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Ac to cut expenses by $50MM immediately

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Hiring freeze, cutting costs with suppliers for current second quarters among the moves spelled out in CEO's memo to senior management

Air Canada is hoping to cut $50-million across the company in the current second quarter, as the airline battens down the hatches ahead of a storm of new competition.

In a memo to senior management obtained by The Globe and Mail, chief executive officer Calin Rovinescu outlined measures to be taken immediately, including a hiring freeze, stopping the use of consultants and further efforts to trim costs with suppliers.

"While we have made good progress on controlling costs, the ground beneath us is shifting almost daily and the goalposts are moving with it," Mr. Rovinescu said in the memo.

He noted that "the revenue environment has been and is expected to remain extremely challenging. We are facing intensifying competition competition and significant capacity additions" in key markets.

Exceptions will be made only for new hires and consultants who are considered "mission critical," and the freeze does not apply to hiring new employees for the launch of Air Canada's new discount carrier, Rouge.

Air Canada's cost-cutting moves come as the Canadian airline industry girds for heightened competition – and possible price wars – with the launch this summer of Rouge, and WestJet Airlines Ltd.'s new regional subsidiary, WestJet Encore.

In addition, the bid by Porter Airlines to get approval to fly longer jet routes from Toronto's Billy Bishop Toronto City Airport could intensify the pace of competition.

Air Canada executives approved the $50-million cost-cutting target this week, which represents less that 2.5 per cent of the the airline's non-fuel costs for the quarter. The goal is to turn a profit in 2013, continuing the airline's relatively strong performance in 2012.

"Last year's profit was an important achievement for all of us and it cannot be a 'one-off' nor can we allow Air Canada to relapse into a money-losing spiral," Mr. Rovinescu wrote in the memo.

Many airlines are scrambling to reduce costs, including WestJet, which is looking to shave $100-million in expenses over three years. Many carriers have instituted major company-wide cost overhauls, such as Air Transat's recent layoffs and restructuring.

At Air Canada, each department is required to contribute cost-cutting targets, the memo said. "We are well within the quarter so we need to act fast," the company's CEO noted.

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http://www.flyertalk.com/forum/air-canada-aeroplan/1466037-air-canada-trim-50-million-costs.html

here's some misquotes from the bunch on FT and their complete ignorance of things in the airline industry.

1.http://www.flyertalk.com/forum/20733142-post36.html

Here's someone trying to suggest that WJA only has 5 VP's. The ones shown are EVP's which clearly indicates there are VP's that report to them. In fact there are about 12 of them in an airline that is about 30% the size of AC and does not have any overseas ops.

2. http://www.flyertalk.com/forum/20732156-post23.html

Here's another gem from the ever "brilliant" Hamer who thinks they should try winning back lost customers. In fact their loads are higher than ever and they have more loyal top tier members than ever before. Besides which Hamer can't fly anymore anywhere. Stupidity reigns.

3.http://www.flyertalk.com/forum/20732186-post25.html

here's an even funnier one with this character trying to compare AC's management with at at National defense!!! I couldn't make this up if I tried!!!!

4.http://www.flyertalk.com/forum/20732947-post35.html

Here's a guy who says he had a complaint that was never handled but doesn't list it. I call BS.

FT is officially whiners international and their key contributers are old white guys who don't even fly anymore and a bunch of young characters who have no clue and simply bitch because they dont get SE for their 25/50K miles flown every year.

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http://www.flyertalk.com/forum/air-canada-aeroplan/1466037-air-canada-trim-50-million-costs.html

here's some misquotes from the bunch on FT and their complete ignorance of things in the airline industry.

1.http://www.flyertalk.com/forum/20733142-post36.html

Here's someone trying to suggest that WJA only has 5 VP's. The ones shown are EVP's which clearly indicates there are VP's that report to them. In fact there are about 12 of them in an airline that is about 30% the size of AC and does not have any overseas ops.

2. http://www.flyertalk.com/forum/20732156-post23.html

Here's another gem from the ever "brilliant" Hamer who thinks they should try winning back lost customers. In fact their loads are higher than ever and they have more loyal top tier members than ever before. Besides which Hamer can't fly anymore anywhere. Stupidity reigns.

3.http://www.flyertalk.com/forum/20732186-post25.html

here's an even funnier one with this character trying to compare AC's management with at at National defense!!! I couldn't make this up if I tried!!!!

4.http://www.flyertalk.com/forum/20732947-post35.html

Here's a guy who says he had a complaint that was never handled but doesn't list it. I call BS.

FT is officially whiners international and their key contributers are old white guys who don't even fly anymore and a bunch of young characters who have no clue and simply bitch because they dont get SE for their 25/50K miles flown every year.

One of the quotes is mine and I stand by it. :P

AC is top heavy !

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AC is top heavy !

The title means nothing.

There are VP's at Air Canada that barely make $100,000 a year, while at the same time 95 of the top 100 paid people at Air Canada are pilots.

When I left 12 years ago I got a pay rise for what amounted to a new part-time job at another company. The middle management that you talk about is highly underpaid.

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AC is top heavy !

The title means nothing.

There are VP's at Air Canada that barely make $100' date='000 a year, while at the same time 95 of the top 100 paid people at Air Canada are pilots.

When I left 12 years ago I got a pay rise for what amounted to a new part-time job at another company. The middle management that you talk about is highly underpaid.

[/quote']

exac: I have great respect for you. I do have a problem with any VP at AC making less than 100K. Forgive my incredulity.


I took a look at AC annual report 2011 on executive compensation. VP are well paid !

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http://www.flyertalk.com/forum/air-canada-aeroplan/1466037-air-canada-trim-50-million-costs.html

here's some misquotes from the bunch on FT and their complete ignorance of things in the airline industry.

1.http://www.flyertalk.com/forum/20733142-post36.html

Here's someone trying to suggest that WJA only has 5 VP's. The ones shown are EVP's which clearly indicates there are VP's that report to them. In fact there are about 12 of them in an airline that is about 30% the size of AC and does not have any overseas ops.

2. http://www.flyertalk.com/forum/20732156-post23.html

Here's another gem from the ever "brilliant" Hamer who thinks they should try winning back lost customers. In fact their loads are higher than ever and they have more loyal top tier members than ever before. Besides which Hamer can't fly anymore anywhere. Stupidity reigns.

3.http://www.flyertalk.com/forum/20732186-post25.html

here's an even funnier one with this character trying to compare AC's management with at at National defense!!! I couldn't make this up if I tried!!!!

4.http://www.flyertalk.com/forum/20732947-post35.html

Here's a guy who says he had a complaint that was never handled but doesn't list it. I call BS.

FT is officially whiners international and their key contributers are old white guys who don't even fly anymore and a bunch of young characters who have no clue and simply bitch because they dont get SE for their 25/50K miles flown every year.

One of the quotes is mine and I stand by it. :P

AC is top heavy !

WJA has more VP's per revenue dollar than AC.

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exac: I have great respect for you. I do have a problem with any VP at AC making less than 100K. Forgive my incredulity.


I took a look at AC annual report 2011 on executive compensation. VP are well paid !

I said they BARELY make 100,000 (so maybe 120,000 is the bottom figure) as cash salary.

The annual report only contains information on the top 5 paid VP's (or executive VP's as they are called). There is no information on what the rest of them are paid.

Also, less than half of what is reported by people as compensation comes as cash. The rest comes as fairy-tale-stock-options and other incentives. Those employees are lucky to see 1/10 of the remaining 'compensation'.

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