By Ken Pole | August 8, 2012 Estimated reading time 7 minutes, 27 seconds.
A federal arbitrator’s imposition of a five-year contract on Air Canada’s 3,000 pilots prompted AC President Calin Rovinescu to state that it “brings closure” to a long-running dispute with the Air Canada Pilots Association. Far from it, says ACPA president Paul Strachan, who warned that there are implications not only for pilots and other employees, but also the flying public and, ultimately, the carrier itself.
The stage was set for the dispute nearly a decade ago, when pilots agreed to pay cuts averaging 22 per cent as part of a 2003-2004 “restructuring” deal to keep AC viable. A 2009 contract froze salaries through to early 2011 and relieved AC of significant pension obligations.
In March 2012, a year after the expiration of the contract, ACPA members staged widespread “sick calls” in protest over the lack of progress, resulting in flight delays and cancellations. Coupled with problems at other Air Canada unions, that prompted Labour Minister Lisa Raitt to ask the Canadian Industrial Relations Board to investigate the various disputes.
But rather than wait for a CIRB report and faced with a lockout by Air Canada despite ACPA’s assertions that it was “showing flexibility at the bargaining table,” Raitt introduced bill C-33, providing for “continuation and resumption of air service operations.” It became law March 16 after being whisked through Parliament in just four days; providing for, among other things, fines of up to $50,000 a day for ACPA executives and up to $100,000 a day for the organization if it refused to comply.
AC’s pilots continued to fly a year after that 2009 contract expired, in hopes of signing a new one. Even though negotiations were ongoing, talks stalemated in April, resulting in Raitt’s May 1 appointment of Doug Stanley, a former Deputy Minister of Labour in New Brunswick, as arbitrator. Raitt called his appointment “a key step” to resolving the dispute and urged both sides “to work together and extend their full cooperation.” ACPA requested 10 days of further talks mediated by Stanley – who was chosen by both sides from a government-supplied list – but those discussions collapsed May 19 and the arbitration process resumed.
Stanley’s report, submitted right on his July 30 deadline, saw him accept Air Canada’s final offer. Retroactive to April 2011, it provides for an initial two per cent pay increase followed by increases of five per cent in August 2012, three per cent next April and then two per cent each in April 2014 and 2015.
Among other things, the imposed contract also affects pensions, flight scheduling, limits pilots’ protection in the event of any fleet reductions, and extends code-sharing on transborder services, as well as, more broadly, with the Continental-United alliance in North America. It also amends type-specific training upgrades, and makes extensive changes to retirement and pension provisions.
“Today’s decision…brings closure to the process for a new collective agreement,” Rovinescu said in a short statement about Stanley’s report. “This agreement preserves our pilots’ compensation and benefits in the top quartile of the North American industry and will help ensure the sustainability of the company’s defined benefit pension plans.” Also, “it provides the company with the necessary flexibility to compete effectively in the current industry environment.”
ACPA estimates pension concessions at $556 million over the life of the contract, plus at least an additional $165 million in other concessions, and its immediate response to Stanley’s report was scathing.
“Federally imposed arbitration could not and did not bring about a negotiated collective agreement, which would lead to the energized and motivated professional pilot group Air Canada needs to succeed,” Strachan and ACPA chairman Jean-Marc Bélanger said in a joint statement. “Air Canada’s cynical ploy to lock out our pilots so they could be swept up in the federal government’s legislation shattered all faith in the airline’s corporate leadership.”
They also said the “corporate leadership…clearly sees Air Canada as nothing more than a marketing logo and a vehicle for generating excessive compensation for a select group of executives.” While their statement did not go into detail, Strachan explained in a subsequent telephone interview that they were referring to a 2011 decision to increase the compensation of five senior executives by some 30 per cent, and to give Rovinescu a $5 million “retention” bonus atop his regular annual compensation of more than $3 million.
His voice fraught with frustration and anger, Strachan told Canadian Skies that he is “absolutely disgusted with what’s gone on.” As for Rovinescu’s declaration about “closure,” he dismissed that as “a nice dream” because the pilots are “completely demoralized.” That said, he pointed out that ACPA’s members “take our responsibilities very seriously” and “won’t behave like a bunch of idiots.”
Strachan also accused the “ideologically-driven” government of not having done its homework about “a lot of serious commercial issues” left over from the 2003-2004 restructuring, issues Strachan said will affect many more Canadians than the 24,000 employed by Air Canada. “It was more than willing to absolutely pounce on the rights of the 3,000 professional aviators who sought nothing more than a reasonable bargained agreement to facilitate the absolutely cynical and disingenuous agenda of Air Canada.”
He said that a decade ago, Qantas, the Australian flag carrier, “was the most profitable airline on the planet” but “look at it today.” Discounted services by mainly offshore-based operators have driven down its share values. “How do you think the Qantas shareholders feel now? It’s a penny stock and that’s exactly what’s going to happen here.” Strachan predicted that Air Canada is going to be “carved into pieces for some short-term capital gains” with key assets being sold to foreign investors and “that’s bad for everybody.”
Responding to suggestions that pilots should stick to flying and let management run Air Canada: “You know, that would be really nice. I’d love for life to be that simple, but unfortunately we can’t trust them. So we have to be on top of everything that they’re doing…This is banana republic stuff.”
