Air Canada threatens sale of Jazz

 - November 30, 2007, 11:05 AM

Air Canada last month suggested the potential sale of Air Canada Jazz, just as executives prepared to meet with key unions to discuss cost cuts at its money-losing regional subsidiary. Air Canada seeks to trim a total of C$650 million ($425 million) in labor costs, an amount equal to roughly 23 percent of its annual payroll and related expenditures. Air Canada Jazz aims to shed C$90 million–the exact amount it lost last year.

In November Jazz threatened to cut 391 jobs–roughly 9 percent of its workforce–to compensate for a 30-percent drop in short-haul travel over the past year. The airline had already laid off more than 130 employees earlier in the year.

Unions representing more than 35,000 workers at Air Canada’s mainline operations, including pilots, flight attendants, ticket agents, maintenance and ground services personnel, have all balked at the airline’s calls for renegotiated contracts. Meanwhile, ALPA representatives for Air Canada Jazz pilots have accused the parent company of inflating maintenance and ground-service costs to Jazz, thereby creating pressure for labor cost concessions at the regional airline.