Air Canada has knocked 10 per cent off its demands for $200-million in labour cost cuts from its seven unions, but that still is not enough for the Canadian Auto Workers union, the last holdout.
"There is a huge gap between where Air Canada was this morning and where our proposal was with them this afternoon [and] whether we can bridge that gap I don't know," CAW national president Buzz Hargrove said following a late afternoon meeting with airline officials.
The meeting came almost 72 hours after the expiry of a midnight Saturday deadline set by a key Air Canada financier for reaching cost-cutting agreements with the unions.
"From what we have been told they have re-checked their numbers and all of the unions were adjusted downward by 10 per cent," Mr. Hargrove said.
Canadian Auto Workers president Buzz Hargrove takes a break Tuesday from Air Canada meetings in Toronto. (Adrian Wyld/CP)
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Air Canada cut its demand for concessions from the CAW to $45-million from $50-million, but the union can see justification for only $18.3-million, he said.
At the meeting, union officials gave the airline its response to a supposedly final offer made by Air Canada yesterday morning. The CAW said last night a meeting was planned for this morning, something an Air Canada spokeswoman denied, saying the company had only agreed to "contact" the union at some point today. Don Johnson, president of the Air Canada Pilots Association, concurred with his CAW counterpart, saying his union negotiated a cost-cutting deal that was 10 per cent lower than the airline had initially demanded.
"We heard that the company padded its demands by 10 per cent so we negotiated accordingly," he said.
Air Canada spokeswoman Laura Cooke said the airline has "received the CAW's response and we are reviewing it." She would not comment on Mr. Hargrove's assertion that it had reduced its demands by 10 per cent.
The CAW represents 4,700 active employees at Air Canada — customer service agents — and 2,000 others who are on layoff. Its members also include 1,600 crew schedulers and maintenance workers at the company's Jazz subsidiary, 400 of whom are on layoff.
The original demand for $200-million in cost reductions —along with another requiring the unions waive almost all outstanding grievances — came from Deutsche Bank. The German bank has agreed, if these and other conditions are met, to backstop an $825-million equity rights issue for Air Canada. As well, U.S. financing giant GE Capital Aviation Services, which agreed to lend the airline $1.8-billion, has also pegged its agreement to the same conditions and timeline.
Without these financial lifelines, Air Canada could be pushed into receivership, raising doubts about its survival.
Mr. Hargrove also said yesterday the CAW has talked to a number of other investors who might be willing to step in, should Air Canada's financing deal fall apart. They include New York financier Gerald Greenwald, who heads Greenbriar Equity Group LLC. Mr. Greenwald is the former head of United Airlines, and before that, vice-chairman of automaker Chrysler Corp., now DaimlerChrysler AG.
Meanwhile, people familiar with the matter said that Air Canada made a proposal to the CAW Monday night under which the company would shut down all its Canadian call centres and move the work to a cheaper locale, likely India.
Ms. Cooke said that this "was never part of any formal proposal to the CAW."
Sources said the union rejected the plan. However, the idea was that by allowing the airline to outsource more than 1,000 call centre jobs, the employees who remained would have been able to escape double-digit pay cuts.
