Air Canada's Unions Are On A Self Destructive Path
Why is Air Canada's unions ignoring the corporation’s shaky financial state? Surely, they can see Air Canada's balance sheet? Technical bankruptcy howls at you when you look at First Quarter 2011, Interim Unaudited Condensed Consolidated Financial Statements and Notes? Clearly, these unions realize Air Canada is insolvent!
Without a strong appetite for risk, why would anyone invest in the airline business? Probably, it's the most structurally unsound industry in North America. Except for Southwest and other similar business model airlines, add to this, the outdated adversarial management-union relations, and you have a perfect disaster. With unions snapping at its heels and management entrenched in its traditional role, how can Air Canada be a long term profitable, robust airline? I don't think it can!
Is the problem primarily union demands? No, but look closely at Southwest Airlines, the only airline profitable consistently for 37 years. Its business model promotes cooperation and flexible working arrangements with union employees. You do not see the adversarial us-them, management-union relationship that is obvious in Air Canada.
The strike by sales and customer service employees at Air Canada will be an opportunity for Air Canada to encourage more customers to use, and depend on online resources. Besides, it could be a bonanza for WestJet with its superior service, but unattractive domestic schedule. Sadly, for Air Canada's unions, I can't see a positive side; they are negotiating with a company that’s broke in a fiercely competitive, and highly unprofitable industry!
Meanwhile, I think Air Canada's unions need to study the past three quarter's financial statements, to get a better glimpse of reality. Shareholders too, need to examine management salaries and bonuses and try to get proxies to stop over paying Air Canada’s leaders who do not seem to be trying to change the business model that leads inevitably to poor morale, bankruptcy, and to a stronger, non union WestJet.
As well, unless management and unions change their approach to one another dramatically, I suggest Air Canada's unions need to ponder these two questions: First, when will Air Canada file again for bankruptcy protection? Second, what are the nature, and type of concessions each union will be forced into to allow Air Canada to emerge from bankruptcy protection?