Judges May Morph Air Canada into a 'Chapter 11' Company?

The Canadian Auto Workers Union (CAW) has filed a motion challenging Air Canada. The motion will ask the Court to amend the April 1 Companies Creditors Arrangement Act (CCAA) temporary order which allows the company to unilaterally terminate or modify longstanding agreements with its unions.

"Air Canada, indeed airlines generally, are in rough financial shape, but what is happening here will not resolve the immediate crisis," said CAW president Buzz Hargrove. "What we need is government support, and a government-enforced airline strategy to sustain a national flagship carrier. Without that, we could work for nothing and the company would still be bankrupt, so going after the workers is no solution.

"The sweeping interim order," Hargrove continued, "means Air Canada, even though it is not in bankruptcy, can amend the pensions, lower wages, lay workers off without regard to seniority -- in essence, anything it wants to -- the Court order allows them to even ignore Labour and Human Rights laws.

"We're challenging that - this company wants to set a precedent whereby a company, whether union or not, can strip people of their hard-earned wages and pensions as a so-called way of 'staving off bankruptcy.' Wages and benefits are less than 30% of the company's total costs -- stripping pensions will do nothing to stave off bankruptcy, but instead will cause enormous harm to workers and their families," Hargrove said.

Also expected to lend similar voices to the argument are the IAMAW and the Canadian Public Employees Union.

IAM Canada General Vice President President Dave Ritchie wrote to his membership, "It is clearly unreasonable to expect any company to function effectively over the many months that the restructuring process is likely to take, if employees are denied the protection from illegal or arbitrary action provided by law and their collective agreements. This is about basic issues of fairness and equity..."

FMI: www.aircanada.ca; www.caw.ca