CEO resigns in surprise shake-up at Air Canada
 

Making a surprising change at the top as it struggles to survive the recession, Air Canada [AC.A-T] has abruptly appointed Calin Rovinescu as president and chief executive officer.

Mr. Rovinescu will take over the controls of the country's largest airline on Wednesday. Resigning is Montie Brewer, an American who joined the Montreal-based airline in 2002 and became president and CEO in 2004. Air Canada is facing a cash crunch, and some industry analysts have speculated that it could be forced to file for bankruptcy protection for the second time in six years.

Mounting debts, a growing pension deficit, weakening travel demand, expiring labour contracts and stiff competition from WestJet Airlines Ltd. are among the challenges awaiting Mr. Rovinescu, a Canadian lawyer who helped restructure the carrier in 2003-04. Calgary-based WestJet, which is launching an aggressive seat sale today, has been stealing domestic market share from Air Canada.

"While the challenges in front of us are large, we will continue to build upon the successes of the airline to date and deliver a quality product for our customers, employees and shareholders," Mr. Rovinescu said in a statement.
Research Capital Corp. analyst Jacques Kavafian said Mr. Rovinescu's cost-cutting expertise will be all too familiar to Air Canada's unionized employees. "Calin is a restructuring expert. He will be able to lead Air Canada, and his appointment could be a signal of a possible bankruptcy protection filing," Mr. Kavafian said, noting that the airline's stock price has plunged.

The newly appointed CEO is a senior executive and co-founder of Genuity Capital Markets, an investment bank, and a former managing partner at law firm Stikeman Elliott. He obtained his law degree from the University of Ottawa in 1980.

In an interview this month, Mr. Brewer indicated that he was committed to Air Canada and wanted to devote his energy to finding ways to ease the cash pressure, including lobbying Ottawa to relax rules on pension plans.

Since emerging from bankruptcy protection in 2004, Air Canada has reduced certain services on basic fares that were formerly free, scrapping complimentary hot meals on North American flights and charging for items such as an inflatable pillow and polyester blanket. For the cheapest fares, collecting Aeroplan points is harder than before, frustrating travellers trying to save up for free flights.

While scaling back service has helped Air Canada compete against WestJet on price, the smaller rival's domestic market share has risen steadily, in part taking advantage of consumer discontent over Air Canada's leaner in-flight offerings, industry analysts have said.

In a statement Monday night, Air Canada chairman David Richardson welcomed Mr. Rovinescu to his new job and to the company's board of directors.

"Calin is no stranger to Air Canada, having been a senior member of the executive team from 2000 to 2004. Calin's reputation as a proven leader and his wealth of experience in corporate strategy will serve Air Canada well during this particularly challenging period for the world's airline industry," Mr. Richardson said.

Mr. Brewer couldn't be reached for comment Monday night, but in a news release issued by the airline, he said he was proud of leading Air Canada for more than four years.

"It has been an honour to lead this great airline and I am confident Calin is the right person to take the company forward at this time," said Mr. Brewer, who replaced Robert Milton in the top executive job in late 2004.

Air Canada also named Michael Green to its board of directors, effective immediately. Mr. Green is already the lead director of ACE Aviation Holdings Inc., which owns 75 per cent of Air Canada.

Mr. Rovinescu's appointment marks the first time that a Canadian has led Air Canada since 1992, when Claude Taylor was in charge.

One of the top priorities will be addressing Air Canada's pension shortfall, which stood at $3.2-billion on Jan. 1, 2009, up 174 per cent from a $1.17-billion deficit at the start of 2008. Air Canada warns that it could be forced to contribute up to $866-million to its pension plan this year under current federal rules, up from $456-million last year.

Other key issues to tackle include six-year labour contracts that will expire at the end of May and the end of June. The airline's union leaders are upset that employees had to make wage sacrifices over the years, and now face another round of fiscal restraint.

Nine years ago, Air Canada controlled 77 per cent of the domestic market while WestJet held just 7 per cent. But Air Canada decided to devote greater attention to routes into the U.S. and overseas — both deemed more profitable pursuits than domestic service.

At the same time, WestJet introduced new Canadian destinations, tapping into places neglected or underserved by Air Canada and its regional affiliate, Jazz. By last fall, the competitive gap had narrowed: Air Canada's domestic market share stood at 57 per cent while WestJet's had grown to 36 per cent.

Air Canada plans to further shrink its network after losing $1-billion last year, raising concerns about its ability to combat the recession.
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Air Canada is by far the best North American airline. It is sad to see them become just another UNITED or DELTA.

Westjet ftw

I just flew Air Canada recently over to HK, the grounds people at YVR were rude and the person at the counter didn't know what she was talking about, got my round trip ticket mixed up as a one-way ticket. The service on-flight was good though, seats (Boeing 777) are much roomier than Cathay. Is it me or am I the only one that find the seats in Business Class too much like a constricted coffin?

My oersonal experience with Air Canada over the decades has been 100% unpleasant. Everything from damaged luggage with no compensation, luggage left behind & they left me standing at the carosel for an hour for it without bothering to tell (this happened on a regular basis Toronto to St Johns), hung-over & rude ticket staff, flight attendants who were rude and refused to seat in specialized areas...even though this was confirmed at the counter, confirmed at the cabin door...the list of "I don't care" attitude goes on endlessly. I will ONLY fly them is there is NO other option...Westjet knows how to treat customers. As far as I'm concerned...if they even had the bad service levels of United etc...it would be a huge improvement! Let them fold, they don;'t deserve any more billions of tax dollars.

It's hit and miss with AC staff. Some are awesome, some are just rude. I was at the AC lounge in Toronto and a passenger started complaining to the staff member at the concierge desk about how the TV on her seat didn't work. The staff member said, "Oh, you should tell that to Robert."
"Who's Robert?"
"Robert Milton, our CEO."

I had to chuckle at that one.

lol i'm gonna have to agree with Marco911.

I think Air Canada is the best north american based airline overall.

No offense, but please tell me you're kidding. Although they're on different routes, United and Continental are waaaay better if you're talking NA airlines. imho Alaska's by far the best.

I've only flown Alaska to Las Vegas in the past, and there was nothing great or bad about it. I fly Vancouver-London regularly and have yet to have any complaints. I checked in late once and was bumped to business with a voucher, and the staff were very accommodating, even asking me if I would like to stay the night in a hotel although they knew I had a home in Vancouver.
For London to HKG, I've found Air New Zealand to be incredible. Their basic economy seats reclined more back then any other airline I've flown, and their food is better than A/C or Cathay. As well, their customer service was impeccable.
If you guys fly a lot, I'd recommend you join flyertalk.com, a frequent flyer forum.

I don't mind AC. I fly AC 2-3 times a month to Toronto and it's usually hassle free and good service. The only issues I've had with AC were during snow storms in TO were AC basically tells you to fuck off, closes all their desks and makes you find your own hotel in the middle of the night but thankfully my CC covers all hotel and food costs during delays. I guess WJ isn't any better when it comes to weather delays because that's the price you pay for flying domestic and not having a bill of rights for passengers like they do in the EU.

The other reason why I enjoy flying AC is you get the chance to fly on the 772, 773, A333 and 763 domestically as oppose to flying med haul on a 737 on WJ. The other perk of course is AC offers business class and WJ doesn't.

Oh wow, what card is that if ya don't mind me asking?

CIBC Aeroplan Gold and RBC Avion but I think most CC's cover weather other delays as long as the ticket is purchased on that CC. Usually the coverage is around $500 which includes hotel, food, travel essentials and entertainment but I can't remember the exact amount. They're pretty strict when it comes to entertainment and travel essentials ;my last claim they only paid for my hotel and food. I tried to get magazines covered under entertainment but they denied it.

i don't mind air canada because i can fly for cheap so i have to put up with it haha