Evidence of meeting #30 for Transport, Infrastructure and Communities in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was aveos.
A recording is available from Parliament.
President and Chief Executive Officer, Air Canada
Let me just finish the answer, please, Ms. Chow.
NDP
Olivia Chow NDP Trinity—Spadina, ON
I already heard your answer, thank you. I don't need to know any more.
President and Chief Executive Officer, Air Canada
You need to know what I'll tell you.
President and Chief Executive Officer, Air Canada
Basically, what we'll be doing until the end of the year—
NDP
Olivia Chow NDP Trinity—Spadina, ON
I'm sorry. That wasn't my question. Let me put my question.
Since 2000 Air Canada has purposely pulled aside their overhaul services outside your shop. You started in 1988. In 2000 you branded it distinct. Then in 2007 you sold it off. By 2011 last year, slightly more than a year ago, the Industrial Relations Board said that these workers are no longer Air Canada workers, but these were Air Canada workers from day one. They feel betrayed.
Canadians feel betrayed, because if you follow through all that paper trail, whether you're talking about the law or the spirit of the law, it was clear that these workers' jobs were supposed to be protected. They feel totally betrayed by Air Canada.
Why would any Air Canada employee trust the company now to believe that their pensions and their jobs wouldn't be privatized, sold off, so that another company or American companies or other companies without the unions, without the pension plan, would then take those jobs away? This is an act of betrayal. That is how the workers are feeling right now.
You can see the pattern. It's deliberate since 2000. How much money did you spend, whether it's in the courts or the Industrial Relations Board, to do this? In 2000, when it first started, that section of your company was making money. That was the ironic thing about it. It was making money, and now it has gone bankrupt.
NDP
Olivia Chow NDP Trinity—Spadina, ON
That is the question. Why don't you bring those workers back to Air Canada? That's my only question. Bring them back.
President and Chief Executive Officer, Air Canada
Thank you, Ms. Chow.
As I said several times in my remarks and in answer to other questions, I have a tremendous amount of sympathy for the workers who have lost these jobs. We don't like the way Aveos has dealt with this situation. The way Aveos dealt with this situation damaged the workers first and foremost. It also damaged Air Canada.
Air Canada needs to maintain the airplanes, and this has been a major point of contention for us as well, as we've said publicly, and we've not shied away from making it very clear. But I have to say the following.
President and Chief Executive Officer, Air Canada
I have to say the following, if I may. Companies are bought and sold every day. Air Canada was privatized by the Government of Canada in 1988 with that provision in the law. Air Canada, if one pays attention to what is going on, as I said earlier, like all airlines, like all legacy airlines, is going through a transformation, has gone through a transformation.
May I continue?
NDP
Olivia Chow NDP Trinity—Spadina, ON
We're running out of time. My colleague from Winnipeg wants to ask a question.
President and Chief Executive Officer, Air Canada
Thank you very much.
Basically Air Canada has gone through a transformation, and these companies—
President and Chief Executive Officer, Air Canada
These companies that were bought and sold—
Conservative
The Chair Conservative Merv Tweed
He's been asked a question. He's in the process of answering it. Then we're moving back across the table.
Please finish.
President and Chief Executive Officer, Air Canada
Basically, other companies were also sold. This company was created with a good capital structure, with good investors, with good shareholders, and they had eight years to make it work. They didn't make it work, which is obviously not good for us. We take no pleasure in seeing the failure of Aveos. It's not good for us. It's not good for the employees.
There are other companies that Air Canada sold. We sold a company called Aeroplan. The company was very successful. It has a $3 billion market capitalization. It's doing very well. We sold a company called Jazz.
That was part of the transformation of Air Canada. The company was privatized, and it then went through a transformation that went back to those years. And it's going to go through still further periods of transformation, because it is a legacy airline structure that is facing brutal low-cost competition. I think that is something we may or may not want to have as a reality, but it is a reality.
Thank you very much for your question.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
Thank you, Mr. Chair.
I want to pick up a little bit on what you were talking about there. In the short period of time that Aveos basically went through such a huge investment.... Obviously that investment plan they had, their business plan, was a solid plan. We don't have people investing that type of money in a company and having it disappear as quickly as it has from the Canadian landscape.
Do you have any sense of where this has come from and what occurred there? I know it's not your company, but as such, is there a perspective you could try to share with us on that?
President and Chief Executive Officer, Air Canada
Thank you for the question.
Basically, our sense is that despite the $975 million investment, and despite the quality of shareholder they had and the lenders, Aveos was not able to be competitive when compared to other international MROs. They were not able to regularly attract third-party business for several of their business units, including, in particular, the airframe area.
They had three business units: airframe, engine, and components. Our understanding is that try as they would, several other carriers came in and found that the productivity was not adequate, which led to turnaround time that was not adequate, which meant that over a period of time these airlines decided to go elsewhere. So the business did not grow.
Contrary to some of the other business units created and sold around that time by Air Canada, this one was not able to attract adequate third-party business to build their business case, largely because of, I believe, productivity issues.
Conservative
Lawrence Toet Conservative Elmwood—Transcona, MB
If the government were to come forward and bail out Aveos and spend all that money.... I mean, we've already had a group of private investors that have lost a lot of money through this process. I've done a few investments in my day, and I'd be very shy about thinking about investing in a company that over a period of five to seven years went through this type of investment and was not able to make it go. I mean, it's not like they started with a shoestring budget. I think that's a critical part of what we have to look at going forward here.
I also wanted to direct my comments back a little bit to where I started, and that's the employment issue. That still comes to the heart of it for me. I wonder if you have initiated contact with any companies that would be looking at facilities in Canada, specifically in Winnipeg, Mississauga, and Montreal.
President and Chief Executive Officer, Air Canada
Yes, indeed. You know, it's interesting.... As I have said a few times before, there are great opportunities because of the pool of talent. We, of course, have needs. Among the companies we've had early discussions with is MTU, which is a very well-regarded engine facility and which in fact has existing facilities in British Columbia. They could certainly look at operations elsewhere if they were interested. They'd have to do due diligence, understand the business unit, and understand the opportunities there.
There are other engine companies, and potentially even some manufacturers, such as, potentially, companies like GE and Lufthansa Technik. We've had, again, very early conversations, recognizing, of course, that the failure of Aveos was sprung on us like it was sprung on the rest of the country.