Air Canada achieves permanent labour cost reductions

July 1 2003 - Air Canada has announced that it will achieve permanent labour cost reductions of $1.1 billion following ratification of all the airline's labour agreements in Canada. Yesterday, the Air Canada Pilots Association (ACPA) representing the airline's 3,150 mainline pilots confirmed that its members voted for agreement with an 87% majority.

The pilots have agreed to a 6-year contract (running until 2009) that includes a reduction of 15% in pay scales and changes in operational rules to offer extra flexibility. 317 Air Canada pilots are also expected to be laid off over the next 6 months.

"We are pleased to report that our pilots have accepted the deal," said Captain Don Johnson, President of the Air Canada Pilots Association. "The ratification of this deal - and the high turn out for the vote - demonstrates that, collectively, our members recognise the severity of the issues facing Air Canada and are willing to do what it takes to get our company back to a profitable footing."

"Our Association has been committed to work with all parties and stakeholders to achieve a successful resolution of the restructuring process," said Captain Johnson. "Today our members have clearly renewed that commitment. Now all the employee groups have ratified their agreements and it is time for the remaining stakeholders to contribute their part. We challenge all stakeholders in this restructuring to move on with finding the solutions needed to take Air Canada through this difficult period and towards a much brighter future."

Air Canada has also reached tentative agreements with the International Brotherhood of Teamsters representing US employees, realizing cost savings of $11 million. While in the UK tentative agreements have also been achieved with AMICUS and the Transport and General Workers' Union (TGWU) that will lead to approximately $22.8 million in cost savings.

Over the last three weeks agreements were ratified with:

- the International Association of Machinists and Aeropace Workers (IAMAW) representing 11,000 technical operations and airport ground service personnel,
- CUPE representing 6,700 flight attendants,
- the CAW Airline Division, representing 6,000 customer sales and service agents and crew schedulers, and
- CALDA, representing the airline's 100 flight dispatchers.

Other agreements were also ratified with all unions representing Air Canada Jazz employees - the Airline Pilots Association (ALPA), CALDA, CUPE and Teamsters Canada.

"I salute the people of Air Canada and Air Canada Jazz and thank them for taking this necessary step in the face the most adverse market conditions this industry has ever seen," said Robert Milton, President and Chief Executive Officer. "The ratification of our labour agreements is a lynchpin to demonstrate to other stakeholders that the people of Air Canada are willing to fight for our company's future. By joining together, Air Canada's people have sent a powerful message to other stakeholders in Air Canada's restructuring. With the solid support of its employees and their union leadership, Air Canada will emerge from CCAA stronger and well positioned to compete profitably in the new environment."

"Clearly, Air Canada's employees are also saying that it is business as usual for Air Canada's customers. On their behalf, I thank our customers for their continued support and encourage them to continue booking Air Canada with confidence," he said.

Air Canada Pilots Offer Wage Reduction

TORONTO, May 9 /CNW/ - The Air Canada Pilots Association (ACPA) announced today that they are offering Air Canada a 10 per cent wage reduction for the months of June and July, 2003. The wage reduction is subject to ratification by the membership, in a vote which is expected to be completed by May 23rd.

Captain Don Johnson, President of ACPA, said today that: "The Air Canada pilots recognise the gravity of our company's financial situation, and we are willing to make an immediate contribution to help alleviate current cash flow pressures."

Captain Johnson noted that ACPA is pressing the federal government to help find ways of easing financial burdens on the airline industry, including funding security from consolidated revenues, suspending airport rental fees for two years and passing the savings on to the airlines, and a reduction or elimination of the federal aviation fuel excise taxes.

"However, we cannot go cap in hand asking for government assistance without being willing to do our own part," said Johnson. The pilots note that for the past 16 months they have already been operating under a work sharing programme that reduced flying hours and has produced a substantial savings to the company.

The Air Canada pilots will return to their established wage scales in August, unless they are superseded by any further agreement that may come out of restructuring negotiations under the Companies' Creditors Arrangement Act (CCAA). The pilots expect negotiations with the company under the CCAA will begin early next week.

"The Air Canada Pilots Association is committed to work with all parties and stakeholders to see this company through to a successful resolution of the restructuring process," said Johnson. "We make this commitment because we know that the pilots have a direct interest in the future of Air Canada... as do all employees, other stakeholders and the communities we serve."

The Air Canada Pilots Association is the largest professional pilot group in Canada, representing the approximately 3300 pilots who operate Air Canada's mainline fleet.