Air Canada parking 155 aircraft!!

['effin hippie]

disco

The dividend was one time, the 2 Beeeellion acquired from the divestiture of AC assets and operating divisions; that cash grab is part of the reason AC is in bad shape right now, do your homework.
It is a greedy shell game, you are right about that, ACE essentially raiding AC for anything that can be turned into cash; check out some of the other threads here for the details. AC is certainly not making an operating profit, and there won't be any more cash to hand out for quite some time even under the most optimistic scenario.
Don't believe me, ask someone else around here; AC's losses aren't as bad as some might make them out to be, but they are still pretty scary.

I'd love to work for WJ.
Didn't know Kavafian was accepting resumes...

ef

[disco]

disco

The dividend was one time, the 2 Beeeellion acquired from the divestiture of AC assets and operating divisions; that cash grab is part of the reason AC is in bad shape right now, do your homework.
It is a greedy shell game, you are right about that, ACE essentially raiding AC for anything that can be turned into cash; check out some of the other threads here for the details. AC is certainly not making an operating profit, and there won't be any more cash to hand out for quite some time even under the most optimistic scenario.
Don't believe me, ask someone else around here; AC's losses aren't as bad as some might make them out to be, but they are still pretty scary.

I'd love to work for WJ.
Didn't know Kavafian was accepting resumes...

ef

Well hippy (or is it effin?), we do agree on a few points: 1) we are witness to a greedy shell game and 2) ACE has raided AC to part off various units for cash and 3) Air Canada is in a precarious position with the possibility of another foray into CCAA. I would argue that we have item 3) largely due to items 1) and 2)

Where we disagree hipster, is in your espousing of Kevorkian's notion that Air Canada should reduce to profitability. You feel that this legacy carrier should park unprofitable routes - you must know that it is not as simple as that right? We service smaller communities in order to feed them into our international route structure. Serving those communities often requires Jazz airplanes and all that is entailed there with our CPA (maybe you are suggesting that Jazz is unplugged and parked?)

In any event, our size is not really the trouble here. In fact, I think our size is one of our strengths. I know that must disappoint you as a teal kool-aid-biased Westjet applicant.

May I remind you that in 2007, Air Canada posted a record operating income of $433 million (meeeellion) compared to operating income of $236 million in 2006.

However, in 2006, Air Canada's EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization and Rent) was $1,043 million as compared to $936 million in 2005.

Yes all this without any of the money from ACE's massive yard sale. ACE has not been sending money this way...it has all been flowing up and out my friend.

The latter half of 06 and into 07 were the early periods of historically record high oil prices.

Air Canada has experienced 3 consecutive years of record load factors ("an unpopular brand" you say. Seems we were popular enough for 3 years of record sales) . Which of those record high load factor routes do you feel we should be suspending? Rest assured that under our previous CEO's stewardship, we trimmed frequency and weak routes (sometimes to seasonal offerings) quite aggressively.

Anyway, I do wish you luck with your WestJet application - they seem like a great place to work - I have many friends there. Probably a little more fun than the Kavafian gig might be...

Cheers

['effin hippie]

Ouch.

Guess you did do your homework.

ef

[joebloggs]

Also, you have to take into account the Air Canada act, in which the Canadian govt has forbidden Air Canada to sell a seat below said cost for that seat. Any other airline in Canada can engage in this practice. Also, Air Canada must publish everything in both french and english(at a cost of millions), again other airlines are exempt from this. Can you see where I am going with this? Air Canada has had to bear the brunt of all negative government legislation just because it's the biggest(and therefore the baddest) game in town. If the playing field was levelled, what do you think would happen then? Food for thought.

[hypoxic]

To top it all off, AC's contracts with Jazz and Aeroplan were "negotiated" and I use the term loosely, with ACE breathing down AC's neck. ACE's shareholders also owned large amounts of Jazz and Aeroplan shares. The guaranteed 14% profit that is stipulated in the AC/Jazz CPA is there to make ACE shareholders happy. It's a money laundering scheme that ACE has capitalized on. Have you noticed what Jazz shares are going for now? ACE shareholders sold all of their Jazz shares knowing they got the moneys worth. I bet Calin is working on new contracts with Jazz and Aeroplan that won't be so favourable.

[RussD]

To top it all off, AC's contracts with Jazz and Aeroplan were "negotiated" and I use the term loosely, with ACE breathing down AC's neck. ACE's shareholders also owned large amounts of Jazz and Aeroplan shares. The guaranteed 14% profit that is stipulated in the AC/Jazz CPA is there to make ACE shareholders happy. It's a money laundering scheme that ACE has capitalized on. Have you noticed what Jazz shares are going for now? ACE shareholders sold all of their Jazz shares knowing they got the moneys worth. I bet Calin is working on new contracts with Jazz and Aeroplan that won't be so favourable.

Your sort of correct. Jazz charges AC 10% of total costs (14 % of controllable costs) as a markup for the service they provide AC. In other words they don't apply a 'mark up' or margin on fuel, Nav Canada fees and the like.

As long as AC collects more than an average of 170 dollars for every passenger Jazz carries or more than an average of 3800 dollars for every block hour flown,,the deal they have with Jazz will generate a profit for AC. (Outrageous margin and all.) This simple math doesn't take into account the 'network value' that Jazz provides in substantially enlarging AC catchment or 'footprint' in the market as it applies to network connections. Nor does it take into account the financial benefit AC realizes by subletting otherwise unleasable a/c to Jazz.

Some insiders say Jazz is the only thing that keeps AC in the game. Some say the opposite. The guys in the middle seem to think AC gets back at least as much back as it gives, visa a vise Jazz.

Having said that, as a Jazz guy, I'm pretty ambivalent at best with the Jazz income trust deal whereby the vast majority of the margin that AC pays Jazz is shoveled out the door every month. I think me and my compadres should get a bunch more

[bmc]

disco

Which of those record high load factor routes do you feel we should be suspending?

Cheers

It's not unusual for money losing airlines to have a break even load factor in excess of 100%

[hypoxic]

Your sort of correct. Jazz charges AC 10% of total costs (14 % of controllable costs) as a markup for the service they provide AC. In other words they don't apply a 'mark up' or margin on fuel, Nav Canada fees and the like.

Yes a very sweet deal for Jazz. The actual guaranteed rate is 14.09% of controllable costs. All uncontrollable cost are paid by AC. How sweet is that!!! The best part, AC leases about 50 a/c to Jazz which is a controllable cost. AC pays Jazz a 14.09% premium to fly it's a/c!

I do agree that most of the profits were laundered away to ACE's shareholders. Having said that I think the tables have turned, sort of. ACE no longer has a controlling interest in Jazz. No need for the 14% anymore. ACE's priority is to raise AC's share price. I believe cost cutting will come from, in no particular order, pensions, new CPA rates, Aeroplan agreement, and ground handling agreements.(some of the highest paid rampies/agents in the world)

I do see Jazz having a place in AC plans but at a larger benefit to AC.

[mattedfred]

Also, you have to take into account the Air Canada act, in whitch the canadian govt has forbidden Air Canada to sell a seat below said cost for that seat. Any other airline in Canada can engage in this practice. Also, Air Canada must publish everything in both french and english(at a cost of millions), again other airlines are exempt from this. Can you see where I am going with this? Air Canada has had to bear the brunt of all negative government legislation just because it's the biggest(and therefore the baddest) game in town. If the playing field was levelled, what do you think would happen then? Food for thought.

unless the federal government abolishes the air canada participation act, they will always be culpable to some extent. this act, scope and greed are the largest deterrents to the success of the red team.

why wouldn't westjet be successful? started from scratch with common type, pre-existing business model, brand new employee group, no pension obligations, no unions, access to sensitive data from competitor, as many new routes as they wish, no requirement to have either their head office or maintenance bases in specific locations, no requirement to provide bilingual service to any location, preferential treatment by some airport authorities in exchange for service etc etc etc

[wrc]

Great spin, I love it!

[mattedfred]

not trying to spin you

my first paragraph is opinion but the second is fact unless i'm proven wrong which i am willing to be

i feel that it is a common misconception that AC can do no right while WJ can do no wrong. both airlines could learn alot from each other yet both airlines have a very different contributing factors.

[RussD]

Yes a very sweet deal for Jazz. The actual guaranteed rate is 14.09% of controllable costs. All uncontrollable cost are paid by AC. How sweet is that!!! The best part, AC leases about 50 a/c to Jazz which is a controllable cost. AC pays Jazz a 14.09% premium to fly it's a/c!

I do see Jazz having a place in AC plans but at a larger benefit to AC.

Do you seriously think that Jazz (or any other provider) should not charge it's customer for the price of fuel, nav charges and the like it spends to provide the service it's selling?? C'mon your kidding right. Jazz passes these costs to the customer just as every, and I mean every other, CPA operator does or for that matter any rational provider regardless of the industry would do.

Why does it not surprise me that there is an attitude amongst a few at AC that seems to think that Jazz (or whoever) should 'just thro in the gas for free' Unbelievable.

The following is cut from the Jazz 2008 annual report. From what your saying you believe Jazz should just eat all of the costs in the first column,,is that right?? Just because why ?? As you can see a/c rent is in the controllable cost bucket with the likes of salaries. maint etc.

Jazz's operating margin for 2008 was 9.1% vs 10.2% for 07. This is right down the middle for CPA carriers in NA. The only way Jazz is signifigantly different than it's Counterparts inthe USofA is that it's performance (on time, completion, pawobs, Customer sarisfaction) beats ALL of it's counterparts. Sweet deal for sure.



Pass-through cost items
Fuel
Navigational fees
Airport user fees
De-icing
Terminal handling
Other

Controllable cost items
Salaries, wages and benefits
Aircraft maintenance, materials and supplies
Aircraft rent and other ownership costs
Terminal handling services
Depreciation
Other

['effin hippie]

Thank you disco, for your erudite, if slightly belittling expansion on the problems facing AC.

I can see now why AC/Jazz politics comes up so quickly when cost cutting measures are contemplated, given the terms of the CPA. Likewise I was interested to learn about the Air Canada Act as a further proof that just when you think greed and short-term thinking can't screw things up any further, a politician will find a way to surprise you.

That said, and with a few days in the real world to consider these new points, I still stand behind my original thesis.

AC has its back to a cash cliff. Its fiscal performance in previous years occupies the same logical space as runway behind you or altitude above you. AC made good money in a Thundering economy, sure. The oil price was immaterial given that all competitors had to carry the increase, and a high oil price was making Canucks in general richer faster than it was shrinking their spending power, hence the boom. But AC is losing money, lots of it, right now.
I won't dispute the power of the business model that made AC profitable in good times. A model that works during normal operations may not be effective and may even be deleterious under different conditions, which these times most certainly are. Maybe there is a way out of the current difficulties for AC that involves neither CCAA or shrinking, I sincerely wish that option for you. All I am saying is that irrespective of how AC has found itself nearly bankrupt, that fact looms right now over all else. If cash savings in the short term can be realized by cutting capacity, then it is time to do so, even if that runs counter to long term strategy.

In relation to that, I doubt that a short term reduction in domestic capacity would have a significant effect on your international loads, given that AC enjoys a near monopoly as a Canadian provider of international service and the way Canadians are hooked on Aeroplan points.

Unpopular brand. Perhaps I worded that too forcefully, sorry. And I must say that AC has gone a good way in improving its customer service. Nonetheless, there is far too much evidence of popular dissatisfaction with the way AC treats its customers to dismiss this as the kool-aid talking. Indirect evidence may include the consistent loss of market share year over year to your (point 3) ferocious competitors.

Again, thanks to all of you who clarified some important and not so obvious aspects of AC's situation. I find the Act in particular, appalling.

ef

[Flightlevels]

Great spin, I love it!

that my friend is why matted would love to see a union shop here...to be more like them and compete on a more level ground. Agendas...aren't they great?

[mattedfred]

i fear thou doth protest too much flightlevels

i don't have an agenda

i'm fascinated by the westjet culture and i would like to learn as much as i can about how the company operates

do you think SWA's culture has suffered as a result of their pilot's union?

[tonysoprano]

i'm fascinated by the westjet culture and i would like to learn as much as i can about how the company operates

...just buy a book on Scientology....

[Batman]

Heard John Travolta just applied.

[tonysoprano]

[the original tony]

Just out of the blue, back to the parking of A/C and such.
Has there been any more talk on numbers of surplus, layoffs, or anything like that?
I as well as most would like to stay with one employer as long as possible, but is it going to be a possibility?
atleasat for the juniors like myself. A '67 rp doesnt have a lot to put on a resume for other companies.............
any info would be appreciated.

Tony

[tonysoprano]

Haven't heard any news lately. It "sounds" more positive than I thought it would but it's all wait and see. As an RP you have a '67 rating, right? I think that resume looks a bit better than you think. I have a feeling you won't need it though.

[the original tony]

U are correct sir. '67 rating with 200 or so on type. Less than two years onboard
Which is what kinda worried me, or I guess it still does!
Good to hear things aren't as harsh as everyone tells.
Here's to hoping all and all get to stay on board.

Thanks for the reply

Tony

[Rockie]

U are correct sir. '67 rating with 200 or so on type. Less than two years onboard
Which is what kinda worried me, or I guess it still does!
Good to hear things aren't as harsh as everyone tells.
Here's to hoping all and all get to stay on board.

Thanks for the reply

Tony

As someone who's rattled around the industry a bit take it from me, the long view is a lot rosier because you have that seniority number. If the worst happens and you have to bag grocieries for a couple of years that number is still there waiting, and no downturn lasts forever. Life is good even when it seems bad, you could afterall be living in Darfur.

[double-j]

Also, you have to take into account the Air Canada act, in whitch the canadian govt has forbidden Air Canada to sell a seat below said cost for that seat. Any other airline in Canada can engage in this practice. Also, Air Canada must publish everything in both french and english(at a cost of millions), again other airlines are exempt from this. Can you see where I am going with this? Air Canada has had to bear the brunt of all negative government legislation just because it's the biggest(and therefore the baddest) game in town. If the playing field was levelled, what do you think would happen then? Food for thought.

unless the federal government abolishes the air canada participation act, they will always be culpable to some extent. this act, scope and greed are the largest deterrents to the success of the red team.

why wouldn't westjet be successful? started from scratch with common type, pre-existing business model, brand new employee group, no pension obligations, no unions, access to sensitive data from competitor, as many new routes as they wish, no requirement to have either their head office or maintenance bases in specific locations, no requirement to provide bilingual service to any location, preferential treatment by some airport authorities in exchange for service etc etc etc

The same could be said about Jetsgo, or a few other canadian upstarts. Thats where you do not understand Westjet, the reason for the success is from customer service...from the top down, period. Not from any of the reasons above.

Nice try tho'

[mattedfred]

that's where the brand new, non-unionized employee group comes in

[joebloggs]

Also, you have to take into account the Air Canada act, in whitch the canadian govt has forbidden Air Canada to sell a seat below said cost for that seat. Any other airline in Canada can engage in this practice. Also, Air Canada must publish everything in both french and english(at a cost of millions), again other airlines are exempt from this. Can you see where I am going with this? Air Canada has had to bear the brunt of all negative government legislation just because it's the biggest(and therefore the baddest) game in town. If the playing field was levelled, what do you think would happen then? Food for thought.

unless the federal government abolishes the air canada participation act, they will always be culpable to some extent. this act, scope and greed are the largest deterrents to the success of the red team.

why wouldn't westjet be successful? started from scratch with common type, pre-existing business model, brand new employee group, no pension obligations, no unions, access to sensitive data from competitor, as many new routes as they wish, no requirement to have either their head office or maintenance bases in specific locations, no requirement to provide bilingual service to any location, preferential treatment by some airport authorities in exchange for service etc etc etc

The same could be said about Jetsgo, or a few other canadian upstarts. Thats where you do not understand Westjet, the reason for the success is from customer service...from the top down, period. Not from any of the reasons above.

Nice try tho'

I Think you are missing the point. Do you honestly think that Westjet would be as successful as it is today if Air Canada didn't have to abide by all those rules imposed by the government? The landscape would look A LOT different, and if you think otherwise, then you are deluding yourself.