Bâtir l’UQAM

/in /by

C’est dans un Québec en pleine transformation que Pierre J Jeanniot a joué l’un des rôles les plus importants de sa carrière. Arrivé à Montréal en 1947 avec sa mère dans l’espoir d’y vivre une vie meilleure que dans sa France d’origine, le jeune Pierre Jeanniot s’illustre à l’école par un talent indéniable et une certaine envie de rébellion. « J’ai été fichu à la porte trois fois! se rappelle-t-il. En dernière année, j’ai été privé de cours pendant les dernières semaines, mais j’ai quand même fini deuxième sur l’île de Montréal. »

C’est à la remise de diplômes qu’il reçoit une moins bonne nouvelle : « Le directeur de l’école m’a félicité pour mes notes, mais m’a dit qu’il refusait de recommander que je remporte une bourse qui m’aurait permis d’aller à l’université à cause de mon comportement. » Sans les préalables nécessaires et avec peu de moyens, le jeune diplômé n’a alors d’autre choix que de se lancer sur le marché du travail.

« J’ai donc commencé comme dessinateur industriel, sans même avoir de formation dans le domaine », explique Pierre Jeanniot. L’idée de poursuivre ses études à l’université restait toujours dans ses pensées, mais ni l’Université de Montréal ni McGill n’offraient de cours de soir dans le domaine qui l’intéressait. « J’ai entendu parler d’une université anglophone, Sir George Williams, qui deviendra Concordia, où c’était possible. Je me suis inscrit à des cours de physique et de mathématiques. » Il entre chez Air Canada comme technicien en électronique et conjugue ses études, auxquelles il consacrait près de 30 heures chaque semaine en soirée, à son travail à temps plein. Pendant 10 ans, il poursuit ce rythme difficile. Il complète son baccalauréat et entreprend des études à McGill en administration. Il s’illustre chez Air Canada, où son talent est reconnu et lui permet de monter les échelons.

En parallèle, la société québécoise se transformait rapidement. Après la création des cégeps dans les années 60, de nombreuses personnes souhaitaient poursuivre leurs études à l’université, une demande à laquelle le système de l’époque ne pouvait pas répondre. Le gouvernement recommande alors la création d’un réseau d’universités afin que ces personnes aient accès aux études, peu importe leurs moyens financiers.

Plusieurs comités sont mis sur pied pour jeter les bases du Réseau de l’Université du Québec, dont un comité technologique, qui veillait à ce que le Réseau soit au fait des nouvelles avancées de l’informatique. Invité par un ancien collègue à y siéger, Pierre Jeanniot, devenu spécialiste en recherche opérationnelle, en devient le seul représentant ne provenant pas du milieu universitaire. Fonder une université – ni même dix! – n’avait jamais été dans ses plans, mais, lui-même empêché d’aller à l’université à la sortie de sa 12e année, l’idée de donner à d’autres la chance de poursuivre leurs études en français l’a convaincu de rejoindre le comité, dont il devient rapidement président. « J’ai demandé un congé d’un an d’Air Canada, et j’ai aidé à créer le Réseau de l’Université du Québec. »

Grâce à beaucoup d’efforts, l’UQAM naît en 1969. Pierre Jeanniot rejoint le Conseil d’administration de l’Université, dont il devient président en 1972, jusqu’à ce qu’il crée la Fondation et en devienne le premier président. « Malgré les postes importants que j’ai eus chez Air Canada et à l’Association internationale du transport aérien, je suis toujours resté proche de l’UQAM. J’ai toujours pensé que quand j’en aurais les moyens, je donnerais des bourses pour encourager les étudiants », explique celui qui a remis à ce jour plus d’un demi-million de dollars à la Fondation de l’UQAM, dont un nouveau don de 170 000 $ confirmé en novembre dernier.

« L’important, c’est qu’on donne une chance de percer à des jeunes qui ont du talent. » C’est grâce à l’un de ses fondateurs que l’UQAM est aujourd’hui une grande université de recherche et de création où on soutient la relève comme jamais. Merci, monsieur Jeanniot!

 

http://100millions.uqam.ca/temoignages-en-details/2020-02-11/pierre-j-jeanniot-batir-luqam

Lifetime achievement award presented to Pierre Jeanniot by the Air Transport Association of Canada in recognition of his outstanding contribution to Canadian aviation.

/in , /by

Air Transport Association of Canada
Montréal, le 19 novembre 2019

M. le Président de l’Association des Transports Aériens du Canada … mesdames … messieurs … ladies and gentlemen.
En tout premier lieu … permettez-moi de remercier … chaleureusement … le comité de sélection … qui m’a proposé pour cet hommage.
Je l’accepte en tout humilité … au nom de ceux … et celles … qui ont travaillé avec moi … pendant tant d’années.
C’est à eux que revient cette reconnaissance … et je suis privilège d’avoir eu le plaisir … et la bonne fortune … de travailler avec tous ses collaborateurs compétents … et dévoués.

Merci en leurs noms … et merci en mon nom!

Indeed … I am most grateful to the Selection Committee … which was kind enough to recommend my name.

I humbly accept this recognition … on behalf of the many competent and dedicated colleagues … that I have been fortunate to work with over the years.

Thank you also on their behalf.

*****

I note that ATAC was formed in 1934 … three years before Trans-Canada Airlines was created by the Canadian Government.
I found it most interesting … that the Canadian Commercial Aviation Industry … felt the need for an association to help … in some ways … guide … the development of commercial aviation in this country.

And that this was taking place … before the Canadian government felt the need to create an airline … with the mission to link this vast country … coast to coast!

Le gouvernement fédéral Canadien … a été fort probablement inspiré … par la création de cette association … qui a démontré l’importance … pour cet immense pays … de développer rapidement les liaisons aériennes
Ever since … and over that period of 85 years … ATAC has been able to successfully evolve … to meet the needs of a fast-changing environment.
The role of ATAC is important … I should say … essential … and also … most demanding.

L’importante responsabilité d’harmoniser … consolider … interpréter … les espoirs … les attentes des quelques 200 membres … partenaires et sociétés affiliés
… requise beaucoup de doigté … et de sagesse.
Le Prince de Talleyrand … ce grand diplomate du 17 et 18ème siècle … disait que dans la vie … il y a trois sortes de savoir

  • Le savoir … proprement dit …
  • Le savoir-vivre … et
  • Le savoir faire

Dans une association comme celui-ci … il est aussi utile d’ajouter … le savoir dire … qui est souvent nécessaire pour convaincre … et maintenir la cohésion … et l’équilibre.

Et dans cet esprit … j’aimerais citer un écrivain Canadien … le regretté Pierre Burton.
Perhaps it was also best expressed … by Pierre Burton … a well-known author of several years ago … “A Canadian” … Pierre Burton observed … “is someone who can make love in a canoe.”

Now … if you have tried to make love in a canoe … you would know …. that to be successful … you need to have persistence … determination … and a certain sense of equilibrium.

Bien sûr … tout le monde n’est pas nécessairement apte … à faire l’amour dans un canoé.

Cela demande beaucoup de ténacité … de persévérance … et bien sûr … un certain sens de l’équilibre.

Ce n’est pas toujours facile … de ménager … « le chou et la chèvre ».

*****

Je suis persuadé … que beaucoup d’entre vous … ont eu aussi … à défendre pourquoi … le cout de voyagé par avion au Canada … est de beaucoup supérieur … aux couts de voyager aux États-Unis.

Et … dans mes diverses fonctions … j’ai eu à répondre fréquemment à cette question.

I have had the privilege to debate this question … of comparison of air travel costs … between Canada and the U.S. … with several Ministers of Transport.

One in particular … had a major airport in this Riding.

That gentleman said to me … “You know Pierre … I understand perfectly well … and I agree … that the Federal government is benefitting … from the high rent at airports … the cost of security … and so on.

“And that the local municipalities benefit … from real estate taxes … and so on …

But … in all my years of campaigning … not once … has any of my constituents … ever requested that I should try to reduce those costs …
And if I did … it could have cost me their votes!”

Then he would add

“You know Pierre … it’s not easy to be a politician. … “Try standing on a fence … while keeping your ear to the ground!”

*****

Finally … receiving a lifelong achievements recognition reminds me that … some 25 years ago or so … I believe I was still President of Air Canada at the time … I was in Prince Edward Island … participating in a lifelong achievement award … being given to a rather elderly captain.

“Congratulations” … I said … “By the way … have you lived in P.E.I. all your life?”

“Well” … he replied … “not just yet … and I do hope to be around for a while … and achieve a few more things!”

*****

En terminant … je félicite John McKenna … et son équipe … pour l’excellent travaill accompli.

A nouveau … M. le Président … merci pour cet hommage. … Je suis comblé … et mes remerciements encore une fois … au comité de nomination.

Bonne fin de soirée à tous!

Boeing Logo

What is going on at Boeing?

/in , /by

The B737-MAX saga illustrates a most unusual – and unfortunate – series of mishaps within the Boeing company which seems to affect many different dimensions of this important company.

It questions the wisdom of extending one more time the B737 line, which was the last airplane designed by Boeing before the advent of the electronically controlled airplane and the fly by wire concept. It is surprising to see that the important safety-related MCAS software designed to prevent low speed stall relied uniquely on one sole sensor, contrary to the usual practice that such a safety-related system must rely on at least two sensors. It is difficult to understand that a second sensor was optional, and offered at a price!

The seemingly excessively confident position of the commercial team in convincing clients of the easy introduction of this model compared to the previous B.737 line, coupled with insufficient training, more particularly on the MAX version, has resulted in over-confidence by airlines in the ease of introducing the new model in their fleet.

The apparent reaction of management to the first crash of the B737-MAX of Lion Air appeared to minimise the importance of that first accident. The company failed to recognize the importance of the circumstances that led to that crash and as a result appeared to show a lack of concern. Some observers could conclude that this was an attempt by management to minimise the importance of that first accident.
The highly questionable mishandling of the communications crisis following the second crash further indicated the inability of management to react appropriately. Some observers felt that the company was reluctant to accept the responsibility.

The shoddy work and poor morale which was reported to be surfacing at the more recently established Boeing plant in the southern part of the US.A. also suggests questionable management capabilities.

It is most disappointing that the FAA has only recently discovered some difficulties with a mini processor on the new airplane, and this appears to have been overseen during the initial approval. This is a further indication of the lack of rigor by management in introducing the new model. But it also points to questionable oversight by the FAA.

This string of incidents appears to be indicative of a lack of professionalism, discipline and rigor throughout the management of the company. It is unusual in today’s company oversight practices to have the CEO of a large corporation also allowed to be the Chairman of the Board.

The role of the Board is to oversee management and to ensure that it is held accountable at all times.
When the Chairman is the same as the CEO, it is difficult to see how this process of oversight can be carried out efficiently. This also calls into question the role of the Board of that company.

Pierre J Jeanniot, O.C., C.Q.
Montreal, 31 July 2019

Some comments concerning the B.737-MAX current issue

/in , /by

We know that the cause of the two crashes … has been attributed to a failed sensor of the angle of attack … and the questionable behaviour of some the Manoeuvring Characteristic Augmentation System (MCAS).

The LionAir accident resulted in 189 fatalities.  The Ethiopian crash caused 157 fatalities.

The M.C.A.S. is the part of the Flight Management System … which senses a loss of speed … and automatically compensates by ordering the nose downwards … to diminish the risk of stalling.

Boeing admits that the M.C.A.S. was designed … to make the MAX feel and handle like a NG … when it is flown manually at low speed with flaps retracted.

The system is intended to switch on automatically … when it senses a risk for the aircraft to stall.

The system relied on a sole sensor of the angle of attack (on the Captain’s side of the aircraft) rather than the two sensors on board.

The system is unique to the B.737 MAX … because the MAX no longer has the docile pitch characteristics … of the B.737 NG at high angle of attack.

This is caused by the larger engine nacelle covering the higher bypass engines (Leap 1.B).

The drawback of the larger nacelle is that it displaces the center of gravity of the airplane … and contributes to destabilizing the aircraft pitch.

And thus … to counter the MAX lower stability margin at a high angle of attack … Boeing introduced M.C.A.S. … a software loop in the flight control computer. … It seems to have been Boeing`s intention … to make the handling feel of the MAX identical to the handling of the NG.

All this to make the introduction of the B.737 MAX type … very easy … to any airline already operating the B.737 NG.

In the spotlight is the training requirement for ensuring that a pilot`s existing type rating … for the B.737 NG … would cover the new B.737 MAX series.

If the license is type rated for both the B.737 NG and the B.737 MAX … a pilot can fly any one of these aircraft … at any time.

Training seems to have been deficient … and it may not have been recommended by the manufacturer to adequately train the pilots for the changes in system in the simulator.

The reputations of both the FAA … and the Boeing company … has been somewhat damaged as a result of these two crashes … as there seems to have been a reluctance to take seriously the LionAir crash … and its impact on the new Boeing model.

It appears that the FAA may had delegated approval authority to Boeing for this particular area … and that Boeing may have attempted to minimise the impact … and the seriousness of the first crash.

The absence of an adequate reaction … to analyse the problem seriously by the FAA and Boeing … and the impression that the first crash may not have been taken as seriously as it should … may have been compounded … by their inadequate handling with the media … and the industry in general.

There seems to be an indication … that the senior management of Boeing … may have attempted to minimise the impact of the first crash … and to deny responsibility for the accident.  …

Some observers feel that the Boeing Company was late … in accepting its responsibilities … and in taking appropriate action … to ensure that the deficiency could be quickly corrected.

Some concluded that crisis management was inadequate … and that the resulting damage to the reputation of the industry as well as to the FAA may be serious … and their respective reputations may take time to recover.  …

Boeing has now taken many steps to ensure that the systems issue has been satisfactorily resolved … and is trying to have it demonstrated in simulators.  …

It is reported that Boeing has made appropriate modifications … and carried out a number of test flights.

*****

Bloomberg has estimated … that the sum of the disruption cost resulting from the grounding of the fleets … would be approximately 1.4 billion USD … assuming that the B.737 MAX would be in operation by October.

Some 360 airplanes have been delivered and another 4,600 are on order.  This estimate assumes that no airline cancels any orders as a result of a lack of confidence and public opinion.  This number does not take into consideration the compensation … that will take place resulting from the two crashes – at least 346 casualties.

Litigation to obtain compensation for each one of those victims could go on for many years.

On that basis … it would not be surprising if the total cost to Boeing could be in the region of 2 billion USD.  … This also assumes that the value of Boeing stock will recover quickly … and that no significant cancellation of orders for the B.737 takes place.

This situation is likely to lead to a serious re-examination of the role of the FAA … and the need to take action to restore its credibility.   … It also raises a serious question mark on the leadership of Boeing … and its performance in handling the crisis.

 

Pierre J Jeanniot, O.C., C.Q., FRAeS

10 June 2019

Nouveau don de 160 000 $ de la Fondation Jeanniot

/in , /by
Pierre Jeanniot, accompagné de Magda Fusaro, rectrice de l'UQAM et Pierre Bélanger, Directeur Général de la Fondation de l’UQAM

Pierre Jeanniot, accompagné de Magda Fusaro, rectrice de l’UQAM et Pierre Bélanger, Directeur Général de la Fondation de l’UQAM

Le 20 décembre dernier, la rectrice de l’UQAM, Magda Fusaro, et le directeur général de la Fondation de l’UQAM, Pierre Bélanger, ont accueilli Pierre J. Jeanniot à l’occasion de l’annonce d’un don de 160 000 $ de la Fondation Jeanniot. Cette somme permettra de bonifier le Fonds Pierre J. Jeanniot, qui octroie des bourses à des étudiantes et étudiants de baccalauréat et de maîtrise en arts, en sciences de l’éducation, en sciences et en sciences de la gestion.

« Anticiper le futur est essentiel – mais ce qui est encore plus important c’est de participer à le bâtir », a déclaré Pierre J. Jeanniot, président de la Fondation pour expliquer son geste. Pierre Bélanger s’est réjoui de cette nouvelle contribution : « Ce don, qui s’ajoute à de multiples contributions précédentes de monsieur Jeanniot, témoigne, encore une fois, des liens étroits qui lient ce grand philanthrope à notre Université et notre Fondation. Je l’en remercie de tout cœur ».

Un homme engagé en faveur de l’enseignement supérieur au Québec
Rappelons que Pierre J. Jeanniot a été étroitement lié à création du réseau de l’Université du Québec, à laquelle il consacre une année complète, ayant obtenu un congé sans solde d’Air Canada. Le réseau de l’UQ, créé en 1969, compte alors cinq constituantes. Suivra une longue période d’engagement envers l’Université du Québec à Montréal, où il siège comme membre du conseil d’administration de 1971 à 1982, période au cours de laquelle sont inaugurés de nouveaux champs d’études, notamment en sciences de l’environnement, en urbanisme et en sexologie. Pierre J. Jeanniot en assume la présidence de 1972 à 1978. En reconnaissance de son engagement indéfectible, il reçoit une Médaille de l’UQAM en 1984 et un doctorat honorifique en 1988. En 1995, il est le premier à occuper le poste honorifique de Chancelier de l’Université, fonction qu’il exerce jusqu’en 2008.

Un autre engagement majeur de monsieur Jeanniot est son rôle dans la création de la Fondation de l’UQAM, dont il préside le conseil d’administration de 1979 à 1992. En sa qualité de président fondateur, il y organise les deux premières campagnes de financement. « En participant à la création de la Fondation, monsieur Jeanniot a permis à l’UQAM de se projeter dans l’avenir en finançant ses projets ambitieux, a souligné Magda Fusaro. C’est un grand honneur de pouvoir compter sur l’engagement et la générosité de ce grand ami de notre Université. »

Rappelons que monsieur Jeanniot a mené une carrière brillante chez Air Canada, où il œuvre à divers titres de 1955 à 1990, occupant le poste de président-directeur général pour les sept dernières années de sa carrière. Ce leader du transport aérien et inventeur de la boîte noire est ensuite élu directeur général de l’IATA (International air Transport Association – dont le siège social est à Montréal), poste qu’il occupe de 1993 à 2002. Citoyen engagé, il a reçu de nombreux prix et distinctions, dont trois doctorats honorifiques d’universités montréalaises, et devient Chevalier de l’Ordre national du Québec en 2002.

Son don s’inscrit dans la campagne majeure de financement 100 millions d’idées, qui vise à récolter 100 millions de dollars dont le tiers sera destiné au programme de bourses d’études de la Fondation de l’UQAM.

Board Member, Argo Consulting Inc.

/in /by

Board Member, Argo Consulting Inc.

An international “operations improvement” consulting firm based in the U.S. which specializes in transportation (notably air and rail), oil and gas, industrial manufacturing, natural resources, and chemical processing industries. Argo also serves numerous Private Equity firms in their pre-acquisition and due diligence processes.

https://www.argoconsulting.com/

Embrace Change or Perish! – Privatization of Air Canada

/in , /by


LECTURE BY PIERRE JEANNIOT TO McGILL INTERNATIONAL BUSINESS CLASS
Montreal, 3 April 2018

 

Change affects every walk of life … every business … every profession.
Looking back at history … we can observe that “change” is relentless … but the pace is not linear.
The invention of “agriculture” gave mankind more time to be creative; … more time to think …
There have been periods of great change … for example the Renaissance … the industrial revolution … and now the technological age!

*****

In terms of its impact on our civilization … the invention of the “internet” is perhaps … comparable to the invention of the “printing press” … in 1440.
It had a major impact … on the dissemination of knowledge …
Created new products … book production flourished … and newspapers were born!
Likewise … the internet … has given rise to tremendous innovations … including … of course … “social media”.
“Social media” deals with the ideas economy. It deals with intellectual property … and collects rent rather then selling goods!

*****

Sometimes … change occurs too fast … questioning our ability to adapt … or to feel comfortable with its consequences.

*****

Change affects every walk of life … every business … every profession.
We have been … and continue to be … in an era of constant innovation …
Some current examples

  • The internet of things
  • The expansion of robotics
  • Drones for package delivery
  • Self-driving … autonomous ground transportation
  • The printing of parts … or 3D printing … or “additive printing”!
  • Not to mention … artificial intelligence.

*****

Innovation can destroy existing companies … and it can create new ones … (creative destruction).
Walmart … and Apple … did not exist 50 years ago.

  • Today they are listed in the top 10 of Fortune Magazine.

The pressure is on to continue to innovate … or perish.

  • Apple says … that it needs to refresh or re-invent its consumer products … every four years … or it will lose leadership. …
  • Think of Blackberry! … At one time an industry leader … today barely surviving.

*****

We are witnessing the start of exciting new ventures … for example …
The commercialization of space …

  • The beginning of “space tourism”
  • The commercial launching of smaller satellites … at a much lower price than today
  • Major developments in air transportation … using electricity as the prime … if not the only … source of energy.
  • Regional electric airplanes … 50 passengers maximum? … a possibility within 10 years? … Maybe hybrids to start with

We are well down the road towards achieving

  • Driverless/autonomous transportation …
  • And the use of drones … first for carrying freight … and for urban transportation. … Experiments in the Emirates … and Singapore.

In short … new technologies have … and will continue to affect the way that we work … and what we do.

*****

The various factors of change can have an impact on the products available …
Change can challenge the relevance of certain firms and institutions … and threaten their very existence.
Such conditions … can be technological … such as the impact of IT … or market changes … or a change in products … such as the availability of electricity … which made other forms of lighting … obsolete
Consumers’ expectations and needs change … for example

  • People are increasingly eating at restaurants.

*****

For any firm … whose existence is threatened … for one reason … or another …
It is essential to define what changes are required … to ensure that the firm responds to evolving needs … or environment … and continues to fulfill an appropriate role … to be in business … and to be relevant.

*****

We are now going to discuss a “real” case.
The following example deals with the transformation undertaken by a company

  • To ensure that it met evolving market requirements
  • And societal expectations.

More particularly … I will discuss briefly the nature of that change …
How it was managed … to ensure that the corporation was transformed …
And achieved the relevance required … to justify its continued survival.
Specifically … as we look ahead … we will review the changes that were required to ensure the survival of Air Canada … and how they were accomplished.
As it would be for all such cases … it is important to understand

  • The strengths … and weaknesses … of the company
  • The forces that are at play … threatening its survival
  • The transformation which is required … to ensure that it will thrive in the next timeframe …
  • And the kinds of programs required to achieve that objective.

If one is going to dramatically change the purpose … or the direction … the nature of the firm … or anything else … it is also important

  • To know where you come from! … and what you are starting from … and what was the original culture.

*****

The predecessor of Air Canada … Trans Canada Airlines … T.C.A. … was created in 1937 by C.D. Howe … nicknamed “Minister of Everything”
(P.M. MacKenzie King and Louis St. Laurent)

  • It was a time of nation building
  • Mandate: … To help unite the country: Atlantic to Pacific … coast to coast … similar to railroad.
  • Shortened the time to cross the country … at the time 5-6 days.

It needed to pioneer radio navigation across the country.
Offer Canadians the best service … at the most affordable cost … i.e. provide them service with a break-even mandate.
Public service mentality
The advice of a Transport Minister was
“If you are profitable … lower the price …
But stay away from deficit … and we will stay away from your business.”

*****

Renamed Air Canada in the 60’s … to reflect an international role.

  • Linking Canada to Europe and the U.S.A. … as well as the Caribbean … for example
    • U.K. … France … Germany
    • New York … Chicago … etc.

*****

Crown Corporation – Constraints
Sometimes … the Government mandated service to small cities … e.g. Sault Sainte Marie and Corner Brooks (by Minister of Transport)
Or promoting Canadian goods … e.g. wine
A Crown Corporation was required to appear every year at various Parliamentary Committees … for instance
Employment equity … languages … Transport Committee
Anecdote for Parliamentary Committee … concerning the Minister of Agriculture … attending Transport Committee … Eugene Whelan (Niagra)

  • Requiring more Canadian wines during the hearing
  • Adjourned to Parliamentary Restaurant
  • No Canadian wines available at the restaurant
  • Reconvenes afternoon sessions … no more questions on wines!

*****

Backtracking for a moment … we should recall …
That in the 1970’s … major changes were taking place.
Technology was changing productivity (jetliners and jet engines

  • Boeing 747 … 350 passengers
  • An increase of more than 4-fold

Increasing consumer pressure in North America.
Then In 1979 … the U.S. government decided to introduce the Domestic Airline Deregulation Act … under the Carter Administration.

*****

We saw the emergence of low costs

  • New York Air … Peoples’ Express (new airlines)

Some traditional airlines could not cope! … Consolidation

  • Eastern Airlines … Continental

Other low costs

  • Laker’s Sky Train … Wardair … originally a charter … then a regular airline.

Interestingly … “Southwest Airlines” is the only one of the original “low costs” surviving today … most new low costs did not survive.
In Canada … we witnessed the emergence of Affinity Charters …
A form of low cost operation …

  • Shortly after … the requirement for Affinity was dropped.

Given the proximity of the U.S. … Canada felt the need for progressive deregulation.
1984 “Freedom to Move” – The Canadian Deregulation Act

  • Any airline can fly anywhere in Canada
  • Freedom of frequency and pricing

The relevance of Air Canada was challenged.
For Air Canada … it was change … or perish!
We decided to develop a privatization plan.

*****

Privatization Plan:

  • New mandate
  • Creating a new vision
  • Defining change elements
  • Managing the transformation

Convincing ourselves of the necessity.

  • Freedom to move … meant increased competition
  • As a crown corporation … Air Canada was unable to move quickly (government controlled) … constraints

Alternative was potential demise
Believe that you can change and that it is feasible.
Developing a new vision … shared by all
We needed to convince everyone of the need for

  • A national … commercial … international airline
  • Profitable
  • Customer-oriented

There was a lot of resistance to change!
We needed to obtain support of:

  • Government
  • Employees
  • Communities
  • Opinion makers

*****

We needed to define a change program
Major elements

  • Improved productivity … efficiency
  • Routes network … optimum fleet
  • Change culture … customer orientation
  • Community expectations
  • Financial community … achieve profitability

Setting goals for each change element … for example … improved profitability

  • Renegotiate contracts – with no government involvement
  • Outsource when appropriate
  • Create a cost/effective network
  • Develop a new fleet plan

*****

Reviewing the network and the current fleet

  • Review service required at small stations.
    • Requirement for different fleet
    • Correct infrastructure/overhead excessive

Solution was to have 12 small stations … served by different aircraft … and less heavy infrastructure.

  • Create regional airlines e.g. Air Ontario, Air B.C. etc,
  • Operate small aircraft – DH-8 100/200
  • More frequent services

But communities losing jet service (DC-9) in return for several flights a day by DH-8 turbo props … had to be convinced.
Air Canada needed to avoid a majority interest … for labor reasons.

*****

To accomplish … extensive communications had to be carried out with …

  • Communities … loss of jet vs turboprop
  • Local and Federal representatives
  • Unions and employees … loss of civil status
  • Local consumers … service vs profit?

*****

Improving the productivity of the employees

  • Convincing the pilots to support change … without work interruption
  • Improving the productivity of
    • In-flight/cabin groups (5-week work interruption)
    • Mechanics group (IAM) (3-week interruption)
    • Counter/reservations people (2-week interruption)

All of which allowed changes in work rules and in some cases … outsourcing.
[Anecdote about walking in to a union meeting in Toronto … discussing strike action.]

 

*****

Developing a new … and more ambitious … international route plan.

  • Untapped potential – 5th Freedom from U.K.
  • Fully exploiting existing rights to the U.S. … and to overseas destinations (Asia).

*****

Communications program.
Carried out an extensive communications program … to reach each individual employee.

  • Joining coffee breaks at various locations in a relaxed “townhall” format
    • Answering questions
    • Talking about the future
    • Enlisting their support
    • Proposing employee partial ownership

Carrying out extensive communication program with the provincial … municipal … various opinion makers … across the country.

  • Explaining the service proposed
  • The need for a major international airline
  • The social and economic advantages

*****

Set up an overall cultural change program

  • Involving each employee
  • Emphasizing team building
  • Customer-oriented
  • Pride of ownership

*****

Improve the debt/equity ratio by … (find hidden values)

  • Monetizing hidden values in the current fleet
    • Sale and lease back of the DC-9 fleet
    • Sale of the Boeing 737 fleet to FedEx … obtain contract to convert to freighter
    • Sell part of investment in Guinness Peat leasing

which generated more than $150 million.
[Anecdote: Bank of Nova Scotia deciding to sell its headquarters for $400 million Canadian [they are not in the brick business].

*****

  • Develop a new fleet plan
    • To acquire/order long range aircraft to support the international expansion program … B767-200/300
    • To replace the domestic fleet A-320/A-321 options
    • To provide new aircraft for the regional operation – 50 DH-8 100 & 200

*****

By 1987-1988 … we achieved

  • Improved productivity
  • Improved profitability – adequate R.O.I.
  • Better debt/equity ratio
  • New regional services (airline and fleet)
  • New proposed Air Canada Act
  • Government-free contracts for suppliers

*****

Proposed partial privatization to the Federal Government … as a first step …

  • Enabled Air Canada to sell $300 million of new equity for 49% of the airline
  • Shares sold for $8.00 each

The Government was able to sell its participation in the airline in 1989 for 500 million CAD

  • 51% of its shares … at $12 CAD a share

*****

Air Canada was then free to operate as a private enterprise with some constraints:

  • Headquarters to remain in Montreal
  • Continue to have technical centres in Montreal, Winnipeg and Toronto
  • Foreign ownership of shares limited at 25%

The financial community was comfortable with Air Canada.

  • Efficient regional services created (JAZZ)
  • International expansion strategy
  • Optimising aircraft fleet
  • Positive change in product – more market-oriented
  • Improved debt/equity ratio
  • Supported by reasonable/acceptable profit plan

*****

To summarize … and recap …

  • Freedom to Move … issued in 1984
  • Program started … Transform airlines to make it “privatizable” e.g. debt/equity ratio …
  • Increase profitability

Partial privatization (1987-1988)

  • Dilution of government ownership to 51% … $300 million raised. … First shares sold at 8 CAD a share
  • New “Air Canada” Act
  • Arms length agreement
  • Limit on foreign ownership … less than 25%

Total privatization … 1988-1989

  • Sale of government 51% share ownership … raised $500 million. … Shares had increased to 12 CAD a share!
  • New fleet acquired
  • Executive management re-appointed for 2 years

*****

Lessons:
Need to make a sober assessment of my/our situation

  • Carrying out a “swot” analysis
  • Strengths … weaknesses … opportunities … threats … challenges

Develop strategy
What are the possible scenarios for tomorrow?

  • Seeing “around the corner” … How is the industry evolving?

Review where we came from

  • Evolution of current culture and expectations

Understand that the keys for success yesterday … are often not the keys to success tomorrow.
Set up and manage a change implementation program with

  • Program managers
  • Milestones and periodic reviews

Follow up … and celebrate … success
In a changing world … embrace change – and prosper!

Thanks … and good luck!