Marking 20 years
of bold journalism,
reader supported.
News
Labour + Industry

Hard Landing for Aveos Workers

Months after their privatized former Air Canada firm collapsed, employees face unemployment, benefit cuts and uncertainty.

Tom Sandborn 2 Aug 2012TheTyee.ca

Tom Sandborn covers labour and health policy beats for the Tyee. He welcomes your feedback and story tips at [email protected]

Months after Aveos Fleet Performance filed for bankruptcy, the more than 2,600 Canadian workers who lost their jobs with the firm are still reeling from the rough landing by their employer, a former subsidiary of Air Canada. Not only are they scraping for employment, former Aveos workers also face uncertainty about how much their employer's economic woes are going to cost workers in terms of reduced pension benefits.

Meanwhile, many skilled, high-paying air frame maintenance and repair jobs once carried out in British Columbia have flown to other countries, yet more fallout from a chain reaction of business dealings related to Air Canada that led to the crash of Aveos.

Aveos filed for bankruptcy on March 19 of this year, casualty of a long and widely criticized process that involved Air Canada being privatized, experiencing bankruptcy itself and then emerging in 2004 to spin off many of its component parts. That included making the low-cost carrier Jazz, the Aeroplan travel points system and Aveos into independent companies, a process that channelled billions of dollars to investors and top management but left some of the spun off components in sorry financial shape.

As of last September, for example, Aveos's liabilities exceeded the book value of its assets by more than $165 million, and its 2011 Q4 financials showed a net loss (before tax) of $48.9 million, according to court documents filed on March 18 with the commercial division of Quebec's Superior Court.

According to Christopher Hiscock, the president of lodge 764 of the International Association of Machinists and Aerospace Workers (IAMAW), the union that represented the over 350 B.C. employees of Aveos, only one in five of his laid-off members have found work since the firm declared bankruptcy on March 19, and not all of those have found work in their trade or at equivalent salaries.

"One guy I know is refueling planes at the airport now for $15 an hour, whereas a few months ago he was making more than $33 an hour at Aveos working as a structural engineer," he told The Tyee Monday.

Hiscock said the situation was nearly as bad across the country, although "maybe a little better in Montreal," where he estimated that hiring by Bombardier, Quebec Hydro and other employers meant that about 30 per cent of former Aveos workers in Quebec were back to work.

Aveos air frame work in BC 'dead as a doornail'

And the prospects for renewal of the role that Aveos's B.C. workers played in providing contract work for Air Canada are not encouraging, Hiscock said. He did, however, identify some reasons for partial optimism about a process that could result in around 50 of his laid-off members hired to staff a small engine overhaul operation in B.C. under new management.

"The air frame part of the business is done in B.C. -- dead as a doornail. No air frame work will remain in Canada," he said. He explained that Aveos formerly provided services in three areas of airplane maintenance in Canada: air frame work, engine overhaul and component work. The latter involves installing and maintaining technological components that have been pre-assembled elsewhere.

Hiscock said the equipment from the air frame work which had previously been done in B.C. had already been sold off by a local auction firm. According to a July 26 statement from Air Canada, air frame work formerly done by Aveos in Canada will now be sent to firms in the U.S., Israel and Singapore.

Aveos workers 'abandoned' by Tories: Sinclair

"The former employees of Aveos have been abandoned by the federal government," B.C. Federation of Labour president Jim Sinclair told The Tyee. "Far from fighting for these workers, Stephen Harper's Conservatives appear to have enabled Air Canada to move their jobs south."

The Tyee asked for an interview with Denis Lebel, the federal minister of transportation, to discuss this and other criticisms that have been levelled at the performance of the Harper government on the Aveos file, but he indicated through a media spokesperson he would not make himself available. The spokesperson did, however, provide this statement:

"The entry of Aveos Fleet Performance Ltd. into the protection of the Companies' Creditors Arrangement Act (CCAA) is regrettable. This was the action of a private company, and Transport Canada has no role to play in this situation. The CCAA process is ongoing, including a court-supervised divestiture process."

Hiscock said that his union was in discussion with the Province of B.C. about the possibility of B.C. providing money to retrain former Aveos workers to staff a new engine overhaul operation in B.C. if a company, MTU Maintenance Canada, widely viewed as one of the two leading corporate bidders to take over the engine overhaul work, is chosen. A successful bid by MTU could create jobs for up to 50 of the laid-off Aveos workers in B.C. For this reason, Hiscock said, his union supported the MTU bid.

Minister Bell praised by Aveos union

Hiscock praised B.C. Minister of Jobs, Tourism and Innovation Pat Bell for the minister's efforts to obtain a provincial commitment to fund the retraining efforts.

"I can't say enough about Bell," the labour leader said. "He has really been putting the pressure on. He's come through for us in spades."

An emailed statement from Minister Bell provided to The Tyee cites efforts made on behalf of laid-off Aveos workers.

"We have been working aggressively with the union from the beginning of this closure to support workers," the statement says, "...with unanimous support in the legislature by both sides of the house. In the Courts with requests of the appointed monitor to sustain supply contracts; with the federal government in discussions with Minister Lebel; and, with employment and training programs, job fairs and ministry facilitation with other employers."

The IAMAW is also supportive of one of the companies in the running to take over the component work previously done by Aveos, Hiscock said. A J Walter Aviation, a firm based in the U.K., would keep an estimated 30 to 50 per cent of the former Aveos component work in Canada, he said.

Pensions up in the air

Meanwhile, former Aveos workers have had to deal with uncertainty about what their employer's bankruptcy means for the future of their pensions. Already, a court deadline for workers to be informed of their pension future has been extended because the relevant termination documents, necessary for pension computations, have not been issued by Air Canada. However, according to an internal union pension plan update document made available to The Tyee by the IAMAW, Air Canada is not to blame for this delay, as it has not been provided with necessary information by Aon Hewitt, the firm acting as government appointed pension administrator for the defined benefit pension plan for Aveos workers.

Aon Hewitt, in turn, sent a letter to former Aveos workers on June 19 warning them that "As a result of the plan termination in a deficit position, your entitlement to benefits will be reduced."

It is unclear just how big that reduction will be, the IAMAW's Hiscock told the Tyee. He estimates, however, that the reduction (which will only diminish pension benefit entitlements accrued since last year, when Aveos workers were transferred from the Air Canada system to a separate Aveos payroll and pension system and not against the larger entitlement his members have earned while employed at Air Canada) could be as large as 30 per cent.

The Tyee contacted Aon Hewitt to ask about the pending reductions in Aveos pension benefits, but Stephen Barrigar, vice President and director, Aon Risk Solutions, marketing and communications, declined to comment, citing client confidentiality.  [Tyee]

Read more: Labour + Industry

  • Share:

Facts matter. Get The Tyee's in-depth journalism delivered to your inbox for free

Tyee Commenting Guidelines

Comments that violate guidelines risk being deleted, and violations may result in a temporary or permanent user ban. Maintain the spirit of good conversation to stay in the discussion.
*Please note The Tyee is not a forum for spreading misinformation about COVID-19, denying its existence or minimizing its risk to public health.

Do:

  • Be thoughtful about how your words may affect the communities you are addressing. Language matters
  • Challenge arguments, not commenters
  • Flag trolls and guideline violations
  • Treat all with respect and curiosity, learn from differences of opinion
  • Verify facts, debunk rumours, point out logical fallacies
  • Add context and background
  • Note typos and reporting blind spots
  • Stay on topic

Do not:

  • Use sexist, classist, racist, homophobic or transphobic language
  • Ridicule, misgender, bully, threaten, name call, troll or wish harm on others
  • Personally attack authors or contributors
  • Spread misinformation or perpetuate conspiracies
  • Libel, defame or publish falsehoods
  • Attempt to guess other commenters’ real-life identities
  • Post links without providing context

LATEST STORIES

The Barometer

Do You Think Trudeau Will Survive the Next Election?

Take this week's poll