Air Canada sending Embraer 175/190s to Express

[mduffy]

I've heard the same - can't reveal source. Sorry.

[pika]

So it's official, skadoo is an ahole.

[Takeoff OK]

Can somebody who actually knows anything about AC's scope language please post some details on it and how the E-jet flying is or is not protected right now? My understanding is that it should require member-ratified concessions to release the Embraers. But considering the Sky Regional fiasco, is that language now toast?

[Rockie]

Rovinescu has made no secret of his admiration for Jetstar and if further proof of his intentions are needed one only has to look at Aveos. The only thing stopping him from doing it is our scope language which he wants eliminated, and will achieve with the government's help.

So it isn't just the Embraer's he will move out, eventually it will be the whole fleet when he finishes funneling all the funds he can from mainline into the new LCC. At that point Air Canada will be liquidated and the employees and shareholders (BofD take note here) will be cast adrift.

This is his plan and everybody knows it. Rovinescu has provided absolutely no assurances it won't happen.

[rudder]

The issue here is not paint jobs and trade marks but rather cost structure. CR wants a Jazz cost structure for the EMB's and a SkyRegional cost structure for the Jazz/Express fleet. He would also like some relief to reduce costs on the contemplated 319/767 leisure routes to those that exist in the sked charter world.

The question is how close is he to achieving this desired outcome? Given the legislation/arbitration looming, I would say that he is as close as he has ever been on the EMB as any change in the scope line will put some or all of EMB's in play. As for Jazz, it may ultimately take an AC CCAA filing to have the ability to outsource the current Jazz/Express flying to other bidders prior to 2020. Some degree of cost reduction could be achieved as a part of a broader CPA renegotiation with Jazz involving fleet substitutions of larger aircraft allowing the smaller gauge aircraft to be reassigned to either SKY or Tier III.

Mainline labour had better hope that it is CR's wish to use them on the leisure routes because if it is not there are actually other employees/operators that are capable of turn-key operations (Jazz/Boeing for example. All of the infrastructure and technical qualifications are already there except ETOPS certification which would be achievable after just one season of north-south flying). In the event of an AC total collapse, some would argue that Jazz is now the logical replacement for AC North American operations. It turns out that operating large aircraft is not rocket science and the Jazz operational footprint already now extends coast-to-coast and to Central America, South America, and a very large portion of the Caribbean. New investment capital will always find the most efficient home.

How would one describe this? A very bad situation for mainline labour. It is the AC pilots that have defined what is mainline flying in their collective agreement and the other employee groups have simply benefited by association. If this legislation/arbitration process redefines mainline flying, a lot of current AC employees will be exposed. AVEOS should be a wake up call to everybody. Nothing is guaranteed anymore. And if AC files for CCAA then a bad situation will become much worse for labour. Nobody would invest money in AC in its current form. Nobody.

CR has a plan and it would appear that he may have some success in implementing it. What is labour's response? You could cry in your milk, talk about the past, and play the victim. Or come up with a better plan. And do not waste your time talking about status quo. That was the 2003 and the 2009 plan and it did not work.

ACPA has few if any allies. Just a bunch of advisors steering them in the wrong direction. Even the anarchist movement of 27 advocating a return to TA1 is not going to move the company nearly far enough to survive in the long term. And with the government now believing that the only person with a viable plan is CR, they are going to clear the way to facilitate its implementation hoping that they can get AC off of their radar screen as it has become a gross distraction with zero political value. It represents a failed privatisation.

So, what is ACPA advocating as a realistic alternative? Dressing up like pilots and going on TV looking for sympathy from the public. Filing legal challenges and pretending that time is not running out. This process is moving at 100 mph and ACPA looks like they are standing still. Maybe this is how it was supposed to be since none of the labour at AC seem prepared to advocate for the necessity of change in order to survive. There is a much bigger picture out there but AC labour looks like a deer in the headlights.

[mbav8r]

Very concise post, the only thing I would disagree with is below. The nice thing about Canada is CCAA does not get you out of contracts unless you can prove they're are onesided in favor of the other company. I believe at best, CCAA might get the rates reset to what CR is trying to attain in the courts presently.

As for Jazz, it may ultimately take an AC CCAA filing to have the ability to outsource the current Jazz/Express flying to other bidders prior to 2020.

This is from 2009, but the context is much the same,

CIBC WM

Jazz Air Income Fund
Jazz (JAZ.UN-SO) provides regional services for Air Canada. In a CCAA filing, the
key document governing the two companies’ relationship, the Capacity Purchase
Agreement (CPA), is subject to opening and negotiation. However, we believe a
bankruptcy court would have to find the contract well offside in terms of market
rates for operations and we believe Jazz provides service to Air Canada at rates
comparable to any of the U.S. regionals and typically exceeds them. Part of the
2010 rate reset process for the CPA already includes a benchmarking process on
cost to U.S. regional carriers.
We believe Jazz would also be ready to provide direct financing or would agree to
changes in the CPA that are mutually beneficial in order to avoid a CCAA filing.
One option for Air Canada in a CCAA filing could be to modify the existing scope
clause with its unions. The current scope clause limits the size, number and type
of aircraft and capacity Air Canada is allowed to contract to Jazz. Jazz has lower
labor costs and more flexible work rules than Air Canada. If the CPA was
terminated, we do not believe Air Canada would find it more cost effective to
internalize the operation.
The scale of services that Jazz provides Air Canada should also not be
underestimated. Jazz provides airport operations for all Air Canada destinations
in Canada other than the largest eight airports and provides service to 86 of 115
North American destinations. We believe the scope of the operation would make
it very difficult, if not impossible, to take over completely. As well, there is no
other entity in Canada with sufficient resources to operate 133 aircraft covered
under the CPA. Installing a transplant airline from U.S. regional airlines is a
possibility but it would certainly take time leading to severe disruption to
service, which we expect the government would not tolerate for long. We expect
Air Canada would not be able to reduce expenses materially in this scenario.

In the event of a strike, assuming Air Canada can maintain its customers
systems, Jazz would continue to operate. In previous labor actions, regional
carriers have typically seen their loads increase as they carry passengers
normally carried by the mainline.

[Rollercoaster Rider]

Thank you Rudder,If you are an ac employee ACPA should elect you as thier new leader as you are the only one with a solid grip on the true reality of the situation.

[swervin]

Thank you Rudder,If you are an ac employee ACPA should elect you as thier new leader as you are the only one with a solid grip on the true reality of the situation.

Fortunately Rudder does not work for AC.

[Fanblade]

Rudder,

So your playing the doomsday card too. Well done. It's not enough that the present CEO has played fear to extremes levels. That the union has done the same in an effort to engage the membership. Why not everyone jump on board.

Last year TA1 had an LCC in it. For many reasons I didn't believe it then. It was a negotiating distraction. A method to show pay increases and advancement that would never exist. But there is no point in getting into that now. Today it is off the table.

Or should I say what an LCC is, has drastically changed. What did it change too? CPA providers. Lots if them. And a lot more flying at them.
Y
In November AC tabled 118 seats. EMJ would go to a new company that they referred to as a domestic LCC. Pilots would go with it. Would be able to return when spot opened back at AC or stay at New LCC. Massive loss of flying at mainline.

Last best final offer Feb 14, 2012. 90 seats. Regional ASM's increased 80% to 20% of mainline. E175 gone.

So what does all this likely mean? Ya know without the fear.

Transboarder joint venture and Westjet's regional. AC's clock will get cleaned if it uses Jazz in competition. I see Jazz getting refleeted right up to 90 seats in an effort to spread cost over more seats. I see multiple CPA players. More than 2. I see Jazz in a very difficult position at CPA renewal. 2016 or 2020?

I see the American regional model being put in place and yes it will impact the mainline fleet. E175 gone. E190/319 reduced. But it will have massive affect at the regional level. All jobs pulled from mainline eventual going to the lowest bidder.

[rudder]

So your playing the doomsday card too.

Anybody who can read the news or access the internet has figured it out. Why is it so difficult for those that will be the most affected to recognise their circumstances?

Don't believe that things always work out for the best? Just ask a (former) AVEOS employee. Perhaps being proactive may have changed nothing. Or perhaps it could have changed everything.

Do you know why they put old Generals out to pasture? Because they never leave the past battles in the past. Until the parties start to look forward rather than backward the outcome is virtually assured. CR wins.

[Fanblade]

So your playing the doomsday card too.

Anybody who can read the news or access the internet has figured it out. Why is it so difficult for those that will be the most affected to recognise their circumstances?

Your not listening. Or are you just disappointed? The last offer from the company, if implemented, would see mainline retain 91 seats and up. It saw an 80% increase in flying 90 seats and below. Will it have an impact on the E and 319 fleet? Yes.

Not doomsday though. Not massive lay offs.

Open your eyes. The corporation is still hiring and training up.

Correction. 80% increase in ASM's from current.

[rudder]

Your not listening. Or are you just disappointed? The last offer from the company, if implemented, would see mainline retain 91 seats and up. It saw an 80% increase in flying 90 seats and below. Will it have an impact on the E and 319 fleet? Yes.

Not doomsday though. Not massive lay offs.

Open your eyes. The corporation is still hiring and training up.

AC has solvency issues and it will need to generate significantly greater free cash flow going forward than it is generating today. Just because AC does not advertise the fact does not mean that it is not the case. Ever heard of Moody's?

Will the fleet reassignment that you have described meet those needs? I guess that we will find out at AC's next attempt to access the capital market. Hope that it will be a more successful attempt than Porter.

And as for hiring, every airline in history has hired right up until the time that they decide to furlough. Day-to-day planning, that is all. Just like a CCAA petition, you will hear about it the day it happens, not before. Wouldn't it be great to go to sleep at night and not worry about waking up to the headline that your airline is bankrupt? That's right, you would have to be a WJ employee to have that security.

[Fanblade]

Rudder,

Your not going to get an argument out of me that AC needs to restructure to survive. It wasn't done in 2003. In fact the restructuring hang over is part of the problem today.

I think Calin is attempting to restructure this Corp as we speak, and is doing so with the back stop of the PMO's office. ACPPA is even apparently on the table. Change always makes people nervous.

All I am saying is that the corporations last position to ACPA IMO was not doom and gloom. The irrational fear that has been woven is getting out of hand.

[Rockie]

No one questions the need for change and the employees have proven themselves willing to accept change for the long term benefit of the corporation and their jobs. A decade of repeated concessions prove that.

It won't do any good though if there isn't a seismic change in management attitudes, style and competency or we will find them coming after us for more and more to cover for their own failures. Give us a management team worthy of believing in and you would be shocked what employees are willing to do.

Not with this last bunch in a long line of world class clowns though.

[Takeoff OK]

Why does everyone assume Jazz would be the benefactor in an Embraer offload? If we're going to look to the US model of fleet distribution, then the lowest bidder will get the hulls. Smart money would be placed on Sky Regional for this one because they absolutely have the ability to undercut any bid Jazz could put forward -- unless,of course, there is something in the scope language that I'm missing, because NO ONE WILL POST THE DAMN THING HERE!!!

[Rollercoaster Rider]

Thats it dropping 15 75 seat hulls and giving all a raise will fix everything...Maybe if it was 10 years ago.If you think that will fix it you better start working on plan B.

[Fanblade]

Why does everyone assume Jazz would be the benefactor in an Embraer offload? If we're going to look to the US model of fleet distribution, then the lowest bidder will get the hulls. Smart money would be placed on Sky Regional for this one because they absolutely have the ability to undercut any bid Jazz could put forward -- unless,of course, there is something in the scope language that I'm missing, because NO ONE WILL POST THE DAMN THING HERE!!!

ACPA has tight scope language. Some of the tightest in North America.

Jets at feeders limited to 50 seats
exception for 16 75 seat jets
Only one feeder (Jazz) allowed
Regional ASM ratio 12:100

The present scope language prevents the transfer of E jets from mainline. The vultures are circling at the prospect of an arbitrator gutting ACPA's scope language.

Last on the table from AC.

Jets at feeders limited to 90 seats.
multiple CPA players.
regional ASM's 20:100

[Fanblade]

Thats it dropping 15 75 seat hulls and giving all a raise will fix everything...Maybe if it was 10 years ago.If you think that will fix it you better start working on plan B.

RCR,

I know I have played down the magnitude of the scope changes tabled by the corporation. They are not however miniscule. It will affect more than 15 frames without a doubt. 2 sky regional RJ900 could replace a 321. Up the frequency. You get the picture. It is why their are concerns about jobs at mainline.

However as bad as the job situation could get based on that alone? It is backstopped by the ASM ratio. With Q400's & rj900 at the regionals and the corresponding drop in Mainline ASM's that extra 8% will be filled fast.

Not really 8% increase in regional flying. As Mainline ASM drops the percentage at regional increases even if unchanged. Think maybe 6% increase in regional ASM's. Worst case 6% of 3000 pilots equals 180 mainline pilot jobs. Those jobs don't transfer over night. It will take a couple of years. No one is at risk IMO. Best case AC expands internationally with 787 arrival. No reduction in mainline jobs.

Problem is people are talking 1000's of jobs. I don't see it in the corporation's proposal. I did in the first one. Not this one.

RCR,

As you can see I'm dancing a tight wire here. I do not want to fuel more fear. However your belief that the changes proposed are far to small? It tells me you don't understand the significance.

To my fellow AC pilots,

I don't like it either. I'm not trying to sell it. Just calling BS on the level of fear mongering.

[Fanblade]

No one questions the need for change and the employees have proven themselves willing to accept change for the long term benefit of the corporation and their jobs. A decade of repeated concessions prove that.

It won't do any good though if there isn't a seismic change in management attitudes, style and competency or we will find them coming after us for more and more to cover for their own failures. Give us a management team worthy of believing in and you would be shocked what employees are willing to do.

Not with this last bunch in a long line of world class clowns though.

Rockie,

I know I am new. I know i didn't live through the last decade. I am also sorry to tell you the last restructuring was not a restructuring. The players were thieves not interested in viability.

We are not productive enough.

No reserve time balancing
to much time in training
one minute out bound rule
Bank time. Overtime taken as time off rather than cash cleared.
Drop flying after taking a draft.
Drop flying with too much block growth.

Those are just off the top of my head.

[HavaJava]

We are not productive enough.

No reserve time balancing
to much time in training
one minute out bound rule
Bank time. Overtime taken as time off rather than cash cleared.
Drop flying after taking a draft.
Drop flying with too much block growth.

Those are just off the top of my head.

Excuse my French...but ARE YOU #%$@ing SERIOUS!?!?!

The fact that you even brought up reserve as being unproductive proves that you are out to lunch. The only thing a reservist has going for them is the ability to pass/lack of time balancing. For the last 3 years on reserve that has meant almost nothing to me. Anytime I choose a juicy trip by using my seniority rights, the pairing is either changed by the time I get to the airport or it is gutted and goes from a 23 hour 4 day pairing to a 17 hours 4 day pairing. The narrow body reserve pilots are working their asses off...I'm sorry, but there are no significant productivity gains to be found on narrow body reserve.

Here are a list of items that reserve pilots have at some other airlines. I would gladly give the company Best Fit or time balancing for even one of these.

- All reserve pilots are paid a minimum of DMM
- All days off are guaranteed days off
- Ability to group days off in patterns other than designated by company
- block holder privileges once awarded a pairing
- Can't be extended another night unless at pilots option
- I'm sure there are more, but these are off the top of my head

Reserve rules at Air Canada are draconian. Reservists have no rights compared to block holders. Now, I hear the argument, don't bid to the bottom of a plane if you don't like reserve. This is fair enough, but I don't think it's a reason to make reserve even worst than it is now.

Dropping flying after a draft!?!?! NOT THE PILOT's FAULT!!! It's the companies fault for not properly staffing the airline

One minute rule??? I haven't had a DMM less than 80 hours for the last 2 years. On average I've been flying 85 hours a month. Without the 1 minute rule I'd be flying 90+ a month every month. We might as well throw the science on pilot fatigue out the window. If the company was serious about having pilots be more productive then they would make the pairings more productive instead of having the vast majority of EMJ pairings be 4-dayers under 20 hours of credit.

Maybe there are some productivity gains that can be painlessly made on the wide-body (doubt it after being a 767 RP), but the narrowbody pilot's are overall extremely productive.

HJ

p.s. I just remembered, one thing that makes AC wide-body pilots extremely productive compared to most other large airlines is that we consistently fly sectors with 2 pilots where other airlines use 3 and sectors with 3 pilots where others use 4. Also, allowing the company to use RPs instead of augment FOs or Capts is a huge productivity gain for the company.