Key Points In The November 1/99 Agreement Between Onex And CAW-Canada


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Airlines
Key Points in the November 1/99 Agreement between Onex and CAW-Canada

While investors battle for the best deal for shareholders and executives, the CAW-Canada has demanded that the two investor groups recognize our members’ rights. On behalf of our members, CAW-Canada president, Buzz Hargrove, called on the investors of both Air Canada and Onex to negotiate a job security agreement as part of the restructuring of the airline industry. At recent meetings of the CAW union leadership of Locals 2213 and 1990 with Air Canada and Onex executives, the union spelled out the concerns of the membership – no forced layoffs, no forced relocations, separate seniority lists, equality of wages, protection of seniority rights, and no transfer of CAW members’ work to the U.S. or offshore. The CAW confirmed these concerns in newspaper ads aimed at the federal government as well as investors in major papers across the country the weekend of October 30, 31.

The CAW position was clear: regardless of who ended up owning the new Air Canada, CAW members’ rights must be guaranteed in writing.

On November 1, 1999, after several days of intensive negotiations including throughout this past weekend, the CAW-Canada national president Buzz Hargrove and Gerald Schwartz, President and Chief Executive Officer of Onex, signed a Restructuring Agreement that meets the concerns raised by our union on behalf of our members with both investor groups.

The Air Canada investment group, without bargaining with our union and only after being informed by CAW president Buzz Hargrove of the agreement reached with the Onex investors, then offered a letter Monday, November 1. The letter contained vague terms, no commitment to enhanced retirement benefits and retained a four-tier wage system for workers under one company. Air Canada’s demand that CAW members give up our collective bargaining rights for 6 years would have been unacceptable in good times and is clearly not acceptable in an industry going through major restructuring. As well, Air Canada’s restructuring proposal continues to include, in spite of strong opposition from all unions, a ‘no frills’, low cost airline operating out of Hamilton. All unions have expressed concern about the downward pressure of a 25-35 per cent lower wage cost carrier on standards for all workers in the new company.

The Agreement with Onex was negotiated to ensure job security for CAW members in the event that Onex is successful in its bid to merge the two carriers. Even more important we have established through our bargaining a minimum standard that must be met by whichever investment group ends up owning the new airline.

We’re calling on our members to demand that the Air Canada investment group meet the same minimum standards if they are the successful bidders.

During the restructuring period until March 31, 2002 when the current Air Canada Collective Agreement expires, and when your union will be back in bargaining on your behalf, the following provisions will apply:

  • The New Air Canada will operate as one company with two business units and two separate seniority lists.
  • Wages at the new company will reach parity for CAW members by January 2002.
  • Onex committed in writing that CAW’s members at the main carriers will not be terminated, laid off or forced to relocate.
  • At the regional carriers, there will be no layoffs. In some smaller bases there may be minimal relocation, but the union and the company agreed to look at retirement incentives at the mainline operations to create job openings for regional employees facing relocation.

* The CAW has bargained a commitment in writing that no CAW member’s work will be moved to the U.S. or off-shore and Onex will repatriate airline jobs that have moved to the U.S.

Retirement Incentives and Severance Packages
Where there is a need in the mainline carriers to reduce the number of employees, there will be retirement incentives and voluntary severance packages offered by seniority.

Here is a summary of the options.

Voluntary Options at Mainline Carriers Incentive
1. Immediate Unreduced Early Retirement
Air Canada: 1
Age 55 and 80 points
CAI:
Age 55 and 25 years service or age 60 and 80 points
  • Retire with a monthly pension
  • Receive a monthly allowance to age 65 (or lump sum equivalent)
  • The allowance + pension will equal 60% to 80% of earnings (varies by years of service)
  • Life insurance and health care continued to age 65
2A. Within 5 years of Unreduced Early Retirement
(See above conditions in each company plan)
  • Receive a monthly bridge to early retirement date
  • Bridge equal to 50% of earnings (if within 5 years of retirement or up to 65% (within 1 year of retirement)
  • Continue to accrue pensionable service as if at full earnings.
  • Life insurance and health care continue to age 65
2B. Within 2 years of Unreduced Early Retirement
  • May opt for 2.5 weeks pay per year of service in lieu of Bridge in Option 2A above.
  • No cap on payment for employees within 1 year of retirement; 60 weeks cap on employees within 2 years of retirement.
3. 8 years service and not eligible for Options 1 or 2.
  • Severance payment of 2 weeks pay per year of service to a maximum of 52 weeks pay.
  • Life insurance and health care continue to for a period of 2 weeks per year of service.


(1) The pension plans will remain separate. The early retirement provisions are different in the two plans. At Air Canada an unreduced pension is payable at age 55 if age plus service equals 80. At Canadian Airlines an unreduced pension is payable at age 55 and 25 years service or at age 60 if age plus service equals 80.

Regional Carriers
There will be no forced layoffs and every effort will be made to avoid relocation. However, if relocation is necessary, relocation expenses will be covered. A Severance Payment Plan will provide 2 weeks pay per year of service to a maximum of 52 weeks pay for employees with 2 or more years service.

Travel Passes
Retiree travel benefits will be available to employees if they have age plus service equal to 60 and a minimum of 10 years service.


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