Economy & Trade, Headlines, Labour, North America

LABOUR-CANADA: Unions at Bankrupt Airline Might Chat Up Investors

Paul Weinberg

TORONTO, Sep 9 2003 (IPS) - Unions at bankrupt Air Canada have won the right to talk to potential new investors but it is a privilege that some workers might decline.

So far, it appears that the talks will mainly involve the highly paid, well-educated and competing pilot associations at the national airline.

Captain Don Johnson, a spokesperson for the Air Canada Pilots Association, says it is too early to know what the discussions might include because the investors have not been identified.

But Johnson is clear that the pilots are expecting ”to establish some kind of relationship” with whoever takes over Air Canada, the country’s largest airline that filed for bankruptcy protection Apr. 1 and is now trying to raise 700 million dollars (511..3 million U.S. dollars) by selling new equity in the company.

”The pilots play a fairly large role in any airline, and if somebody is considering investing in Air Canada, I would think that they would want to talk to us, just as much as we would want to talk to them,” Johnson told IPS..

At the same time, two competing pilot unions has led to a ”mixed up jumble” of labour relations at Air Canada, he added.

One scenario sees the Air Line Pilots Association (ALPA), which speaks for the pilots at Air Canada’s potentially more lucrative discount Jazz division, outbidding the Air Canada Pilots Association, which represents the rest of the company’s pilots on its more standard, sometimes money-losing routes in Canada.

Among the pilots it could turn into ”a cost competition”, says Gary Fane, director of transportation at the Canadian Auto Workers (CAW), ”over what airplanes the company will buy, what routes they will fly and what union will get those routes".

Fane says Air Canada management is pitting one pilots’ union against another while it struggles to stay afloat. His own union, which represents about 6,000 Air Canada employees, including reservation and ticket agents, is not ruling out contacting potential investors – which also occurred in a previous ownership battle over the airline.

”We said that we were interested in that approach; we haven’t come to any conclusion … if it is in our best interests at this time,” said the CAW spokesperson.

An expert says talking to unions could pay off for possible investors.

As Air Canada’s billion-dollars debt continues to grow what will be important for potential investors is labour peace, which can be achieved if the generally ”militant” pilots’ unions are on board as ”a moral influence” to maintain the company, says Douglas Reid a professor of business at Queen’s University.

One of the CAW’s concerns, according to Fane, is that its representatives in discussions with investors could be obliged to sign confidentiality agreements that would keep other members in the dark about what transpires in the boardroom.

Historically, the union, the country’s largest representative of private-sector workers, has taken the position that workers gain more from bargaining in an adversarial relationship with the employer, rather than accepting either to place representatives on the corporate board or having the workers themselves run the company, said Fane.

The CAW has also taken a no-concessions to approach in its bargaining. Nevertheless, it made an exception with Air Canada, which sought to cut internal costs as it scouts for investors.

The CAW accepted a wage cut of 10 per cent for two months for its members, as well as reduced vacations and the layoffs of more than 800 people. The rollbacks represented an annual savings of about 149 million dollars for Air Canada.

Unionised workers in other sectors like steel, cars and food are facing similar pressures from employers to make concessions, says Anil Verma, a professor of human resource development and industrial relations at the University of Toronto.

Traditional labour relations, where unions make their demands every three years, has become redundant when the existence of the employer is on the block in a competitive marketplace where economic restructuring is ongoing, he added in an interview.

What Verma calls ”strategic bargaining” or ”the survival of the business” is becoming paramount. ”Maybe, the new equation is that unions have to be more concerned about the business side of business, and how to make money and how to increase the size of the pie, so they can take a bigger share.”

Pradeep Kumar, a professor and director of the school of industrial relations at Queen’s University at Kingston, east of Toronto, says CAW’s concessions to Air Canada should not be viewed as a surrender of its principles.

With one third of the Canadian work force unionised, the labour movement in this country, including the CAW, is vibrant and strong, he adds.

Also, Canadian union negotiators have always take into consideration the financial health of the employer, Kumar told IPS. ”The negotiators are not stupid, in the sense that they don’t ask for wage increases when you know the company is going into losses..”