Air Canada faces critical restructuring hearing CTV.ca News Staff Air Canada might be forced to ground its fleet today, as it struggles to come to some agreement with its main pilots' union -- the only one of nine Air Canada unions that has yet to accept a tentative cost-cutting agreement. There is an emergency board of directors meeting Friday to discuss the company's losses. The board may have few options other than to resign en masse or shut down the airline. "People are worried sick about this," CAW President Buzz Hargrove said. "They know the airline is not doing well." Air Canada has negotiated about 4,200 job cuts so far this week, with flight attendants and machinists among those accepting layoffs. The airline is losing about $5 million a day, mainly due to the outbreak of SARS. A lawyer for the pilots, Richard Jones, said they were being asked to provide almost a third of the cuts, even though pilots make up only 10 per cent of the workforce. Jones also says a significant barrier to an agreement was a proposal that the Air Canada Pilots Association and the pilots' union at Jazz -- a regional subsidiary -- compete for aircraft assignments. Reports say the pilots have been asked to cut more than 800 jobs, accept 15 per cent wage cuts, and accept other concessions that would save Air Canada $250 million annually. A report prepared by Ernst & Young, a court-appointed monitor assisting with Air Canada's restructuring, warned the lack of a deal with the pilots threatens to undermine the tentative agreements with the company's eight other unions. The monitor also says Air Canada doesn't have enough cash on hand to cover all the financial obligations it has amassed since obtaining court protection from creditors on April 1. Air Canada has refused to use financing it arranged when it sought court protection "unless a labour-cost realignment is achieved to halt such losses," the monitor's report said. A spokesperson for the airline said she couldn't say what Air Canada's plan would be without an agreement with the pilots. "The reality is that the next step will really be determined by the judge," said Renee Smith-Valade. "It's really Justice (James) Farley's decision as to how he should choose to take the process forward." If Air Canada can't get a deal with the pilots, it could be headed into bankruptcy as early as Friday afternoon, to be sold to the highest bidder or broken up. With a deal, Air Canada has a chance to survive, albeit in a smaller form. Air Canada has said it wants to fly fewer big jets and buy about 85 new regional jets that are less costly to operate and better-sized for the reduced passenger traffic it's experiencing. Consumers are bound to be affected either way, although the consequences may not be immediately apparent. Whatever happens in court Friday, the planes will continue to fly and Aeroplan points will continue to be awarded and redeemed. But service cuts are inevitable. "This is a new world after 9/11. The rules have changed," said Joseph D'Cruz, a professor of strategic management at the University of Toronto. It's a message Air Canada is reportedly delivering to the holdout pilots' union. "The best case scenario is the pilots recognize ... that the airline is in very serious difficulty and they have to compromise," D'Cruz told CTV News. A first-quarter financial report issued by Air Canada late Wednesday confirmed a three-month operating loss of $354 million, a deterioration of $194 million from the year-earlier quarter. The airline also confirmed that the downturn worsened in April, primarily because of the SARS outbreak in Toronto, its main hub. This is estimated to have cut last month's revenue by $125 million, leaving an April operating loss of $152 million. Bookings for May, June and July were down by 20 to 25 per cent from a year ago. First-quarter revenue was down 12 per cent on Canadian routes and nine per cent on U.S. transborder routes, but edged up three per cent on other international services, while cargo revenue improved by 11 per cent. With reports from CTV's David Akin and Canadian Press *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.caribbeanfloral.com TnT Webdirectory: http://search.co.tt *********************************************************