It all began in 2000, when a decision was made to merge the four regional airlines that Air Canada owned into one common regional operation called Air Canada Regional (ACR). One of those airlines—Jazz Aviation LP—is partnered with Air Canada under a capacity purchase agreement to operate a large fleet of domestic aircraft for the airline. Jazz operates approximately 800 flights a day for Air Canada, with 123 aircraft throughout Canada and the US. As one of the largest regional airlines in North America, Jazz serves more than 80 destinations in Canada and the US, and provides customers with seamless connections to the worldwide networks of Air Canada and Star Alliance under the brand name Air Canada Express (formerly Air Canada Jazz).
In total, the merger involved more than 20 collective agreements, which, according to Colin Copp, Jazz Aviations’s chief administrative officer, was no easy task. “It was very difficult because not only were we consolidating the collective agreements, but there were additional complexities such as seniority-rights issues that needed careful consideration,” he says.
Jazz worked closely with its unions to determine how seniority applied to current and future positions, as they simultaneously consolidated employee classifications; and more specifically with their pilots, they agreed to a mediation process that allowed for a transitional seniority agreement over a term of several years. “We had multiple collective agreements that we were consolidating down into five major ones, so we had to find creative ways not only how to consolidate the organizational structure but also how to fairly recognize employee seniority and how to deal with the cultural issues that existed within the various airlines,” Copp says.
When Air Canada went into bankruptcy protection in early 2003, Jazz was part of that process, as it was a wholly owned subsidiary at the time. “We restructured as well,” says Copp, “and our plan was to emerge from the Companies’ Creditors Arrangement Act (CCAA) as a standalone regional airline business which could be spun off through an Initial Public Offer (IPO).”
Copp believes that having foresight in this industry was critical to the successful merger of the four regional airlines and to the restructuring of ACR, which later, in 2006, successfully went public. “One of the things that I feel has been very helpful to me is that I’ve spent so much time in this industry,” he says.
By the Numbers
Destinations across Canada and the US
Passengers carried each weekday
Years many employees have remained with the company
He adds that the degree of experience and knowledge that one acquires over time in one industry is an essential ingredient in anticipating and looking forward to where the business needs to go next. “A big part of my capacity to have foresight really relates to vision perspective—where you’re going, what your goals and objectives are, and why,” he says. “For me, it’s all about having a broad amount of experience in both the operational and corporate sides of the business, and working closely with our stakeholders to understand their interests.”
Copp explains that in order to understand your objectives, goals, and vision, you must spend a significant amount of time with your stakeholders (employees, unions, investors, boards, etc.). “In our case, that also includes our key customer, Air Canada,” he says. “By working with them and understanding their needs, you gain important insight and attain clarity around their interests.” Copp notes you can then develop your specific steps to reach your end-state vision or goal of what you want to change and how you want to change it.
Many of the changes that were made during the restructuring required an alignment of the union stakeholders’ interests with the company’s needs to achieve specific cost-reduction targets in order to ensure that the company would be profitable upon exit. “There were specific thresholds established in operating cost savings to get to our bottom line,” Copp says. This cost-reduction initiative was distributed across the organization in such a way that there were targets for all core groups. “So we went through a process with our unions, determining how to achieve these savings, essentially working through cost reductions that entailed everything from establishing new wage scales to changing work rules that enhanced productivity—all of which required carefully balancing the interests of our unions and employees with the organization’s need for change.”
There were many days of challenging negotiations, which truly paid off because today Jazz’s holding company, Chorus Aviation Inc., is a publicly traded company on the Toronto Stock Exchange. “When Jazz first exited CCAA for restructuring, the objective was always twofold: one was to establish a commercial agreement between Air Canada and Jazz, and number two was to take Jazz public through an IPO,” Copp says. While Jazz continues to deliver strong operational and financial performance, the regional airline industry is undergoing significant change as new competitors enter the marketplace. “Jazz needs to continue to adapt and change to maintain its strong position so that we can take advantage of opportunities that will secure our future,” he adds.
One of Copp’s biggest challenges has been managing complicated relationships between the key stakeholders whose interests do not always align. “In this business, our capacity to deliver operationally comes relatively easy as we have a great deal of strength in that regard,” he says. “Our core is our ability to deliver on the operational side and our capacity to scale up quickly to manage complex operations safely.”
In order to achieve this, Copp again states that you must have a very strong understanding of the stakeholders’ interests. “You’ve got to understand your business strategy and what the employees’ and unions’, your customers’, and your shareholders’ interests all are—those things must come together for you to be able to achieve organizational change and to deliver on the business objectives and vision.”