Transport Committee on Dec. 14th, 2010

[The Chair, Conservative, Merv Tweed]

Thank you, and good morning, everyone.

Welcome to the Standing Committee on Transport, Infrastructure, and Communities, meeting number 44. The orders of the day are pursuant to Standing Order 108(2), a study of issues related to the Air Canada Public Participation Act.

Joining us today from Air Canada we have Michel Bissonnette, Joseph Galimberti, and Louise-Hélène Sénécal. Welcome.

As always, we'll have a brief presentation from our guests and then we'll move to questions and answers.

Please begin.

[Louise-Hélène Sénécal, Assistant General Counsel, Law Branch, Air Canada]

Thank you, Mr. Chairman.

Honourable members, we are pleased to accept this committee's invitation to talk about Air Canada's aircraft maintenance operations.

My name is Louise-Hélène Sénécal and I am assistant general counsel at Air Canada. I have been with Air Canada for nearly 22 years. I am accompanied by Mr. Michel Bissonnette, Senior Director, Engines and Airframe Maintenance, and Joseph Galimberti, Director, Government Relations. Allow me to provide the following by way of background.

Since October 2004, Air Canada no longer operates on its own all of the aircraft maintenance functions it once did. Air Canada's Plan of Compromise and Arrangement under the Companies Creditors' Arrangement Act resulted in Air Canada becoming a wholly-owned subsidiary of ACE Aviation Holdings Inc.

At that time, Air Canada's technical services division, or ACTS as it is also referred to, was spun off as a separate entity owned and controlled by ACE. In effect, the former maintenance division of Air Canada was divided in two. The airframe, engine and component maintenance operations were spun off to ACTS while the line maintenance operations were retained by Air Canada.

The 2004 plan of compromise, which was the basis for Air Canada emerging from insolvency protection and continuing to operate, was implemented following a creditor vote and was sanctioned by the court under the Companies Creditors' Arrangement Act. All of Air Canada's unions, including the IAMAW, the International Association of Machinists and Aerospace Workers, voted in favour of the 2004 plan, which included the spin-off of ACTS.

Since that time, Air Canada itself has gone public and ACE's interest in Air Canada is now reduced to a minority interest. Also, in 2007, ACE sold ACTS to private equity interests. ACE no longer holds any ownership interest in this company.

ACTS changed its name to Aveos in 2008. Air Canada and Aveos are parties to certain services agreements by which Aveos is the exclusive supplier to Air Canada of maintenance services, other than line maintenance, for airframes, engines and components. Aveos operates out of various bases including maintenance bases formerly operated by Air Canada at, among other locations, Montreal, Mississauga—or Toronto—and Winnipeg. Air Canada also operates its own maintenance bases at, among other places, Winnipeg, Toronto and Montreal to perform line maintenance.

In 2009, Air Canada spent a total of $944 million in aircraft maintenance. Of that amount, $659 million, or approximately 70%, was spent on aircraft, engine, component and line maintenance services performed by Aveos or Air Canada at maintenance bases located in Montreal, Mississauga and Winnipeg.

For the first nine months of 2010, Air Canada spent $648 million in aircraft maintenance. Of that amount, $462 million, or approximately 71%, was spent on aircraft, engine, component and line maintenance services performed by Aveos or Air Canada at maintenance bases located in Montreal, Mississauga and Winnipeg.

I would like to conclude this statement by dispelling rumours some of you may have heard regarding maintenance work on Air Canada aircraft which could be outsourced to Aeroman, an airframe maintenance company located in El Salvador and owned by Aveos.

To begin, let me start by saying that Aeroman is not certified to perform maintenance work on Air Canada aircraft, something your colleagues at Transport Canada can readily confirm. More importantly, Air Canada has absolutely no intention of sending any airframe maintenance work to Aeroman, now or in the future.

I would like to complete this by assuring you that Air Canada complies with and will remain compliant with the Air Canada Public Participation Act.

My colleagues and I would be pleased to answer your questions in the official language of your choice.

Thank you.

[The Chair, Conservative, Merv Tweed]

Thank you very much.

We'll go to Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chairman.

Thank you to the witnesses for coming today.

I'd like to know, in your opinion, what the obligation to maintain operational and overhaul centres means. And given that Air Canada does not own the majority of Aveos, does this requirement apply as well to Aveos?

[Louise-Hélène Sénécal]

First of all, I would invite you to read the specific provisions of the law that say the obligation is not to maintain, the obligation....

Just to rephrase my answer on the obligations, we are confident that we are complying. We've just explained what we do, and we believe that constitutes compliance.

[John McCallum, Liberal, Markham—Unionville, ON]

If Aveos should decide to shift its operations from the three traditional maintenance centres, do you think that would be a violation?

[Louise-Hélène Sénécal]

My opinion is that we're not here to issue a legal opinion.

We believe that with the operations as they exist, and with our line maintenance bases, we are in compliance.

[John McCallum, Liberal, Markham—Unionville, ON]

But I'm asking you--

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Point of order.

[The Chair, Conservative, Merv Tweed]

Yes, Mr. Guimond?

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Ms. Sénécal stated that she is not here to give us a legal opinion. We don't want to hear her legal opinion; we want her to answer the questions based on her own opinion. I would like to warn her right away that if she gives me that answer, things are not going to go too well.

Mr. McCallum asked a question and I would like to hear what Ms. Sénécal has to say. She's going to have to be willing to testify and answer the questions.

[The Chair, Conservative, Merv Tweed]

It's not a point of order. I don't believe, as the chair, that a witness' opinion is of relevance. If it were a factual statement, then I would expect the witness to put it forward.

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

Then let me rephrase the question.

Mr. Chair, I hope these translation and points of order interruptions don't detract from my time.

[The Chair, Conservative, Merv Tweed]

I would never do that.

[John McCallum, Liberal, Markham—Unionville, ON]

Okay.

[Michel Guimond, Bloc, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

I'll give you my time.

[John McCallum, Liberal, Markham—Unionville, ON]

I'd like to repeat my questions.

I would like to know one thing. I don't want your opinion, I want to know the facts. If Aveos decided to move its operations from these three locations, would that be a breach of the clauses in the Air Canada Public Participation Act?

[Louise-Hélène Sénécal]

Aveos is not subject to the Air Canada Public Participation Act. I repeat that our current activities, our direct activities, including Aveos' activities for us, comply with the act.

We are compliant today and we will continue to be compliant in the future.

[John McCallum, Liberal, Markham—Unionville, ON]

I don't fully understand, because I think the answer gave two different answers.

The question is, if Aveos were to shift its operations, would that be a violation of Air Canada's articles?

[Louise-Hélène Sénécal]

I am not here to give you a legal opinion, to tell you whether or not I think this would be a violation of Air Canada's articles. Aveos is not Air Canada. Therefore, Aveos' activities cannot constitute a violation of Air Canada's responsibilities.

In fact, if Aveos were to decide that, then we would decide what to do subsequently. It is currently a hypothetical question.

[John McCallum, Liberal, Markham—Unionville, ON]

I understand you're now in the process of dividing your maintenance union, so many of the workers will now be contracting directly with Aveos. Is that right?

[Louise-Hélène Sénécal]

This issue is currently being considered by the Canadian Industrial Relations Board and there will be hearings on the seniority list and union certification.

[John McCallum, Liberal, Markham—Unionville, ON]

I thought I heard you say that Aveos was not subject to the act; therefore, if Aveos decided to shift its operations, that would not be the responsibility of Air Canada. Is that what you said?

[Louise-Hélène Sénécal]

In that case, one would have to see how they were proceeding. Currently, the act applies to Air Canada.

[John McCallum, Liberal, Markham—Unionville, ON]

Since Aveos is not owned by Air Canada, it does not apply to Aveos. Is that right?