cattle

Kum by ya my Lord, Kum by ya.....

AC*SE

Unfortunately, we are left with an awful lot of conjecture. Was the CP merger effectively imposed on AC, or did AC engineer the circumstances to push Onex away? Was there an honest belief in the ability to absorb CP, with the commitments regarding services and labour, and maintain profitability?

I am not yet persuaded that signing off on this makes the directors liable. Yet. But a lot of it depends upon the assumptions that were made in the plan, and the contingencies that were provided for.

Contingency planning has its limits. Did 9/11, Iraq and SARS made a reasonable situation bad, or did they make worse a situation that was bad to begin with? If it is the latter, should management and the directors have realized that the situation was as bad as it was?

There is a presumption that management made bad choices, and the directors let them get away with it. There is rampant speculation about the hand of Slaphead (Collenette) in much of this.

But there is a difference between responsibility and liability. Of course management and the directors are responsible for where AC is today. But are they liable to anyone? That depends entirely on how prudent their decisions were, at the time that they were made, without the benefit of hindsight.

I'm not ready to jump in that boat, just now.

LeSabre74

Don't the CEO and BOD ultimately bear responsibility for the direction of the company, even union wages. Nobody forces the executive to approve contracts. If they felt the wages or work rules they were being asked to pay were excessive, they should never have rubber-stamped them. Yes, it might have meant a strike but is that worse than the situation they are in now?

airbus320

I guess that the crux of the matter comes down to the question:

Did the directors exercise due diligence in their decisions?

B767

You simply don't wake up day and realize that your suddenly $13B in debt and the company has negative equity approaching $2B. IMHO it's not simply a matter of one bad decision during trying times. It has been a series of bad decisions over a period of time. The board is supposed to be responsible to the shareholders. This is the same board that approved managements "no lay off" agreement with flight attendants only last December knowing full well that the airlines was losing $3M plus per day in December and heading into it's slow period. Just how prudent was that? I call it incompetence!

exAC

Funny.... this is what was said to the unions back at the end of January and their respomse was "Let's see what CCAA holds first".

B1

The 9/11 decline might have taken AC by surprise in another way. It appeared to some of us that Tango looked like an effort to weaken Canada 3000's share while maintaining AC's own fare structure. Tango could be a strategic tool wherever MM was getting a share. AC could grind them down as they had with CP and buy them out on the cheap or have them go away on their own. Or it could be a coincidence. The 9/11 evil worked most severely against MM, driving them out of business, despite their excellent service and price. AC and Tango would have picked up most of the MM market share with no added effort. The trouble was that while the percentage went up, the total volume went way down. If travel had picked up more quickly, then with Canada 3000 out of there, AC would have been in a much better position after 9/11 than before. As it was, C3000's payoff for Royal went to start SG, which is a new pain for them (and a rather unpleasant way to travel)and the market is being cherry-picked again. At least AC can't be tempted to buy that one (if only to avoid the awful MD-83's).

Why me?

I hope this will not be insensitive, but I completely disagree.

Speaking for myself, I do not have active "bones" with front line personnel. Sure, everyone has bad days, at the office or in a plane, and will have an occasional bad experience with this or that one person: I'm sure passengers can be rude. No, I’ve never seen an AC employee being openly rude to a passenger.

From my perspective, the problem is not in the relations between frontline personnel and travelers. Rather, it is between a faceless organization and a corporation that has repeatedly displayed a lack of class, at least towards me as a customer.

I could fill pages with horror stories that happened to me personally in the last three years. This is not the place for this. If only such situations were truly anecdotal and would happen infrequently, I would gladly dismiss them as exceptions to the rule. But that is NOT the case: these days, fewer than 1/2 of my flights go smoothly; I’ve come to expect problems, and am now surprised when everything goes according to plans.

If anything positive has come out of these bad experiences, it is that, somewhere along the line, I’ve usually met some extremely nice AC agent that did his or her best to rectify the situation on the spot, and tried to put out the fires started by other higher ups. I am grateful to those who helped me, and I can testify that the initiative of some frontline AC employees has often what prevented the situation from going from worse to complete disaster.

Until AP announced booking fees and fuel surcharges, I was the one on denial, giving AC and AP the benefit of the doubt more often than they deserved. Now, every day brings a new disincentive to fly AC.

I don’t want to know if there is a difference between a free ticket and a reward ticket.
I don’t want to hear excuses any more: I’m tired of complaining to AC and accumulating AP miles because of “service irregularities.

I’ve now reached a point where, if the sh*t hits the fan on my next trip, that is IT for me: AC, which was my carrier of choice, will become nothing more than carrier of convenience, as I will make every effort to avoid it. Sure, I’ll be forced to fly AC for some local segments, at least until WJ or JetsGo expand sufficiently, but that won’t last for long at the current rate of events.

I just want this to stop, and AC to fix the problems that they themselves are largely responsible for creating in the first place. My sensitivity towards AC front line personnel is not gone, but I will not deny any more that my reservoir of goodwill towards the corporation is now completely empty.

Best,

YME

[This message has been edited by Why me? (edited 05-16-2003).]

Shareholder

"Some have told us that there was nothing AC management or the Board could have done to change the outcome. Yet this very same person sold their shares when they were in the $ 16 range. What did this person know that caused them to sell their shares instead of holding that AC management and the board didn't??????? "

Nothing more than every other shareholder who basically received an offer from AC to buy back 60% of the shares of the company. And most shareholders exercised this option, because when the Quebec court ruled Onex's offer violated the articles of incorporation, there was no other deal on the table. Anyone who did not tender their shares deserves being left with sub-$2 shares. This left us with 40% of our original holding, but given the price paid by AC, these shares had no real value to us since we recouped our original buy-in from the $16 buy-back.

The point is that one does not buy airline stocks for rational reasons. These are highly volatile, and huge uncertainties surround the operating environment. My point has been that the average AC shareholder has come through this whole thing better than it looks like. It is the institutional buyers who have been burned, but I have little sympathy for fund managers and others who speculate with other peoples' money.

B767

Such strong confidence in the board and management! Unless of course it involves "your money"! Your money did the talking, and it was walking, yet you keep talking! If they are so great put your money where your mouth is!

So who are these "institutional" investors?? They were banks, pension funds etc, etc. Well who owns the banks, whose pension dollars where being used. Why ours of course, that''s right, common everyday people who worked very hard for there money. This wasn't Bre-X stock, this was an airline with 80% of the domestic market, that's right $ 0.80 our of every dollar spent on air travel within Canada.



[This message has been edited by B767 (edited 05-16-2003).]

I'llMissCP

Case in point is the contract signed in December that needed to be renegotiated in january.

exAC

The CUPE contract that you allude to was part of a mediated settlement that was an all or nothing package deal. The other outcome was that it brought the Flight Attendents equal with the contracts given out to all the other unions so that as cuts were started or concessions made they would start from the same position as the other employees. This also finally brought the two parts of the Flight Attendents together so that they could operate as one unit.

This is all too complex to dismiss so lightly.

Abby

From the above-mentioned G&M article:

"It is common during corporate restructurings that directors are replaced, often when a company emerges from bankruptcy protec.tion. A task force on insolvency law reform recommended last year that the federal government should ensure that courts have au.thority to replace "some or all of the existing directors" of a com.pany under bankruptcy protec.tion, when the company's governance structure is getting in the way of a successful restructur.ing."

I read another article in National Post by Derek CeCloet (April 2, 2003) which states:

"If ever there was a boardroom in need of an overhaul, it's Air Canada's. Five directors have been on the board since the 1980's. One is a Senator who has been a director since the early days of the Mulroney government when the airline was still a Crown corporation. The chairman, John Fraser, has been there since 1989, the same year Ottawa sold its last shares."

"Fresh thinking is in short supply here. most of the directors share the same qualities: long resumes, short on relevant experience. [...] This is not the group you want in charge of a painful reorganization or the airline that emerges from it."

Mr. DeCloet puts lots of blame on Robert Milton and union leaders for not making good decisions, but wants the Board included as well. I agree, I don't understand what the point of AC's Board was, because I really don't think they were contributing much in the way of business acumen.

It seems to me that they still had a bunch of old political patronage type appointments. How did Pierre Marc Johnson get picked???? Seems to me after his 15 minutes of fame in Quebec politics, his emphasis has been on environmental issues. I am not sure this interest and his PQ background makes him helpful to an airline which was supposed to be "Canada's airline."

At any rate, Mr. DeCloet's article hit a nerve with me. And although he sees plenty of blame for everyone, he still believes that the company could be a strong and vibrant company, but it will have to get rid of managers, union leaders and the current Board of Directors.

I also applaud the judge for asking the tough questions.

parnel

Quote by abby:
It seems to me that they still had a bunch of old political patronage type appointments. How did Pierre Marc Johnson get picked???? Seems to me after his 15 minutes of fame in Quebec politics, his emphasis has been on environmental issues. I am not sure this interest and his PQ background makes him helpful to an airline which was supposed to be "Canada's airline."

What problem do you have with an ex premier of one of the two largest provinces being on the BOD--did AC not just get a large provincial govt contract several months ago while the PQ was in power---sounds more like anti French Canadian bigotry than qualification related if you ask me--- maybe SH should judge this as he is good at calling people bigots and racists---falsely---- but he's good at it.

Guava

I agree mostly with your comments. One of the common problems that CEOs used to have back to the 60's and 70's when 'unrelated diversification' was popular among big companies because the thinking was if theya are good at managing one business, they must be able to duplicate the same performance in another field as well. That has proven to be costly over the decades as it's pretty rare to see companies venturing into anything but related diversification these days. The point is anybody on a board of director must have expertise and experiences that are pertinent to the company. If not, well, what do you have to contribute to the company?

On a side note, I also recommend you to ignore some personal and inflammatory comments that one particular member here somehow feels he/she has the moral duties given to him by god to go around and talk to people in a condescending matter. In Quebec, we usually tell these type of people: "Tu te prends pour qui, toi?" I think the thief is usually the one screaming for stopping robbery. Just ignore the comments and don't reply, if it gets out of hands, e-mail Randy, he will take care of it.