=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/05/19/f= inancial1655EDT0281.DTL --------------------------------------------------------------------- Wednesday, May 19, 2004 (AP) Air Canada halts talks with CAW, declares impasse after days of negotiations (05-19) 19:18 PDT TORONTO (AP) -- Air Canada's 13-month-long restructuring was thrown into turmoil Wednesd= ay after the company pulled out of talks with the Canadian Auto Workers on a cost-cutting deal intended to ensure a German bank's investment in the insolvent airline. The airline said wage concession talks reached an "impasse" because the union has not moved far enough in a counterproposal presented a day earlier. "There was insufficient movement in the union's response to the company's offer of May 17 to warrant a continuation of discussions," stated Paul Brotto, Air Canada's executive vice-president for cost control and planning. Late Wednesday, Air Canada CEO Robert Milton and union leaders agreed to meet Thursday morning at a Toronto hotel with the judge who is overseeing the airline's restructuring. In key talks needed to secure its restructuring, Air Canada had reached concession agreements with all of its labor groups except the CAW, Canada's largest industrial union. CAW president Buzz Hargrove said the union is willing to ensure that Air Canada receives labor-cost savings agreed to about a year ago but will not go further, saying Air Canada is seeking additional millions in reductions. The standoff is not expected to affect Air Canada flights in the short term, and Hargrove expressed confidence that Air Canada will survive whether or not an agreement is reached. "I don't think the airline's going down -- I don't think that's even a remote possibility," he said. "There's other groups out there waiting to look at this airline and see = if they can pull it together." Hargrove added that he is ready to meet further with Air Canada, Deutsche Bank, GE Capital, an investment group headed by former airline executive Don Carty, another group headed by Greenbriar Equity Group, or anyone else considering an investment in the airline. Germany's Deutsche Bank has demanded significant concessions from Air Canada's workers as part of a proposal to underwrite an investment by creditors in the airline. Also thrown into doubt is Air Canada's $1.5 billion financing agreement on airplane leases with GE Capital Aviation Services. The GE unit has said it could drop its funding if Deutsche Bank withdraws. "We are too close to our goal to turn back. And so we will immediately commence discussions with Deutsche Bank and GECAS to determine next steps," Brotto said. GECAS spokesman Eric Jones said his company was "very disappointed and we're evaluating our options." David Ritchie, head of the largest union at Air Canada, the International Association of Machinists and Aerospace Workers, called the situation "grave." He said Air Canada's creditors, waiting for the airline to reach new lab= or agreements, may ask an Ontario judge at a hearing Friday to begin liquidating the airline. "These people are running impatient," Ritchie said. Asked his opinion of the CAW's stance, Ritchie stopped short of criticizing the other union but said none of the unions wanted to accept more concessions. "But the fact is if we did not, the airline wouldn't fly. There wouldn't be any jobs." The CAW said it agreed to new concessions to make up for an $18.3-million shortfall in the $165 million in labor cost cuts it agreed to in April 2003, but rejected the company's demand for a total of $45 million in new cuts. Hargrove has said the airline wants 5,000 CAW members at the main airline to suffer pay cuts averaging C$10,000 annually. They earn between C$35,000 and C$49,000 a year. Air Canada official say that's an oversimplification, but Hargrove insisted: "No matter how you add it up, it comes to C$10,000 per head." ---------------------------------------------------------------------- Copyright 2004 AP