Newspaper article The Canadian Press

Air Transat Seeking to Reduce $20 Million of Costs to Boost Competitive Position

Newspaper article The Canadian Press

Air Transat Seeking to Reduce $20 Million of Costs to Boost Competitive Position

Article excerpt

Air Transat seeking $20M in cost reductions

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MONTREAL - Air Transat is seeking to cut $20 million in annual operating cost as part of its parent company's efforts to restore profitability in the face of toughening competition.

Executives told employees Wednesday that the airline needs to realize the savings in order to operate a fleet of Boeing 737 aircraft and replace those flown under subcontract by Nova Scotia-based Canjet since 2009.

The Canjet contract ends in April 2014. It follows an earlier deal in 2003 with WestJet Airlines (TSX:WJA).

"We continue to reflect on our strategy concerning small planes and the meetings with our employees are designed to report on this issue," spokeswoman Debbie Cabana said in an email.

The first in a series of meetings took place at company headquarters in Montreal and will be followed by additional sessions over the coming days in Toronto and Vancouver.

Some of the savings will come from unspecified concessions by employees, who last year accepted a two-year wage freeze. But this time, the company isn't seeking to touch salaries, Cabana said.

She said the $20 million in cost savings will help parent company Transat AT (TSX:TRZ.B) realize its goal of improving its pre-tax operating profit (EBITDA) by $50 million over three years through a series of cost reductions and moves to boost sales.

Carol Lavoie, president of the pilots union, said Wednesday that he doesn't view the employer's demands as "excessive."

He said pilots were prepared, for example, to stay in hotels near airports instead of downtown, which would allow the airline to realize considerable savings.

The union representing flight attendants said it will take a few days to study Air Transat's plan to better control its costs and ensure employment stability.

"We all have a stake in Air Transat returning to profitability and maintaining jobs," Peter Buzzell, president of the Air Transat component of the Canadian Union of Public Employees (CUPE), said in a release. …

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