Air Canada Second Trip to C.C.A.A.?

[altiplano]

Is yet another thread going to be hihacked into an unrelated debate?

NO.

On topic of AC and CCAA from now on, please, gentlemen!

I've never been so happy to hear AC and CCAA used in the same sentence.

['97 Tercel]

Wait...did the guy who created the thread just get in trouble for derailing it?

[Squid]

Is yet another thread going to be hihacked into an unrelated debate?

NO.

On topic of AC and CCAA from now on, please, gentlemen!

How about we talk about the $1.6B getting raised, and how AC almost certainly won’t go into CCAA in 2020! Perhaps AC has enough liquidity to roll into Q2 20201.

Everyone involved in AC (employees and investors alike) should be celebrating this!

That’s like celebrating that you maxed out your home equity line of credit

[BTD]

enough liquidity to roll into Q2 20201.

That’s a lot of liquidity.

[altiplano]

NO.

On topic of AC and CCAA from now on, please, gentlemen!

How about we talk about the $1.6B getting raised, and how AC almost certainly won’t go into CCAA in 2020! Perhaps AC has enough liquidity to roll into Q2 20201.

Everyone involved in AC (employees and investors alike) should be celebrating this!

That’s like celebrating that you maxed out your home equity line of credit

Not really. They don't have to pay back the stock issued, and the share price went up a couple percent so the dilution wasn't significant. The convertible notes can be paid back or rolled into more shares issued down the road.

This was a positive move by AC and a solid endorsement from institutional investment that they will weather this and recover.

[brooks]

Motley Fool:
Air Canada seems to be falling behind its biggest competitor on refunds, you can’t completely blame it.

In 2020, AC has lost untold billions of dollars. It lost $1.05 billion in the first quarter, $1.7 billion in the second, and $685 million in the third. That brings year-to-date losses to about $3.4 billion. If the fourth quarter doesn’t show improvement, then we could see $4 billion in losses for 2020.

That’s a lot of cash out the door. Potentially enough that Air Canada may legitimately be struggling to issue refunds at all. In the early months of the pandemic, Vice reported that many force-cancelled passengers were told that AC simply didn’t have the money to pay them. If we look at Air Canada’s finances, that could be the case. In the third quarter, AC had $196 million in interest expenses alone on $757 million in revenue. Throw other fixed costs (pension obligations, etc.) on top of that, and the company will really struggle with cash.

To be sure, Air Canada has borrowed and issued equity to maintain its liquidity. But it’s not clear that that will be enough. Quite possibly, the company will need a bailout before it can pay refunds in full.

$4 Billion....

[YYZSaabGuy]

Not quite: you need to look at the cash flow statement and balance sheet as well, not the P&L in isolation.

As you've noted, the YTD loss to September 30th is around $3.49 Billion, and may well reach (or exceed ) $4 Billion by year-end. However, the loss includes a bunch of non-cash expenses - for example, $1.4 Billion in depreciation and amortization, which are bona fide expenses but which don't require a cash outlay. As at September 30th, Air Canada had $7.78 Billion in cash and short-term investments - that's actually up from $5.89 Billion at December 31, 2019. Cash and investments actually increased by about $1.89 Billion YTD - that's cash in the door, not cash out the door.

That was ample to refund the $2.32 Billion in advance ticket sale liabilities - if that's what management had wanted to do. That would've required something less than 30% of cash on hand (I assume not all customers are looking for refunds, given that certain routes are still being operated), leaving the company with somewhere north of $5.45 Billion in cash and short-term investments on hand.

Is that enough to continue operating, even at a reduced level, given the ongoing Covid-19 impact on the business? Hard to say, but if it was my decision, and assuming I could defer refunds under the terms of Air Canada's tariff (and I'm confident management is very much aware of their tariff terms and conditions), I wouldn't be refunding any tickets until the status of federal government relief funding was clarified - and in my favour.

Customers and the media wouldn't appreciate that position, but on the other hand, they're not the ones facing the pain of a CCAA filing, should it come to that. Management is working very hard, and so far pretty successfully, to stave that off.

[Fanblade]

Brooks your posting Motley Fool?

How about check what real investors think via the stock price?


“ We're going to be ready to recover on the other side of COVID-19: Air Canada CEO
It's been a tough year for the airline industry, and Air Canada has been feeling the pressure. Revenue plunged 86 per cent in the third quarter. Calin Rovinescu, president and CEO of Air Canada, joins BNN Bloomberg to talk about how the company has been managing. Rovinescu says that he has yet to see suggested terms for government aid for the airline industry. He also says he still thinks it will take three years for the airline to get to 2019 levels of revenue and capacity.”

https://www.bnnbloomberg.ca/video/we-re ... eo~2079654

[Torontomaplelaughs]

Isn't Brooks a WestJet Koolaid Lackie?

Just looking for any straw he can find...some bitter jaded folks on AvCanada. A cesspool?

[altiplano]

Whatever makes you feel better about yourself Brooks.

But companies on the way to CCAA aren't buying other companies and launching a freighter operation...

AC went into this strong and will come out strong. They have the confidence of the market and those that count in the finance side.

[RRJetPilot]

Isn't Brooks a WestJet Koolaid Lackie?

Just looking for any straw he can find...some bitter jaded folks on AvCanada. A cesspool?

Yes he is. A few years ago he was on here telling us how WJ would eat AC lunch. EtcEtcEtc. SAD. But in reality he is probably now at Encore or Swoop just trying to stay positive and grabbing on to any "Motley Fool" story he can that is negative about AC. Its sad but human nature.
I think WJ fucked up a bit by offering all refunds before the government assistance was actually announced. Even though they really haven't given any yet, if by chance the government support isn't favourable to the airlines and the shareholders dont go for it, WJ will be in a really tough spot.
AC is doing a fantastic job and I think will come out of this in a much stronger position relative to other airlines in Canada.

[Torontomaplelaughs]

Air Canada will not be sitting on its hands.

WestJet has more than its work cut out for itself if it wants to secure anywhere near a 10B market cap. That market share has to come from somewhere, and AC won't be giving up any willingly.

Don't ever underestimate CR....he's a shark, and likely smarter and far more experienced and connected in aviation than Gerry.

Interesting times ahead.

DP.

It's called eating your lunch bud. That's exactly what WJ is going to do to AC on it's international routes. The 787 product is identical if not better than AC and WJ costs structure is lower.

This did not age well, at all.

[brooks]

I post a quote from an article about AC taking a $4 billion dollar loss and you guys pile on like a herd of sea lions. Hilarious. Let's be clear about something. AC is bailing out Transat so the government doesn't have to. It's a salvage operation to protect Quebec jobs.

[chaster]

I post a quote from an article about AC taking a $4 billion dollar loss and you guys pile on like a herd of sea lions. Hilarious. Let's be clear about something. AC is bailing out Transat so the government doesn't have to. It's a salvage operation to protect Quebec jobs.

Just to be Clear Brooks WJ was in the Market for AT before the S#&t hit the fan! With AC shares on the upswing they will pick AT up for a SONG And the company FYI has a great deal to offer! Go do your homework!!

[altiplano]

I post a quote from an article about AC taking a $4 billion dollar loss and you guys pile on like a herd of sea lions. Hilarious. Let's be clear about something. AC is bailing out Transat so the government doesn't have to. It's a salvage operation to protect Quebec jobs.

Motley fool will make you look like a fool. Their analysis is junk and flip flops every other day.

[rudder]

Thus far, AC has been able to ‘restructure’ many cash sensitive financing and commercial obligations. Accordingly, cash burn is reduced and tipping point for insolvency moving further away from today’s date.

No doubt that AC will be engaging with vendors as well to modify terms to reflect anticipated reduced operations for at least 2021/2022 if not 2023 and beyond.

Even without government assistance or relief, AC is in better shape to cope with COVID related reduced demand than it was in Q1 and Q2. If there is assistance or relief offered on reasonable terms, then the financial situation at AC will further stabilize and perhaps even estimate when AC will reach daily cash burn of zero (no time soon but perhaps on the horizon).

As another poster pointed out, many of the AC losses incurred to date were non-cash. US carriers doing the same accounting. They have thrown the kitchen sink in to 2020 hoping financials for 2021 will turn the corner.

[rudder]

AC went to market today to solicit $850MM from a share offering. If the 15% oversubscription is converted, the proceeds will be just under $1B.

And AC acquired TRZ for virtually no cash outlay, assuming that most TRZ shareholders opt for AC shares in lieu of cash.

December 2020 is looking like a pretty good month for AC, COVID notwithstanding.

CR is a shark. Never lets a good crisis go to waste. Somewhere up on the top floor of AC HQ there is a big board that looks well out in to the future. Would be great to get a peek at it.

Certainly hope that MR will be able to execute. The skill set that CR brought to the position was unique. More simple force of character than anything else. Knowing when and how to make the other side blink is an art rather than a science. You don’t learn it in a classroom.

I wouldn’t be surprised to see a few more significant announcements before CR departs on Feb 15.

[goldeneagle]

AC went to market today to solicit $850MM from a share offering. If the 15% oversubscription is converted, the proceeds will be just under $1B.

More dilution of the share base to keep the company afloat. That's the way it should be, shareholders take the haircut from a downturn, dont offload it on the taxpayers.

This is basically the third trip to the dilution trough, had a significant share sale some months back, then the Transat transaction will result in yet more new shares being printed, and now this financing round that is producing 35.4 million shares priced at 24.00, which will turn into 40 million shares if the 15% over subscription is taken up.

After you tally up all the new shares printed, AC stock price reaching 30 dollars will put the corporation at the same value it was pre-pandemic with a 50 dollar share price. With this round priced at the 24 dollar point, a significant recovery in the medium term is already fully priced into AC shares.

[Phileas Fogg]

Buy!!!!! Jan2022 share price will be $47.26

I have a Delorian.

[Squid]

850 raised @ 10-15 mil burn per-day gone in 2-3 mos
Hope it gets better sooner rather than later but I honestly can’t see it being a summer where everyone wants to travel just yet.