Air Canada CEO Calin Rovinescu is Report on Business magazine's pick for top leader of 2013.
It is still dark when we hit the gravel trail. As we make our way around the Lac des Castors pond, the wind tears away at the last leaves of a summer gone too fast. Only our crackling footsteps on the frozen ground break the silence.
By the time we reach the long staircase that flanks Mount Royal, Montreal is lazily waking up to a cold and sunny day. There are 260 steps, and Calin Rovinescu is climbing to the top, two stairs at a time.
The president and CEO of Air Canada is not the fastest runner, he concedes between two winded breaths. But you can tell the 58-year-old executive wants to stay ahead of his jogging buddies—Fednav Group CFO Paul Setlakwe and Norton Rose Fulbright senior partner Pierre Bienvenu—as we go up and down three times, breaking only for sets of push-ups that he instructs me to do in a tone that brooks no argument. Even if this is no race, the high-flier Rovinescu is going to win.
That he is an über-competitive hard-ass is the one thing his friends and detractors agree on. Testament to that is Air Canada’s turnaround. The airline is the comeback story of 2013. Its stock skyrocketed 277% between the start of the year and Nov. 11—although it remains a far cry from its 2006 IPO price of $21. Among North American airline stocks, only American Airlines’ pink-sheet-listed shares have fared better, with a return above 1,000%. While all airline shares have gone up, up and away, thanks to high demand for air travel, Air Canada’s ascent rests on the belief that the country’s biggest airline has finally got its act together.
The contrast with 2009 is glaring. When Rovinescu became CEO, Air Canada was a plane crash waiting to happen. The financial crisis had morphed into a global recession. Plunging oil prices provided no relief. The airline’s hands were tied by fuel contracts signed in the fear that crude would spike past its 2008 summit of $147 (U.S.) a barrel—a $400-million mistake.
But it was the sharp drop in equities and basement-level interest rates that almost drove Air Canada back into creditor protection for the second time in six years. Had the airline gone belly-up, it would have had to scramble to find the $2.9 billion required to ensure the pensions of its employees and retirees.
Air Canada lost patience with then-CEO Montie Brewer and asked Rovinescu, former CEO Robert Milton’s right-hand man during the 2003-2004 restructuring, to replace him. He started on April Fool’s Day, 2009, and many of his friends thought he was the biggest fool of them all to leave Genuity, the investment bank he co-founded with dealmaker David Kassie. “It was impossible for me to pass this up,” says Rovinescu.
“For me,” he adds, “Air Canada was never just another company.”
Unlike Robert Milton, who, at age 10, decided he would preside over an airline after watching a Pan Am 747 glide over Brussels, Rovinescu is no aviation buff. When Milton first mentioned a wide-body to him, he imagined a bulky guy, not a twin-aisle airplane.
But Rovinescu’s career is intertwined with Air Canada’s history. At 31, the Stikeman Elliott lawyer became lead external counsel on the airline’s privatization, completed in 1988. It wasn’t the biggest deal he had worked on, but it made him a sought-after expert. As he puts it, it was a “defining moment.”
The Air Canada work kept coming. In 1992, he advised the airline when it sold its courier service, Gelco Express, and its enRoute credit card, and again when it tried, but failed, to acquire Canadian Airlines. In 1999, he also helped Milton fend off a hostile takeover by Onex Corp. By 2000, he was so indispensable that Milton asked Rovinescu—then a managing partner at Stikeman—to join the airline.
Any expectation the drama would abate vanished with the deflating tech bubble, the 9/11 terrorist attacks and the SARS outbreak. In 2003, Air Canada hit a wall. Faced with slowing revenues and a debt of nearly $13 billion, inherited largely through its eventual acquisition of Canadian Airlines in 2001, the company sought bankruptcy protection.
As chief restructuring officer, Rovinescu did most of the dirty work. But he threw in the towel in 2004, when the $650-million investment he had brokered with Victor Li’s Trinity Time Investments collapsed. The deal-breaker: Li had requested that Air Canada’s new hires receive cheaper defined-contribution pensions. For the union employees, who felt they’d already made huge sacrifices in the restructuring, this was the last straw. In his letter of resignation to Milton, Rovinescu compared the trying negotiations to “playing full-contact, multidimensional chess in a fishbowl.”