Request for intervention from Ottawa | Air Canada is pushing the envelope a bit far, says Transat

Air Canada is pushing the envelope a little too far by requesting unprecedented intervention from Ottawa to avoid a labour dispute with pilots, denounces Transat AT, which warns that this scenario would unduly advantage the largest air carrier in the country.

In the airline industry, no one has had to make such a request in the context of collective negotiations, recalled the president and CEO of the leisure travel specialist on Thursday.

The latter gave as an example negotiations between Air Transat and its 2,100 flight attendants. The talks were heated between the union and the employer, but a negotiated agreement was eventually reached, Annick pointed out. Guerard.

“Transat was severely affected earlier this year by several episodes of collective negotiations with our flight attendants without this type of recourse [une demande d’arbitrage exécutoire] ” she explained, as part of a conference call with analysts to discuss third-quarter results.

M^me Guérard commented on the revelations of The Press indicating that Air Canada had asked the Trudeau government to impose binding arbitration even before the start of the strike by its 5,400 pilots, which could be triggered as early as September 18.

The maple leaf company made this request in a letter dated September 7 and sent to federal Labour Minister Steven MacKinnon.

The letter asks him to turn to the tool that helped end the labor dispute that paralyzed the country’s two largest railroads last month, but to use it before a strike is even called.

Enough help already

Air Canada has benefited enough from the Trudeau government’s support, believes the president of the blue-star company. If Transat was able to benefit from hundreds of millions in government loans during the COVID-19 pandemic, this caused its debt to explode, she stressed.

In this context, it is already difficult to compete with the main player in the Canadian industry, which is still knocking on Ottawa’s door, worries M.^me Guerard.

“The hundreds of millions of repayable loans have [fait exploser notre dette]limiting our ability to attract capital to compete on equal terms with Air Canada, which received a capital investment of $500 million [du gouvernement fédéral] under restrictive conditions,” she added.

Transat must repay 740 million to the federal government.

This request from Air Canada comes as Transat is trying, without success, to reach an agreement with the Trudeau government to restructure its debt. The president of the airline and tour operator also revealed that Quebec was involved in this matter.

With a fine-tooth comb

In the meantime, major changes are on the horizon at Transat, which spent a good part of the summer combing through its activities, with the help of an external firm, in the hope of restoring some luster to its finances.

The presentation of third-quarter results – in which the company delivered results below analysts’ expectations – coincided with the unveiling of the “Elevation program”, which aims to improve profits by around 100 million over the next 18 months.

“We had to deploy something extremely powerful to maximize the value of Transat,” said Mr.^me Guerard.

We should have more details by the end of the year on the initiatives that will be put forward, but they will be divided into three main themes: technological improvements and the use of artificial intelligence, the review of expenses with suppliers and network optimization.

It was not immediately clear whether any staff reductions were planned.

“We believe Transat should generate more than $100 million in improvements if it wants to be able to generate a profit margin above 10%,” said analyst Cameron Doerksen of National Bank Financial in a note sent to clients.

Transat’s president warned that the coming months are likely to be turbulent in the industry. Nevertheless, unit revenues – a key indicator of performance in the airline sector – are showing encouraging signals, she added.

According to M^me Guérard, the uncertainty hanging over Air Canada could have a positive impact on bookings at Transat in the fourth quarter.

On the Toronto Stock Exchange on Thursday, Transat shares fell 7%, or 14 cents, to $1.82. Since the beginning of the year, its share price has fallen by more than 52%.