Pilots, Air Canada book dates to negotiate wage re-opener

30 May 2006

Pilots who fly for Air Canada will meet with the company starting June 5 to negotiate wage improvements that will reverse concessions imposed during bankruptcy proceedings in 2003 and 2004.

"Our members have made tremendous sacrifices to transition Air Canada into a long-term, sustainable company," says Capt. Serge Beaulieu, spokesperson for the Air Canada Pilots Association (ACPA). "Now that Air Canada is profitable again, we are looking forward to getting our wage levels back to normal."

As part of the concessions package negotiated during the Companies Creditors Arrangement Act (CCAA) process, Air Canada must re-open negotiations on wages and pension terms with the pilots effective June 2.

Beaulieu says ACE Aviation Holdings, Inc., Air Canada's parent company, has posted excellent financial results over the past year, recording $400-million in operating profits. In the first quarter of 2006, ACE posted a net profit of $118-million in what is typically the airline's weakest quarter.

In addition, he says, executive compensation is has exceeded pre-CCAA levels and shareholders have received returns on their investments.

"These are the kinds of things that happen in a company that is on secure financial footing," he says. "The company can now afford to share this success with the people who have helped achieve it.

"The company has an opportunity to acknowledge the hundreds of millions in savings pilots gave to help it through the hard times. Bankruptcy was a painful process but we are once again profitable."

Air Canada emerged from bankruptcy protection in Sept. 2004.

ACPA is the largest professional pilot group in Canada, representing 3100 pilots who operate Air Canada's mainline fleet.

BACKGROUNDER AND FACT SHEET - WAGE AND PENSION RE-OPENER

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- In accordance with the agreement reached with Air Canada while the

company was under bankruptcy protection, a wage and pension re-opener

will be triggered this summer for all of Air Canada's mainline

unions. For mainline pilots, the re-opener is effective June 2.

- Wages renegotiated through the Re-Opener will extend to the

expiration of the current collective agreement for mainline pilots,

which is July 2009.

- Pilots took a 30 per cent pay-rate cut on the Embraer aircraft, 20

per cent on A320 aircraft, and a 15 per cent on all other aircraft.

- By comparison, Robert Milton took a 13.5 per cent salary reduction

from 2002-2005. During the same period, Milton's annual compensation

grew by 72 per cent, and nearly doubled (+93 per cent) from 2004 to

2005.

- Work rule changes resulted in 317 lost positions, further pay cuts,

layoffs, and demotions. For example, a First Officer who was demoted

from the A340 to the A320 would have seen a wage reduction of

33 per cent.

- 171 pilots were laid-off, 75 accepted leaves of absence and 111

accepted early retirement as part of the concession bargaining during

the CCAA process for a total of 357 pilot positions. All laid-off

pilots have since been recalled and Air Canada has plans to hire over

500 new pilots in the next two years due to growth, retirements and

the improved financial position of the airline.

- Pension benefit terms also fit within the scope of the Re-Opener.

BY THE NUMBERS

$1.1-billion - Dollar value of monetary concessions imposed upon all

of Air Canada's employees

$288.2 million - Dollar value of pilot group concessions acknowledged

by the bankruptcy monitor

- $249.7-million - Round 1 of concessions in 2003

- $38.5-million - Round 2 of concessions in 2004

$500-million - Total dollar value of all concessions imposed upon

Air Canada pilots by through the CCAA process, including those not

acknowledged (or "valued") by the bankruptcy monitor, i.e. reduction of

30 per cent for Embraer pilots.

9 % - Percentage of all mainline employees who are pilots

22 % - Percentage of Air Canada's wage expenses paid to pilots

27 % - Percentage of all mainline concessions accepted by Air Canada's

pilots through CCAA

$118-million - Profit posted by ACE Aviation Holdings in Q1 of 2006

$400-million - Air Canada's operating profit over the last four quarters

$266-million - Payout made to ACE shareholders in the form of Aeroplan

Income Trust Units

$54.8-million - Profit share paid out equally to all ACE employees

$7.49-million - Value of Robert Milton's pay package for 2005

(source: Globe and Mail)

$5.3-million - Robert Milton's payout from exercising stock options in

2005 (source: baystreet.ca)

$1.59-million - Value of Montie Brewer's pay package for 2005

(source: Globe and Mail)

CONCESSIONS NOT VALUED IN CCAA:

- Regional jets moved from Air Canada mainline to Jazz - loss of

mainline pilot jobs

- Fleet guarantee - having a certain number of plane types in the AC

fleet. This is a benefit to pilots as it provides a more secure

career progression when switching aircraft, securing pay increases

and improved working conditions.

- Elimination of the top two pay scales, Years 13 and 14, in the

collective agreement.

- An additional pay cut up to 30 per cent on Embraer aircraft

BACKGROUND

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"Air Canada's revenue performance continued to be a success story with the airline reporting a 16 per cent increase in revenues over the previous year in the industry's weakest quarter. Robust market demand, rising capacity, increased load factors and higher yields all contributed to the revenue growth." - Robert Milton, ACE News Release, May 11, 2006

"These results for the third quarter (2005)... are the strongest results reported by any North American carrier for the period and reflect our ability to now achieve North American industry leading levels of profitability ..." - Robert Milton, ACE News Release, Nov. 2, 2005

In Dec. 2004, Air Canada filed for protection from its creditors under the Companies' Creditors Arrangement Act (CCAA). At that time, the company had nearly $13 billion in debt, much of which it acquired in its 1999 takeover of Canadian Airlines.

Concessions with Air Canada mainline pilots were done through two rounds with Memoranda of Understand signed in June 2003 and June 2004.

Air Canada emerges from bankruptcy protection Sept. 30, 2004

Air Canada posts its first quarterly profit out of bankruptcy in Q4 of 2004

ACPA is the largest professional pilot group in Canada, representing 3100 pilots who operate Air Canada's mainline fleet.

Canada and the United Kingdom recently signed an Open Skies agreement that will allow airlines from both countries to connect flights to other international destinations.

For further information: Media Contacts: Capt. Serge Beaulieu, ACPA Spokesperson, (514) 236-2243; Carl Mavromichalis, ACPA Communications, (416) 578-2272

Source: newswire

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