Go Back  FlyerTalk Forums > Miles&Points > Airlines and Mileage Programs > Air Canada | Aeroplan
Reload this Page >

State of Denial continues - Globe & Mail story

State of Denial continues - Globe & Mail story

Old May 16, 2003, 6:13 am
  #1  
Original Poster
 
Join Date: Apr 2000
Location: Mississauga Ontario
Posts: 4,085
State of Denial continues - Globe & Mail story

Globe & Mail, Air Canada defends board of directors http://www.globeandmail.ca/servlet/s...ery=air+canada

"....no board 'could or should have foreseen' the Sept. 11 terrorist attacks, the war in Iraq or the outbreak of severe acute respiratory syndrome."

Yes, in the mind of AC, none of its problems were caused by a) shoddy customer service b) ill conceived business strategies c) an absolute focus on market dominance to the detriment of service d) an employee attitude that until only recently viewed the customer with something approaching disdain e) customer relation strategies vis-a-vis it's best customers (SE's and E's) that border on outright hostility if not stupidity f) numerous brilliant business flops and many other other factors

Years out, someone will do a book on AC after its demise, and the statement above about the board will be indicative of the state of denial that existed within AC right up to the end.
InTheAirGuy is offline  
Old May 16, 2003, 6:26 am
  #2  
FlyerTalk Evangelist
 
Join Date: Mar 2000
Location: Southern Alberta
Posts: 20,550
I have always maintained that the BOD bears some responsibility pre 9/11. I am happy that Judge Farley has asked the question.

I wonder if there are lawsuits in the wings.
airbus320 is offline  
Old May 16, 2003, 6:32 am
  #3  
Original Member
 
Join Date: May 1998
Location: Canada
Programs: AC SE 2MM, HH Dd, SPG; IC Pl/A; AA; DL
Posts: 14,320
I hope they prove us wrong but the whole system seems set up for failure. It can't move fast enough when crises arise (and they always do). Management and the unions need to understand this and get a better model for responding rapidly to change.

I keep flying them anyway . . .

At least I'll have one last good year as SE (and hopefully many more)
BlondeBomber is offline  
Old May 16, 2003, 6:55 am
  #4  
At Large
 
Join Date: Jan 2002
Location: oakville Ontario canada;AC*SE
Posts: 16,985
<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by BlondeBomber:
I hope they prove us wrong but the whole system seems set up for failure. It can't move fast enough when crises arise (and they always do). Management and the unions need to understand this and get a better model for responding rapidly to change.

I keep flying them anyway . . .

At least I'll have one last good year as SE (and hopefully many more)
</font>
Since the government had so much influence over the CP deal they now need to be involved today and allow AC to undo some of the legislation that forced them to eat each and every CP employee after the merger.Unfortunately the taxpayer is again on the hook but we also allowed our government to fail the business in the first place. That bailout should not come as a rescue to the unions though. AC needs to restructure their labour force without undue influence from union thugs and brain dead government ministers.
I too will keep flying them.

[This message has been edited by parnel (edited 05-16-2003).]
parnel is offline  
Old May 16, 2003, 7:42 am
  #5  
FlyerTalk Evangelist
 
Join Date: Sep 1999
Location: Toronto, Ontario, Canada
Programs: OWEmerald; STARGold; BonvoyPlat; IHGPlat/Amb; HiltonGold; A|ClubPat; AirMilesPlat
Posts: 38,186
The Board presented downsizing plans in advance of 9.11 and AC was moving towards changing to a lower cost carrier at that time. TANGO had been set up as one response, and AC had called its unions to the table to outline cost cutting needs. Seats were being removed from J because the ".com" bust had affected AC's two biggest business customers: Nortel and JDSUnifaze. The business slump was recognized in Canada long before the Americans woke up to that reality. None of the US carriers had begun to rationalize their ops prior to 9.11.

The AC Board adopted a major redirection plan, took a significant gamble on the future with one issue in mind: reducing operating costs and reevaluating routes and the very logic of the traditional model used by most NAmerican airlines. It was clear even before 9.11 that domestic travel was becoming cost sensitive as taxes and fees were piled on and shifted to the customer. But transborder and intercontinental routes remained strong and viable.

Then came 9.11, which decimated the transborder ops. And Canada's own version of 9.11 has been SARS, which has knocked the critical North Pacific for a loop. Afterall, these were the routes AC so coveted from CP, and figured under normal circumstances, it could carry other commitments based on the revenues and profits from those routes.

And it was not just the labour commitments it took on from the CP merger that created problems. The anti-ONEX strategy resulted in a major share buyback [60% of all outstanding shares at two to three times their average trading value pre-ONEX ($6)] that added debt beyond what the balance sheet could handle once traffic began to drop.

Yes, one can argue the Board made some bad decisions, but no more so than you can argue this with BCE's board under Jean Monty's failed designs. As I have argued, if the Board's role is to serve the best interests of the shareholders, then it did this by ensuring they lost no money in all this. Their buy-back of shares meant everyone holding AC stock got more than they paid -- had they been long term shareholders and not bought in after the ONEX run-up -- and those who feel betrayed are the investors who bought back in at more than the settled price range of $3 to $4 AC shares had traded before the most recent problems.

If no other NAmerican airlines were losing money, or filing for one form or another of Chapter 11, than I would say there is a strong case to be made. But that is not the case, so AC's board can be said to be no worse than those overseeing UA or AA or US or NW or DL or CO. [LCCs are a different matter and cannot be used in this comparison for too many reasons to set out here.] At least AC's long term shareholders have not suffered the plight of those holding stock in these US carriers.

As for the staff-related matters, there is a lot of denial on the other side of the bargaining table too. Businesses that are in depressed industries, and who are losing buckets of money, cannot afford to pay employees indefinitely at rates that make their product uncompetitive. The pilots strike, and the threat of a FAs strike, certainly contributed to instability coming out of the ONEX battle.

Given what they had to deal with, I doubt the Board could have done much better. And even with another president, AC would likely not be in that much of a different situation.
Shareholder is offline  
Old May 16, 2003, 8:20 am
  #6  
 
Join Date: Feb 2001
Location: Kitchener
Posts: 141
While I agree with some of the points made by "In the Air guy", I find others quite insensitive. Perhaps if something is repeated often enough, it becomes true! Over the course of my twenty-five years with AC, I have rarely seen an employee treat a customer with disdain. The vast majority of my colleagues have always gone out of their way to provide excellent customer service. Why do I constantly receive rave reviews regarding the inflight service on my flights from non-Canadian customers, while only grudging praise from most Canadians? Where did all of the industry customer service awards that AC has won over the years come from?
What leads certain people to believe that if they are not upgraded to J class, from a Q fare, they are not receiving good service? I value all customers, regardless of the side of the curtain they are sitting on!! Does denial of a complimentary upgrade constitute poor customer service and entitle a customer to be belligerent with my crew? Does it make financial sense for Air Canada to offer Westjet fare levels, for business class products? While I believe that there are many areas in my contract with my employer that can be made more efficient, I do not believe that flight attendants making an average of $33 thousand per year are over paid.
I do not deny that AC has made some strategic mistakes, but I also do not buy into this common belief that poor customer service is the cause of AC's woes. Yes, anecdotal evidence of poor customer service can always be found. Unfortunately, it is next to impossible to totally control the human variable in a customer service situation. As well, it is also human nature to forget the positive and dwell on the negative.
The industry as a whole is going through a very trying period, and SARS has hit AC harder than any non Asian carrier. We employees would really appreciate some of the kindness and support that we have shown our valuable customers over the years!
Have a great day!
purser @AC is offline  
Old May 16, 2003, 8:51 am
  #7  
 
Join Date: Dec 2002
Location: GRIMSBY, Ontario CANADA
Posts: 811
What ever happened to "ACCOUNTABILITY"!!!!!!!!

For a change it would be nice to hear someone from AC stand and up say "we made a mistake". Doubt I will live long enough. It is always some one else's fault!

They want us to believe that all of AC's problems started with the "purchase of CP" (they paid $90M for the assets of CP). What a crock! You don't just wake up one day $ 13B in debt. Keep in mind they have sold assets along the way and even after that still owe $13B. Their dividend performance since they were privatized has been an embarrassment. The went public at $ 8.00 and for years it languished in the $6-10 range. Sure after the CP "purchase" the shares shot up to the $16 range. The share price increase was not driven by actual operating results but the anticipation of what AC should have delivered with over 80% of the domestic market, the lions share of Transborder and a dominate position in the Int'l routes to/from Canada. They have never even come close to delivering the results. The operational whiz that runs the company was never able to deliver any operational savings after the merger. In fact the opposite held true, they increased the payroll to handle the same amount of passengers.

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???????
B767 is offline  
Old May 16, 2003, 9:13 am
  #8  
Original Member
 
Join Date: May 1998
Location: Canada
Programs: AC SE 2MM, HH Dd, SPG; IC Pl/A; AA; DL
Posts: 14,320
and when I am talking about unions I am usually not talking wages (with a few exceptions I don't think you are overpaid).

It is about efficiencies and job rules. The larger the organization and the more rules, the less efficient you become and less adaptable to change. When I say adaptable, I mean in the rapid sense (ie days and weeks, not months and years).

And regarding service--I think I have said on numerous occasions, and have put it in writing to AC, that the service levels are generally of a high standard. The real exceptions are memorable but, fortunately, few and far between.

That doesn't mean that many aspects of the operation aren't broken. The complex fare structure, the differential between the full fare and super discount and the byzantine rules that even agents have trouble keeping up with and understanding are symptoms of a deeper malaise. Add to that the things the take some of the fun out of flying like terrorist attacks, SARS and the security crap I have to occasionally put up with and you can see why AC went into rapid decline.

I do think that even though the service levels are of a high standard, there is a certain je ne sais quoi lacking. You shouldn't have to send memos out to your staff to have them smile. It should be part of the corporate culture--I think management has failed utterly to create a winning and enthusiastic team. Enthusiasm, ah yes, that's the je ne sais quoi . . .
BlondeBomber is offline  
Old May 16, 2003, 9:16 am
  #9  
 
Join Date: Mar 2000
Location: YVR
Posts: 9,999
It may not have been possible to foresee specificly 9/11, SARS, etc, but in general, these types of things are always happening. The outbreaks of Ebola virus, AIDS, and any number of other diseases have had an impact on travel since forever. Wars are always breaking out somewhere. Airlines in particular have always been subject to terrorist attacks. The economic business cycle has always gone up and down.

To say no one could have predicted specific, detailed events is an utter cop-out. So in that regard, let me help out managers and executives the world over...

Between right now (~summer 2003) and ~summer of 2008, there will be a major world shaking event. This event will have a profound negative impact on businesses in general, and airlines and the travel industry in particular. In the meantime, things will generally improve, with increasing demand for service and products, revenue, profits and disposable incomes. Start preparing for both now.

Between ~summer 2008 and ~summer of 2013, there will be a major world shaking event. This event will have a profound negative impact on businesses in general, and airlines and the travel industry in particular. In the meantime, things will generally improve, with increasing demand for service and products, revenue, profits and disposable incomes. Start preparing for both now.

Between ~summer 2013 and ~summer of 2018, there will be a major world shaking event. This event will have a profound negative impact on businesses in general, and airlines and the travel industry in particular. In the meantime, things will generally improve, with increasing demand for service and products, revenue, profits and disposable incomes. Start preparing for both NOW.

Between ~summer 2018 and ~summer of 2023, there will be a major world shaking event. This event will have a profound negative impact on businesses in general, and airlines and the travel industry in particular. In the meantime, things will generally improve, with increasing demand for service and products, revenue, profits and disposable incomes. Start preparing for both RIGHT NOW!

Not next year. Not next month. Not next week. Not Monday. Not this afternoon. Today. Right now. This very instant. Friday, May 16, 2003, at 8:15am PDT.

In other words, RIGHT F****** NOW!!!!

'Cause in 2023, when some airline executive tells me no one could have predicted the recent problems the airline industry encountered, I'll be bringing up this post and saying, "Wrong, bozo."


[This message has been edited by Ken hAAmer (edited 05-16-2003).]
Ken hAAmer is offline  
Old May 16, 2003, 9:31 am
  #10  
Original Member
 
Join Date: May 1998
Location: Canada
Programs: AC SE 2MM, HH Dd, SPG; IC Pl/A; AA; DL
Posts: 14,320
BlondeBomber is offline  
Old May 16, 2003, 9:35 am
  #11  
 
Join Date: Dec 2001
Location: YEG - No Particular Loyalty Anymore
Posts: 3,610
ProudEdmontonian is offline  
Old May 16, 2003, 9:37 am
  #12  
FlyerTalk Evangelist
 
Join Date: Mar 2000
Location: Southern Alberta
Posts: 20,550
Give 'em h*ll Ken.
airbus320 is offline  
Old May 16, 2003, 9:40 am
  #13  
FlyerTalk Evangelist
 
Join Date: Nov 2002
Location: Chilling with penguins
Posts: 13,043
YOWkid is offline  
Old May 16, 2003, 9:50 am
  #14  
 
Join Date: Jun 2002
Posts: 5,284
So Ken, just to clarify, where do you stand on this issue?

cattle is offline  
Old May 16, 2003, 10:37 am
  #15  
At Large
 
Join Date: Jan 2002
Location: oakville Ontario canada;AC*SE
Posts: 16,985
Get ready for a shock guys-----I mostly agree with SH's last post
parnel is offline  

Thread Tools
Search this Thread

Contact Us - Manage Preferences - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.