Source: Reuters Author: Rita Devlin Marier 06/08/2009
Subject Concerned: Government Airlines Human Resource
Air Canada said on June 8 that its planes flew less full in May even as it cut capacity in the midst of a sharp global downturn in the airline industry.
The country's biggest airline reported a load factor of 81 percent for last month, down from 84.3 percent in May 2008.
Traffic, measured by revenue passenger miles, totaled 3.55 billion, down 10.4 percent, while capacity fell 6.7 percent to 4.38 billion available seat miles.
Air Canada is dealing with a tight cash position as it weathers the recession and struggles to fund a multi-billion-dollar pension shortfall for its employees -- a key sticking point in current contract negotiations with its unions.
Several airline analysts believe Air Canada may be forced to file for bankruptcy protection later this year -- the second time in six years it has needed court protection.
The Canadian government stepped into the labor talks last week, a surprise to both the airline and its unions.
Finance Minister Jim Flaherty defended his decision on June 8, saying: "I appointed the mediator last week because the pension issue is fundamental to a resolution of Air Canada's operations."
Asked if he is prepared to impose a deal on the airline and its unions over the thorny pension issue, he said: "There are certain pension rules. There are capitalization requirements with respect to pensions, and Air Canada and others who are fully regulated are obliged to abide by those rules. And if they run afoul of those rules, then the Office of the Superintendent of Financial Institutions can take action."
Also on June 8, Jazz Air, Air Canada's regional affiliate, reported a load factor of 65.6 percent in May, a drop of 6.8 points year-over-year.
Capacity at Jazz rose 0.2 percent while traffic fell 9.2 percent to 317 million revenue passenger miles.