Air Canada deal 'a big milestone' Airline avoids collapse, will save $250M= =20 a year through contract with pilots union 'It's business as usual,' carrier= =20 tells travellers Paul Vieira and Nicolas Van Praet CanWest News Service TORONTO -- Air Canada has avoided collapse and managed to slash its labour= =20 costs by more than $1 billion annually after three weeks of marathon=20 bargaining ended yesterday with the main pilots union agreeing to a=20 tentative deal. The Air Canada Pilots Association -- with 3,150 members --= =20 was the last of seven unions to come to terms with the company, agreeing to= =20 a six-year deal that will save the airline about $250 million=20 annually. "This is a huge step forward and a big milestone," Murray=20 McDonald, Air Canada's court-appointed monitor, said shortly after the deal= =20 was announced early yesterday morning. "This lets the company go forward.= =20 But there's a lot of work yet to be done." The other tentative agreements=20 Air Canada negotiated with its unions were contingent on the pilots coming= =20 on board. Without the pilots, the airline -- which is burning through $5=20 million a day -- might have been forced to halt operations. Air Canada's renegotiated labour contracts will save the company about $870= =20 million a year. Add that to savings of $120 million from non-union staff=20 and $110 million from cutting back on its routes, and the company has saved= =20 $1.1 billion on an annual basis. All the agreements must be finalized by=20 tomorrow, with ratification by union members to be completed by June 30.=20 Serge Beaulieu, a spokesman for the pilots, said the union's negotiating=20 team "deserved a medal" for their work. However, "when you just gave $250=20 million in concessions, I am not going to put any epithet on it ... and I=20 am not going to take my wife out to dinner to celebrate." The company can=20 now shift its focus to renegotiating new deals with its lenders, aircraft=20 lessors and suppliers, who are owed roughly $13 billion. Those groups were= =20 reluctant to take a hit unless labour shared in the pain. Robert Milton, the company's chief executive, praised the union leaders for= =20 helping the airline while it is under court-ordered protection from=20 creditors. "I salute Air Canada's union leadership for doing the right=20 thing under trying circumstances to ensure the survival of this great=20 airline," Mr. Milton said in a statement. "I recognize what a difficult=20 and unsettling time this has been for all of Air Canada's employees. A=20 successful ratification of all the tentative agreements will establish the= =20 foundation to move forward with lessors, lenders, key suppliers and other=20 stakeholders." He added: "I wish to reassure Air Canada's customers that it= =20 is business as usual." The uncertainty caused people to rethink travel=20 plans and worry about the value of their Aeroplan frequent-flyer points. In= =20 some cases, Air Canada's business partners decided to cut ties with the=20 carrier. Future Shop, the electronics retailer, told customers via an=20 e-mail this weekend that it was cancelling, for the time being, its=20 partnership with Air Canada, whereby shoppers could accumulate=20 frequent-flyer points. Prime Minister Jean Chr=E9tien said the deal, was "very positive" news. "But= =20 it's a file that is very complicated and we have to see what is next," said= =20 Mr. Chr=E9tien, who is in Evian, France, for a meeting of the G8 countries.= =20 Air Canada has to re-establish the consumer trust it has lost over the past= =20 week, and convince creditors and employees that it has a viable business=20 plan, industry experts said. "Air Canada has to come forward and say we are= =20 an ongoing entity and we're going to continue to be one and we have no=20 reason to expect otherwise," said Fred Lazar, a business professor at York= =20 University. Air Canada filed for bankruptcy protection on April 1, due to=20 its dwindling cash position and close to $13 billion of debt. The airline=20 is free from paying a number of bills while it seeks to reduce debt and=20 reorganize the company. But since the filing, the airline's balance sheet has further deteriorated,= =20 largely because of the outbreak of SARS in Toronto, Air Canada's main hub.= =20 Recent reports indicate the company is losing $5 million a day, and needed= =20 to find cost savings quickly if it is to emerge from bankruptcy protection.= =20 The company is looking to cut its overall annual costs by twenty-five per=20 cent, or $2.4 billion. It is close to the halfway mark. Besides pay cuts,=20 the big stumbling block to completing a deal with the pilots was Air=20 Canada's plan to switch much of its flying from the mainline carrier to=20 Jazz, its regional carrier. The Air Canada Pilots Association, which=20 represents Air Canada and Zip pilots, said that would put hundreds of their= =20 members out of work. The union that represents pilots at Jazz won a big=20 concession in its bargaining that will allow its members to operate=20 regional jets -- work that until now was exclusively reserved for ACPA=20 members. Air Canada will also take 25 regional jets (with seating for up to 75=20 passengers) operated by ACPA pilots and transfer them to Jazz -- where the= =20 pilots earn less money. Court documents suggest Air Canada will save $160=20 million a year by having Jazz pilots fly the 25 regional jets. It's unclear= =20 how this issue was resolved, but sources said ACPA demanded the company=20 reopen its deal with the Jazz pilots before it would sign a new agreement.= =20 That did not happen. Also, had ACPA and Air Canada failed to agree to a new= =20 pact, a lawyer for the Jazz pilots threatened to argue in court that a=20 judge has some authority to interfere with a collective agreement in=20 "extraordinary circumstances," in an effort to save the airline from=20 liquidation. Labour and legal sources say the threat was a factor in=20 persuading ACPA to sign a deal. Mr. Beaulieu declined to comment on the=20 legal challenge. *************************************************** 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.natalielaughlin.com/ TnT Webdirectory: http://search.co.tt *********************************************************