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dagger

Not an April Fool Joke for the competition: Calin's 10 year anniversary

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I will be the first to admit that I didn't expect AC to be where it is today when I heard Calin was taking over as CEO. And I didn't expect it to work out as well as it has at the time of AC's pension crisis in 2010. So now with a $30 plus stock price, fully funded pension plans, a strong and still getting stronger balance sheet, decent labor relations, two new fleet types ordered since he took over (mind you, one is grounded and delivery on the other only begins next winter), I have to say he's been a positive force for AC and everyone associated with it. And he's undid the negative impact of the ACTS and Aeroplan spinoffs, and used AC's leverage to get progressively better terms out of Chorus. It's hard to think of many other CEOs of large Canadian corporations who have had such a positive impact.

 

https://twitter.com/AirCanada/status/1112817174702379010

 

Edited by dagger
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6 hours ago, dagger said:

I will be the first to admit that I didn't expect AC to be where it is today when I heard Calin was taking over as CEO. And I didn't expect it to work out as well as it has at the time of AC's pension crisis in 2010. So now with a $30 plus stock price, fully funded pension plans, a strong and still getting stronger balance sheet, decent labor relations, two new fleet types ordered since he took over (mind you, one is grounded and delivery on the other only begins next winter), I have to say he's been a positive force for AC and everyone associated with it. And he's undid the negative impact of the ACTS and Aeroplan spinoffs, and used AC's leverage to get progressively better terms out of Chorus. It's hard to think of many other CEOs of large Canadian corporations who have had such a positive impact.

 

https://twitter.com/AirCanada/status/1112817174702379010

 

Don't forget the uneven playing field that is the ACPPA.

An incredible turnaround.  

He is an incredible businessman, who if memory serves, started with AC and the CCAA mess many years ago now.  He had a job to do then, and by all accounts completed it very well.

Everybody knew they were gonna get a haircut, but so much needed to change.

 

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He has been a very good CEO.  Transforming AC into a business that can hold its own against the likes of WestJet, Sunwing and Air Transat was quite a feat.

I like him personally, too.  He’s kind of quiet but determined, and he communicates well with employees.  I give him big credit for saving the DB pension plans.

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The pension turnaround is all the more remarkable because it disproved the case put out by many companies that DB plans or hybrids with DB components are unsustainable. Yes, a long economic expansion helped, but those plans now stand AC well as both a plus for current employee satisfaction and a recruiting tool for future employees. If the stock markets are about to correct, as I expect they are, those plans are secure - since most of the assets are fixed now - and will do rather well against pure DC or employer-funded RRSP plans.

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1 hour ago, dagger said:

Yes, a long economic expansion helped, but those plans now stand AC well as both a plus for current employee satisfaction and a recruiting tool for future employees. If the stock markets are about to correct, as I expect they are, those plans are secure - since most of the assets are fixed now - and will do rather well against pure DC or employer-funded RRSP plans.

Too bad future employees won't be on the DB plan.  Well, pilots anyway, can't remember what's happening with the other groups.

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53 minutes ago, seeker said:

Too bad future employees won't be on the DB plan.  Well, pilots anyway, can't remember what's happening with the other groups.

Sure wish the pensions were indexed.....again.4314.gif

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On 4/2/2019 at 10:53 AM, Kip Powick said:

Sure wish the pensions were indexed.....again.4314.gif

There is no question that Mr. Rovinescu has done a stellar job in turning around AC from its near-death experience in the mid to late 2000's. As I recall, the pilots helped out during those dark days when the company was in precarious financial difficulty and the pension plan was in severe deficit by voluntarily (and temporarily, the thought went) giving up indexation. When times got better, it was believed, then indexation could be, and would be re-instated. Well times did get better, in fact much better, and with the pension plan now over-funded the company has shown no interest in the return of indexation. I seem to recall them actively resisting indexation during one of the many arbitrations ACPA has had with them in the intervening years. What is that saying about being nice guys???

Meanwhile Mr. Rovinescu and all the other senior executives (who enjoy participation in their own non-contributory pension plan) can look forward to a very sweet pension for which they made not a single contribution. I'm not suggesting that their pensions are not deserved, yet it bothers me nonetheless that these same people, with a clear conscience, continue to reject all requests from us former worker-bees for re-instatement of our indexation. Silly me, apart from feeling that we deserve it, I believed that we had earned it.

Some interesting reading here, particularly starting at page 72: https://www.aircanada.com/content/dam/aircanada/portal/documents/PDF/en/2018_proxy.pdf

 

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Not only is it very sustainable to have DB pensions, contrary to what they want you to believe, it apparently is very profitable as well.

Why else would they start an AC Lifeco to manage the situation rather than paying someone else to do it?  Pay yourself!

https://www.benefitscanada.com/news/is-air-canadas-move-to-enter-annuity-market-the-start-of-a-new-pension-trend-118526

Thankfully, for the time being at least, Canada has laws that prevent what happened in the U.S. with raiding pensions.  Hopefully AC will be a fair leader in this current creation and show that not only can you offer a decent DB pension to your employees, but it can be good for both sides.

Edited by deicer

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CR’s goals have not differed materially from many of his predecessors. However, he is a master tactician and strategist which has allowed him to succeed at AC as CEO where others have failed.

His next project should be Boeing. Cancel the balance of the MAX deliveries. Re-sell the 24 that are on the property (sort of). Do a deal with Airbus to bridge the required NB fleet with used A320/321 until 55 NEO’s can be delivered.

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59 minutes ago, rudder said:

His next project should be Boeing. Cancel the balance of the MAX deliveries. Re-sell the 24 that are on the property (sort of). Do a deal with Airbus to bridge the required NB fleet with used A320/321 until 55 NEO’s can be delivered.

Are you privy to the details of how much AC paid for the MAX?  Are you also able to tell us what it would have had to pay for the NEO had it opted for the Airbus product, and when Airbus could have delivered it?  What arrangements would AC then have had to make for disposal of the Embraer 190 fleet?

Edited by FA@AC

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11 minutes ago, FA@AC said:

Are you privy to the details of how much AC paid for the MAX?  Are you also able to tell us what it would have had to pay for the NEO had it opted for the Airbus product, and when Airbus could have delivered the NEO?  What arrangements AC would then have had to make for disposal of the Embraer 190 fleet?

Other carriers are cancelling MAX orders. Yes, it will be litigated. Even customers that stick with Boeing are going to sue for damages resulting from the MAX grounding and delayed deliveries.

AC was at best a luke warm MAX customer. With the A220 order, it is unlikely that AC would have ever converted a single MAX option.

Now is the chance to reverse a questionable fleet decision. Short term pain. Long term gain.

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12 minutes ago, rudder said:

Now is the chance to reverse a questionable fleet decision. Short term pain. Long term gain.

Garuda, the national airline of the country in which the first MAX crash unfortunately occurred, has cancelled MAX orders.  Are there other cancellations?

If one doesn't have the figures on what AC paid for the MAX, what it would have paid have it bought something else, when that something else would have been delivered or what it would otherwise have cost to dispose of a chunk of its Embraer fleet, one can't determine whether it is actually a short term pain/long term gain scenario costly though the current situation is likely to be.  That's why I asked if you had the numbers.

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25 minutes ago, FA@AC said:

Garuda, the national airline of the country in which the first MAX crash unfortunately occurred, has cancelled MAX orders.  Are there other cancellations?

If one doesn't have the figures on what AC paid for the MAX, what it would have paid have it bought something else, when that something else would have been delivered or what it would otherwise have cost to dispose of a chunk of its Embraer fleet, one can't determine whether it is actually a short term pain/long term gain scenario costly though the current situation is likely to be.  That's why I asked if you had the numbers.

What I know is that AC first choice was NEO. Airbus would not take any 190’s. Boeing did so reluctantly and only accepted responsibility for 20 of the 45.

The numbers for the actual purchase agreement are known (to AC and Boeing). What is not yet known and to be determined is damages. Could be millions. Could be tens of millions. And if the MAX recertification in Canada is delayed beyond July 01st it could be even more.

This thread is about CR and the things that he has been able to achieve over the last 10 years that nobody else could. He took lemons and made lemonade. This is just another opportunity.

I will watch with interest and nothing would surprise me.

Edited by rudder

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35 minutes ago, rudder said:

This is just another opportunity.

I will watch with interest and nothing would surprise me.

Interesting perspective.  I'm sure we all find it distasteful to discuss seizing commercial advantage from two horrible tragedies, but CR is responsible for acting in AC's best interests.

I would doubt that Airbus feels any pressure whatsoever to offer sweetheart deals to any carrier who is now looking to buy 140-200 seat aircraft and I'd also be surprised if (gently?) used 737 MAX aircraft would fetch much on the market over the near term, but we shall see.

Edited by FA@AC

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14 hours ago, FA@AC said:

Interesting perspective.  I'm sure we all find it distasteful to discuss seizing commercial advantage from two horrible tragedies, but CR is responsible for acting in AC's best interests.

I would doubt that Airbus feels any pressure whatsoever to offer sweetheart deals to any carrier who is now looking to buy 140-200 seat aircraft and I'd also be surprised if (gently?) used 737 MAX aircraft would fetch much on the market over the near term, but we shall see.

The grounding of the MAX is a reality. AC is significantly affected. CR has an obligation to manage the company through the crisis.

The MAX customer perception issue will not likely be fully erased with the return to service, whenever that may be.

Planning, contingency planning, and response planning are all part of strategic planning. Nobody wanted an accident or would seek to benefit from one. But the MAX situation will impact different operators in different ways. Each operator will have to formulate its own response.

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A minor point here.  The 737MAX still holds a valid type certificate in most parts of the world.  The aircraft is not technically grounded - it is restricted from commercial service.  Many have flown since the restrictions came into force, ferry flights to storage for example.  

Re-certification would require an additional step of revoking the existing certification.  Given how much time has passed, I think that still possible, but remote.

Reading some of the other threads on this, there does appear to be some smoke to the story about refurbished AOA sensors.  Whether that turns into something more, we'll see.  That might attract a lot of lightning and split the focus somewhat.

None of this takes away from the obvious - serious errors were made in the certification of this design and the prioritization of getting the common type rating seems to have resulted in the introduction of a fatally flawed MCAS system.

What I would like to know is, for operators who own only the MAX and for whom a common type rating is unimportant, why have MCAS at all?  Can it be disabled at this point?

Vs

 

Edited by Vsplat

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A minor point here.  The 737MAX still holds a valid type certificate in most parts of the world.  The aircraft is not technically grounded - it is restricted from commercial service. Many have flown since the restrictions came into force, ferry flights to storage for example.  

Well maybe the aircraft may not be technically grounded  but it  is more than just "Restricted from commercial service".  

It is  banned from operation in the airspace of many jurisdictions, Canada being one of them. 

I believe  the EU allowed three ferry flights per airframe for storage, placement etc. and that was it.

Political regulators are not going to stick their necks out until it is fixed and confidence restored.

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On 4/3/2019 at 7:30 PM, rudder said:

CR’s goals have not differed materially from many of his predecessors. However, he is a master tactician and strategist which has allowed him to succeed at AC as CEO where others have failed.

His next project should be Boeing. Cancel the balance of the MAX deliveries. Re-sell the 24 that are on the property (sort of). Do a deal with Airbus to bridge the required NB fleet with used A320/321 until 55 NEO’s can be delivered.

I agree, and I wonder if there would be room in an Airbus order to be launch customer for the now somewhat likely to happen A220-500. With oil prices tracking up and in the view of some analysts likely to stabilize in the $60-70s, such a plane might be a better choice for the lower end of the narrow body fleet.

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18 hours ago, dagger said:

I agree, and I wonder if there would be room in an Airbus order to be launch customer for the now somewhat likely to happen A220-500. With oil prices tracking up and in the view of some analysts likely to stabilize in the $60-70s, such a plane might be a better choice for the lower end of the narrow body fleet.

I have a better suggestion (although the possibility of larger c-series variants would be intriguing).

CR should contact Brad Tilden at Alaska. AS is still working through the operational nightmare of a mixed fleet having inherited the Airbus leases from VA. My guess is that AS might be a motivated partner for an Airbus/Boeing fleet swap with AC.

Airbus fleet at AS will be 10/53/10 319/320/*321NEO by June 2019. AS also inherited 30 A320NEO delivery slots (which have been pushed back from 2020-2022 to 2022-2024). Airbus leases start to expire in 2019 and are slowly staggered to expire thereafter. 10 of the 320’s are owned.

AS has been aggressively converting MAX8 slots to MAX9 slots. AC has done the opposite. Regardless of the current 737 ‘crisis’, AS will always be a large and loyal 737 customer. Their commitment to the 737 product line is all encompassing and long term.

I have no idea what the lease terms are for the Airbuses at AS, but assuming commercially reasonable terms I cannot see why AC would not be interested in assuming some of those leases in exchange for assigning the 24 MAX’s and remaining 737 deliveries to AS. AC could add the 10 AS 321NEO’s to current fleet and use the 320 leases to bridge to the 30 320 NEO deliveries. AC could also talk to Airbus about reverting the delivery schedule back to 2020-2022 and/or converting some of the 320NEO slots to 321NEO slots.

Sure seems like a win-win to me for both AC and AS. Also looks like a good deal for Boeing and Airbus as well. I think that through different commercial transactions both airlines ended up with fleets that were sub-optimal. This would correct that anomaly and return the fleets to a more stable and efficient state.

 

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Two more A320s coming to rouge from Interjet...

https://www.airfleets.net/flottecie/Interjet-history-a320.htm?fbclid=IwAR0Tc7_ide5TLxPDE6B5zOgTWq3AgjGG5J4H39WhjlE4dARfObokt6vh3yA

 

 
MSNsort_up.gif sort_down.gif Type sort_up.gif sort_down.gif Active from sort_up.gif sort_down.gif to Registration sort_up.gif sort_down.gif Remark
1179 320-214 01/12/2005 16/05/2009 XA-AIJ To Interjet
as XA-MTY
1259 320-214 18/02/2006 06/06/2009 XA-ITJ To Interjet
as XA-VTA
2189 320-214 22/11/2010 06/04/2014 XA-SOB To Air Malta
as 9H-AEI
3160 320-214 22/06/2007 01/04/2019 XA-VAI To Air Canada Rouge
as C-GFCH
3286 320-214 26/10/2007 01/04/2019 XA-MXM To Air Canada Rouge
as C-GFCI

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If AC did a deal somewhere to replace its 737s with A320 variants, how big a deal would it be to get existing 319s modified for ETOPS?  I'm wondering how AC would operate TATL narrow-bodied routes over the near term without the MAX.

I had always wondered if the 321NEO-LR would be the replacement for the 767s currently at Rouge, but AC doesn't seem to be in any hurry to replace them.

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I can’t help but think the move away from DB pensions for pilots will come around to backfire on the company. Yes, strategically, it removed  a large obligation from the balance sheet, but in the coming years as the pilot shortage becomes critical, what will prevent Air Canada becoming a revolving door for low time pilots?? Gain experience, move up to the left seat and adios. The new hire pay scale is another issue...5 years of flat pay (not sure). The American pay scales, in US $ no less, leave Canadian pilots drooling. So.....what will stop a newly hired Air Canada pilot leaving the co. after 2-3 years and heading off to more lucrative pastures?? (Assuming the US shortage gets dire enough to allow green cards....overseas is another market).

In the old days, it was the dB pension that maintained a pilot’s loyalty to the mothership, there was something to work toward. I think millennials will have a different perspective to what will be best for THEIR long term interest.

Having said that, kudos to Calin for re-structuring the co. to make it as profitable as it is. (Wish he’d stayed with the      Airbus products though).

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AC is assigning B737 pilots that do not require a full course back to their previously qualified aircraft.

CR also stated that MAX will not go back in to service until AC is satisfied that it is safe.

Perhaps just another step towards abandoning the MAX at AC.

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Airbus must be just loving this

 

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3 hours ago, rudder said:

AC is assigning B737 pilots that do not require a full course back to their previously qualified aircraft.

CR also stated that MAX will not go back in to service until AC is satisfied that it is safe.

Perhaps just another step towards abandoning the MAX at AC.

Lets not read any more into this that is there. That is what the media is for 🤨

AC like other airlines that operate the Max, have both a huge public perception issue to deal with as well as trying to cover the anticipated summer flying season. Which is the busiest and usually most lucrative part of the year.

All this really says is that the resumption of the Max is still a ways off.

 

 

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