WJ vs. AC......performance

[Transonic]

Lateralus,

No, it's not pathetic. This thread provides a sobering view on the strategy of growth fueled by low interest rates and cheap fuel.

Realitychex provided a hypothetical and probable scenario that all junior AC pilots should consider. If fuel were 17 cents/litre more this quarter, the result would have been a million dollar loss every day. If that were to occur, one could reasonably assume a good number of the leased 763s and A333s would be discarded.

Air Canada knows this and its why 20 of 32 763s are on operating leases. Further, the A333 fleet will not undergo the new cabin refurbishment while being consolidated in YUL. The above makes for a clean cut, which as a pilot worries me.

Please keep up the good work on here Realitychex.

[atphat]

Realitychex provided a hypothetical and probable scenario that all junior AC pilots should consider.

Really? Perhaps junior AC pilots should jump ship and head to WJ? Wait.... Seems like the reverse is happening. You can say all the hypotheticals you like. For a junior AC pilot the future has never been brighter.
Sit back and enjoy the ride girls and boys.

[Shady McSly]

What happens when WJ pilots unionize then go on strike a year later?

[TheStig]

I find it interesting how obsessed with Air Canada so many Westjetters are, the David vs. Goliath narrative seems to be an integral part of the culture. I can't really blame WJ too much as it has been an effective way of creating unity. However, maybe it's time for a new focus. Maybe, Westjet should start focusing on their internal issues a bit more. Due to its success Westjet isn't exactly David anymore; 3 Fleet types, multiple bases, constant union drives, along with the Alberta economy and the CEO's recent comments seem to be creating an 'us vs. us' mentality within the employee groups. Welcome to the real world of airline business.

While Air Canada has gained momentum, it's aviation and we all know how thin the margins are and how quickly plans can change. Since 2009 the airline has been in transition and while everything hasn't gone smoothly the airline has met, or more often, exceeded its growth and financial targets. Which it why when they state costs (excluding fuel) will continue to drop, I believe them. When they state that they have a plan to balance growth and profitability, I also believe them. I could cite a number of reasons why Air Canada's profits could be higher (such as the massive investment costs modernizing the entire 777 fleets interiors over the winter) and a number of reasons why the profits could have disappeared altogether (but that has already been stated). But the fact of the matter is that's not my job, and the people responsible seem to be doing theirs just fine without me. Air Canada improved its 2016 Q1 by a huge margin over 2015 (and it made 1.2 Billion in profits in 2015...) While Westjets Q1 profits took a beating.

Air Canada isn't focused on short term profits, low fuel prices are doing that and no one is complaining. The real objective is on growing to becoming a large international carrier which will then provide long term financial stability. The business isn't planning for Q3 or Q4 of this year it's planning for 2021, so whether the 767's are phased out next year or in 2025 it doesn't really matter. What matters is having the flexibility needed to match market demands while keeping costs at levels that provide growth opportunities and they have that.

Westjet has an undeniable CASM advantage, it's employees hourly rates are inferior. As a pilot are you a little concerned with how much of your take home pay based on stock performance and corporate profits? Air Canada pilots get a bonus if the airline makes huge profits, but can still pay their mortgage if it doesn't. Westjet wages never caught up in the glory days of rapid expansion and massive profits and those days have passed.

[Transonic]

There is no animosity, just frustration when reality is ignored.

Any growth involves risk. Air Canada is positioned well to shed load if the bet goes wrong. It would be prudent for a junior pilot to be as equally prepared and positioned if the bet goes wrong. Yet the advice above is to “sit back and relax. ”

Big picture, those joining AC must hope that the Sunni/Shiite power struggle in the Middle East and resultant proxy wars between Saudi Arabia and Iran continue in the long term.

Yet the majority of pilots, with their narrow view of the world, will simply chock it up to “bad luck” if laid off due to an increase in oil. They’ll blame their position on a list; ignorant of the risk they had taken to join a growth play.

I agree, life has never been brighter as a junior AC pilot. So long as Saudi Arabia continues to "cut off the nose to spite the face."

[tailgunner]

Transonic,
You do realize that WJ has cut the number of mainline 737's through lease returns and delivery deferrals , while increasing the size of Encore? It would appear that junior WJ pilots are the ones nearer the perverbial ledge....WJ leadership blamed BBD for not deferring the Dash deliveries, but I believe that was a convenient way to deflect scrutiny and continue with their fleet plans....
Cheers.

[aerobod]

Transonic,
You do realize that WJ has cut the number of mainline 737's through lease returns and delivery deferrals , while increasing the size of Encore? It would appear that junior WJ pilots are the ones nearer the perverbial ledge....WJ leadership blamed BBD for not deferring the Dash deliveries, but I believe that was a convenient way to deflect scrutiny and continue with their fleet plans....
Cheers.

No cuts in the 737 fleet have happened or are planned, here is the committed minimum 737 fleet / maximum fleet:

Year End:
2014 - 107/107
2015 - 114/114
2016 - 115/118
2017 - 115/124
2018 - 113/131
2020 - 119/149
2023 - 120/164

Latest info available on p19 of the quarterly report: http://www.westjet.com/pdf/investorMedi ... Report.pdf

[fish4life]

I might be wrong but I believe WJ pilots can opt to leave the 37 for the Q instead of getting laid off should it happen. Right now I think a junior AC guy would be better off though because they have more projected attrition then WJ does.

One interesting line did come from a Globe and Mail article on WestJet I can't seem to link here but if you check today's upgrades and downgrades it refers to this statement.
"Outside of the financial outlook, management provided disclosure surrounding a 'greatly expanded charter program,' and noted that full details will be announced within the next week or two"

Overall though should the Canadian economy get worse AC is well positioned since most of their projected growth plans involves moving traffic from the US around the world while WJ is more aimed domestically. I for one hope both companies are going to be profitable for years to come and pilots on both sides do well, it leads to a better overall situation for Canadian pilots if we have 2 healthy airlines not 1.

[Transonic]

Transonic,
....WJ leadership blamed BBD for not deferring the Dash deliveries, but I believe that was a convenient way to deflect scrutiny and continue with their fleet plans....
Cheers.

Last I read BBD plans to layoff 7000 workers. A reasonable person would assume to warrant such a massive layoff BBD must be severely cash strapped. Thus cannot afford to lose cash flow from deferring deliveries that they are not contractually obligated to do so.

http://www.huffingtonpost.ca/2016/02/17 ... 50634.html

[plhought]

...management provided disclosure surrounding a 'greatly expanded charter program,' and noted that full details will be announced within the next week or two"

Great - they already low-balled work away from the other operators around my parts, and are planning to do more. F***.

[rxl]

I might be wrong but I believe WJ pilots can opt to leave the 37 for the Q instead of getting laid off

Please tell me that this scenario would only be possible if there is a vacancy at Encore.

[fish4life]

I don't know for sure I thought that was something with the one list deal, perhaps someone at WJ or Encore could clarify ?

[flashheart]

Lateralus,

Realitychex provided a hypothetical and probable scenario that all junior AC pilots should consider. If fuel were 17 cents/litre more this quarter, the result would have been a million dollar loss every day. If that were to occur, one could reasonably assume a good number of the leased 763s and A333s would be discarded.

Air Canada knows this and its why 20 of 32 763s are on operating leases. Further, the A333 fleet will not undergo the new cabin refurbishment while being consolidated in YUL. The above makes for a clean cut, which as a pilot worries me.

Please keep up the good work on here Realitychex.

Are you guys even aware of what is going on at AC?

Training is full up, interviews everyday. I haven't even flown a plane yet and there are 200 people below me. I am not sure what I am supposed to be losing sleep over? Should I apply to WJ as a plan b?

I used to be a big fan of WJ. They came into the market and really offered a great product. Something Canada definitely needed. But this attitude, is just brutal. I mean all the best. But I am quite happy to just fly planes and go home. No Koolaid required.

[altiplano]

just frustration when reality is ignored.

Which is exactly what you are doing. Making things up that didn't happen to suit the narrative you and your colleagues have believed and wish to perpetuate.

Stig stated it well. Year over year AC is improving - they are hitting targets, turning a profit in a quarter that used to be a disaster and are more nimble than ever - and still improving.

Changes to the ACPPA, pension funding holidays, and new CPA agreements will be freeing up even more capital moving forward. A new fleet and corporate strategy are paying dividends, opening up markets and delivering results.

I hope you guys keep drinking the kill aid because it won't be the same playing field as the last 20 years. Particularly as you start overseas. A wide wide world and AC isn't your only competitor on the Atlantic... It is the most competitive market on earth with the most players.

As for junior pilots and new hires at AC it has never been a better time. Again come on back to reality! Upgrades available within the first few years on narrow bodies or direct entry as an FO on widebodies, dozens of new aircraft being delivered over the next several years... Hundreds of retirements every year starting in 2017... there is so much opportunity right now...

[rudder]

AC will hire 311 more pilots by June 2017 and AC Express carriers will hire 300+. Even a minor 'correction' would only slightly alter these forecasts.

How many pilots is WJ and Encore hiring?

[watermeth]

hiring has nothing to do with growth.
earnings and profit margin only count, numbers, ASM, CASM,..., all the things realx has been deciphering previously.
your legitimate enthusiasm from a pilot pov is not the same as a CFO, or a bean counter.
one could wonder what a 10/20% increase on the jet gallon price could produce on a 2% net profit margin, etc.
but yep, it's a good time to join nevertheless.

[Realitychex]

I might be wrong but I believe WJ pilots can opt to leave the 37 for the Q instead of getting laid off should it happen. Right now I think a junior AC guy would be better off though because they have more projected attrition then WJ does.

One interesting line did come from a Globe and Mail article on WestJet I can't seem to link here but if you check today's upgrades and downgrades it refers to this statement.
"Outside of the financial outlook, management provided disclosure surrounding a 'greatly expanded charter program,' and noted that full details will be announced within the next week or two"

Overall though should the Canadian economy get worse AC is well positioned since most of their projected growth plans involves moving traffic from the US around the world while WJ is more aimed domestically. I for one hope both companies are going to be profitable for years to come and pilots on both sides do well, it leads to a better overall situation for Canadian pilots if we have 2 healthy airlines not 1.

Did anyone else catch one of the reasons for the yield decline on page 9 of the MD&A?

"a higher proportional growth of lower-yielding international connecting traffic (sixth
freedom traffic) in support of the airline’s international expansion strategy".

Do a search for US to Europe or Asia and AC often usurps Air India as the king of low yield traffic and is chasing Norwegian and others for the lowest yield traffic. Does AC really want to get in the business of chasing Norwegian and other LCC's for that market?

It's perfect for the local church group looking for the cheapest possible flights but i doubt its the basis of long term strategy. What happens when the C$ dollar improves? Will US carriers, who are all considerably larger and dramatically more profitable quietly sit in the wings and let AC poach anything but the lowest yielding junk traffic? I doubt it.

Americans are as loyal to their loyalty plans and status as Air Canada customers are to Aeroplan.

Besides, WS can, and is doing the same, with a considerably lower cost base. For example I have friends in the US southwest who, to my surprise, are flying WJ from PHX - YYZ - YHZ - GLA. Why? It was the least expensive alternative. And both could afford to pay more, but they don't.

It's amazing what $500m a quarter in fuel savings will do to the bottom line.

[Duke p]

hiring has nothing to do with growth.
earnings and profit margin only count, numbers, ASM, CASM,..., all the things realx has been deciphering previously.
your legitimate enthusiasm from a pilot pov is not the same as a CFO, or a bean counter.
one could wonder what a 10/20% increase on the jet gallon price could produce on a 2% net profit margin, etc.
but yep, it's a good time to join nevertheless.

If you guys think Calin R hasn't factored fuel projections into his long-term strategy for Air Canada, you have no idea who he is. That guy didn't just fall off a "turnip truck" like a lot of posters on this forum appear to have. As much as I hate to say it, I would implicitly trust that man with my business, and outlook strategy any day of the week.

Hiring has "everything to do with growth"....if you're a pilot, and we're hiring pilots, growing the list. Seriously, what other "growth" is there that matters to a pilot??? As long as the "business strategy" is sound, and I have no doubt it is...... there's no worry......get a 300 name "market correction buffer" under you on that list as fast as you can. I mean seriously......as a pilot do you really care what CASM and ASM are??? If the Company is on solid footing, has the backing of the Government, has massive retirements on the horizon, and is growing the fleet, and pays you without fail two times a month......who seriously cares about the details of the "ongoing plan". I'll leave that up to the experts (of which, there are none here...except Rudder...maybe...) and continue collecting my paycheques, and logging left seat time while I'm waiting for things to "implode".........right.

We've been through far more dire scenarios over the last 15 years than fuel prices rising....and we're stronger than ever. It would be pretty naïve to assume that Air Canada's growth plan suddenly came to fruition as soon as oil dropped to $30 a barrel......and whos success is based on it remaining there. This plan was years in the making, contrary to the belief of some "expert-armchair strategic planners" who seem to have the "inside scoop" on both Companies actual financials. They just end up sounding silly.

A few questions for those "experts".........

I asked this at the beginning of this thread if ASM's and CASM is truly "EVERYTHING" why is WestJet not twice the size of Air Canada 20 years on???? Twenty years is an absolute eternity in this business, and market share is everything....everything. The relative size, and real growth plans of the two respective organizations 20 years on speaks absolute volumes, and says all that needs saying.

Why is it that Air Canada will have 100 widebodies on the property in two years if WestJet is pulverizing them in the CASM/ASM race, and has been for two decades??? Why don't you take off your "sunglasses" for a moment and address that one personally Realitychex?

Why did WJ buy four clapped-out 767's then put them on a super-competitive trans-Atlantic market??? How long will it even last? Who's idea was that??? Sounds like "experimental dabbling in an unknown market" to me. If they had a real stratigic growth plan, it likely wouldn't include "dabbling" with older maintenance hungry, relatively inefficient frames.


I mentioned in a post long ago that I heard Clive state that back in 2003....... "Air Canada is a bankrupt monopoly with a multi-billion dollar market cap that was there for our taking." I ask again....... how has that worked out exactly 20 years down the road? For the record, it was a vivid memory of his "smugness and arrogance" after he made that comment that made me start this thread in the first place....if anyone wanted to know "why".

DP.

[Realitychex]

hiring has nothing to do with growth.
earnings and profit margin only count, numbers, ASM, CASM,..., all the things realx has been deciphering previously.
your legitimate enthusiasm from a pilot pov is not the same as a CFO, or a bean counter.
one could wonder what a 10/20% increase on the jet gallon price could produce on a 2% net profit margin, etc.
but yep, it's a good time to join nevertheless.

If you guys think Calin R hasn't factored fuel projections into his long-term strategy for Air Canada, you have no idea who he is. That guy didn't just fall off a "turnip truck" like a lot of posters on this forum appear to have. As much as I hate to say it, I would implicitly trust that man with my business, and outlook strategy any day of the week.

Hiring has "everything to do with growth"....if you're a pilot, and we're hiring pilots, growing the list. Seriously, what other "growth" is there that matters to a pilot??? As long as the "business strategy" is sound, and I have no doubt it is...... there's no worry......get a 300 name "market correction buffer" under you on that list as fast as you can. I mean seriously......as a pilot do you really care what CASM and ASM are??? If the Company is on solid footing, has the backing of the Government, has massive retirements on the horizon, and is growing the fleet, and pays you without fail two times a month......who seriously cares about the details of the "ongoing plan". I'll leave that up to the experts (of which, there are none here...except Rudder...maybe...) and continue collecting my paycheques, and logging left seat time while I'm waiting for things to "implode".........right.

We've been through far more dire scenarios over the last 15 years than fuel prices rising....and we're stronger than ever. It would be pretty naïve to assume that Air Canada's growth plan suddenly came to fruition as soon as oil dropped to $30 a barrel......and whos success is based on it remaining there. This plan was years in the making, contrary to the belief of some "expert-armchair strategic planners" who seem to have the "inside scoop" on both Companies actual financials. They just end up sounding silly.

A few questions for those "experts".........

I asked this at the beginning of this thread if ASM's and CASM is truly "EVERYTHING" why is WestJet not twice the size of Air Canada 20 years on???? Twenty years is an absolute eternity in this business, and market share is everything....everything. The relative size, and real growth plans of the two respective organizations 20 years on speaks absolute volumes, and says all that needs saying.

No. Who cares about market-share if it results in the worst profit margin in the Americas? I'm sure AC has a dominant position on YVR-LAX, forcing one of the most profitable airlines in the US off the route. Even with 90%+ l/f's and a system belf of 68%, Alaska walked away from it. Do you really think AC was making money in that environment with their costs? And the moment the fares increase, Alaska will be back. It's a dumb strategy. The cost of buying that market share is never recouped.

Being profitable on a consistent basis, through all parts of the business cycle, four quarters a year is everything. And not defining "profit" by using EBITDAR, a meaningless metric that pretends depreciation, interest, rents, amortization and taxes don't really matter. Do those costs matter in your household? They better.

Being consistently profitable requires growing at a manageable rate and not throwing capacity at markets that canibalizes existing markets in order to buy labor peace with the pilot group. You tell me what happens when circumstances develop where the growth comes to a screeching halt?

Why is it that Air Canada will have 100 widebodies on the property in two years if WestJet is pulverizing them in the CASM/ASM race, and has been for two decades??? Why don't you take off your "sunglasses" for a moment and address that one personally Realitychex?

WJ is slow and methodical. They avoid risky moves. Doing so ensures their consistent profitability for 20+ years.

Why did WJ buy four clapped-out 767's then put them on a super-competitive trans-Atlantic market??? How long will it even last? Who's idea was that??? Sounds like "experimental dabbling in an unknown market" to me. If they had a real stratigic growth plan, it likely wouldn't include "dabbling" with older maintenance hungry, relatively inefficient frames.

See above. Ask any WJ'r if they were able to get a seat to Dublin or Glasgow the past few years, or about the chances of getting a seat to London this summer. The 767's are dirt cheap and with current fuel regime, have superb economics. Don't worry. You'll see an order for new iron before too long.

I mentioned in a post long ago that I heard Clive state that back in 2003....... "Air Canada is a bankrupt monopoly with a multi-billion dollar market cap that was there for our taking." I ask again....... how has that worked out exactly 20 years down the road? For the record, it was a vivid memory of his "smugness and arrogance" after he made that comment that made me start this thread in the first place....if anyone wanted to know "why".

Take 1Q 2014 fuel cost, 1Q 2014 loads, 1Q's much higher rasm and 1Q 2014's much better C$ exchange rate, over lay those key metrics on 1Q 2016 data and see what happens.

It isn't pretty.



DP.

[altiplano]

Why don't you drop the fantasy, bean?

Come back to real numbers and what's actually happening. Not what if, what if, which is bullshit.