Air Canada to trim $50-million in costs

[scopiton]

http://www.theglobeandmail.com/report-o ... e11874346/

Air Canada is hoping to cut $50-million across the company in the current second quarter, as the airline battens down the hatches ahead of a storm of new competition.

In a memo to senior management obtained by The Globe and Mail, chief executive officer Calin Rovinescu outlined measures to be taken immediately, including a hiring freeze, stopping the use of consultants and further efforts to trim costs with suppliers.
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“While we have made good progress on controlling costs, the ground beneath us is shifting almost daily and the goalposts are moving with it,” Mr. Rovinescu said in the memo.

He noted that “the revenue environment has been and is expected to remain extremely challenging. We are facing intensifying competition competition and significant capacity additions” in key markets.

Exceptions will be made only for new hires and consultants who are considered “mission critical,” and the freeze does not apply to hiring new employees for the launch of Air Canada’s new discount carrier, Rouge.

Air Canada’s cost-cutting moves come as the Canadian airline industry girds for heightened competition – and possible price wars – with the launch this summer of Rouge, and WestJet Airlines Ltd.’s new regional subsidiary, WestJet Encore.

In addition, the bid by Porter Airlines to get approval to fly longer jet routes from Toronto’s Billy Bishop Toronto City Airport could intensify the pace of competition.

Air Canada executives approved the $50-million cost-cutting target this week, which represents less that 2.5 per cent of the the airline’s non-fuel costs for the quarter. The goal is to turn a profit in 2013, continuing the airline’s relatively strong performance in 2012.

“Last year’s profit was an important achievement for all of us and it cannot be a ‘one-off’ nor can we allow Air Canada to relapse into a money-losing spiral,” Mr. Rovinescu wrote in the memo.

Many airlines are scrambling to reduce costs, including WestJet, which is looking to shave $100-million in expenses over three years. Many carriers have instituted major company-wide cost overhauls, such as Air Transat’s recent layoffs and restructuring.

At Air Canada, each department is required to contribute cost-cutting targets, the memo said. “We are well within the quarter so we need to act fast,” the company’s CEO noted.

[Jack In The Box]

Hiring freeze?? So in other words....no more hiring except for rouge? So much for lots of movement....
Gonna be busy for all current pilots if true as they try to cover the gap from the increasing number of retiring pilots, no?

Im all for trimming unnecessry costs, but it sure would be nice if they would offload some of the unnecessary upper management costs rather than dumping it on all the other employees.

[MB22]

I hope this doesn't include pilots at the moment.

[crazy_aviator]

Typical selfish answers from pilots ME ME ME ME ME

[MB22]

Typical selfish answers from pilots ME ME ME ME ME

I am a bit confused as to how this is a selfish statement? The forum users are 90% pilots, so how is inquiring about the negative ramifications of this news article towards the pilot aspect of it selfish?

My statement wasn't meant in a selfish manner. Being on an aviation forum with pilot users, wouldn't one first inquire or have questions about their own profession? I'm sure all CSA's, FA's, ramp personal etc. are all asking the same questions of how this will affect their job and more specifically those individuals in all those different positions who are hoping to one day work for Air Canada. Are they selfish as well if they inquire about their own career?

Overall, it's not great news for any Air Canada employee but it's not fair that you insult people who also ask a more direct question that is more so directed towards their own profession. Again, selfishness wasn't intended but rather just an inquiry.

[wallypilot]

I hope this doesn't include pilots at the moment.

Article indicates exceptions for " mission critical" positions. My guess is they will hire the crews they need.

[cpt.sam]

What was Calin's bonus last year?

[Jack In The Box]

Typical selfish answers from pilots ME ME ME ME ME

Mind explaining the "selfishness" of these posts?

[BlueSkies12]

I honestly think saving 50 million a year shouldn't be that hard. They waste so much money.
For example asking the pilots whether or not they need to de-ice would be a start, instead
of someone with 3 days of training making the call for you. A lot of days where Air Canada
and Jazz are the only planes in the bay.

[crazy_aviator]

What was Calin's bonus last year?

I honestly think saving 50 million a year shouldn't be that hard. They waste so much money.
For example asking the pilots whether or not they need to de-ice would be a start, instead
of someone with 3 days of training making the call for you. A lot of days where Air Canada
and Jazz are the only planes in the bay.

Here are 2 pro-active answers above. LOOK at the WHOLE situation, NOT like your at a polling booth and ONLY interested in what the politician can promise for YOU YOU YOU It doesnt take a NASA rocket scientist to figure out that a wannabe pilot would sell his grandma out to the mafia for an extra hours night flying

[pilotbzh]

save 100 millions by laying off all the useless managers (and there is lots of them) turn them into front line worker and you get a profitable operation....

[livin']

22 Vice Presidents

[TheStig]

I hope this doesn't include pilots at the moment.

Wouldn't expect pilot hiring to change much, say 90-120 over the next year with most new hires going to rouge.

[Old fella]

22 Vice Presidents

Air Canada has 22 VPs - you can't be serious

[DBC]

And 2400+ managers last I heard.

[cpt.sam]

I honestly think saving 50 million a year shouldn't be that hard. They waste so much money.
For example asking the pilots whether or not they need to de-ice would be a start, instead
of someone with 3 days of training making the call for you. A lot of days where Air Canada
and Jazz are the only planes in the bay.

YESSSSSS!
There's also the issue of how they de-ice!
I've been showered with, literally, tons of type 1. Most of it misses the wing all together!
I'm sure there are to be trainees now and then, but sometimes the waste is INCREDIBLE!

[TheStig]

AC stock has been taking a beating and all the sudden internal memos regarding saving millions of dollars start getting 'leaked' to the media.

As an individual entity Mainline Air Canada is shrinking in 2013-2014 with the transfer of the E175's to Sky Regional and 20ish A319's to rouge. If the organization wasn't bloated with mid level managers and contractors before it certainly will be soon, this just seems like a good time to make these corporate adjustments especially given the Q1 results and associated thrashing the stock has taken. Jaded personal experience within AC would lead me to believe there aren't going to be too many managers out of work any time soon, but more likely finding themselves with promotions to new positions at rouge.

From a pilot hiring perspective this doesn't change much, the 175's have for the most part already been removed from the equipment bid and ACPA pilots will still be flying the A319's.

[MB22]

Thanks guys for the informative posts and insight

[whiteguy]

And 2400+ managers last I heard.

Welcome to CP!

[livin']

22 VP's, all collecting significant bonuses. A 10:1 employee:manager ratio.