Ac Numbers In...

[deicer]

And they're good.....

http://web.tmxmoney.com/article.php?newsid=75414898&qm_symbol=AC

[dagger]

http://www.bloomberg.com/news/articles/2015-05-12/air-canada-first-quarter-profit-beats-estimates-as-traffic-gains

Air Canada First-Quarter Profit Beats Estimates as Traffic Gains

Air Canada reported first-quarter profit that beat analysts’ estimates as the country’s biggest carrier benefited from a drop in fuel prices and revenue advanced.

Earnings excluding one-time items amounted to 41 Canadian cents, topping the 16 cent average of 13 analyst estimates collected by Bloomberg. Passenger revenue rose 6.9 percent to C$2.79 billion ($£2.32 billion) as traffic advanced 11 percent.

Chief Executive Officer Calin Rovinescu’s five-year plan to trim costs is being helped by a decline of more than 30 percent in jet kerosene prices in the past year. His strategy includes measures such as the expansion of the Rouge leisure unit and the addition of new Boeing Co. 787 jets, which burn less fuel than the older aircraft they’re replacing.

Efforts to lower costs and boost sales “appear to be generating strong revenue growth and margin expansion,” David Tyerman, an analyst at Canaccord Genuity Inc. in Toronto, said in a note to clients before results were released. “We expect Air Canada to continue to post strong growth and good margins in 2015 due to the company’s much improved cost position.”

Air Canada shares rose 2.4 percent to C$11.72 Monday in Toronto. The stock has declined 1.3 percent this year, trailing the 3.6 percent advance by Canada’s benchmark Standard & Poor’s/TSX Composite Index.

[CAT3DUAL]

Bean, what's your spin on this, just curious!

[Thebean]

Take a look at the scorecard. That's pretty much all you need to know.

Note that I ignore Forex gains/losses in margin and BELF calculations.

Notice the YoY break-even l/f gap grew between WJ and AC. That's rather mindblowing, given all the cost saving initiatives being introduced.

Last year the gap was 10.36% points. It's now swelled to 10.9% pts. With the massive reduction in fuel, there's only one reason why that occurred. Let's start with $65 fares on YVR-LAX......

Substitute 1Q 2014 fuel prices in 1Q 2015, ( and you can bet your sweet bippy those prices will be back), and AC's margin would have been -5.7%, worse than the -4.5% reported in 1Q 2014.

Yes, WJ would also have been caught up in the whirlwind of over capacity and heavy discounting to fill seats, and their margin under the same circumstances would have dropped from 11.5% to 9.5%.

But a 9.5% margin trumps a -5.7% margin any day of the week.

It doesn't take a real man of genius to figure out what will likely happen when oil shoots back to prices near to where they were a year ago.

[FA@AC]

Substitute 1Q 2014 fuel prices in 1Q 2015, ( and you can bet your sweet bippy those prices will be back), and AC's margin would have been -5.7%, worse than the -4.5% reported in 1Q 2014.

Substitute 1Q 2014 fuel prices in 1Q 2015 and the CAD $ would have been stronger, fares would have been higher, LFs would have been different, and there'd have been far more high-yield traffic in and out of Alberta.

I think the equation is a lot less simple than you make it out to be.

[Thebean]

...and all those circumstances would have benefitted WJ equally or more.

Too often there's a tendency to "yes, but..." numbers. Doing so is nothing more than whistling past the graveyard.

If things were improving as is being touted, a company's placing on the ranking of operating margins and BELF would be leap frogging north over various competitors.

To claim great progress as the company slips south in the industry rankings is, at best, rather optimistic, wouldn't you say?

And could someone shed some light on why Air Canada is perpetually the last airline to report its quarterly numbers, and why they are the only publicly traded airline to not include full financial statements in their press release, forcing inquiring minds to have to dig into their Investor Relations site to get the full story?

Why not make the statements easily available like everyone else?

[dagger]

And could someone shed some light on why Air Canada is perpetually the last airline to report its quarterly numbers, and why they are the only publicly traded airline to not include full financial statements in their press release, forcing inquiring minds to have to dig into their Investor Relations site to get the full story?

Who cares? How hard is it to find? It takes me about 20 seconds. Where are you this week, in Upper Mongolia without web access? And if the release had both GAPP and Non-GAPP numbers, the release would run for a dozen pages and you'd be griping about that, too. West jet's MDA is 30 pages, AC's is 41 pages. Just more to report.

[Thebean]

What's with all the apologists today?

If all the other publicly traded airlines in North America can include the info in their quarterly press releases, I'm sure AC could manage to do it too.

It's not hard to find for those of us with inquiring minds. For those who are lazy and like to be spoon fed information, and I include most media types in that category, it is a rather big step.

And for the record, I'm not in Mongolia, but it does begin with an "M".

[Guest]

I have always found the stock market to be strange, guess that is why I don't dabble in it. That being said, WestJet stock not trading much only showing a gain of .22% on trades of 350,000 or so today and in the past few days it has been down even though their 1st quarter was very strong, AC posted a good quarter for them but nowhere as good as posted by WestJet, today they are up 3.4% on trades in excess of 3.5 million.

So is what we are seeing simply folks playing the averages in that they get more bang for their buck trading AC stock(because of their better gains) or ????? In other words it would seem that WestJet stock is a better long term investment.

[FA@AC]

...and all those circumstances would have benefitted WJ equally or more.

I'm not sure that they would. AC would likely be pulling in a lot more high yield J class traffic on some of its routes. I don't know if that crowd would be flocking to WestJet to enjoy its opulent boxed lunch or its premium cabin that is soon to be offered in exactly the arrangement you have ridiculed at Rouge.

AC margins vary wildly from season to season as you well know. If history repeats itself we'll see AC near the top of the pack in 3Q. Should that be the case I expect that you'll again be too busy to post the rankings, but we'll be able to read the results elsewhere.

[CanadaEH]

I have always found the stock market to be strange, guess that is why I don't dabble in it. That being said, WestJet stock not trading much only showing a gain of .22% on trades of 350,000 or so today and in the past few days it has been down even though their 1st quarter was very strong, AC posted a good quarter for them but nowhere as good as posted by WestJet, today they are up 3.4% on trades in excess of 3.5 million.

So is what we are seeing simply folks playing the averages in that they get more bang for their buck trading AC stock(because of their better gains) or ????? In other words it would seem that WestJet stock is a better long term investment.

My guess.. when you're consistently near the bottom there is far more upside than the one that is consistently in the top third.

[acsidestick]

.

And for the record, I'm not in Mongolia, but it does begin with an "M".

Mogadishu?

I'd like to by a vowel, I'll take an a,u,or i. It doesn't matter which.

[conehead]

Mogadishu?

I'd like to by a vowel, I'll take an a,u,or i. It doesn't matter which.

Mississippi?

[dagger]

I'd like to think it's Moncton

[FA@AC]

I'd like to think it's Moncton

Perhaps to rekindle memories of his and Clive's whining to the competition authorities that AC should not be allowed to match WestJet's fares to that city.

[Maverick]

Perhaps to rekindle memories of his and Clive's whining to the competition authorities that AC should not be allowed to match WestJet's fares to that city.

My, somebody's a wee bit b!tchy today!

[Thebean]

Last time I checked, Moncton wasn't a country.

When you have the worst break even load factor in North America and the second worst margins, the only place to go is up I guess.

No one on the continent needed to fill more seats to simply break even last quarter even after having introduced countless initiatives to drive costs lower and after enjoying a one time windfall as a result of dramatically cheaper fuel.

Had nothing changed, that BELF should have precipitously dropped.

Alas, excessive discounting to fill seats as a result of ploughing capacity in the market resulted in the unit revenue side of the equation going upside down and the BELF delta between WJ and AC grew.

I don't think many would have expected that result. I certainly didn't.

[Boney]

Maui?

[FA@AC]

My, somebody's a wee bit b!tchy today!

Just today?

Among all the cheerleading for one particular carrier and criticism of its major competitor, a reminder now and then of some of the events that brought us all to where we are today is appropriate, I think.

[thor]

Actually I thought I saw someone who looks like him In Monaco yesterday... But then I've been mistaken.

[Thebean]

How on earth does WJ taking AC to task with the Bureau in, what, 1999, (!) have anything to do with Air Canada continuing to dramatically lag the industry in key metrics?

Any other red herrings or excuses you want to dredge up? Bird flu? An ice storm, perhaps?

Maui is not a country either.

I don't have time to check but the numbers are all in the scorecards going back countless years. Besides, the Internet is a little slow in these parts.

AC has beaten WJ's operating margin in one quarter in the last decade, and likely longer than that.

In 3q 2014, the beat was by .7 percentage points, not a thrashing by any definition.

I wonder where AC would have ended up on the scorecard had they'd taken full advantage of all the cost savings they've worked so hard to achieve over the years rather than fritter it all away chasing marketshare hither and yon.

It really is too bad. It could have been a killer quarter.

[Thebean]

Actually I thought I saw someone who looks like him In Monaco yesterday... But then I've been mistaken.

Unless it was a time warp from the EOY Awards in 2001 or the following year when I was a judge, you're right. I wasn't there.

[FA@AC]

I wonder where AC would have ended up on the scorecard had they'd taken full advantage of all the cost savings they've worked so hard to achieve over the years rather than fritter it all away chasing marketshare hither and yon.

You mean if AC did as you want it to do, and withdrew from every route WS flies? I wonder where AC would have ended up on the scorecard had it shrank to nothing rather than address its cost disadvantage with Rouge and other measures.

The market seemed to be ok with AC's results. How did WS shares do today?

[dagger]

If AC opts out of the pension deal with the feds, AC cash could reach $3.8 bln this year, more if they finance all aircraft deliveries. I remember in the runup to 2003 when cash fell below 1 bln.

[Boney]

Then, Mexico.

Cheers