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Aveos (formerly Air Canada maintenance) lays off 2,400 workers

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Unionist
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Air Canada maintenance firm workers protest in Montreal:Employees block street after Aveos shuts down operations in 3 cities

Quote:
wo hundred workers from Aveos Fleet Performance Inc. were blocking a major street near Montreal's Trudeau Airport this morning after the private company suddenly shut down over the weekend.

The protest comes after Aveos, which maintains many of Air Canada's aircraft, posted notices on Sunday at its plants in Montreal, Winnipeg and Vancouver, locking out at least 2,400 workers and telling them not to return to work.

The signs said the company is no longer "performing airframe maintenance."

There are indications Aveos may file for bankruptcy protection today.

Many workers feared this endgame when Air Canada hived off its massive maintenance operation in recent years. If this is a permanent closure/layoff, who will maintain AC's aircraft now? Will the workers have any kind of successor rights if the work is done in Canada? If not, what happens to them, including their pensions?


KenS
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I did not know anything about this previously.

But I know a fair bit about airline industry economics, albeit with no one in my family still active in aircraft maintenance.

The short answer about where do they go for maintenance- other airlines and independent operators. The bulk of aircraft maintenance has for decades been done by a limited number of airlines: especially United and American.

Up until when I was up to date, that would not have included an airline as large as Air Canada- but there is no technical or economic reason it could not have. United and American did all the North American maintenance for a lot of the big international carriers, including a good chunk of work that did not need to be done in North America.

In principle, a lot of the long term and mid term maintenance could be done in China or India. But I doubt it- the FAA would never let that happen.


KenS
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Implicit in what I just said: the work Aveos was doing by and large does not have to be done in Canada, so the already iffy succesor rights would vanish.

But my hunch is that if Air Canada could find someone else in Canada to do the work- which I think is unlikely- the succesor rights would not apply anyway. [Unless its a succesor company out of the bankruptcy... but there aren't the hallmarks of that intention.


KenS
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The type of airframe maintenance that Aveos did is routine and sceduled in.

Air Canada must have kept enough line mecahanics to do the non-routine and quick turnaround maintenance. Which means they can find someone else to do Aveos work.

But even routine and scheduled maintenace has to be done within a relatively short time frame. So you can absolutely bet that Air Canada already, and always, had in place the near term destinations for that maintenance work they will need done soon.

And whether they did it this way or not, it would not be rocket science to take these steps:

** Hive off Aveos with the plan to keep the contract prices dangerously low viz whether the firm can survive. Management would certainly be able to bring costs down some versus Air Canada's costs- even without renogotiated contracts. If costs dont come down to the targets- let it go bankrupt.

** If and as Aveos is headed for bankruptcy, start looking for where the maintenance will be done. There's lots of excess capacity out there.


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Ken, the 2400 Aveos mechanics remained Air Canada employees when Robert Milton pulled his two-step scheme: 1. Hiving off maintenance as a stand-alone operation still owned by AC in 2003 (or thereabouts); and 2. Contracting all the work to this sketchy Aveos outfit in 2007. I repeat - they're still AC employees. And why do I think Robert Milton controls Aveos? I have no idea what the full story is, but right now 2400 workers are off the job, with no prior advice to their union, and no idea what the future holds.


KenS
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They are definitely not AC employees.

And actually, Aveos was sold off in 2007. Even if Milton was controlling, it was then and still is an independent company.

On top of screwing the workers, there is something shady going on among the various owner/principals. But that does not effect that legaly, they are not AC employees and have not been for some time.

Who knows what the shady arrangements were among the principals. Maybe the private investors had a side deal that kept them from losing money, and their ownership would only be realized if Aveos could survive on the AC contract pricing. Who knows? But it was legaly hived off- and on paper at least, which matters, 70% to outsiders.


KenS
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Where do you get the idea they are still AC employees? I dont see any of the workers saying that.


Unionist
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The recesses of my memory, Ken - notoriously unreliable. Let me do some digging. I'm pretty sure an IAM confrère told me that at a union confab a couple years ago.

 


Unionist
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Well, it's a little more complicated than I thought. Someone read this and get back to us as to what it all means. Especially all the transition options.

WARNING: PDF of 33 pages is in typical union-management contract language, ergo undecipherable and of questionable literary style.

 


KenS
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When you go digging you'll find that in the first step- prior to 2007- they would have remained AC employees. Aveos [not named that yet] had always existed as a shell company. It looks like they used it for AC doing maintenance for other airlines [as I pointed out United and American have long done in a big way].

When it was a shell company, the workers were AC employees. That may have included a period of time before 2007 when AC began to treat Aveos as operatively more seperate, but where the ownership and contractual relationships did not change.


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It's more or less clear from the PDF I linked to above that:

1. Everyone concerned (AC mechanics "seconded" to Aveos) was still an employee of Air Canada as of the date of the signing of that Memorandum of Agreement - namely January 8, 2009.

2. Seven (7) transition options are outlined for employees, some of which involve remaining AC employees, some resigning from AC and becoming Aveos employees, some being laid off and retaining AC recall rights, etc.

3. BUT, none of the transition options come into effect until the "CIRB date" (see Definitions section on page 2) - namely the (future) date upon which the Canada Industrial Relations Board splits the existing AC bargaining unit into two pieces, one AC, one Aveos. Once that happens, there's a selection process, where each employee picks a transition option, over a 74-day period.

THEREFORE:

The 64 euro / yuan question is:

Has the CIRB ordered the split of the bargaining unit yet? If not, my understanding is that the status quo (everyone still employed by AC and "seconded" to Aveos) remains frozen.

Anyone out there shed any light on this? Any IAM reps reading this?

Bobby Milton???

ETA: I guess the answer is yes, the CIRB has split the bargaining unit - but it appears to be just last year, from this union bulletin of March 2011. So as late as spring of 2011 or maybe later - actually look at this November 2011 bulletin! - the selection and transfer procedure would not have been complete, and everyone would still have been AC employees.

Maybe...


KenS
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The MOA confirms that as of 2007/2008 the companies were seperated and the workers are not AC employees.

[ETA, given crosspost with U. Yes, there was not a split as of the MOA. I read this as the union essentially giving the green light for the labour board to split the bargaining unit. And that it happened in short order after this.]

One thing I read in it, and expected, was the basic reality that although the decision by an individual worker to go to Aveos or not was voluntary.... there was a very big stick:

If you elected to go to Aveos and were "chosen," you had a job.

Depending on your seniority, and most likely including some workers with very high seniority, if you did not elect to go with Aveos, you might be immediately laid off. And even if you were not, in that immediate future you were more exposed to lay-off than the wokers who went with Aveos.

At least for the visible term at the time of choice: more work at Aveos if you are in airframe, but once you go to Aveos, you have no seniority rights at Air Canada.

[Airframe by the way includes power plant and all the controls... so its the bulk of mechanics working on the planes.]


KenS
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I would interpret that June 2013 termination date for the MOA as being time for the collective agreement to have next come up, for the first time with the bargaining units seperated, and to have completed a new agreement between the union and Aveos.

Which would be moot now.


KenS
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Unionist wrote:

I guess the answer is yes, the CIRB has split the bargaining unit - but it appears to be just last year, from this union bulletin of March 2011. So as late as spring of 2011 or maybe later - actually look at this November 2011 bulletin! - the selection and transfer procedure would not have been complete, and everyone would still have been AC employees.

Maybe...

And from the department of cold water....

The March 2011 union negotiating committee bulletin is stll just holding out the hope that they can bargain the new Aveos contract with Air Canada. And even then, it would be negotiating with AC with them as Aveos employees, not AC employees.

The November bulletin is just information for what AC employees need to do if they want to belatedly jump ship to Aveos... presuambly because they are on lay off and have given up hope of ever being re-called at AC. Fortuneately for them, there probably wasnt time for them to get "in" at Aveos.


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So my memory was accurate - what that IAM brother told me a couple years ago was true at the time - but as you say Ken, it's at best unclear what the employment status is as of today. I've seen nothing current on any IAM site to enlighten me. They probably have much bigger fish jumping into the frying pan this morning...

 


KenS
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And in case people are getting lost, whatever the legal 'niceties', there is no doubt whatsoever that Air Canada is calling ALL the shots in this.

I'm curious about the timing of the bankruptcy. The puppet strings are not so finely controlled that they could have literally picked their time for cloing Aveos doors. On the other hand, they can do a lot of steering, and here is the closing landing right smack in the middle of the pilots disputes.

Not that I can see what the point of that would be.

Possibly that since the closing of Aveos is not going to impact flight cancellations, get the bad PR of the closing done while they have the bigger to the public bad PR that is going to happen anyway. ????


Unionist
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KenS wrote:

I'm curious about the timing of the bankruptcy. The puppet strings are not so finely controlled that they could have literally picked their time for cloing Aveos doors. On the other hand, they can do a lot of steering, and here is the closing landing right smack in the middle of the pilots disputes.

Not that I can see what the point of that would be.

Great question. And it's not only the pilots' dispute. Air Canada had a 72-hour lockout notice against the IAM timed for the same Monday as the pilots' 72-hour strike notice, when Raitt helpfully crushed collective bargaining and the workers' rights.

If the bargaining unit was already split, then legally I would guess the Aveos workers, even if still AC employees, were not in a legal strike position, unless their own bargaining was at that stage (no idea about that). What impact would an AC IAM work stoppage have had on Aveos then? If their workers (even the "seconded" ones, if any remain) had joined in the walkout, could that have been perceived as freezing or delaying or complicating their ability to go for CCAA protection (if that's where they're headed now)?

Wow, am I ever good at asking questions...


Unionist
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This is from section 6 of the Air Canada Public Participation Act, the cynically-misnamed 1988 legislation by the Mulroney government which privatized Air Canada:

Quote:
6. (1) The articles of continuance of the Corporation shall contain

 (a) [Repealed, 2001, c. 35, s. 1]

(b) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting shares of the Corporation to prevent non-residents from holding, beneficially owning or controlling, directly or indirectly, otherwise than by way of security only, in the aggregate voting shares to which are attached more than 25%, or any higher percentage that the Governor in Council may by regulation specify, of the votes that may ordinarily be cast to elect directors of the Corporation, other than votes that may be so cast by or on behalf of the Minister;

(c) provisions respecting the counting or prorating of votes cast at any meeting of shareholders of the Corporation and attached to voting shares of the Corporation that are held, beneficially owned or controlled, directly or indirectly, by non-residents so as to limit the counting of those votes to not more than 25%, or any higher percentage specified for the purposes of paragraph (b), of the total number of votes cast by shareholders at that meeting;

(d) provisions requiring the Corporation to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community and the City of Mississauga; and

(e) provisions specifying that the head office of the Corporation is to be situated in the Montreal Urban Community.

Unless I'm mistaken, Air Canada is in the process of moving its HQ to Toronto. And I guess subsection (d) carries about as much weight.

The only thing left now is for the Harper government - which declared that a work stoppage at the private company Air Canada was a matter of sufficient public jeopardy to justify intervention - to now announce that Aveos is a private company, so they can do whatever the fuck they want.

Anyone see that announcement yet?

 


KenS
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Sorry to say, but they dont have to 'declare' Aveos is a private and seperate company. Just affirm it.

I forgot that the IAM was to be locked out.

FWIW,Raitt's order would not apply to the Aveos workers. Its a question whether the Aveos IAM workers were also to be locked out, but that would officialy have to come from Aveos management.

My guess would be that negotiating between Aveos and IAM was pretty much on hold, and would not proceded until at least the basics of the AC bargaining directions were settled. The Aveos work flow would not be effected by a stoppage at AC for quite a while, and theoretically would never be effected.


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KenS wrote:

Sorry to say, but they dont have to 'declare' Aveos is a private and seperate company. Just affirm it.

 

Yeah, that's what I meant - they'll just "note" that it's private, therefore it's none of the government's affair to intervene.

I just heard a local radio news report saying workers thought nothing would happen before 2014. Does that mean they weren't in bargaining with Aveos at all yet? Gotta check that out.

 


Unionist
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Ok, this is exceedingly clear:

Quote:

ACE Aviation Holdings Inc., created after Air Canada emerged from bankruptcy protection in 2004, unloaded a 70-per-cent stake in the repair firm for $723-million at the height of the leveraged buyout boom in 2007.

ACE later wrote off its remaining minority investment in Aveos, as did two buyout specialists – New York-based Kohlberg Kravis Roberts & Co. and Sageview Capital LLC of Greenwich, Conn., founded by two former KKR partners.

In 2010, a group of lenders took majority control of Aveos, converting debt into equity in a deal that cast aside the two U.S.-based private equity firms.

I ran it through Google Translate, but came up dry.

 


KenS
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Translation:

Whatever the shady arrangement between the various players/owners of Aveos in 2007, by 2010 that had been rubbed out by ongoing operating losses- a consequence of the impossible maintenance contract prices with Air Canada.

Spome other invisible vultures took over in 2010. This was hopeless.

The workers may well have known more, but I dont really unserstand why this was not seen as hopeless. Except that bankruptices and 'refinancing' comes like the seasons in the industry. So why should they have thought this was not going to work as much as anything else does?


KenS
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It looks like Air Canada had no formal ties to the Aveos management. None.

But Aveos was so precarious that AC management could have timed to the minute when they pushed them into bankruptcy.

Just tell Aveos when they are going to stop paying, and throw them a few bones in return for not snivelling and going quietly.

Even AC could not get away with simply not paying Aveos, but paying substantially later [or even later than usual] they can get away with, and would put under a company on the edge.


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Hey, someone's reading babble!

Québec solidaire calls on government to take Air Canada to court in order to save jobs

Quote:
Québec solidaire vigorously condemns the decision by Aveos Performance Aviation, responsible for a portion of the maintenance of Air Canada aircraft, to close its doors and eliminate 1800 jobs in Montréal. In order to avert a socially unsupportable situation for hundreds of Québec families, QS calls upon the provincial government to act swiftly to preserve these highly skilled aviation jobs, a flagship of the Québec economy.

"The Québec government should take its inspiration from the action by the Manitoba government several years ago and approach the courts in order to force Air Canada to respect the conditions imposed on the company at the time of its privatization, in 1988, namely that the jobs linked to maintenance must remain in Montréal. These jobs cannot be moved - it's against the law", says Françoise David, chair and spokesperson of Québec solidaire.


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Montréal looking at court action

Mayor Tremblay is being coy, whereas both opposition parties (Vision Montréal and Projet Montréal) are demanding that he act quickly.

I was hoping for a similar demand on the part of the NDP (remember them?), given that it's a federally regulated enterprise and the 1988 legislation is federal. All I saw was a statement by Nycole Turmel on the murderous attack on a school in France.

Ok. At least we have our priorities in line.

Anyway, now that she's almost history, everyone's praising Turmel for her wonderful job in keeping the caucus united and making the NDP work as a wonderful and powerful opposition.

Wow, I shouldn't have said that, excuse me, I'll be right back, don't worry, I'll be feeling better shortly...

 


Hoodeet
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Pretty shameful that Turmel said nothing about this.  Or was it just not reported?

 


Kanada2America
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A very unfortunate development for those workers. But AC's cost structure was already out of whack (other than what its management has been doing), for the modern deregulated reality. Those retirees had pretty rich pension plans and that was going to hit the company eventually.

There are more retirees than there are workers to pay for those pensions. So essentially the company may be resorting to cutting costs on maintenance by looking at what other airlines are doing. If you look up a story done by KIRO 7 in Seattle about a company called Aeroman in El Salvador that does maintenance for some pretty big carries, you'll be surprised - and likely shocked.


Unionist
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Kanada2America wrote:

 Those retirees had pretty rich pension plans and that was going to hit the company eventually.

Which retirees? Aveos? What's this about pension plans? Can you give us details of the plans?

Or are you just asking us to join in mourning Air Canada's plight and its need to find cheap labour in El Salvador?

I'll try to squeeze out a tear for Robert Milton and Calin Rovinescu, personally toiling day and night to feed those undeserving wealthy pensioners.

 


Kanada2America
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Try and stay with me here. Why did AC have to spin off maintenance work to Aveos? And now in turn Aveos is in trouble. Why does AC's cost structure look totally out of whack with every other N.A. airline? I'm talking about the AC retirees of course. Cry all you want about management, but the decades of AC being a public airline and then privatizing... well that wasn't going to end well was it?

Want to talk about outrageous salaries for AC workers from the 70's onward until the 90's when all that baggage caught up with the balance sheet? Not sustainable, but look who I'm talkin to. I can point you to a very nice forum for former ACers who boast about wonderful fancy trips in Arizona and cruises and how they worked there for 25+ years and so forth. Completely oblivious to what the average Canadian faced during the same time. Guess they don't care about their colleagues today do they?


Unionist
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Kanada2America wrote:

Cry all you want about management, but the decades of AC being a public airline and then privatizing... well that wasn't going to end well was it?

Oh no, of course not. CN Rail, which was a crown corporation since its founding in 1924 and privatized in 1995, didn't go from being the bottom to the undisputed top of the Class 1 railways in North America in a matter of a few years, under the presidency of ex-chief-bureaucrat Paul Tellier. It, of course, didn't have any retirees, or anything like that to worry about. No, none of that ever happened.

Quote:
Want to talk about outrageous salaries for AC workers from the 70's onward until the 90's when all that baggage caught up with the balance sheet?

No, I'd like you to quote me the salary of an Air Canada maintenance mechanic. Can you do that?

Quote:
Not sustainable, but look who I'm talkin to. I can point you to a very nice forum for former ACers who boast about wonderful fancy trips in Arizona and cruises and how they worked there for 25+ years and so forth. Completely oblivious to what the average Canadian faced during the same time. Guess they don't care about their colleagues today do they?

What happened - lose all your money speculating in mutual funds, and now somebody - anybody - has got to pay? I'm sorry for your loss.


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