AC and Jazz Amend CPA

[the original tony]

Yes sir, I can surely use it!!
Anything helps us bottom feeders.
Thanks for the input, safe flying

Tony

[scopiton]

He has done more in his short tenure here than Montie ever did and I am really starting to see some operational improvements on the line.

what kind of improvement, just curious ?

I have seen a cultural shift. Before, it seemed that middle and lower management would never make a decision for fear it might be the wrong one. Calin has introduced the " just do it " philosophy and has empowered his management to take a harder line with suppliers like ACGHS for instance.

For the most part, I am now seeing ground crews at the gate waiting for us rather than the other way around. Ground power and environmental is put on the airplane in favor of running the APU. Load finals are often in hand before pushback, so no waiting around there either. There has been a more active role to track ground delays. He seems to be actively trying to grow markets rather than run from them.

This sort of stuff, which is so basically fundamental, was seriously lacking when Montie was around. Just my opinion of course but this the observation I have seen.

glad to read that. a fellow who's a 777f/o told me canadian airports were the only airports where he was waiting for a ground crew.
taking a harder line with ACGHS seemed obvious when you could wait 45' front of a gate before seing marshallers or an apu, or a cooler.
lets hope you're right and that this cultural shift will be confirmed in the future. funny to see how obvious solutions where easy to find but MB didn't find them. go figure.
just do it, as they say.

[Jastapilot]

We all know what your opinion is Jast. You're so predictable it's boring. Get a life twirp.

So what's my opinion? You tell me what's so predictable?

Calin has been able to bring all labor groups together at a time when management and labor were far apart and vote in favor of a crucial contract to restructure the company. He has been able to secure a billion dollars in cash and rewrite the Jazz CPA. He also sees the glass half full by being smart about growth opportunities while eliminating weak markets. He has warned against giving in to the so called experts who have never run an airline before but rather sit at the sidelines being arm chair quarterbacks telling him he needs to shrink the company. He has brought a positive mentality at a time when AC employees need it. AC is by far not out of the woods. Many challenges and hurdles still remain. Some things will never change. The rewards of Calin's efforts will take time to have effect but I for one like what he has done in the short term.

Looks like you're not only armchair quarterbacking, but commentating with a play-by-play. Give it a rest if you don't like others doing the same. BTW I have no problem with what you said, but to call someone else an armchair quarterback...

[rudder]

AC just has to find its way again.

Free pillows are not going to turn the financial tide at AC. Brewer was guilty of implementing 'nuisance' changes which provided no enhancement to the bottom line and diminished the product. Calin has reversed most of those changes already.

It is a new revenue environment and there is a domestic competitor that is more than capable of handing AC its head from a cost point of view. 'Legacy' is not a word that engenders endearment any more, partucularly given the GM/Chrysler fiasco. These auto makers found out that there is no economic value in nostalgia.

Something has to change. Does anybody believe that the change will come in the NIMBY (not-in-my-back-yard) form? AC's continued liquidity challenges will not permit it to 'experiment' with new routes that will take time to develop. Nor is it capable of financing any fleet changes beyond the B767/B787 swap. Even that may be questionable.

Once again the focus will be on the cost side of the operation. One slightly irrational analyst suggests that the cost deficiency is on the order of $1B per annum. Calin himself has set the target at about $250M. Perhaps the truth lies somewhere between those two numbers.

Change is coming. And all will be affected.

[tonysoprano]

Looks like you're not only armchair quarterbacking, but commentating with a play-by-play. Give it a rest if you don't like others doing the same. BTW I have no problem with what you said, but to call someone else an armchair quarterback...

Jast. I think being an employee of the company being discussed gives me the knowledge and the right to comment. You on the other hand have very little to contribute and usually show up on the AC site with nothing more than predictable insinuations for whatever reason, probably because you work for another company and/or have had a lifetime hate for AC. Armchair quarterback is not derogatory. It's my opinion of someone who doesn't know enough but claims to have all the answers. Yes, done it myself. Here's the thing Jast, AC is digging itself out of a mess and many seem to enjoy the mess it's in. That's what makes some posters so predictable. Like I said, time to get a life.

Rudder.
Totally agree.

[rudder]

For those that were around for the CCAA process, you will recall that many believed that the process would be complete after much heated debate and machinations during Round 1 of concessions. Then came Round 2

What we have just experienced is simply round 1 of the CCAA avoidance restructuring of AC. Round 2 is just around the corner and could make the first round look like a cake walk

Fasten seat belts...

[Inverted2]

There will have to be job cuts or pay cuts. How else do you think they are going to stop the money losing?

[tonysoprano]

There will have to be job cuts or pay cuts. How else do you think they are going to stop the money losing?

Unionized workforce costs have dropped significantly. There won't be much room for further cuts on the labor side. There might be job cuts but if I read Calin right, it's not the plan. Significant pilot retirements alone within the next five years will mitigate job losses perhaps even call for new hiring. AC's money loss in the past couple of years has been attributed to other things, the same that have plagued other large carriers. I think this has been discussed already but the message hasn't gotten through. Seems like that broken record is still turning. I'm willing to bet that in 2 years or less we'll have to find some other problem with AC to discuss.

[Brick Head]

What we have just experienced is simply round 1 of the CCAA avoidance restructuring of AC. Round 2 is just around the corner and could make the first round look like a cake walk

Fasten seat belts...

I agree. 21 months from tomorrow AC still will not be able to pay the pension deficit. By that time the pension review and it's recommendations will be out. We will then be told, implement the recommendations or CCAA. Problem then will be to say no with every asset encumbered, including the name Air Canada, slots in LHR and, yes there is more. And anything else AC might acquire between now and then, yup it actually stipulates that in the financing, would be suicidal.

They are backing us into a corner.

As for how much cost savings is required? The ACPA high priced help came up with 1/2 a billion annually. Fits right in with you 1/2 way logic.

But there is a shoe or two to fall yet in round one. Randall made reference to it in his letter to Jazz employees. Calin has stated it numerous times as well. Aveos or Aeroplan or both? Aeroplan has provided financing so may have purchased immunity. I am concerned about what is planned for Aveos.

All told? Plus pension reform? He'll get it, just watch.

I see Jazz is making some positive moves as well. Looks like they are going to start holding cash for future capital purchases. At least that is the way I interpret the 50 million cut to investors and 40 million past onto AC.

Gotta give Calin credit. The biggest reason ACPA believed AC would fail, no matter what happened, was because of advice that said the odds of getting everyone to the table outside of CCAA was very remote. This is what precipitated the belief that now was better than later. Later with everything encumbered would be nasty. So far he appears to be defying the odds.

[Jastapilot]

.

[Jastapilot]

Looks like you're not only armchair quarterbacking, but commentating with a play-by-play. Give it a rest if you don't like others doing the same. BTW I have no problem with what you said, but to call someone else an armchair quarterback...

Jast. I think being an employee of the company being discussed gives me the knowledge and the right to comment. You on the other hand have very little to contribute and usually show up on the AC site with nothing more than predictable insinuations for whatever reason, probably because you work for another company and/or have had a lifetime hate for AC. Armchair quarterback is not derogatory. It's my opinion of someone who doesn't know enough but claims to have all the answers. Yes, done it myself. Here's the thing Jast, AC is digging itself out of a mess and many seem to enjoy the mess it's in. That's what makes some posters so predictable. Like I said, time to get a life.

Rudder.
Totally agree.

Don't worry Tony, I don't have a hate-on for AC. I do think you're a pretentious, arrogant, hypocritical asshole though. Have a nice day.

[tonysoprano]

You jast keep proving me right.

[BMR]

This agreement is good for both companies.

Sorry, I may be missing something here. Someone do explain this in further details..... How is this a good agreement for jazz. Does seem like much of an agreement. The way I see it, Air Canada is trying to save their ass and downsizing jazz seems to be the answer. I completely understand jazz does flying FOR Air Canada, but am I the only one here that finds it outrageous that their idea of saving themselves some money is by downsizing the airline that is still doing ok with the current economic crisis. Personally I don`t see how this benefits jazz. See I think this is where I am missing some key information because I think AC going ahead and downsizing the CPA for another airline instead of downsizing themselves is a low blow! Hmm the only thing I can see is jazz saving AC money, and helping them pull through these hard times. Which is prefectly acceptable since that's ideally what the goal is. I just don't see how people are saying this is a good agreement for both companies?

Again, I'm not looking to stir up some trouble here, I just want someone to clarify what I'm missing here.

[rudder]

Again, I'm not looking to stir up some trouble here, I just want someone to clarify what I'm missing here.

There is assuredly some flying that Jazz does for AC that currently does not make money for AC after making the requisite CPA payments to Jazz.

AC wants to eliminate some Jazz flying (lower block hours), reduce guarantees/shrink fleet (lower overhead), and reduce margins on 100% of the remaining Jazz flying with a view to moving as much Jazz flying as possible from the 'loss' column' to the 'profit' column.

An AC CCAA filing would be a bloodbath for Jazz. That's why they signed on the dotted line.

[BMR]

ahhhhh, very good. sometimes you just need to view it from a different approach. thanks

[Jaques Strappe]

There will have to be job cuts or pay cuts. How else do you think they are going to stop the money losing?

No doubt that costs need to be controlled. I would argue however that for the most part, employee salaries are not the issue.

Pension reform? Absolutely and I for one am welcoming it. Many at AC believe we should save the pension at all costs because a DB in Canada is safe and secure. More so than an RRSP. My response to that is, go ask a Nortel employee how "safe" his DB pension turned out to be.

More savings need to realized by efficient management of the operation. Something sadly lacking for a long long time. Oh yeah, and no more buying personal registrations for vanity reasons. Every penny of the C-FRAM transaction should be repaid in my opinion.

[teacher]

Good for Jazz:

CPA term extended to 2020
Distributions reduced which saves more moeny for Jazz than the cut in payments by Air Canada ($50 million savings)
Commitment to fleet renewal

Bad for Jazz:

Min aircraft lowered to 125 from 133 HOWEVER those 8 aircraft are now considered floaters that can be used when needed.
Lowered block hours see below taken from CIBC world markets report

Block Hours: 2007 - 401,134 2008 - 401,041 2009Estimate - 386,679 2010Estimate - 389,589

Air Canada pays less for Jazz's services ($40 million savings so less than what Jazz saves from cutting distributions)

So yes, this is good for both companies. Savings for Air Canada mean that Jazz's main customer gets reduced costs and saves money. But Jazz gets new planes which cost less to run and cuts distributions which save it money as well.

[squawk 7600]

so when they say "fleet renewal", do they mean the entire fleet? Are all the RJ's, including the 705's, being replaced with Turbo-props? Or will AC be deploying more EMB's on Jazz's RJ routes, and Jazz will be downsized and left with Dash's only?

Wow, if that's the case, Jazz will take on a completely different look...as will Air Canada. But I do think Air Canada will be in a much better position to regain it's lost domestic market-share. I guess time will tell.

[rudder]

so when they say "fleet renewal", do they mean the entire fleet? Are all the RJ's, including the 705's, being replaced with Turbo-props? Or will AC be deploying more EMB's on Jazz's RJ routes, and Jazz will be downsized and left with Dash's only?

Nope. Nope. Maybe. Sort of. Nope.

[Bede]

Unionized workforce costs have dropped significantly. There won't be much room for further cuts on the labor side.

Sadly, there is always room for more cuts. Look at Swissair: in the '70 they used to pay their top guys $250K/yr. Now Swiss guys are on status pay with the top end at $160K. When you adjust for cost of living, that works out to about $100K in Canada. In the end, they pay about the same as Jazz, flying AC size equipment.

[tonysoprano]

Not sure but wasn't most of the workforce in the new "Swiss" taken over by the regional carrier CrossAir? If so, the real lesson there is that pilots are their own worst enemies.

[Bede]

Tony,

After bankruptcy, Crossair took over Swiss assets. You think pilot-pilot relations were bad at AC- at Swiss the Crossair guys were pushing for a stapled list with the Swissair guys at the bottom, after all they were the bankrupt party.

[tonysoprano]

Yeah Bede I had a good friend at Crossair who kept telling me he was going to "screw" the mainline guys. Well, I guess it worked to some extent. In this business, there's always someone trying to screw you.