Canada's Minister of Labour Lisa Raitt issued (08-Mar-2012) a referral pursuant to the Canada Labour Code, preventing both the International Association of Machinists and Aerospace Workers (IAMAW) from commencing a strike and Air Canada from locking out pilots, originally scheduled for 12-Mar-2012. Air Canada previously announced plans to lock out its pilots after the Air Canada Pilots Association (ACPA) failed to accept the carrier's recent offer regarding contract negotiations which commenced 18 months ago. Meanwhile, WestJet announced plans to add extra flights to accommodate passengers that will be otherwise stranded in the event of strike or lockout at Air Canada. [more - original PR - WestJet] [more - original PR - Air Canada] [more - original PR - Canadian Government] [more - original PR - ACPA]
Air Canada and IAMAW stopped from commencing strikes and lockouts
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A decade ago it would have been unheard of for Air Canada to contemplate reaching an investment grade credit rating. The airline had emerged from bankruptcy protection, but was still struggling financially. It would teeter on the verge of another formal restructuring before setting out on a course to restructure its financial foundation – a process that has allowed the airline to improve its balance sheet and leverage.
Air Canada’s leverage targets for YE2018 will not meet the general proxy for an investment grade rating; however, its lower capital commitments and debt refinancing could create an opportunity for achieving that status beyond 2018.
Attaining an investment grade credit rating likely remains a longer term goal for Air Canada as its major financial goals in the short term remain paying down debt that is creeping up due to a fleet renewal, as well as funding growth to drive long-term shareholder value. More meaningful shareholder returns will likely occur once the company reaches what it deems as acceptable progress in debt management, and reaches a certain maturity level in growing its international network.
This is Part 2 in a two part series on Air Canada. Part 1 dealt with long haul LCC subsidiary, rouge.