Air Canada is forecasting that its employees will reap $2,125 each in extra compensation for 2010 after the airline met an array of financial and operating targets. But the pay-for-performance system clashes with union desires for sharp jumps in base wages.
Management is striving to instill a corporate culture that rewards workers for flights arriving on time, friendly customer service and company profitability. As contracts with its five unions near expiry, however, labour leaders say they're determined to make up for years of wage sacrifices and workplace concessions.
While a new program to issue $500 worth of Air Canada shares to each employee is being billed as a sound way to help engage the work force, union leaders said staff would rather see base wages grow.
The differing priorities highlight the challenges ahead in contract talks as Air Canada seeks to continue on the path to financial recovery, less than two years after a cash crunch nearly forced it to seek bankruptcy protection. Last week, the Montreal-based carrier announced that it posted a $107-million profit last year - its first annual profit since 2007.
"Our members have done their part to help Air Canada get back to making a profit. Are they looking for increases in wages and benefits? You bet they are," said Dave Ritchie, general vice-president of the International Association of Machinists and Aerospace Workers (IAMAW).
Leslie Dias, national representative for the Canadian Auto Workers union, said her members make an average of $24.58 an hour, only 4.5 per cent more than they did in 2003, so the "bonuses" for 2010 don't replace wages that have risen at less than half the inflation rate. She said employees are working harder than ever, awaiting recognition not only for having their paycheques frozen over past two years, but also for enduring wage cuts from 2003 to 2005. (In April, 2003, Air Canada entered 18 months of bankruptcy protection.)
Officials from the CAW, which represents 3,800 airport customer service agents and call-centre staff, met last Friday with management representatives to kick off negotiations. The two sides are to reconvene next Monday.
When Calin Rovinescu took over as Air Canada's chief executive officer in April, 2009, he acknowledged that it would take time to change the corporate culture at the airline. Last week, he reiterated the importance of rewarding a productive work force.
"It is my desire to build a focused, performance-driven culture. In 2010, we delivered on all of our priorities we set for the company, and we will both reward and celebrate this so we can build on our successes in the years ahead," Mr. Rovinescu told analysts on a conference call.
On top of wages negotiated in labour contracts, the airline's employees are garnering about $55-million in other remuneration pegged to 2010's performance, or $2,125 for each full-time worker, according to Air Canada.
At WestJet Airlines Ltd., which has a non-unionized work force, more than 84 per cent of employees own shares in the Calgary-based carrier. Air Canada employees have tended to avoidstock ownership, but last week the airline announced that it will soon grant $500 worth of shares to each eligible employee worldwide, in a $14-million payout. "Half of these shares will vest immediately and the other half will vest in February, 2014," Air Canada said in a statement.
As well, in a "special incentive," $500 in cash will be awarded to each member of the carrier's Canadian defined-benefit pension plan. "The award is being made pursuant to the 2009 pension funding and other arrangements as a result of the company achieving certain financial targets in 2010. This award is being made at a cost of $13-million to Air Canada," the airline said.
About $1,125 is flowing to each eligible employee in a $28-million "sharing our success" program that rewards employees for meeting certain operational and customer service targets, notably on-time performance of scheduled flights and favourable passenger satisfaction surveys, among other measures. Workers are eligible to receive $75 a month for achieving on-time performance targets and another $75 a month for meeting consumer-oriented goals.
"In 2010, the company contributed $243-million to its pension plans. Moreover, based on the close of markets on Feb. 10, 2011, the 17.6 million shares granted to the unions for the pension fund in 2009 are now worth about $60-million," Air Canada added.
The CAW's Ms. Dias said union leaders are bracing themselves for a long set of talks over the next collective agreement. "We plan to meet for an extended period of time if we're making progress. We could be meeting for a few weeks," she said.
The CAW's contract expires Feb. 28. Collective agreements expire March 31 at the IAMAW, the Canadian Union of Public Employees, Air Canada Pilots Association and the Canadian Airline Dispatchers Association.