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What's conveniently forgotten is that as the dominant carrier, AC could not lead on any pricing initiatives, even though they were, and continue to be desperate for revenue.
It would have been PR suicide and they know it.
WJ did a AC a huge favor by leading the luggage charge initiatives.
The difference between WJ matching New Leaf today and AC matching WJ 20 years ago is that WJ has been consistently profitable operating at these sorts of fare levels.
20 years ago, AC was regularly losing $150m a quarter or more, yet attempted to argue to the Competion Tribunal that they could profitably match WJ's fares. It was bullshit and everyone knew it.
Their bankruptcy in 2003 pretty much put that argument to rest, regardless of the testimony of various egghead economists discussing the concept of "beyond revenue" ad nauseum.
I wouldn't be at all surprised if New Leaf ran into different CTA issues again. They have very little capital and are attempting to cash flow the business. That may work briefly, but they'll see a cliff around Aug 15 as post Labor Day bookings start to dominate.
What little cash they have ultimately comes from investors of Iranian descent based in Minneapolis. I hear it's being channeled thru a Native Band in Manitoba, but it's US sourced and they are more than likely offside on the 25% foreign ownership regs, which will be applied to whoever takes the commercial risk. The strategy, as explained to me by some US folks who passed on the deal is to play the "aboriginal sympathy card" to the CTA. It won't work. Rules are rules for all. Until the GoC raise foreign ownership limits for all, I suspect this dodo won't fly.
Flair is Cdn owned and controlled, but they are taking no commercial risk.
Besides , their route network is retarded. Some of their flying is so stupid, it defies belief.
Stay tuned.....
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4Q 2015
AC Revenues: $3.182m
Expenses: $3.024m
Interest Expense: $112m
Operating Earnings: $46m
Operating Margin: 1.45%
WJ Revenues: $958.7m
Expenses: $846.0m
Interest Expense: $12.9m
Operating Earnings: $99.7m
Operating Margin: 10.4%
North American Industry
Revenues: $42.8m
Expenses: $36.6m
Interest Expense: $736m
Operating Earnings: $5.4b
Operating Margin: 12.63%