The dismal state of Air Canada

[galt]

As a VERY frequent traveller on Air Canada I have been following the news over the past few weeks with some moderate interest wrt the CAW's (Specifically Buzz Hargrove's) dinosaur like union dogma and his willingness to put all of his union members jobs at risk for the sake of principle.

I find it incredibly curious how Buzz is so willing to note how poor union workers are trampled under the feet of management when he spends the CAW's membership money on first class return tickets between Ottawa and Toronto (A one hour flight and with a ticket cost differential of about 70% for restricted business class.)

I saw both Stockewell day and Buzz on an AC filight from Ottawa to Toronto and guess which one of the two was in business class. I'll give you a hint. It was the MP. Sorry I digress.

Now in fairness to Buzz, I also have a huge issue with Robert Milton. This is a man who took the reins of a profitable and well run company and has run it into the ground. For those that cite 9/11 and the price of gas, your arguements are valid but AC's woes began long before 09/01 and the blame for many Air Canada's problems need to be placed firmly on the shoulders of a CEO who treats humans as cargo and has destroyed this company from the top down.

From the CEO, to the inflated fares, to the domenatrix like biatch at the gate at La Guardia, to the rude guy that monitors 'ushers' the cattlegate like line at terminal two on Monday mornings to the baggage Nazi in San Francisco that will allow someone with a poodle in a gym bag on a plane but insists that a briefcase with a laptop be checked if it is litterally 0.5 pounds over weight and then insists that you can't take the hard cover novel that you were going to read on the plane out of said briefcase to bring it under the limit, to the unions with inflated salaries that stimulate medocrity and poor work ethics. This is an incredibly disfunctional company and I hope to god that the government does not step in to save it if it comes to that. Open up competition. Remove the limits on foriegn control over transportation providers but for the love of God do not give these people any more money

 

[WhOiSyOdAdDy?]

I thought that in most corporations, a CEO would step down ar be fired when the company did not perform to expectations and especially when it files for bankruptcy protection, yet there is one blunder after another with Air Canada.

I don't believe that Air Canada should have been allowed to spend money that it did not have to buy a failing Canadian Airlines.

Maybe if the price is right Onex will save Air Canada and return it to good service and make it profitable again

 

[ceo8888ca]

Look at the Bigger Picture...

There are a number of Companies and Corp's that would not be allowed to be "folded" due to political Expediency. Many of these existed in an attempt to "protect" the Canadian identity, industry, and showcase our distinction from the Americans :

Air Canada, AECL, CFL, Via Rail, CBC, Petro-Can, Bombardier,...

If I am given a mandate to run something without fear of bankruptcy and a "bail-out" is guaranteed, I sure as heck will screw it up too!

Believe me, AECL has not sold a CANDU reactor for last decade and a half! And, if CFL is down to 2 teams playing, they will still be running it on Government subsidy.

 

[xarir]

The troubles with Air Canada start at the top. Robert Milton is going to be paid millions if Air Canada survives. If Air Canada hits bankruptcy and folds, Robert Milton is going to be paid millions. So what's he got to lose?

Personally I'd like to see Milton and the rest of upper management paid a decent salary (say, $500,000) and get the rest in stock options. They could receive 1 million options a year with a strike price of $4.00. This would theoretically incent them to do everything they can to make the company a viable, ongoing interest by getting the stock price up from the current $1.37. The only way they will (legitimately) move the stock price is to fundamentally fix the company.

Air Canada has to realize that as an organization they need to change. Yes Sept 11 had a lasting impact on air travel. Yes fuel prices are up. Yes it's difficult for any airline anywhere to make a stable profit. But that's not an excuse for shoddy service. When I have a choice of airlines, I usually use someone else. At my company we now use WestJet, Jetsgo etc much more than we use Air Canada. If service on AC was vastly superior (and it used to be) then we would use AC more often.

The best time to fly was during the merger war with Canadian Airlines. AC really tried hard to be the best airline it could be. And it was a pleasure to fly with them. Now, they couldn't care less about me as a traveller and in return, I couldn't care less about them as a company. If they want me to fly AC, they have to earn my business back.

 

[WhOiSyOdAdDy?]

They should open up Canadian skies to foreign competition

 

[xarir]

They should open up Canadian skies to foreign competition

I agree. That would get things going!

 

[Muddy]

An interresting dicussion. Air Canada, like most public companies, has three masters. And they seem to have the order of importance backwards. First, the shareholders - thbey've got to be protected. Then the staff - the brass all take massive salaries and bonuses, while the workers desperately try to salvage some dignity and fair conditions via their unions.

Last, and very much least, are the customers. Ineed, as somebody just noted, they are treated like shit by a staff that is tired, exhaused, ill-paid and ill-managed.

And Robert Milton and the Air Canada brass just don't get it. Lose the customers, and you lose everything. And Air Canada is spectacularly good at losing customers!

 

[galt]

for those interested, this site provides some very interesting observations...it also has some great rants in the forums section

http://www.errorplan.com/

 

[Mao Tse Tongue]

The problem is that Buzz has always fancied himself a player.

I guess the ra ra "working man" speeches get tired after ten or fifteen years and what you really want is some peace and quiet in first class.

Can't say I blame him. Human nature, I guess.

 

[johnnyhandsome]

Canadian airline + Monopoly = Worst service in the whole fricking world!!!

 

[sweet guy]

The problem is that Buzz has always fancied himself a player.

I guess the ra ra "working man" speeches get tired after ten or fifteen years and what you really want is some peace and quiet in first class.

Can't say I blame him. Human nature, I guess.

Buzz paycheck is 100K annually just to be a "player" on behalf of the working men and women.

Not bad considering Robert Milton screws Air Canada with millions of dollars on his paycheck. Either way he wins.

Plus he is an American.

The best scenario would be liquidating Air Canada and open the skies to foreign competition, and let the westjet, southwest, or Jet Blue of the world takes over the domestic market.

Only then the perrenial Air Canada problems will be solved for good.

The bottom line is the airline industries are among the worst business in the world since the recession in 2000, well ahead of 911.

My bet will be sooner or later Air Canada will be back to bankrupcy protection again next year after this DB financing becomes a reality. Who knows Air Canada will suffer the same fate as TWA or PanAm?

 

[Keebler Elf]

I find it amusing that someone would have a problem with Buzz Hargrove flying first class when business executives do it all the time. Buzz is the head of one of the most powerful Canadian unions and you chide him for flying first class? Gimme a break. Actually, give him a break.

 

[onthebottom]

......

Plus he is an American.

.....

And your point is?

There is almost a oxymoron down here that the more market share you have the less profitable you are (United, American, Delta.....) Only Contential can run a large airline profitibly - and it's the best domestic airline by far.

I agree with the above posters that would open all of N. America to forign airline competition, old hub spoke systems don't work.

OTB

 

[galt]

I find it amusing that someone would have a problem with Buzz Hargrove flying first class when business executives do it all the time. Buzz is the head of one of the most powerful Canadian unions and you chide him for flying first class? Gimme a break. Actually, give him a break.

Actually, NO. This is a man who trumpets out how corporate fat cats live high on the hog. He's a hypocrit. To spend union funds to pay 70% more for a first class ticket FOR A ONE HOUR FLIGHT is living high on the hog. How many of his members fly first class while he and his union leech off of their paycheques? I'm one of the people that Buzz refers to as a corporate fat cat and I only fly business class on flights that are longer than 5hrs and 45 minutes. It's my company policy for everyone with the exception of partners in my firm and when the partners fly business class that's, effectively, money right out of their pockets so they do so using good judgement.

Buzz, like Robert Milton is a loud mouth pig who pulls down much more than 100K a year. Maybe he deserves it on his sixth grade education but if he does he should take a good hard look behind his pointed finger on who he calls greedy

 

[Keebler Elf]

Oh ok, I get it. I didn't realize you have a personal vendetta against the guy. I'll leave you to it then.

Buzz probably has more Canadian values than a lot of Canadians do.

 

[Keebler Elf]

One thing people are overlooking is that Air Canada serves a vast number of areas that simply would not be serviced by other companies should Air Canada shut down. That's a very important role that the Canadian gov't takes into account when it looks at helping out Air Canada.

Sure, you can say "screw 'em, they need to be profitable", but this isn't the US, this is Canada. We live in a country that's spread across a vast area of space with many communities that cannot afford to pay the full freight of having an airline service them. Part of Air Canada's role is to provide air access to the entire country - not just the areas that are most profitable (which is what will happen if we open up the skies to foreign competition).

Is Air Canada bloated and inefficient? Probably. But gutting the airline in some delusional belief that foreign competition will save the day is naive. What we'll get is cheaper rates to the bigger hubs and no service to the smaller ones.

Transportation has always been a MAJOR issue in Canadian politics and society (railways, canals, TransCanada highway, etc.). We don't have the population to properly fund transportation privately and that is where the gov't steps in. Air Canada may not be as profitable as people would like, simply b/c it can't.

The issue of customer service is a whole 'nother can of worms and I would agree that all airlines need to improve that level of service. One thing I have learned from that TV show Airlines, however, is that a lot of the people who complain about customer service are people who have been inconvenienced and take out their frustration on airlines in general. "Oh, there's a lightning storm in Dallas? Damn Air Canada, they can never get me to my destination on time!"

 

[james t kirk]

Actually, Buzz is ok in my books.

Even Christie Blatchford likes the guy.

I have no idea how much he makes, nor if he flies first class or not, but he has a point about the obscene imbalance between management and worker salaries.

The average ticket taker at Air Canada supposedly gets paid 34 grand a year and that was before this 11'th hour agreement, so I have no idea how much they make now.

That's not being too greedy in my eyes.

Now the pilots are making on average 200k a year. I realize that there is a big difference between a ticket taker and a pilot, however, they only actually fly for something like 14 hours a week and have all kinds of other stipulations, etc. Yet the pilots at Jazz make like 70 grand a year (more in line with what you would expect.)

And Milton is completely over the top in his pay packet, several million a year I believe. He's right up there with Frank Dunn in terms of scam. When Victor Li was looking at buying them out, Milton was going to get some 19 million in a bonus. I sure as hell hope that that has been canned!!!

There is one thing that baffles me though........

The share price. They have already said that the current common shares are virtually worthless, that they will re-issue new shares on completion of financing.

So why the hell is anyone buying AC shares right now, bidding them up even????

That doesn't make sense.

 

[james t kirk]

One thing people are overlooking is that Air Canada serves a vast number of areas that simply would not be serviced by other companies should Air Canada shut down. That's a very important role that the Canadian gov't takes into account when it looks at helping out Air Canada.

Absolutely true.

And another thing, apparently AC is constrained by the gov't to service these places AND AC must maintain 3 separate maintenance facilities across the country when really, all they need is one. Again, that is the gov't dictating terms.

They could close two facilities and save a whole lot of money.

Originally posted by Keebler Elf Is Air Canada bloated and inefficient? Probably. But gutting the airline in some delusional belief that foreign competition will save the day is naive. What we'll get is cheaper rates to the bigger hubs and no service to the smaller ones. [/B]

I am very divided on the gov't stepping in and bailing out AC.

On one hand, we need a national carrier in order to benefit the entire country. No ifs ands or buts.

On the other, the unions will see any bail out as a chance to line up at the trough of never ending money. You will have ticket takers making 60 grand a year and thinking that that is normal.

Originally posted by Keebler Elf Transportation has always been a MAJOR issue in Canadian politics and society (railways, canals, TransCanada highway, etc.). We don't have the population to properly fund transportation privately and that is where the gov't steps in. Air Canada may not be as profitable as people would like, simply b/c it can't.

[/B]

It's not just Canada, it's the US too. AMTRACK is gov't run. Canals, some freight train lines, highways, etc. Your economy needs sound transportation to profit.

In the case of the airlines, the americans are in the same boat too. In fact, they have ponied up a whole hell of a lot of money to the airline industry, far more than Canada.

The problem as I see it is that the air lines are competing themselves to death. Which is one of those laws of macro-economics I believe that states that the amount of profit in an industry is constant and that when there is less profit to be made some players will fall by the wayside allowing those who survive to make a decent profit.

 

[onthebottom]

Actually, Buzz is ok in my books.

Even Christie Blatchford likes the guy.

I have no idea how much he makes, nor if he flies first class or not, but he has a point about the obscene imbalance between management and worker salaries.

The average ticket taker at Air Canada supposedly gets paid 34 grand a year and that was before this 11'th hour agreement, so I have no idea how much they make now.

That's not being too greedy in my eyes.

Now the pilots are making on average 200k a year. I realize that there is a big difference between a ticket taker and a pilot, however, they only actually fly for something like 14 hours a week and have all kinds of other stipulations, etc. Yet the pilots at Jazz make like 70 grand a year (more in line with what you would expect.)

And Milton is completely over the top in his pay packet, several million a year I believe. He's right up there with Frank Dunn in terms of scam. When Victor Li was looking at buying them out, Milton was going to get some 19 million in a bonus. I sure as hell hope that that has been canned!!!

There is one thing that baffles me though........

The share price. They have already said that the current common shares are virtually worthless, that they will re-issue new shares on completion of financing.

So why the hell is anyone buying AC shares right now, bidding them up even????

That doesn't make sense.

There has been a ton of noise down here as well as to CEO pay packages. I think you have to view a CEO like you would a pro athlete, there are very few people who can do those jobs thus they get paid a ridiculously high amount of money to do them.

OTB

 

[Keebler Elf]

Agreed. Are CEOs worth it? Surprisingly enough, sometimes they are worth every penny. Of course, the average joe on the front line doesn't want to hear that but it can be true.

Think of it this way: A company make $1 billion in revenue. A new CEO is brought in and his insight increases revenues by 1%. That's $10 million dollars. Of which he gets a few million. You have to look at a CEO's ability to improve the company; if he does than he's worth it. If not, then he's not. There is an increasing push for CEO salary to be tied to the financial improvement rather than the financial success of a company, b/c that is a more accurate measurement of the CEO's input rather than the input of the economy as a whole.

Being a CEO isn't like being joe average worker. You live, breathe, and sleep business. And for that sacrifice (and the education and experience required along with it), you earn the big bucks. I don't have a problem with high CEO salaries; it's just when executives sink the ship to attain short-term bonuses that sticks in my craw...