Air Canada CEO Robert Milton will meet with union head Buzz Hargrove Thursday morning, in an attempt to break a deadlock in negotiations aimed at settling the airline's financial future.
For three days the airline's representatives have negotiated with Hargrove's Canadian Auto Workers over a wage-cutting deal. The CAW is the lone holdout among Air Canada's six major labour groups.
The meeting is bound to be tense. "Air Canada's future does not rest in the leadership of one union's hands," Milton told reporters on the phone Wednesday. "We have come to far and achieved too much to let that happen."
The last-ditch talks between Milton and Hargrove come at the urging of Ontario Superior Court Justice Warren Winkler, who is supervising the airline's attempt to restructure under protection from creditors.
Air Canada's court protection from its creditors is scheduled to expire on Friday.
The airline needs to save $200 million in labour costs to satisfy a bailout deal with Germany's Deutsche Bank. That agreement is also a key to Air Canada's $1.5-billion US financing agreement with GE Capital Aviation Services, which has said it could drop its funding if Deutsche Bank withdraws.
Air Canada reportedly wants its 6,400 CAW employees -- ticket-counter and call-centre agents, crew schedulers and maintenance staff -- to accept $27 million in reductions. That's in addition to $1 million of wage cuts agreed to in April 2003.
But Hargrove says his union's accountants peg the shortfall at approximately $18 million in new concessions.
"So that's where we're at," Hargrove said, noting that he would be willing to have an independent economist come in and try to reconcile the difference.
With Air Canada dominating domestic and international travel, more than $1 billion in assets and as much again in concessions from the unions, Hargrove said he doesn't believe the airline will collapse.
Analysts have warned that if Deutsche Bank walks away, it will be difficult to find replacement investors for Air Canada, which remains under bankruptcy protection.
In his news conference Wednesday afternoon, Hargrove suggested other investors are lining up for a crack at the struggling airline. Former United Airlines chief executive Gerald Greenwald may be interested, he suggested.
"He sounds very confident to me that he can make this thing go," Hargrove said. "He wouldn't be talking to me if he wasn't."
Milton shot back at the union, saying it was floating "myths" that potential investors are waiting in the wings, if
Deutsche Bank backs out.
"There are many myths being floated about what is on the table with the CAW and who might be willing to step in and invest in Air Canada," Milton said in a message posted on Air Canada's website.
Air Canada persuaded Deutsche Bank to step in after Hong Kong billionaire Victor Li walked away in April from an agreement to buy a third of the airline for $650 million.
Air Canada CEO to meet with union head Hargrove
