Layoffs

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Squid
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Re: Layoffs

Post by Squid »

Sorry to pop the bubble but there is a serious downsizing if you haven’t figured it out. At least the uptake was good on the early out but it’s still going add up to about 1200 by my math. Why keep you on if you do t have a plane to fly and if you did, nobody in the back along with the rest of the group on a reduced block for 6 mos. that’s the harsh cold reality.
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Fanblade
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Re: Layoffs

Post by Fanblade »

tallyho wrote: Mon Mar 30, 2020 8:53 pm If the government just agreed to pay 75% of all businesses wages up to $58k why is there still a need to lay off half your workforce? As for AC pilots specifically, the bottom 600 are all on flat pay so the $58k max is basically what they'll be earning on 55hrs. This will now be covered by the govt no? Why any further need for layoffs?

Am I missing something? (Probably).

https://www.cbc.ca/news/politics/trudea ... -1.5514558
The problem is that an employees cost is far more than just wages. The employer side of health benefits, pension, EI, CCP, dry cleaning, passport allowance and the cost of giving notice to name a few.........It all starts adding up. For example the Employer side of EI and CCP is higher than we pay as employees.

So as Squid says. If this was short term, yes no layoffs makes sense with the government program. AC has already told analysts they believe this will not be a v shape recovery like SARS. It will be U-shaped. They are acting accordingly.
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Fanblade
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Re: Layoffs

Post by Fanblade »

tallyho wrote: Mon Mar 30, 2020 8:53 pm If the government just agreed to pay 75% of all businesses wages up to $58k why is there still a need to lay off half your workforce? As for AC pilots specifically, the bottom 600 are all on flat pay so the $58k max is basically what they'll be earning on 55hrs. This will now be covered by the govt no? Why any further need for layoffs?

Am I missing something? (Probably).

https://www.cbc.ca/news/politics/trudea ... -1.5514558
The problem is that an employees cost is far more than just wages. The employer side of health benefits, pension, EI, CCP, dry cleaning, passport allowance and the cost of giving notice to name a few.........It all starts adding up. For example the Employer side of EI and CCP is higher than we pay as employees.

So as Squid says. If this was short term, yes no layoffs makes sense with the government program. AC has already told analysts they believe this will not be a v shape recovery like SARS. It will be U-shaped. They are acting accordingly.
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goldeneagle
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Re: Layoffs

Post by goldeneagle »

tallyho wrote: Mon Mar 30, 2020 8:53 pm Am I missing something? (Probably).
The program covers 75%, company still has to pony up 25%. Even with 75% covered, makes no sense to keep folks on if there is no short term recall visible on the horizon. The program wont cover those wages forever, it's intended to be a short term bridge for places that will ramp back up to normal operations as soon as this whole episode is behind us. Airlines are not going to be one of those industries.
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CPT.HarshColdReality
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Re: Layoffs

Post by CPT.HarshColdReality »

goldeneagle wrote: Tue Mar 31, 2020 6:38 am
tallyho wrote: Mon Mar 30, 2020 8:53 pm Am I missing something? (Probably).
The program covers 75%, company still has to pony up 25%. Even with 75% covered, makes no sense to keep folks on if there is no short term recall visible on the horizon. The program wont cover those wages forever, it's intended to be a short term bridge for places that will ramp back up to normal operations as soon as this whole episode is behind us. Airlines are not going to be one of those industries.
Airlines do NOT have to pony up the 25%.

What about the cost of re-training costs and logistical nightmare?
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rudder
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Re: Layoffs

Post by rudder »

Economic recovery (and therefore passenger demand recovery) forecasts are being remodelled as we speak. V-shaped has been replaced by U-shaped as the prediction. Characteristics of a U-shaped recession include longer time spent in the bottom with a slightly less aggressive recovery. Global airlines are looking particularly exposed due to the nature of the root cause of the recession. Airlines are suffering from a condition described as “demand destruction” due to imposed travel and mobility restrictions.

Regardless, the announcement of a Federal wage subsidy program seemingly without many conditions should be investigated by all qualified employers and labour representatives.
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alkaseltzer
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Re: Layoffs

Post by alkaseltzer »

Fanblade wrote: Tue Mar 31, 2020 6:06 am
tallyho wrote: Mon Mar 30, 2020 8:53 pm If the government just agreed to pay 75% of all businesses wages up to $58k why is there still a need to lay off half your workforce? As for AC pilots specifically, the bottom 600 are all on flat pay so the $58k max is basically what they'll be earning on 55hrs. This will now be covered by the govt no? Why any further need for layoffs?

Am I missing something? (Probably).

https://www.cbc.ca/news/politics/trudea ... -1.5514558
The problem is that an employees cost is far more than just wages. The employer side of health benefits, pension, EI, CCP, dry cleaning, passport allowance and the cost of giving notice to name a few.........It all starts adding up. For example the Employer side of EI and CCP is higher than we pay as employees.

So as Squid says. If this was short term, yes no layoffs makes sense with the government program. AC has already told analysts they believe this will not be a v shape recovery like SARS. It will be U-shaped. They are acting accordingly.

Sorry Fanblade, I call bullshit on that line of thought. Chopping off the legs of your most junior pilots is atrocious.
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Last edited by alkaseltzer on Tue Mar 31, 2020 8:19 am, edited 1 time in total.
rudder
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Re: Layoffs

Post by rudder »

Here is is the problem that AC (and every global airline) needs to ponder: what will our flight schedule look like in October 2020? What about June 2021?

Any carrier that identifies a sustained significant schedule reduction (think 15%+) will be looking at fleet and then staffing requirements based on a revised operation.

The US carriers are already starting to game this out. And they are talking about it internally (employee awareness) and externally (shareholder awareness).

AC will do the same. Perhaps not today, but sometime over the next 90 days.
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CPT.HarshColdReality
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Re: Layoffs

Post by CPT.HarshColdReality »

I am one to think people will want to travel after all this confinement. Especially that we are going to be going into the summer.

I'm encouraging everyone I know to go out to bars restaurants and local retailers this summer. We can definitely jump start the economy if everyone went to the restaurant and ate out once a week.

Those who can at least. Together we flatten the curve. Together we can make this a V.
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47north
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Re: Layoffs

Post by 47north »

CPT.HarshColdReality wrote: Tue Mar 31, 2020 8:48 am
I'm encouraging everyone I know to go out to bars restaurants and local retailers this summer. We can definitely jump start the economy if everyone went to the restaurant and ate out once a week.

Those who can at least. Together we flatten the curve. Together we can make this a V.
You can do this now by ordering takeout or delivery and if you do give them a good tip because the staff are largely hurting. Also you can support your local businesses by purchasing online or by buying gift cards to be used when they open up.

For those of us that can afford it now, it can make a big difference.
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digits_
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Re: Layoffs

Post by digits_ »

I live in a small town. The restaurants etc seem to be hanging on. The "businesses" asking for support from the local community, seem to be the businesses that nobody really needs. Selling overpriced scented candles and fancy soap. Overpriced tourist crap etc. Maybe it is nice you have one of those for the people looking for those things, but 3 of 4 in the same building? That just gets silly. Unfortunately these will be the first to go. I doubt a lot of people will support these kind of stores with gift cards or fancy tips.
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CPT.HarshColdReality
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Re: Layoffs

Post by CPT.HarshColdReality »

digits_ wrote: Tue Mar 31, 2020 9:36 am I live in a small town. The restaurants etc seem to be hanging on. The "businesses" asking for support from the local community, seem to be the businesses that nobody really needs. Selling overpriced scented candles and fancy soap. Overpriced tourist crap etc. Maybe it is nice you have one of those for the people looking for those things, but 3 of 4 in the same building? That just gets silly. Unfortunately these will be the first to go. I doubt a lot of people will support these kind of stores with gift cards or fancy tips.
Yes unfortunately I do agree. This is somewhat a natural cycle of life. Eliminate the really really weak. Sad but its life. I will help us in the long term. I think many people, including myself, are getting a wake up call on many different levels. Oh how lucky we are to be in Canada.
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WhatThe?
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Re: Layoffs

Post by WhatThe? »

Those Novelty stores are famous for being money laundering operations.
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47north
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Re: Layoffs

Post by 47north »

digits_ wrote: Tue Mar 31, 2020 9:36 am I live in a small town. The restaurants etc seem to be hanging on. The "businesses" asking for support from the local community, seem to be the businesses that nobody really needs. Selling overpriced scented candles and fancy soap. Overpriced tourist crap etc. Maybe it is nice you have one of those for the people looking for those things, but 3 of 4 in the same building? That just gets silly. Unfortunately these will be the first to go. I doubt a lot of people will support these kind of stores with gift cards or fancy tips.
I agree, but there are a number of 'useful' businesses in my small town that are worth supporting IMO. Restaurants, hardware store, auto parts store etc. that are likely to be there when this ends.
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47north
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Re: Layoffs

Post by 47north »

Comments from TDW on AC and Chorus:

https://stockhouse.com/companies/bullbo ... d=30860199


TD Waterhouse Comments on AC this morning
TDW sees AC in strong position to weather the storm. AC strength will benefit Chorus.

Below are TDW comments.


Air Canada
(AC-T) C$16.03
Highlights from AC Management Call

Event
Yesterday, TD hosted a conference call with Michael Rousseau, Deputy CEO
and CFO, to discuss Air Canada's positioning and initiatives for dealing with the
COVID-19 pandemic.

Impact: POSITIVE

We are maintaining our BUY recommendation, $28.00 target, and forecasts. The
call confirmed our view that Air Canada has sufficient liquidity to meet financial
obligations. The company is responding quickly to the crisis in adjusting its cost
structure without sacrificing its ability to ramp-up operations once the recovery
begins. We believe that there could be an upward bias to our forecasts and valuation
multiples within the next 12 months depending on the duration of the negative news
and contraction in industry revenue. We continue to believe that Air Canada's longterm
value is well above our 12-month target, but that in the current environment,
our target represents a reasonable risk-adjusted expectation for investors.

Assuming that the impact of COVID-19 has started dissipating by the end of 2020,
we believe Air Canada's share price will be higher in 12 months (notwithstanding
the potential for more downside in the meantime). We believe that Air Canada has
the financial strength to sustain itself through a crisis that continues well beyond
H1/20. Air Canada management has extensive experience to facilitate navigating
this unprecedented event. The conservative approach to how the balance sheet was
managed prior to the downturn is benefiting the company today, and management
is working towards exiting this crisis as strong as the company entered it.

Liquidity
Air Canada had $7.3 billion of liquidity (cash, cash equivalent, short- and longterm
investments) as at mid-March, including drawdowns on its U.S.- and Cdnbased
revolving credit facilities.

TD Investment Conclusion
Air Canada is trading at an attractive valuation when considering its earnings
potential beyond 2020 and 2021. Based on our current assumptions regarding the
impact from COVID-19, we believe that Air Canada's strong liquidity, capacity cuts,
and limited debt-repayment requirements will allow it to navigate this challenging
environment and reward investors who decide to ride-out the current volatility and
elevated risk.

Details
Liquidity (cont'd)
· Management believes that the company has one of the strongest liquidity
positions among airlines globally, a view that we share. Regardless, the company
is adding additional layers of liquidity insurance to protect against a much more
prolonged impact than expected. This should not be viewed as liquidity that is
required based on the company's current assumptions and planning.

· Air Canada has $5 billion in unencumbered assets that can be used to secure
additional liquidity. Approximately 60% is aircraft. Cash and liquidity is well over
30% of trailing revenue.

· The company is in discussions with the federal government regarding support.
Given the stage of discussions with the government, there were no details
regarding specific potential sources of assistance. However, we believe flexibility
on fees related to aviation infrastructure, and access to liquidity (loans/loan
guarantees) are likely outcomes.

· Not surprisingly, there will be a reduction in liquidity in the short-term as certain
fixed costs and capital expenditures continue. The company estimates that its
cash burn (operating cash flow before working capital) is 40-50%, which implies
that for every $1 reduction in revenue, operating cash flow will decline by $0.40-
0.50.

· The normal seasonality in cash generation from working capital in the first half of
the year and a reversal in the second half could be reversed in 2020. Air Canada
(and other Canadian airlines) have secured regulatory relief regarding customer
deposits for non-refundable fares for flights that have been cancelled. At the end
of Q4/19, the deposit liability was $2.9 billion. The relief means that the airlines
can retain a portion of those deposits and provide affected travellers with a 24-
month credit for future travel. As a result, cash outflows related to the burn-down
and return of deposits will be less significant than they would be if this relief was
not provided.

· As at Q4/19, Air Canada planned $2.4 billion in capital expenditures for 2020,
approximately 50% of which is for aircraft (17 A220s and six 737 MAX). The
company still plans to accept delivery of these aircraft, and has debt already
secured for the A220 purchases. Assuming the 737 MAX grounding is lifted, and
Air Canada takes delivery, we believe financing will be secured. The remaining
50% of originally-planned capital expenditures have been reduced by several
hundred million dollars, implying that cash usage for capex in 2020, after
deducting financing inflows will be below $1 billion. Our forecast is for the
equivalent value to be approximately $850 million.
Outlook

· Management expects the eventual recovery in air travel demand to be more Ushaped
than V-shaped.

· Excluding fuel and D&A, approximately 50% of its operating expenses are
variable. The timing of labour expense reductions is dependent on the underlying
employment contracts. Air Canada has announced layoffs of more than 5,100
cabin crew members. Pilot layoffs must be managed with a view to the
requirement to ramp-up flying as the recovery gains momentum due to the
regulatory requirements for pilot training. As a result, Air Canada has sought to
reduce the minimum number of hours for pilots as opposed to layoffs. Other
variable costs can be reduced in less than a month.

· The company extended A320 and E190 leases last year to backfill the lost
capacity from the grounding of the 737 MAX. There is some flexibility to return
those aircraft to lessors this year if demand results in the need for further capacity
reductions.

· Regional partners have been very receptive to necessary actions and represent a
source of reduced costs with regional capacity generally coming down in-line with
mainline.

· There is a significant amount of incoming interest in cargo services.
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mbav8r
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Re: Layoffs

Post by mbav8r »

Heard notices went out yesterday, any updates from ACPA regarding mitigation, early retirements etc..
We had 675 notices at Jazz, apparently they are still working on mitigation but there is a chance more notices go out if the flying is further reduced. Currently sitting at 12% of the original April flying!
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Fanblade
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Re: Layoffs

Post by Fanblade »

alkaseltzer wrote: Tue Mar 31, 2020 8:10 am
Fanblade wrote: Tue Mar 31, 2020 6:06 am
tallyho wrote: Mon Mar 30, 2020 8:53 pm If the government just agreed to pay 75% of all businesses wages up to $58k why is there still a need to lay off half your workforce? As for AC pilots specifically, the bottom 600 are all on flat pay so the $58k max is basically what they'll be earning on 55hrs. This will now be covered by the govt no? Why any further need for layoffs?

Am I missing something? (Probably).

https://www.cbc.ca/news/politics/trudea ... -1.5514558
The problem is that an employees cost is far more than just wages. The employer side of health benefits, pension, EI, CCP, dry cleaning, passport allowance and the cost of giving notice to name a few.........It all starts adding up. For example the Employer side of EI and CCP is higher than we pay as employees.

So as Squid says. If this was short term, yes no layoffs makes sense with the government program. AC has already told analysts they believe this will not be a v shape recovery like SARS. It will be U-shaped. They are acting accordingly.

Sorry Fanblade, I call bullshit on that line of thought. Chopping off the legs of your most junior pilots is atrocious.
I suspect you took my comments as rather cold.

Unfortunately the cold hard truth is that a company in austerity mode will shed costs it doesn’t need for its survival. All costs.

With that said. I have witnessed this group, despite the rumours of cannibalism, rally and do whatever it takes to save as many junior positions as possible.

- The large blocking window in our contract, that allows about a 25% cut in pay overnight, is one.
- Added pay cuts on top of that, which we are currently doing, is two.

Approaching September with better visibility. You will see that the first negotiations to save jobs were just that. Only the first.

- I guarantee we will be extending those cuts beyond September, assuming no v recovery.
- Once there is visibility forward there will be more Early retirements offered.

The bid on the 7th will be ugly. Keep in mind.

- A bid is a paper shuffle that can be altered overnight.
- The company will over down bid to remove as many activation dates as possible.
- The down bid will force people left to right seat creating immediate saving to the company. Hint- DO NOT bid to change seats on type.
- The down bid will force many off base.
- The bid will show surplus.

This will cause massive pressure on ACPA to negotiate round 2.

The pilot group will, and always has, done whatever it can. The pain will be felt everywhere. Imagine a newly promoted Captain. Now a 25% pay cut. Demoted and another 40% from that. Say he just bought a new house. Personal Bankruptcy. I watched this happen to a buddy in 04.

This isn’t the first time I have seen this kind of carnage. Back in 2003 I showed furloughed at one point, but hung on by my fingernails through the months long stressful process above. Thanks to my fellow pilots my pain was limited to a 4 year commute and the pay cut everyone else took.

My suggestion to you is don’t ever forget what can happen and how fast. Always have a rainy day fund. This industry, the industry we, you and I have chosen, has manic personality disorder. It is either way up or way down. If it comes off it’s medication all hell breaks loose.
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BTD
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Re: Layoffs

Post by BTD »

The bid on the 7th will be ugly. Keep in mind.

- A bid is a paper shuffle that can be altered overnight.
- The company will over down bid to remove as many activation dates as possible.
- The down bid will force people left to right seat creating immediate saving to the company. Hint- DO NOT bid to change seats on type.
- The down bid will force many off base.
- The bid will show surplus.
I agree with most of what you have said. However, the activation date for pay purposes on a reduction does not occur until you are qualified in the new position.

So according to the contract, getting moved on paper does not equal a pay rate loss. Therefore no immediate savings to the company. There is still training for left to right seat.

I suppose what may save us for now, is there probably isn’t enough flying going on and restrictions on the flight ops building make it so that very few new courses can be run and completed right now.
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Fanblade
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Re: Layoffs

Post by Fanblade »

BTD wrote: Wed Apr 01, 2020 9:29 am
The bid on the 7th will be ugly. Keep in mind.

- A bid is a paper shuffle that can be altered overnight.
- The company will over down bid to remove as many activation dates as possible.
- The down bid will force people left to right seat creating immediate saving to the company. Hint- DO NOT bid to change seats on type.
- The down bid will force many off base.
- The bid will show surplus.
I agree with most of what you have said. However, the activation date for pay purposes on a reduction does not occur until you are qualified in the new position.

So according to the contract, getting moved on paper does not equal a pay rate loss. Therefore no immediate savings to the company. I suppose what may save us for now, is there probably isn’t enough flying going on and restrictions on the flight ops building make it so that very few new courses can be run and completed right now.

1) There are a lot of pilots currently getting, or about to get, activation pay for their awarded position, while still on their previous type. Maybe an A320 CA not yet trained on the 787 because of the 737 grounding. A down bid that now shows them in their current qualified position wipes out that pay immediately. They might be senior to a 737 CA who did get trained to the 787 instead of leaving them grounded. Won’t matter. The senior pilot will take the $ cut. Might impact his pension. The junior pilot May or May not get trained back to the 737. If they don't, they keep 787 pay.

2) If you bid right to left seat on type. Or Right seat to RP on type it is a very short course. You make yourself an easy target for cost savings. Especially if there is a shortage in those positions like NB FO. Someone junior to you who bids to a different equipment type is less a target for cost savings.

It happens every time we have a large down bid.

Example. CA (A) ——A320 CA seniority number 3000—— CA (A) does not want to do a full course so he bids A320 FO. CA(B) ——-A320 CA seniority number 3001——- CA(B) bids A220 CA.

The company immediately does the short course on CA (A) but leaves CA(B) where he is. Why, because it is cheaper for the company, and our contract does not force training in seniority. That is what bypass pay is for. But on a down bid all protections are lost. Pay kicks in the second you do an LOE.

The following month CA(B) and the newly minted FO (A) have a pairing together. It makes for interesting conversation.

Mark my words......Every time
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Daniel Cooper
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Re: Layoffs

Post by Daniel Cooper »

I think the rumours of Rouge's death have been greatly exaggerated.
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