A company that flew 1.5 million passengers a year as an Air Canada sub-contractor has taken the first step toward bankruptcy protection after the bigger airline ended for good their low-profile out-sourcing arrangement.
Air Georgian last week filed what’s called a notice of intent to make a proposal under the Bankruptcy and Insolvency Act, its chief source of income cut off by Air Canada in late January.
Many of Georgian’s employees have begun receiving layoff notices, says one of their unions, despite being earlier promised jobs at other carriers.
Georgian operated 63,000 short-haul flights annually under the Air Canada Express banner to destinations in Canada and in the U.S., a little-known cost-cutting practice followed by most large “mainline” airlines.
But Air Canada quietly announced last year it was winding up the “capacity purchase agreement (CPA)” and transferring the work to Jazz Aviation, though the accord was later extended by a few months.
Both companies denied at the time that the decision had anything to do with concerns about safety and maintenance at Georgian, first reported by the National Post.
Most passengers likely did not even notice the change — completed Jan. 31 — given the planes, their crews’ uniforms and tickets all bore Air Canada branding.
Georgian said last year Air Canada’s decision would not have a large impact on its viability, telling the Post “we are very well-positioned in the marketplace, with a 25-year track record of superior safety, operational, and financial performance.”
Air Georgians head offices at Torontos Lester B. Pearson airport.Peter J. Thompson/National Post files
As word emerged in early in 2019 that the contract with Air Canada was ending, the company and pilots’ union assured crew members they would be provided work elsewhere.
Pilots would be absorbed by Jazz, said the Air Line Pilots Association (ALPA), and Georgian said the flight attendants it rendered surplus would get positions at Air Canada or Air Canada Rouge.
“I want to assure everyone that your job as a flight attendant is secure,” said Julie Mailhot, then the chief operating officer, in a note to employees on Jan. 25, 2019, a copy of which was obtained by the National Post.
But more than 40 of those flight attendants have received layoff notices in recent weeks, while the Canadian Union of Public Employees, which represents them, said it received confirmation of the bankruptcy filing only when notified by the Post Thursday.
“Georgian did not disclose to CUPE that they intended to file for bankruptcy,” said union spokesman Kevin Wilson. “When asked directly, Georgian declined to give us a straight answer in regards to this.”
Georgian did not disclose to CUPE that they intended to file for bankruptcy
Kevin Wilson, CUPE spokesman
The company could not be reached for comment Thursday. But ALPA Canada president Tim Perry said in a statement that Georgian told the pilot’s union it intended to restructure and “continue to pursue securing new business opportunities and relationships.”
Perry said that ALPA will assist any pilots who might be laid off, while ensuring those who are scheduled to transfer to Jazz do, in fact, make the move.
“ALPA staff are monitoring the situation very carefully,” he said.
The company has said it is one of only nine Canadian airlines that has passed a rigorous, 900-point safety audit by an international airline association, and that “safety is a cornerstone of Air Georgian’s business.” Air Canada said last year that Georgian “performed safely and reliably for us for 20 years.”
But a National Post investigation in late 2017 reported the concerns of several current and former crew members about Georgian’s safety approach, including allegations that it delayed fixing defective plane parts, discouraged reporting of problems and experienced an unusual number of emergency landings.
In a 2018 report, the Transportation Safety Board (TSB) blamed a 2016 incident in Calgary — where a plane’s front landing gear failed to extend and the aircraft nose scraped along the runway — on longstanding failings, including inadequate maintenance procedures and training and internal systems that failed to detect potential maintenance problems.
But in an internal memo, Georgian said the TSB’s investigator showed bias, bullied employees and acted insensitively toward staff whose first language was not English. And it has called the allegations from current and former employees false and in some cases motivated by revenge.
Financial Post
Email: tblackwell@nationalpost.com | Twitter: tomblackwellNP