First Air cancelling flights, fuel shortage or $$$ shortage?

[Donald]

http://www.cbc.ca/news/canada/north/low ... -1.2725548

First Air has cancelled some flights out of Yellowknife and rescheduled others Friday, because its suppliers were unable to provide the required fuel.


First Air announced Friday it was cancelling some flights out of Yellowknife and rescheduling others because its suppliers were unable to provide the required fuel. ((CBC))

In a news release, First Air blamed a "significantly reduced availability of fuel" for the cancellation of Flight 955, a Yellowknife-Rankin Inlet-Iqaluit flight, and the return Flight 956.

Flights between Yellowknife, Hay River and Fort Simpson were rescheduled Friday.

N.W.T. Highway 3, the only road in or out of Yellowknife, has been closed intermittently for weeks due to forest fires and smoke that's reduce visibility along the road. First Air says its fuel suppliers have been unable to guarantee required fuel quantities because of those closures.

The airline says its flight schedule for the next few days also has to be revised, with priority given "to essential services to allow for medical travel and cargo."

There are two aviation fuel distributors in Yellowknife and trucks carrying fuel for both companies are waiting to get through the closed section of Highway 3.

A representative for Esso says there's a significant amount of fuel already stockpiled in Yellowknife.

While First Air disrupted service, no other airline appears to be affected.

[FL020]

No flight cancellations at 5t.....

[Adiabatic]

Anyone know how to look at NOTAMs from the last couple of days? Curious to see what YZF, YRT and YFB were saying during this 'fuel shortage'.
It's so funny how rumours are started, I heard lots of them about 5T and didn't believe any of it unless it was coming from the horses mouth.
Donald, do you have prior knowledge of 7F being short $$ or do you just think they are short $$ because of this news article? Why do you think they would be short $$? The forum topic you chose leads me to believe you have more info you want to share.

[mbav8r]

Was in YZF recently and the rampies told me that the day before Shell was fuelling everyone because Esso was out and that the highway had just reopened and let 72 trucks through of which many were fuel. So it's likely their contract fuel provider is rationing the fuel. Anyone know who fuels First Air?
Maybe Shell doesn't have a stockpile

[Adiabatic]

As an addition, does 7F use Shell or Esso? Do they have a different tank system between providers?
Example:
If 7F used Shell out of YZF and they were unable to get fuel due to the reason of fuel not available (trucks broke down, drivers quit, too busy, only one truck, fuel not available, etc.) would they use Esso as an alternate? If so, why didn't they do that to get the fuel they required? Maybe they only deal with a certain supplier?

It seems odd that an Esso representative would say there was availability of fuel and deny what 7F was saying, when 7F would be a major customer of fuel in YZF. I wouldn't be happy if my supplier was denying what I said!

Just wanted to add that!

I can't remember 100% who 7Fs fuel was supplied from. My guess is Esso. My memory is bad.

[frozen solid]

I would be frightened to drive a fuel tanker through a forest fire. No sir, not a job I would like.

[boxcut]

The understanding I have of the situation is that 7F and 5T use Esso as their fuel supplier, and get a contract rate for the gas. Esso ran out of gas, Shell still had gas. Shell would not sell the Jet A to either 5T or 7F at the contract rate, and told them if they wanted fuel they'd have to pay full retail. 7F told Shell to go pound sand and cancelled their flights, or rerouted them through Hay River. 5T bit the bullet and bought the marked up gas from shell, and operated normally.

I don't know the reasons behind 7F not wanting to spend the extra at the time, and go after Esso later for the difference (since Esso couldn't honor the contract) but my suspicion is that because of 7Fs financial situation, any excess cost is not in their playbook at the moment.

[Adiabatic]

The understanding I have of the situation is that 7F and 5T use Esso as their fuel supplier, and get a contract rate for the gas. Esso ran out of gas, Shell still had gas. Shell would not sell the Jet A to either 5T or 7F at the contract rate, and told them if they wanted fuel they'd have to pay full retail. 7F told Shell to go pound sand and cancelled their flights, or rerouted them through Hay River. 5T bit the bullet and bought the marked up gas from shell, and operated normally.

I don't know the reasons behind 7F not wanting to spend the extra at the time, and go after Esso later for the difference (since Esso couldn't honor the contract) but my suspicion is that because of 7Fs financial situation, any excess cost is not in their playbook at the moment.

Makes total sense!

[pdw]

...they'd have to pay full retail.

Since there is the forest fire danger around, it's real smart to reduce empty seats (cancel any wasted/mainly-empty flights) to avoid drawing expensive fuel; also an opportunity (out of necessity) to nail things down tight to stay profitable. The 'inbound' would be at maximum efficiency as well. How many cancellations are there already anyway with all the fires/traffic-jams going on ?

Also, the contract fuel is expensive enough as it is for every day flights; and soon, when the trucking crisis ends, the competition still has supply but your contractor is now nearly empty, a chance to make the best $$$ arrangement with your broker to carry on after the difficulty in delivering. Is there EVER any room in airline profit margins to overpay for fuel burn ?

I don't know the reasons behind 7F not wanting to spend the extra at the time, and go after Esso later for the difference (since Esso couldn't honor the contract) but my suspicion is that because of 7Fs financial situation, any excess cost is not in their playbook at the moment.

Due to the emergency (scarce fuel because of fires / more cancellations) there's a bit of face-saving while staying efficient by cancelling some flights while filling the others up. Sooner or later when things get back to normal comes the chance to make the compensating arrangement with the preferred fuel contractor on the new batch (under the circumstances will have to take into consideration the earlier customer inconvenience while restocking larger volumes of empty storage now available), so nobody loses. No cash lost now for the operator nor the supplier, and the opportunity for giving the discount later ...

[Donald]

Donald, do you have prior knowledge of 7F being short $$ or do you just think they are short $$ because of this news article? Why do you think they would be short $$? The forum topic you chose leads me to believe you have more info you want to share.

No prior knowledge, just the same rumours and observations anyone familiar with YZF sees.

One other consideration....could this be a pre-merger move? Cancel the under performing flights, put the pax on 5T, and it's win-win for the "new northern airline."

[boxcut]

could this be a pre-merger move? Cancel the under performing flights, put the pax on 5T, and it's win-win for the "new northern airline."

Other then the announcement, there has been no further move by the companies involved. To my knowledge nothing has come back from the government about approving the merger either. Both airlines are currently operating independently, there is no co-operation or collusion as of yet.

How many cancellations are there already anyway with all the fires/traffic-jams going on ?

Well that depends on which airline you are talking about, 5T, none, 7F, two, and two re-routes. YZF has dropped to 1/2 mile in smoke, but it is still operable, ditto YHY. There was just a different policy at both airlines with how to respond to paying more for go juice at YZF.

[FICU]

Last I heard the companies are going through the valuation process to see what each bring to the table.

[WhiskeyWhiskey]

CYTZ is having fuelling issues as well. Tried to start a separate thread but has to be approved.

[thirdtimecharm]

First Air is in way better shape financially than Canadian North... one of those weird misconceptions out there.

Has 5T caught up on their YFB fuel bill yet?

[midwingcrisis]

Curious thirdtimecharm how you are aware of the current financial situation of both operators in question? What determines in your views "way better" ?

[thirdtimecharm]

Recently 50% of Norterra was sold by Nunavut ownership... that would set the valuation pretty clearly, no?

The new management at First Air has stopped the bleeding but even during the darkest days, First Air was never cash poor. Unlike Canadian North who had numerous cash calls over the past 10 years. You have one ownership group (Makivik) who doesn't want to lose money and the other (Inuvialuit Regional Corporation) who is tired of losing money.

But hey, I could be wrong

[FICU]

Last I heard 7F is way under 50% in valuation...

But hey, I could be wrong