Zoom in trouble?

[BoomerPete]

I have no idea who this 'bean' individual is and frankly I don't really care. Zoom had an excellent product with safe, reliable, on-time flights that included meals, movie and wine while earning a profit over the first five years.  Many of our customers were of the repeat variety. Not too bad for a LCC.

Management mistakes were made, however, and the airline's demise resulted.

On behalf of 600 or so Zoom employees I sincerely thank those with the kind comments and toasts. They are appreciated.

Jdix

Jdix,

I'm very sorry to hear today's news. I know there are many fine indivduals at Zoom who helped make it the well regarded carrier that it was. It's a great shame to see all your efforts come to nought. Here's hoping that the industry treats you better in the future and that you all recover from this setback quickly.

Best wishes,

Pete

[Thebean]

Bean

With all due respect your middle class neighbours in Oak Bay probably average 150000.00 a year minimum on a fixed income. If they earn less than that then the house has been passed down generation by generation or perhaps they bought in the 40/50's when houses there were MUCH cheaper. I know the property values as Victoria has been my second home since 1973.

I'm not pointing any fingers at anyone but you get what you pay for. If the price of a ticket is too good to be true then it probably is. It's unfortunate that the passengers are not made aware of the repercussions if an airline ceases operations before purchasing their tickets. The air carriers who are members of IATA have an agreement to carry each others passengers in IROP's, union disputes or even an airline failure.

I sympathize with the travellers who are scrambling to get where they need to be.  But more so to the employees of Zoom.  Good luck just doesn't seem to cut it.

The Bean lives in Oak Bay? I guess you didn't get the memo....

As for the complaints that Zoom staff were nowhere to be found at airports, would YOU stick around knowing that 1) You'd have the worst day of your life at work dealing with hundreds of steamed, stranded customers? and 2) there was zero chance of being paid for taking all that brain damage?

No way.

[internet]

Anyone at YYC knows Mr. Chris Richardson from Wingtips.

I saw him on CFCN last night. If anyone would help out these people, Chris would. Sadly, he's been through this many times before.

[Super 80]

As for the complaints that Zoom staff were nowhere to be found at airports, would YOU stick around knowing that 1) You'd have the worst day of your life at work dealing with hundreds of steamed, stranded customers? and 2) there was zero chance of being paid for taking all that brain damage?

No way.

No kidding, I know somebody who hung around after the "temporary shutdown" of Legend. "I was shitting out my elbows by the time I got home"

The WORST thing for them was the local media in Dallas who decided this would be a good screwed consumer story and only reported that Legend would not be issuing refunds - they DID NOT report that Legend had made arrangements with Continental before the "temporary shutdown" who was honoring their tickets.

Apprently only CNN and Fox News reported that.

So cut to giant haired texas "journalist" standing with some dude pissing and moaning about how much he had to pay to get out on American Airlines and damning Legend to hell for abandoning him.

When JetsGo went down, everyone got a call in the wee hours of the morning just telling them not to come back.

[Jdix]

BoomerPete:

Thanks for the message and wishes. They are appreciated.

All the best

Jdix

[Thebean]

Anyone at YYC knows Mr. Chris Richardson from Wingtips.

I saw him on CFCN last night. If anyone would help out these people, Chris would. Sadly, he's been through this many times before.

Chris is a great guy. I'm glad to hear he's doing well.

[Guest floatrrr]

If it looks like a duck, walks like a duck, smells like a duck and tastes like a duck, it's probably a duck.

In this case, I think we're referring to a dead duck.

If Zoom employees were watching loads of 76 folks on a transatlantic flight paying rock bottom fares, I think they'd probably have figured out that they were in trouble.

Typical for a charter outfit, they've managed to carry on thru the busy summer season with tomorrows revenues paying todays bills.  How many times have we seen this movie?  Roots, Greyhound, Nationair, Royal, C3, Canadian, Jetsgo.......

As unearned revenue turns into earned revenue, advance sales dry up going into post labor day, and seat sales galore across the Atlantic, (which should be another thread....the sales are fast and furious ex the US these days),  was this ever in doubt?

What assets could Zoom have that would be the basis of any sort of reorganization?  Some office supplies?  A broom and a few buckets? Who's going to sink  money into Zoom? 

By the time aircraft are impounded, it's too late.  Impounding aircraft is the very last thing leasing companies and creditors want to do.  It guarantees that repayment will never occur.  No airplanes = no revenues.

There's at least one other privately held carrier carrier that is in precisely the same position as Zoom was a week ago.  It professes to be doing well, but has been trying to sell itself to anyone who will listen to the pitch for quite some time now.

No one is buying, so now they are trying the "Crazy Ivan" strategy.

Meanwhile, the all knowing LAA's, who can't see the forest for the trees, and have the right to tax at will, extend massive amounts of credit to these dingbats, without even looking at audited statements.

Lo and behold, they are out hundreds of thousands of dollars, which is ultimately paid for by the airlines that are properly managed.  All those employees building monuments to themselves and no one working the risk management desk.

No pay fees duly, regularly and promptly?  No land airplanes.  Period.

Are you sure that's what happened to Greyhound? I thought Laidlaw purchased Greyhound and wasn't all impressed with the revenues from the start up, so the wet lease operator was paid the early contract termination, and they ceased operation. Come to think of it, I seem to remember their loads at roads end were in the 80% range.

Either way you slice it, it's a sad thing for the employees there. The entire industry in this country is sick. Re-regulation anyone?

[Pivot]

I heard that Laidlaw was invested in Canadian so it was a conflict of intrest. But KFC also said that if Greyhound had charged something like $5 more per ticket then they would have made money. So I'm not sure who to believe as to why they didn't make it.

[Thebean]

Are you sure that's what happened to Greyhound? I thought Laidlaw purchased Greyhound and wasn't all impressed with the revenues from the start up, so the wet lease operator was paid the early contract termination, and they ceased operation. Come to think of it, I seem to remember their loads at roads end were in the 80% range.

Either way you slice it, it's a sad thing for the employees there. The entire industry in this country is sick. Re-regulation anyone?

80% loads? Are you dreaming?

And since when did loads provide any indication of profitability? Hawaiian had 85% loads in 2Q, and that's after Aloha shut down and they STILL lost money. C3000 consistently had 90% loads and they shut down....

Greyhound Air was a money pit. You should have seen the financials. Ugly, ugly ugly. That's why they were shut down by Laidlaw.

Huisman and the gang didn't have the cajones to do it themselves, so they almost ran the entire company into the ground. Ego.....

Had Laidlaw not bought Greyhound strictly for the bus operation, and immediately shutdown the giant sucking sound of the air operation, the entire thing would have imploded. No more Greyhound Bus in Canada. That's how bad it was.

[Moon The Loon]

C3000 consistently had 90% loads and they shut down....

Not post 9-11. More like 40-45%. The cancellations of trips that followed 9-11 let the BoD know they would not be seeing 85%+ loads until well into 2002. 85% was the number we perceived as "break even". That number was required in September to pay for the bills received from August. The bills were going to continue to come in but not the revenue hence Leckie's panic call to the press in mid September for government aid or they "wouldn't make it to Christmas".

C3 had a great and (as far as most of us were concerned) unsurpassed product. It was just a horribly run business. Given another year of what was happening pre 9-11, some of us expected a shareholder revolt, maybe even charges of misrepresentation during the original IPO.

Thankfully, I hope, I am done with all that crap now. Best wishes to all those unfortunate folks at Zoom who gave it their all.

About a year ago, on an related topic, I asked about the relationship between Zoom Canada and Zoom.co.uk and was told "they are two separate and completely distinct companies." If that was the case, why would the two of them declare bankruptcy at the same time? Are there some foreign ownership questions that need to be asked during the post-mortem?

[Thebean]

Not post 9-11. More like 40-45%. The cancellations of trips that followed 9-11 let the BoD know they would not be seeing 85%+ loads until well into 2002. 85% was the number we perceived as "break even". That number was required in September to pay for the bills received from August. The bills were going to continue to come in but not the revenue hence Leckie's panic call to the press in mid September for government aid or they "wouldn't make it to Christmas".

C3 had a great and (as far as most of us were concerned) unsurpassed product. It was just a horribly run business. Given another year of what was happening pre 9-11, some of us expected a shareholder revolt, maybe even charges of misrepresentation during the original IPO.

Thankfully, I hope, I am done with all that crap now. Best wishes to all those unfortunate folks at Zoom who gave it their all.

About a year ago, on an related topic, I asked about the relationship between Zoom Canada and Zoom.co.uk and was told "they are two separate and completely distinct companies." If that was the case, why would the two of them declare bankruptcy at the same time? Are there some foreign ownership questions that need to be asked during the post-mortem?

And what do you think WJ's, AC's or any one of the other 21 publicly traded airlines loads likely looked like post 9/11?

The difference was, C3000, like other airlines that over expanded, were using tomorrows bookings to pay todays bills.

All it took was a minor change in the advance booking curve, or overselling too much future inventory, leaving nothing left to sell in the future to cause the ponzi scheme to implode.

Quickie Quiz. Which week every year is typically the slowest booking week of the year for an airline?

[Evinrude]

The slowest week would be the third week of august.

[Moon The Loon]

And what do you think WJ's, AC's or any one of the other 21 publicly traded airlines loads likely looked like post 9/11?

Not a complete picture. Every month's profit was being sucked out of the company just as before the IPO. The difference was the shares being sold were upper managements who had been acquiring stock since day one of C3. The day the IPO was issued, those previously worthless shares were converted at a ratio of 17:1 (to the best of my limited knowledge).

When MTW (as opposed to MTL ) had his wife sell some of the shares he acquired as a result of the sale of Royal, shares he had to contractually promise not to sell for a period of time, it was found out and he was unceremoniously turfed from the BoD of the amalgamated C3.

They were all cashing out. There was never any money left over. The bills were paid; the shareholders-in-the-know got their cash, and all was well.

Until the load factors dropped below the threshold to simply pay the bills.

Most reputable companies would have had a six month (or some other short term) note from a bank to wade through tough times. C3 never even had a line of credit with any institution. When the money from the previous month was supposed to roll in, it didn't at the end of September. October's operating costs skyrocketed with the introduction of the A340 YYZ-DEL.

In answer to your direct question, abysmmal. But they had the ability to continue with their business practices if even in a deficit fashion. C3 could not. Together with the disastrous IPO and idiot-driven takeover of MTW's sham, they were doomed with the death of the first innocent passenger taken hostage on 9-11.

[Guest floatrrr]

80% loads? Are you dreaming?

And since when did loads provide any indication of profitability? Hawaiian had 85% loads in 2Q, and that's after Aloha shut down and they STILL lost money. C3000 consistently had 90% loads and they shut down....

Greyhound Air was a money pit. You should have seen the financials. Ugly, ugly ugly. That's why they were shut down by Laidlaw.

Huisman and the gang didn't have the cajones to do it themselves, so they almost ran the entire company into the ground. Ego.....

Had Laidlaw not bought Greyhound strictly for the bus operation, and immediately shutdown the giant sucking sound of the air operation, the entire thing would have imploded. No more Greyhound Bus in Canada. That's how bad it was.

Spare me the loads vs. yields lecture. Were you there? Comparing the Hawaiian 2Q loads and their profitability is not a good comparison if you want to factor in start up costs. Greyhound had it's share of problems in the beginning with Transport that had them losing money before the first flight even left the ground. So, yes ,Laidlaw shut down Greyhound due to poor financial performance, but had they waited, since the loads were at or near 80% near the end, we may have had another airline (other than your precious) eating up domestic market share. Shoulda , coulda , woulda .

[Thebean]

Not a complete picture. Every month's profit was being sucked out of the company just as before the IPO. The difference was the shares being sold were upper managements who had been acquiring stock since day one of C3. The day the IPO was issued, those previously worthless shares were converted at a ratio of 17:1 (to the best of my limited knowledge).

When MTW (as opposed to MTL   ) had his wife sell some of the shares he acquired as a result of the sale of Royal, shares he had to contractually promise not to sell for a period of time, it was found out and he was unceremoniously turfed from the BoD of the amalgamated C3.

They were all cashing out. There was never any money left over. The bills were paid; the shareholders-in-the-know got their cash, and all was well.

Until the load factors dropped below the threshold to simply pay the bills.

Most reputable companies would have had a six month (or some other short term) note from a bank to wade through tough times. C3 never even had a line of credit with any institution. When the money from the previous month was supposed to roll in, it didn't at the end of September. October's operating costs skyrocketed with the introduction of the A340 YYZ-DEL.

In answer to your direct question, abysmmal. But they had the ability to continue with their business practices if even in a deficit fashion. C3 could not. Together with the disastrous IPO and idiot-driven takeover of MTW's sham, they were doomed with the death of the first innocent passenger taken hostage on 9-11.

I think you might want to consider a primer on how the stock market works and the risk/reward nature of buying into a company well before it's shares become liquid.

Sure, MW was a piece of work, but post IPO, the profits generated by C3000 were not going directly into shareholders pockets.

I recall when the Royal shares sky rocketed in value late 1999 or 2000 (?) and Royal was asked by the TSE whether or not there was any material event going on that the market needed to be advised of. You know what the answer was. A few weeks later, Royal announced the sale of Royal to C3000. Royal's big shareholders went "ka..ching".

C3000 share profit/ loss crystallized if people chose to buy C3000 shares on the open market, at a price supported by the existing and potential future earnings per share of the company. It also required a seller to sell at a price that resulted in a profit being realized. Those transactions were via the TSE and various brokerage houses.

The profit some garnered was not underwritten by C3000's cash reserves, nor were the losses.

As for Greyhound ever being a profitable venture, yes it was. For precisely 2 months of it's existence. You don't have to be a rocket scientist to figure out what those two months were.

The numbers were circulated within the industry in mid 3Q 1997 prior to their shut down. Why? You recall that most airlines in trouble try to sell themselves to someone, and Greyhound was no exception.

Any prospective purchaser needs to be able to take a peak under the kilt, so to speak. I have the numbers in a box somewhere.

That's why Sunwing's "for sale" sign is known within the industry. The obvious, (at least to Sunwing), buyer was WJ, but I imagine they were quickly told what to do with themselves, and now the spurned lover is playing "Crazy Ivan". There are a few other potential purchasers and the business is a close knit community.

In any event, The Greydog's financial problems were huge, and were not getting any better.

The weakest sales week of the year? I'll place my bet in 2008 on the week of Dec 15th. No more xmas / New Years inventory to sell and folks too busy thinking about the Holidays than where they are going in mid January.

[Moon The Loon]

Sure, MW was a piece of work, but post IPO, the profits generated by C3000 were not going directly into shareholders pockets.

I recall when the Royal shares sky rocketed in value late 1999 or 2000 (?) and Royal was asked by the TSE whether or not there was any material event going on that the market needed to be advised of. You know what the answer was. A few weeks later, Royal announced the sale of Royal to C3000. Royal's big shareholders went "ka..ching".

C3000 share profit/ loss crystallized if people chose to buy C3000 shares on the open market, at a price supported by the existing and potential future earnings per share of the company. It also required a seller to sell at a price that resulted in a profit being realized. Those transactions were via the TSE and various brokerage houses.

The profit some garnered was not underwritten by C3000's cash reserves, nor were the losses.

The profits weren't, but the knowledge of just how much one could cash in "one's" shares were.

You missed my point.

Purchasers of the IPO had no idea an impending purchase of MTW's sham was in the works. The C3 BoD though (in my opinion), did.

With the pilot employment contract talks looming (this just makes everything that much more muddier), the Saudi's couldn't have picked a better time to scuttle the C3 operation.

[CanadaEH]

Zoom's grounding leaves 1,200 stuck in Caribbean

Toronto-based tour operator struggling to bring customers home after carrier's planes stopped flying

From Thursday's Globe and Mail

September 4, 2008 at 3:14 AM EDT

At least 1,200 Canadians have been stranded in the Caribbean after the shutdown of Zoom Airlines ruined the best-laid plans of a Toronto-based tour operator.

Since Ottawa-based Zoom's grounding last Thursday, G.G. Tours has been scrambling to get its customers back to Canada, lining up charter planes to replace Zoom's service.

Hundreds of travellers had to wait an extra two to four days to catch make-up flights departing from Trinidad and Jamaica, and now the focus shifts to finding planes for remaining customers in Grenada and Jamaica, even as another storm looms.

John Gideon, wholesale manager at G.G. Tours, said in an interview yesterday that he secured flights for 800 passengers over the past week, but another 1,200 to 1,500 customers are forecast to return to Canada, mostly over the next several days.

"We're doing our best, but we have a long way to go. It's very stressful and daunting for us," Mr. Gideon said. "Zoom stranded these people at a very inopportune time. This time of the year is very busy, trying to bring everybody back for school and whatnot."

Zoom's abrupt closing has hit the family-owned business hard, as Mr. Gideon and his father, George, have already cancelled 500 G.G. Tours bookings in September for sun destinations and will be issuing refunds. The Gideons have also been forced to absorb the costs of using other carriers for "repatriation flights" back to Canada, including hiring Air Transat for Jamaica flights and Skyservice Airlines Inc. for Trinidad and Guyana.

Extreme weather conditions have complicated matters, with hurricane Gustav earlier this week and now tropical storm Hanna gathering speed, making it hard to confirm charter flights.

"Because of the brewing storm, the airlines can't guarantee times and dates for us. If they can't find those slots to fly for us, we'll just have to wait for something available," said John Gideon, whose grandfather founded the tour company more than 45 years ago.

An estimated 4,500 Zoom passengers were stranded last week, and at least 40,000 customers were left holding worthless tickets after the discount carrier collapsed amid high fuel prices and a slowing economy dampened travel demand.

Canadian Transportation Agency spokesman Jadrino Huot said the regulator approved the two earlier Skyservice flights, and will fast-track further charters, as needed, to help stranded passengers.

Zoom is the 27th airline to have either shut down, suspended operations or go to bankruptcy court this year, the International Air Transport Association said yesterday.

IATA director-general Giovanni Bisignani said global carriers are headed for a combined $5.2-billion (U.S.) loss this year, assuming crude oil prices average $113 a barrel. In June, IATA said losses among international carriers could range from $2.3-billion to $6.1-billion in 2008.

For 2009, major airlines could lose $4.1-billion, based on a forecast of oil averaging $110 a barrel, Mr. Bisignani said during a conference call from Montreal.

Stubbornly high oil prices and weakening travel demand are a "toxic combination" eroding profitability, he said.

Zoom co-founders Hugh and John Boyle, who blamed runaway fuel bills and faltering ticket sales for the airline's demise, posted an apology on their website last Thursday. "We are desperately sorry for the inconvenience and disappointment that this will cause passengers and those who have booked flights," they wrote.

[CanadaEH]

Zoom highlights need for scheduled cover

Thursday, September 04, 2008

Chris Gray

The failure of transatlantic airline Zoom has provoked fresh calls for a £1 consumer protection levy on scheduled flights.

Abta, the FTO and Aito said Zoom’s collapse and the dangers facing all airlines added urgency to ensuring all air passengers were protected, not just those who booked with a tour operator.

TTG backed the industry’s efforts to bring in a levy three years ago with its Just a Quid campaign, but the government rejected the idea.

Zoom’s failure starkly demonstrated the difference for consumers between booking direct and buying a package; about 15,000 of 60,000 customers had booked through an operator.

Those operators had to find alternative flights for their customers and one, Canadian Affair, rebooked 7,500 people.

But other customers had to obtain refunds from credit card companies or insurance firms and pay for new flights, leading to chaotic scenes at UK and Canadian airports.

Aito council member Noel Josephides said the government had been warned consumers would be left unprotected as airlines’ tight margins led to many going bust.

“Airlines are much more risky businesses than operators, but the government could not understand that,” he said.

Thomson Holidays commercial director David Burling said only a third of UK travellers booked a package, leaving the rest at risk.

[Thebean]

The profits weren't, but the knowledge of just how much one could cash in "one's" shares were.

You missed my point.

Purchasers of the IPO had no idea an impending purchase of MTW's sham was in the works. The C3 BoD though (in my opinion), did.

With the pilot employment contract talks looming (this just makes everything that much more muddier), the Saudi's couldn't have picked a better time to scuttle the C3 operation.

The only problem with that theory is that C3000 went public in May 2000, about 9 months prior to the massive expansion and about 18 months prior to their collapse.

If C3000 managment knew they were going to buy Royal and CJ at the time of the IPO, they sure didn't mention it.

If they knew they were going to, but didn't mention it in the Prospectus, it was C3000's management who pulled a fast one on everyone.

[Moon The Loon]

If they knew they were going to, but didn't mention it in the Prospectus, it was C3000's management who pulled a fast one on everyone.

The prosecution rests.

[Thebean]

The prosecution rests.

If this is the case, it's a little awkward to blame MTW for C3000's downfall.

[Lakelad]

Zoom Creditors without a Parachute

September 16, 2008 - Globe and Mail

Brent Jang

The collapse of Zoom Airlines has left creditors with little to no chance of recovering any money because the discount carrier racked up $94.2-million in liabilities while having few assets, according to the bankruptcy trustee.

Ottawa-based Zoom's balance sheet carries only $3.5-million in assets, leaving a financial "deficiency" of $90.7-million, Sandra Massé said in a statement of affairs filed under the Bankruptcy and Insolvency Act.

The airline shut down on Aug. 28, stranding an estimated 4,500 travellers and leaving another 40,000 customers with useless tickets.

The statement of affairs shows Zoom had $49.6-million in deferred revenue, mostly from advance ticket sales on flights that will no longer be flown. There had been earlier estimates of higher advance bookings, but those were based on outdated documents.

Unsecured creditors have liabilities exceeding $44.3-million while preferred creditors who are owed money for items such as wages and rent have liabilities totalling more than $196,000.

Zoom's assets include $720,000 in jet fuel, $500,000 in parts and $107,465 in tools, furniture and fixtures, a property list shows. The carrier, whose cheap transatlantic flights failed to fill enough seats to stay viable, has $1.3-million in accounts receivable and $315,000 in bank deposits.

GTAA on hook for $1.9M

[Guest woxof]

So will AC start up the Trinidad flights again?

[Thebean]

Zoom Creditors without a Parachute

September 16, 2008 - Globe and Mail

Brent Jang

The collapse of Zoom Airlines has left creditors with little to no chance of recovering any money because the discount carrier racked up $94.2-million in liabilities while having few assets, according to the bankruptcy trustee.

Ottawa-based Zoom's balance sheet carries only $3.5-million in assets, leaving a financial "deficiency" of $90.7-million, Sandra Massé said in a statement of affairs filed under the Bankruptcy and Insolvency Act.

The airline shut down on Aug. 28, stranding an estimated 4,500 travellers and leaving another 40,000 customers with useless tickets.

The statement of affairs shows Zoom had $49.6-million in deferred revenue, mostly from advance ticket sales on flights that will no longer be flown. There had been earlier estimates of higher advance bookings, but those were based on outdated documents.

Unsecured creditors have liabilities exceeding $44.3-million while preferred creditors who are owed money for items such as wages and rent have liabilities totalling more than $196,000.

Zoom's assets include $720,000 in jet fuel, $500,000 in parts and $107,465 in tools, furniture and fixtures, a property list shows. The carrier, whose cheap transatlantic flights failed to fill enough seats to stay viable, has $1.3-million in accounts receivable and $315,000 in bank deposits.

GTAA on hook for $1.9M

Gosh. Zoom had no assets. Who da thunk it?

Think of Icarus Airways.

Do they own any aircraft or all they all leased?

Do they own any real estate or is it all rented?

Do they own any parts or all they all leased?

Do they own any simulators or do they contract that all out?

Do they have any intellectual property of any value?

Are the ground support vehicles owned or leased?

They own nothing at any of the airports they operate at.....

What's the danger of bankrupting the corporate entity? There are no assets at all in the company other than used office furniture, some office supplies and some used PC's.

That's about it.

The entire operation is financed on advance bookings. Any hiccup and the whole scheme implodes.

The Ponzi scam is named after Charles Ponzi, a clerk in Boston, who first orchestrated such a scheme in 1919.

Although a Ponzi scheme is based on new investors' funds (Think: advance purchase fares) to pay the earlier backers, (Think: aircraft lessors, fuel suppliers, airports, Nav Canada, etc).

The Ponzi mastermind signs up new investors, (Think: more airplanes) who are used to attract potential investors, (Think: future fare paying passengers).

Eventually, there isn't enough returns (Think: advance revenue) to go around, (Think: to pay todays bills) and the schemes unravel.

Sound familiar?

Caveat emptor

[ModerateChop]

In the hole for $90.7M ! To put things in context does anyone know much Canada 3000 had left (assets-liabilities) when they shut down ?

MC