Hiring Freeze at WJA?

[invertedattitude]

Understood Kag,

times are tough in the industry for a lot of pilots, and the ever constant fear of losing your job (for a lot of pilots) creates a hostile environment to work in at the best of times.

I 100% agree that if AC and Jazz can't get along, there's no hope for true unity in the country.

[shagger]

Wasn't this thread about hiring?

Maybe a little reality check as to why we are where we are. Both sides I mean.

AC. under the helm of Mr. Brewer, since the start of the slow down, deliberately under supplied seats in an effort to drive yield up. This is a common yield management technique although usually only works short term. We know why Brewer was doing it. Because he needed higher yields due to AC's higher costs. The downside to this is that by under supplying the market with seats you drive people to the competition. You not only drive people to the competition, but at an inflated yield. This type of marketing, as it always does if depended on too long, was inadequate. It is this very marketing that has allowed low cost carriers so much success against legacy carriers during lean economic times in the past.


So sometime in Feb the AC BOD decides AC's business model has failed. Yeah I know you guys have been saying it since we left CCAA. Fuel hedging didn't help.

So Brewer was replaced by a financial restructuring specialist CR. Obviously a company can not keep throwing high yield tickets at the competition forever. Particularly an aggressive competitor that is trying to expand. Eventually you will have no market left. It doesn't take a brain surgeon to understand that what is really needed is lower costs.


So what does the new CEO do? He ends AC's deliberate attempt at creating higher yield. He supplies the seats that the market is demanding and lets the market decide the price they will pay. Notice AC's load factor barely moved. (not including Jazz. That is a product of too many aircraft operating under the CPA at the moment. That one needs a thread onto itself.)

So poof over night we have recession reality yields kick in for everyone.

It is why there has been this sudden change at WJ. WJ suddenly finds itself in a very different yield market.

It is why AC needs restructuring fast. I don't just mean pensions either. Costs will be reduced voluntarily out of CCAA or not so voluntarily in CCAA.

Or liquidation? Then you can charge what you want.

I think Durf is concerned of the unknown. When your competition is heading toward obvious restructuring, you have no real idea of what cost structure you will be competing with out the other side. You prudently get careful.

Of course his aggressive expansion accelerated the situation. I always wonder? And AC did the same to CAIL. Does anyone else think airlines make the mistake of trying to kill off their weaker competition? Would it not be more lucrative, long term, to make sure your wounded competition was always on the verge of life support but not so far gone they were forced into massive restructuring? But no we all have to go and try to pull the plug.

Capitalism.

Fantastic post brickhead. History clearly shows that within the Canadian aviation market the same scenario continually repeats itself. This since Ward Air ...a truely fantastic airline in its day came into a market where CP and AC would actually come together to make sure that neither treaded on the others toes. From that point on it as been dog eat dog.

[Realitychex]

There is so much in this theory that is so fundamentally wrong and so easily discredited by easily obtainable data, I don't even know where to start.

[tonysoprano]

[ivanhoe]

There is so much in this theory that is so fundamentally wrong and so easily discredited by easily obtainable data, I don't even know where to start.

Realitychex (dannydog/salmon5/thebean/andwhoknowswhatelse)


Why don't you give it a try. It seems to make a lot of sense to me. WestJet is in a world of hurt compared to the good old days. In spite of massive advantages in so many ways , a loss in Q2 is possible without some fancy footwork. We have gone from the "Trifecta" to Ben's "Double Whammy".

I sense a real change in direction for the goodship ssAC. CR has managed to change "walk the line in 09" to "where do I sign". AC has been a dream competitor for the last few years. I don't think it's going to be so easy going forward...

[Jastapilot]

"Where do I sign, in '09"

[Realitychex]

If you paid any attention to history, you would know that, unlike most airlines, WJ's 2Q is traditionally the weakest quarter of the year.

Even when WJ was making money hand over fist in 2006/2007, this was the case. Their 2Q margins in the low teens were, in most instances, lower than the other quarters of the reporting year.

WJ uses 2Q every year to spool up its annual phase of domestic growth. For it to be weak should not come as a great surprise, yet every year, it's pointed out as the irrevocable sign of the apocalypse.

It should not come as a surprise to anyone that 2Q 2009 will likely be the weakest quarter for WJ, anymore than it should come as a surprise to anyone that pretty much every airline on the planet will be profitable in the third quarter. You can pretty much take that to the bank every year.

As for the rest, well, let's have a look at what the rasm declines are at all airlines when they release 2Q numbers before we start singling out the few, ie American, Continental, Southwest, United, WestJet, who have noted that year over year rasm in 2Q will be down between 16 and 20%.

If you believe these sorts of declines are unique to the airlines who have chosen to report this trend, and the ones who have chosen not to are experiencing "business as usual", I am afraid you are living in a dreamworld.

To use Herb Kelleher's words in 1994 referring to 1991-1993, I'm sure WJ is quite happy to be the "the tallest of a bunch of midgets" given todays operating environment.

It's pretty obvious that there are a number of legacy airlines out there that will lose a huge amount in 2Q, will make low single digit margins in 3Q this year, but then....look out for the post Labor Day cliff. It's going to be a long, ugly winter.

Barring a dramatic reversal of fortune that will positively impact all the players, there are a few airlines out there like United who are going to have enormous difficulty making it through to April 2010 without some significant changes to the way they do business. Funding infinite losses with finite assets can only continue for as long as there are assets to sell.

After that? Like GM, they are going to have to get serious about amputating the pieces that are causing the problems. Like GM, the solution will be to get smaller and get those unit costs into territory that reflect where fares are these days.

Reshuffling the deck isn't going to cut it on the next Chapter 11 go-around. No more Pontiacs, no more Hummers. No more Saabs, no more Saturns.

Unthinkable a year ago, reality today.

[ivanhoe]

If you paid any attention to history, you would know that, unlike most airlines, WJ's 2Q is traditionally the weakest quarter of the year.

Even when WJ was making money hand over fist in 2006/2007, this was the case. Their 2Q margins in the low teens were, in most instances, lower than the other quarters of the reporting year.

WJ uses 2Q every year to spool up its annual phase of domestic growth. For it to be weak should not come as a great surprise, yet every year, it's pointed out as the irrevocable sign of the apocalypse.

It should not come as a surprise to anyone that 2Q 2009 will likely be the weakest quarter for WJ, anymore than it should come as a surprise to anyone that pretty much every airline on the planet will be profitable in the third quarter. You can pretty much take that to the bank every year.

As for the rest, well, let's have a look at what the rasm declines are at all airlines when they release 2Q numbers before we start singling out the few, ie American, Continental, Southwest, United, WestJet, who have noted that year over year rasm in 2Q will be down between 16 and 20%.

If you believe these sorts of declines are unique to the airlines who have chosen to report this trend, and the ones who have chosen not to are experiencing "business as usual", I am afraid you are living in a dreamworld.

To use Herb Kelleher's words in 1994 referring to 1991-1993, I'm sure WJ is quite happy to be the "the tallest of a bunch of midgets" given todays operating environment.

It's pretty obvious that there are a number of legacy airlines out there that will lose a huge amount in 2Q, will make low single digit margins in 3Q this year, but then....look out for the post Labor Day cliff. It's going to be a long, ugly winter.

Barring a dramatic reversal of fortune that will positively impact all the players, there are a few airlines out there like United who are going to have enormous difficulty making it through to April 2010 without some significant changes to the way they do business. Funding infinite losses with finite assets can only continue for as long as there are assets to sell.

After that? Like GM, they are going to have to get serious about amputating the pieces that are causing the problems. Like GM, the solution will be to get smaller and get those unit costs into territory that reflect where fares are these days.

Reshuffling the deck isn't going to cut it on the next Chapter 11 go-around. No more Pontiacs, no more Hummers. No more Saabs, no more Saturns.

Unthinkable a year ago, reality today.

History? Believe me , I've paid attention.

We're not talking about the traditionally weak Q2 that we are both well aware of. I believe you are on record predicting a solid profit for Q2. From what I'm seeing , I'm not so sure. Weak vs losing money are two different things.

You write at length about the American legacy carriers. Who cares? WJ will benifit to some degree from their problems but the big kahuna is AC. How about some opinion on our MAJOR competitor. I think they are starting to figure it out. CR is on record as believing that you DON'T shrink an airline to profitability. I agree. Let's focus the discussion on Canada. AC , Sunwing , Porter and Skyservice. They are more relevent to WestJet's situation.

[Obbie]

YAWNNNN.........

So......How about them Blue Jay's ?

[Herc_Driver]

So......How about them Blue Jay's ?

They suck ..............

[ivanhoe]

So......How about them Blue Jay's ?

They suck ..............

As does Realitychex's answer (or should I say non-answer) to my question.

Illustrating the US carriers shortcomings smacks of a bully beating up the 90 lb weakling. It's too easy. They are all basket cases and it is beyond me how any business can operate for so long and lose so much money and still continue to operate year after year after year...

I still want to know how this is all going to shake out in Canada. RC seems to be avoiding the question despite his vast knowledge of the industry. Horrors , is he afraid of becoming politically incorrect? Maybe afraid to close some doors to future opportunity?

[CanadaEH]

Well, Porter is still here after how many years now?
Sunwing is still here, after how many years now?

Air Canada's dealt with most of its unions to avoid "walking the line in '09". Westjet has interlines and a FF program on the horizon, not to mention a new reservation system. Transat has Canjet and Enerjet doing work for it instead of Westjet and Sunwing. And the tour operator market is getting very crowed with WJV, Transat, Sunwing, and the other traditional operators (ACV, Sunquest, Signature, etc.).

Where to start?

[tonysoprano]

Where to start?

Don't. Why bother? It's been my experience that you can analyze these things at nauseum. In the end the laws of nature also apply to life in general which includes airline economics. Just a matter of time till nature takes its toll.Those that fail, will fail for a reason. Those that survive also survive for a reason. But in the interest of having fun on an anonymous forum, have at her if you have to.

[ivanhoe]

Where to start?

Don't. Why bother? It's been my experience that you can analyze these things at nauseum. In the end the laws of nature also apply to life in general which includes airline economics. Just a matter of time till nature takes its toll.Those that fail, will fail for a reason. Those that survive also survive for a reason. But in the interest of having fun on an anonymous forum, have at her if you have to.

Why bother?

Well , RC was the one to jump in and discredit brickheads post. When I asked him to tell us why we got a lot of mostly irrelevent info on US carriers. I've noticed he tends to ignore the really difficult questions on other forums he inhabits. Just asking him to finish what he started.

You are right about the fact that a bunch of us clowns can analyze all day long and still not come close to reality. I suspect that RC has more knowledge in his little finger than our sum total. That's why I am so interested in his opinion on the subject.

[CP]

Tonysoprano wrote

Don't. Why bother? It's been my experience that you can analyze these things at nauseum. In the end the laws of nature also apply to life in general which includes airline economics. Just a matter of time till nature takes its toll.Those that fail, will fail for a reason. Those that survive also survive for a reason. But in the interest of having fun on an anonymous forum, have at her if you have to.

At nauseum? Thats a new one. Just having fun.

[tonysoprano]

Nauseum=
A result of the same arguments, the same BS, the same bla bla bla. Over and over and over.....
Yep. Sure is fun.

[mattedfred]

its actually ad nauseam

[rightseatwonder]

i believe the comment was made because it is ad nauseam not AT nauseum.

ad nau⋅se⋅am  [ad naw-zee-uhm, -am] Show IPA
–adverb
to a sickening or disgusting degree.
Origin:
< L: lit., to seasickness
Dictionary.com Unabridged
Based on the Random House Dictionary, © Random House, Inc. 2009.
Cite This Source | Link To ad nauseam


ad nauseum
Etymology
From ad nauseam, with influence from the common Latin ending -um.
[edit]Pronunciation
Audio (US)help, file
[edit]Adverb
ad nauseum
Common misspelling of ad nauseam.


ahhh too quick for me........

[tonysoprano]

Thanks matt and r/s/w. I had a hunch but let it go. I left my Latin vocabulary in the airplane. To all the Latin professors on here, I stand corrected. Now on with the vomiting.

[CanadaEH]

I guess now that you've voted on defering pension payments for 21 months all is well? C'mon, there's gotta be something to talk about.

[rightseatwonder]

lets get to the heart of the matter... whats your stock gonna do in the next little while... i figured it would pop when the unions signed on for the moratorium, but nothing much... and q 2 numbers are coming out soon and they are gonna suck for all of us..

any guesses?

[KAG]

My guess we just kept our head above water, just. If were down, it won't be much.
Hope you all enjoyed that last profit share check, cause I think it's going to the last big one for awhile...

[CAL]

lets hope for the best and get back to some hiring!!:)

[tonysoprano]

I guess now that you've voted on defering pension payments for 21 months all is well? C'mon, there's gotta be something to talk about.

Fill yer boots Hoss. Enjoy it while it lasts.

[roger.roger]

CanadaEH wrote:
I guess now that you've voted on defering pension payments for 21 months all is well? C'mon, there's gotta be something to talk about.


Fill yer boots Hoss. Enjoy it while it lasts.

I guess now that you've voted on defering pension payments for 21 months all is well? C'mon, there's gotta be something to talk about.

Fill yer boots Hoss. Enjoy it while it lasts.

20 years of private operations and looking at your second CCAA got you a little bitter?