Air Canada unit had 'productivity issues': Airline chief denies charges of wrongdoing in collapse of heavy-maintenance company

Air Canada president Calin Rovinescu laid the blame for the bankruptcy of Montreal's Aveos Fleet Performance Inc. squarely on "productivity issues" Thursday.

Testifying before the federal Standing Committee on Transport, Infra-structure and Communities in Ottawa, Rovinescu said he had heard that other airlines had backed away from doing business with Aveos because of long turnaround times.

He also held firm in his assertion, bolstered by an Ontario Court judge's ruling last year, that the airline is compliant with its privatization terms.

Since Aveos, its former heavy-maintenance unit, collapsed earlier this month, putting 2,600 employees out of work, Air Canada has been accused of being in violation of the Air Canada Public Participation Act, under which it was privatized in 1988.

"Let me state clearly and unequivocally that we continue to be in full compliance with the letter and the spirit of the act - despite the demise of Aveos," Rovinescu told the committee.

Under the terms of the legislation, the airline is required to keep maintenance, overhaul and repair (MRO) facilities in Mississauga, Ont., Winnipeg and Montreal.

Rovinescu pointed to a decision last May in the Ontario Superior Court of Justice that concluded as long as Air Canada was performing some maintenance, overhaul and repair work in the three cities, either on its own or through its contracts with Aveos, it was following the spirit of the law.

In his decision, Justice Frank New-bold said there was also "some force" to Air Canada's argument that it was performing some overhaul work in the three centres on its own with its own workers even if Aveos were to stop performing the other tasks.

Newbold also noted that the wording of the act was so vague that it didn't specify exactly what overhaul work had to be done or even by how many employees.

Rovinescu also said Air Canada could hire "certain, very specific [Aveos] employees" back, but he carefully avoided any specific commitments on how many and where.

Rovinescu dismissed claims that Air Canada intends to send work to Aeroman, Aveos's low-cost subsidiary in El Salvador.

"I would like to categorically state that we have not and we will not send any work to Aeroman, the San-Salvador-based sister company of Aveos - not under any circumstance.

"Some Aveos business units are absolutely capable of being resurrected through different ownership by some more powerful strategic players, but not necessarily the whole," he said.

The industry is largely moving off-shore, especially to low-cost developing countries. But it's also moving to non-union operators like Premier Aviation in Trois-Rivières, Que.

Air Canada has already said that it will switch some work to Premier Aviation, which sprouted out of nowhere recently to become a major player in the Canadian MRO industry.

Source:   http://www.theprovince.com