When he took control of Aveos in the spring of 2011, Joe Kolshak was surprised at how difficult Air Canada was. For this industry veteran, this turbulent relationship is one of the main causes of the crash of the maintenance specialist.
“In 30 years in the industry, I have never seen a supplier and a customer be involved in so many disputes,” said the man, Wednesday, to judge Marie-Christine Hivon, of the Superior Court of Quebec. Every invoice was contested. ”
Mr. Kolshak, who has held senior positions at Delta Air Lines and United Airlines during his career, was being questioned, via videoconference, in the lawsuit of the at least $ 150 million class action brought by d ‘ former Aveos employees against the airline, whose hearings continue for the second week.
In his view, the liquidity crunch that plagued the company was mainly due to two factors: the discord surrounding the invoices and the cancellation, reduction and postponement of maintenance work allegedly decided by Air Canada – the main customer. Aveos, which accounted for over 90% of its revenue.
“I don’t want to point the finger at anyone, but it was a very difficult relationship,” said Kolshak, now retired and residing in Atlanta, Georgia.
During his testimony, the former president and CEO of Aveos also had to answer several questions from defense attorneys, who questioned some of his claims in order to demonstrate that the company had been struggling financially since. several years.
Moreover, the defense stressed, dispute settlement mechanisms enabled Aveos to obtain sums of money for contracts that were the subject of arbitration.
Responsible for the maintenance of the planes of the largest airline in the country, Aveos suddenly went out of business in March 2012 from its centers located in Montreal, Winnipeg and Mississauga. This closure was the source of legal action against Air Canada, which was accused of not respecting federal law.
About 2,600 employees, including 1,800 in Quebec, had lost their jobs. The class action covers the period from 2012 to 2016 – the year the federal law was amended by Ottawa. The plaintiffs also want to demonstrate that Air Canada willfully provoked the Aveos debacle.
A plan debunked
Mr. Kolshak was committed to a strategy to grow and diversify the customer base. But by the end of 2011, the volume of work was shrinking and Air Canada’s attitude was changing. At least $ 16 million in revenue soared during the first two months of 2012, according to Aveos.
“In early 2012, Air Canada demanded not to touch the engines that were in our house,” he said. Our employees were ready, but we were ordered not to touch it. So we couldn’t get any income. ”
Not having been able to prepare for such a change of course, Aveos found itself with several hundred employees that it had to pay and who “had nothing to do”, according to its ex-leader. It was not possible to carry out immediate layoffs since 60 days’ notice was required, he added.
In the industry, Aveos’ financial precariousness was beginning to worry, said Mr. Kolshak, who considered himself handcuffed when the time came to convince possible clients.
“I remember talking to Southwest Airlines about engines,” he said. There was progress until their maintenance manager told me: ‘We heard you were going to close your doors. Why should we consider an offer from you? ” ”
Cross-examined by the defense, the former president of Aveos was briefly impatient following questions about Air Canada’s liability, retorting that maintenance center activities would not have had to cease if the carrier Aviation had respected its commitments.
Air Canada had offered $ 15 million in funding to Aveos when the company took cover from its creditors. For Mr. Kolshak, it was a loan that did not address the substantive issue and would have allowed the airline to overtake several creditors.
“It is in a way as if a firefighter set fire to a house before coming back to extinguish it”, illustrated the former president of the maintenance specialist.
According to him, this financing would never have been necessary if Air Canada had “respected its exclusivity contract” with Aveos and if the airline had agreed to pay the sums due to its supplier.
Hearings are scheduled to continue until the end of the month.