#Canadian flag carrier’s proposed low cost #airline at the root of #labor woes
Air Canada’s plan to start a low cost carrier for holiday destinations seems to have hit a snag in the wake of its latest labour controversy. The Canadian national carrier’s earlier deal with its employees was signed under the view that once the airline finds a way out of its troubles. However, the latest cause for concern seems to be a requirement wherein employees on the payroll of the proposed LCC would be paid less than their mainline counterparts. The deal, which was agreed between the airline and union, generated such an overwhelmingly negative reaction that it resulted in the sacking of some of the union leaders.
On one hand, the employees had expressed their displeasure about compromising on their pay-cuts when the airline faced heavy turbulence due to the economic crisis and market downturn. However, they were of the opinion that things will be back to normal once the airline returned to profitability. Also, the airline’s recent financial performance backed their opinions, as the airline has come back to square one after posting higher operating revenue during the second quarter while drastically reducing its net loss to $46 million, down from last year’s $318 million.
The real fly in the ointment here is that Air Canada CEO Calin Rovinescu has made it clear that the proposed LCC will not get off the ground unless it is cost-effective, AKA lower payroll and work rules that will be in the carrier’s favour.
What remains to be seen is will they work out a compromise as many analysts are predicting a global economic recovery, which would really help the proposed LCC make a name for itself without much efforts. Will Air Canada become successful in winning over its employees without compromise or will it budge to their employees demand?
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