=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/2004/05/21/f= inancial0914EDT0046.DTL --------------------------------------------------------------------- Friday, May 21, 2004 (AP) Air Canada reaches deal with union on costs (05-21) 06:14 PDT TORONTO (AP) -- Air Canada has reached a crucial cost-cutting agreement with the Canadian Auto Workers that removes one of the last remaining barriers to its 131/2-month-long restructuring. "We can now clearly see the finishing line," Air Canada chief executive Robert Milton said at a news conference late Thursday after a day of top-level negotiations with the union. The tentative accord with the CAW -- the last of seven Air Canada unions to hold out against new concessions -- frees Canada's biggest airline to attend a bankruptcy court hearing Friday morning at which it will apply to have its protection extended under the Companies' Creditors Arrangement Act. The labor deals must still be ratified by union members, but appear to satisfy conditions under financing agreements with Deutsche Bank of Germany and GE Capital Aviation Services of the United States. The company hopes to emerge from court protection in September, with Milton saying he was "very confident" an acceptable package can be presented to creditors. He acknowledged the restructuring will prove "bittersweet" for employees, who accepted 1.1 billion Canadian dollars ($802 million) in concessions over the past year as part of an overall 2 billion Canadian dollar ($1.46 billion) cost-cutting plan. "This is about dramatic change for our employees," Milton said. But he said the deals with all of the unions will move Air Canada from "a broken model to a new place where we can compete with the low-cost and the most profitable carriers in the world." Milton and CAW president Buzz Hargrove did not disclose details of the pact, and it was unclear how they bridged a wide gap between the cuts sought by the company and what the union said it would accept. The Toronto Star quoted an unidentified source as saying the union had agreed to a wage rollback of 2.5 per cent over the next two years. As well, the airline will spend about 50 million Canadian dollars ($36.4 million) over three years on voluntary buyout packages, the source told the Star. Union members, who will give up paid lunches as part of the deal, and family members would also receive airline passes for free travel until 2009. The CAW had said it would agree to cuts that would cover an 18.3 million Canadian dollar ($13.3 million) shortfall in the 165 million Canadian dollars ($120.3 million) in labor cost cuts it agreed to in April 2003, but balked at company demands for 45 million Canadian dollars ($32.8 million) in new cuts. Hargrove indicated the agreement fell somewhere between those two number= s, but Milton said the company "definitely hit the target." He said the deal includes work-rule changes as well as pay reductions. "There's a compromise here that I think our members will be absolutely elated with," said Hargrove, while indicating there had been a softening in the position of the CAW, representing 6,400 ticket-counter and call center agents, crew schedulers and maintenance staff -- roughly 20 percent of Air Canada's work force. "We all knew that we couldn't come out of this with the same position we had been holding in the last several days," the union chief said. Justice Warren Winkler of Ontario Superior Court, who had summoned Hargrove and Milton to Thursday's meeting, said the chemistry was good and both sides worked hard. "Hopefully a lot of people in Canada are going to be very relieved," Winkler said. "I think this company has a great future." ---------------------------------------------------------------------- Copyright 2004 AP