeeded the government and public opinion would force them to inherit CP’s employees etc. Microsoft was smart. When Apple was doing bad, MS helped Apple survive because they knew that if Apple went belly up, it would be bad news for MS due to the monopoly status of MS. It was to AC’s advantage to keep CP up. They chose otherwise. Too bad. Did anyone really believe AC’s claims that they would be growing like mad and wouldn’t have to do any layoffs and would be buying new planes left and right ?
Response:
> I dont see how lossing 1-2 million dollars a day means they are not going > bankrupt…. any company that looses that much would soon be declaring > it…
How many billions does AC have in secure credit lines? They can lose 1-2 million a day for a while. As to Canada3000, if they get into real trouble, I would go along with the government garanteeing some loans or something. > The goverment should back our airline for a change..look at the way they > bungled the whole caniadian/onex thing.. almost sold our whole industry out > to the yanks..then they keep handcuffing AC.. by forcing them to merge, not > buy out or take over, but to merge with cail.. For once those spinless > liberials should do something for others in canada other then just for > themselves.. Give our airlines some substacial assistance. break into the > coiffers and payout..hell the goverment should take a paycut and make the > payout from that..
Funny. When CP went down, the government did not provide support. Now that the predator is in trouble, they should. Welfare to the shareholders, eh? I say, let them bleed first. When they are close to death and become less arrogant, then you do something. At a price though.
Response:
Not that they are anywhere close to bankruptcy apparently. But if their competitors get support in the US, they feel they should be entitled to support too… No Sir, we don’t believe in free enterprise. Our shareholders qualify for public welfare. :-(
Response:
Air Canada is asking for money for the WHOLE airline industry NOT just Air Canada. When the news anchor from the CBC Nationa asked is this for the whole industry he said "Yes". So this WOULD INCLUDE Westjet, Canada 3000, and others. THIS IS NOT A BAILOUT IT IS FOR STABILIZING THE AIRLINE INDUSTRY LIKE THE AMERICAN GOVERNMENT IS GOING TO DO IN THE US. Thank you
– Hide quoted text — Show quoted text -> Not that they are anywhere close to bankruptcy apparently. But if their > competitors get support in the US, they feel they should be entitled to > support too… > No Sir, we don’t believe in free enterprise. Our shareholders qualify > for public welfare. :-(
Response:
I dont see how lossing 1-2 million dollars a day means they are not going bankrupt…. any company that looses that much would soon be declaring it… The goverment should back our airline for a change..look at the way they bungled the whole caniadian/onex thing.. almost sold our whole industry out to the yanks..then they keep handcuffing AC.. by forcing them to merge, not buy out or take over, but to merge with cail.. For once those spinless liberials should do something for others in canada other then just for themselves.. Give our airlines some substacial assistance. break into the coiffers and payout..hell the goverment should take a paycut and make the payout from that.. Snow..
Response:
- Hide quoted text — Show quoted text – > Air Canada is asking for money for the WHOLE airline industry NOT just Air > Canada. When the news anchor from the CBC Nationa asked is this for the > whole industry he said "Yes". So this WOULD INCLUDE Westjet, Canada 3000, > and others. THIS IS NOT A BAILOUT IT IS FOR STABILIZING THE AIRLINE > INDUSTRY LIKE THE AMERICAN GOVERNMENT IS GOING TO DO IN THE US. > Thank you > Not that they are anywhere close to bankruptcy apparently. But if their > competitors get support in the US, they feel they should be entitled to > support too… > No Sir, we don’t believe in free enterprise. Our shareholders qualify > for public welfare. :-(
Well, then, it probably should be a bailout for everyone except AC… They sure didn’t believe in government bailout when CP went down.