How Air Canada broke the law, laid off thousands of workers, and outsourced operations to Israeli military drone maker

Air Canada had a very simple plan to increase its profits.

Step 1: Spin the airline’s heavy maintenance unit off as a separate entity
Step 2: Starve the spin-off of work and bankrupt it gradually
Step 3: Outsource the operations to an Israeli military drone manufacturing company wholly owned by the government of Israel.

Air Canada spun off its in-house maintenance, repair and overhaul (MRO) unit Air Canada Technical Services as a separate company, AVEOS, in 2007, four years after the national carrier entered into bankruptcy protection.

In 2011, many Air Canada workers were transferred against their will to AVEOS, despite a legal challenge by International Association of Machinists and Aerospace Workers
to prevent this transfer.

Slowly, but surely, Air Canada started taking work away from AVEOS, and sending it abroad, First it was to Germanythen to China. As Air Canada accounted for 90% of AVEOS’s business, Air Canada’s actions hit the maintenance company hard, and AVEOS was forced to file for bankruptcy in March 2012 leave 2,600 employees jobless.

Air Canada CEO  Calin Rovinescu, who raked in $9.5 million the same year, justified Air Canada’s actions by placing the blame squarely on AVEOS for not being “cost competitive”.

The Attorney General of Canada filed a law suit against Air Canada for breaching the  Air Canada Public Participation Act which reads:

6. (1) The articles of continuance of the Corporation shall contain

(d) provisions requiring the Corporation to maintain operational and overhaul centres in the City of Winnipeg, the Montreal Urban Community and the City of Mississauga;

In February 2013, the Quebec Superior Court issued a 139-page ruling finding Air Canada guilty of violating the Air Canada Public Participation Act.

“The court concludes that Air Canada doesn’t respect the law put in place when it privatized in 1988,” Justice Martin Castonguay wrote.

Georges Bujold, general chairman, eastern region, for the International Association of Machinists and Aerospace Workers warned the workers not to have too high expectations about getting their jobs back anytime soon, as he expected Air Canada to drag this all the way to the
the Supreme Court, and a final ruling won’t be made for years.

Bujold’s prediction came true in the form of a terse email from Air Canada: “Air Canada will be appealing this Quebec Superior Court decision, given the importance of the matter, and makes no further comment at this time.”

Even if the Supreme Court rules in the Canadian workers’ favour, Bujold fears that the Harper government will simply pass legislation to overturn the decision.

“We never know with the Tories what position they would take but it wouldn’t surprise the IAM that Air Canada would make that request to the prime minister or the minister of transport to revisit the Air Canada Act and make those modifications,” Bujold said.

In January 2014, the Air Canada CEO accompanied Stephen Harper on the Prime Minister’s official visit to Isreal. A year later, Air Canada signed a maintenance deal with Israel Aerospace Industries, a company wholly owned by the government of Isreal, and considered to be a pioneer of drone technology.

Senate Judiciary Committee – Subcommittee on Constitution, Civil Rights and Human Rights heard from journalist and author Peter Bergen that “Israel is the world’s largest exporter of drones and drone technology, and the state-owned Israeli Aerospace Industries (IAI) has sold to countries as varied as Nigeria, Russia and Mexico. IAI has also reportedly sold a ‘loitering weapon’ called the Harop to India, Turkey, France, and Germany.”

Meanwhile, it has been a turbulent time for many of the 2,600 workers who lost their jobs and had to wait almost two years to hear any news of their severance pay or pensions. Some workers are hopeful that Air Canada will drop its appeal and bring maintenance jobs back to Canada. Many others, however, are not holding their breath.