mrlupin

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mrlupin last won the day on September 6 2016

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  1. Interesting read... https://outline.com/4n7zmJ https://www.economist.com/business/2020/05/02/imagine-the-post-pandemic-misery-of-business-travel?fsrc=scn/fb/te/bl/ed/bartlebyimaginethepostpandemicmiseryofbusinesstravelbusiness&fbclid=IwAR0N9x8VP40Uy7aOtof7WBnd5VUJvQYGQND3j86NGpndBptv5IEkA4UwVVs Bartleby Imagine the post-pandemic misery of business travel
  2. It's hard to tell for anyone. Economists do these sort of prediction and forecasting for a living and they still can get it wrong. It's hard to forecast macroeconomics situations that involve so many factors. Who knows how things will evolve... Unemployment has reached 13% in Canada. More than 7 million Canadians have applied for the Canada Emergency Response Benefit... We also have a Country wide real estate bubble that has been the elephant in the room room for years. Combine that with an average consumer debt to income ratio at 179% and it's an interesting mix. (We are among the highest in the world, the US had its ratio reset in 2008 it sits at around 100%, Canada just kept going). What does that mean? It's an added risk to the economy... If the real-estate bubble were to burst, then you would find the Canadian Housing and Mortgage Corp having issues with all these mortgage.... The agency has already forecast a double digit drop in the values of homes. (it varies by region) The CHMC is backstopped by the Canadian government... Hopefully they have sufficient money aside to handle any issues... On the consumer side, people that can't make mortgage payments don't travel much... The OECD reports Canada has one of the highest household debt to GDP ratio in the world. (#5 in the world at 105%, Link) Such a high level of debt renders Canada quite vulnerable to any economic disruption. The Canadian economy might recover in the same fashion as other world economies due to high levels of consumer debt. Speaking of government, the Canada central bank which tries to maintain inflation at 2% through monetary policy has it's Bank overnight lending rate down to between 0.25% and 0.50%. The record low rates are meant to stimulate the economy. They can't go much lower so their next tool is to print money, a form of quantitative easing... It's a tool but like anything else, it comes with consequences... Usually in the form of inflation. On the provincial front, we have a Canadian province trying to sell the world Oil at bargain prices and due to the present geopolitical situation and a transport issue they are struggling. Albertans aren't likely to be the globe hopping bunch they used to be... This pandemic is also likely to be the piece of straw that breaks the camels back for many small restoration outfits. They can't be expected to pay rent for months if revenue isn't coming in. Some will reopen, many will not... Also, think of dance schools, martial arts schools, community cultural centers, yoga studios, gyms, public pools, arenas... When will they open again? Right now the entire festival season is cancelled in Montreal and much of the ROC. Concerts are being postponed, organized sports are on hold, parades are cancelled... Our government chose to shut down the economy in order to assess and stabilize the situation with a potentially devastating virus. As far as I know, that hasn't been done before so it's hard to model for the impacts with a high degree of accuracy. What airline industry CEOs do have to predict tomorrow are sales reports of advanced ticket sales. They know that at this time last year they had sold x % or the July capacity, Y % of the August capacity etc... They know how many seats they are offering (I think I read that AC will be operating 25% of its normal capacity this summer) and what the market is buying (it would be interesting to see what percentage of the capacity they manage to sell). I'd imagine that since the Canadian Carriers will graciously hold and keep your money if things go sour unless you bought a more expensive refundable ticket, advance sales must be even harder to make... Boeing and Airbus know how many airlines have asked to defer deliveries so they too have a rough idea of how long it may take for air traffic to recover. I think 2 to 3 years is a definite possibility, it might be longer is the housing market tanks. We will find out soon enough...
  3. The corresponding press release... https://www.newswire.ca/news-releases/air-canada-expands-its-cargo-only-flight-schedule-806054955.html?fbclid=IwAR0kdwytMLVTbiY_d9aGPbnhWOsm1sJ9RWa8ShsdTxtVV6Wy2Op9dMoQG_k
  4. What is the relevance to the Air Canada/Air Transat merger? That's a deal done in the late eighties when economic context was much different. If AC wanted A321, Airbus would be glad to produce them. They are presently reducing production and have tons of spare capacity and customers willing to defer their deliveries.
  5. So book your flight with us and if we can't get you there because of border restrictions we'll gladly give you a voucher or Aeroplan points? That sounds enticing...
  6. I wonder if their is a possibility of a conversion to freighter? The lifting capacity is huge and with so many getting parked you'd get spares and engines for peanuts.
  7. Looking at Flight Aware this morning to see what is going on for AC. https://flightaware.com/live/fleet/ACA From what I understand, the 7*** and the 2*** flights are cargo. What is the difference between the two? Not many passenger flights in the Air at the moment...
  8. If you give money to large stock market listed companies, aren't you saving the shareholders? Why give money? If the government is going to be sending money to companies, they should get the corresponding equity.... if that equity gives partial control then appoint someone to the board of directors. Lowering Landing fees, airport improvement taxes, Nav Canada fees and fuel taxes might be a better way to go about helping the various carriers.. That way they all get a similar treatment and a reduced cost environment.
  9. In the article, above there are aerial pictures of various storage airports with pre and after photos showing the quantity of parked planes increasing. You'd get an opposite effect if you took an aerial shot of the AC headquarters parking lot in YUL. To give context the parking lot there is probably just a bit bigger than 2X a Walmart lot. It used to be full and now its seldom filled to 10% capacity...
  10. I don't think you will see an AME surplus at least not on the medium term. The situation in maintenance is not the same as for pilots. To start with, take a company such as AC. You had 4500 pilots and probably 1300 AMEs. So the numbers of AMEs looking for a job is going to be much lower. AMEs are also not restricted to airlines... Many recycle their skills in automotive, heavy equipment, rail, manufacturing and general industry. A few things come to mind concerning the AME situation.... 1) What you are seeing now is not a structural surplus but a punctual one. The schools haven't been producing like they used to so not many new techs were on the job market. What was happening in the industry was a transfer from company to company, with AMEs chasing wages and benefits. Many went toBombardier/Airbus, Transat, Westjet, and AC. Many others exited the industry to greener pastures. The end result was that the outfits on the bottom of the chain that were paying 60G/year for AMEs had to adjust their payscales and even then they were left with vacant positions. I doubt the wages will go down since most are locked in with negotiated contracts and were lower than what a car mechanic gets paid. About Marshall's comment on AME wage reduction, a few years back a Montreal company did just that. After an AC layoff (2003 I think), Exceltech hired on the AMEs at reduce wages. As soon as employees got the opportunity to go elsewhere, their was a mass exodus of their workforce. 2) The 60G/year (30$/hour) paid by the small operators had the effect of emptying the colleges. Kids saw Air Canada get rid of thousands of maintenance workers in 2012, they saw Bombardier doing massive layoffs. They voted with their feet and abandoned the aircraft maintenance programs. If you can be an electrician (in Québec) and make 42$/hour, with pension plan, job security, day shift and the ability to work just about anywhere in the province, why would you want to go work on airplanes on a night shift, tied to a large city for less money? The prestige and glamour? lol For pilots, finding another job related to their training can be quite a challenge... the sheer size of the pilot group assures that.
  11. From the headlines section: https://www.nasdaq.com/articles/exclusive-air-canadas-transat-buyout-fuels-investor-coronavirus-jitters-sources-2020-05-01 With the current state of affairs, one has to wonder why this purchase would move forward. It was originally performed at a time when AC was aggressively looking for extra capacity and qualified labor force. It now has over 80% of its fleet parked, thousands of employees on layoff and is likely flying less than 5% of its 2019 capacity. What would be the appeal of such a purchase now? Is a quasi monopolistic pricing ability worth the price?
  12. Interesting interpretation... The government is extending credit and subsidizing wages for AC while the maple leaf carrier is sending aircraft to the US to park them. The daily and weekly maintenance of AC aircraft has been outsourced while contractual obligations forbid it at this time. And your interpretation is that the NDP thinks AC is sitting on a pile of money...
  13. On the US Airline Aid... https://newrepublic.com/article/157275/airline-bailout-strings-attached-harp An Airline Bailout Should Have More Strings Attached Than a Harp
  14. It's a delicate balancing act... The Canadian Household debt to income ratio is 176%. That is extremely high compared to most countries. World Debt/Income Data If that ratio wasn't so high, inflation could be used to reduce the debt load. The issue faced when the general population is under such a debt burden is that any increase in the lending rates is likely to result into an increase of debt default and a correction of any asset whose value inflated because of low rates. The central bank doesn't have much margin left.
  15. An article by Matt Taibbi... he mentions the airline stock buy backs in the past years... With all the money that was made by the airlines over the last years, it seem strange to give them money with no strings attached... https://taibbi.substack.com/p/the-sec-rule-that-destroyed-the-universe And via the Globe and Mail: https://www.theglobeandmail.com/business/commentary/article-an-air-canada-bailout-should-stick-in-the-craw-of-canadian-taxpayers/