Calin is Report on Business CEO of the Year (again)

[dagger]

https://www.theglobeandmail.com/business/rob-magazine/article-ceo-of-the-year-calin-rovinescu-keeps-air-canada-soaring-through/

 

A bit of interesting insight to how the MAX grounding unfolded within AC

 

Quote

 

When the Canadian government grounded the Boeing 737 Max 8 aircraft this past March, the decision threatened to unleash operational chaos at Air Canada. The company had 24 Max airplanes, making up 20% of its narrow-body fleet, and another dozen slated for delivery later in the year. Guiding the airline’s response was one major question: How long could this go on? The question was particularly burning for Mark Galardo, Air Canada’s vice-president of network planning, who was charged with overhauling its schedule in real time to maintain order and minimize loss of revenue.

Some of Galardo’s colleagues speculated the Max would be back in the air within a couple of months. Calin Rovinescu, Air Canada’s CEO, told him something different. “Mark, categorically, I think this is going to go right through the third quarter,” Galardo recalls Rovinescu saying. Those summer months mark Air Canada’s busiest and most lucrative season. Galardo had to prepare for the worst. “Those were words very few people wanted to hear, but he said them because his instincts and foresight are second to none,” Galardo says.

Rovinescu, it turns out, was correct. The Max is still parked, ever since two deadly crashes led aviation authorities worldwide to ban it from the skies. Air Canada has removed the plane from its schedule until February 2020. The grounding is the kind of unexpected cataclysm that could bring an airline down. Rovinescu says it has been more disruptive to the company than the terrorist attacks of Sept. 11, 2001. “9/11 was catastrophic for the industry. It was sudden, it was overnight,” he says. “But what we faced with the grounding of the Max was actually much, much more significant and much more complicated for us to deal with.”

So far, though, Air Canada has remained relatively unscathed. In the pivotal third quarter, the company managed to complete 95% of its planned flying and earn $636 million. Profit-wise, Air Canada is further ahead than it was at this time last year. The performance is a testament to the strategy Rovinescu set when he joined as CEO more than a decade ago, as the company teetered near bankruptcy for the second time. He has put existential threats far behind Air Canada. Rovinescu’s favoured word to describe the company these days is “sustainable.”

 

 

[Guest]

Good to see you  back as a frequent poster (I hope).  Cheers

[Fido]

The MAX grounding at Air Canada has shown that curbing expansion is very profitable.

[FA@AC]

1 hour ago, Fido said:

The MAX grounding at Air Canada has shown that curbing expansion is very profitable.

It was in this instance perhaps because AC's largest Canadian competitor had to do it at the same time.

[Fido]

and they have been making record profits too.

Curbing expansion and doing without the costs of new airplanes saves money.

[FA@AC]

But unless yields increase it also reduces revenue.  The MAX grounding seemed to occur just as analysts were beginning to opine that there was excess capacity in the market, so one would suppose that yields did improve.  Should the grounding continue longer than Q2 2020 AC might have to make costly decisions to extend the life of its oldest 320s or the remaining 767s at mainline.  And then of course all the "brand" experts will weigh in on the devastating damage AC's brand (whatever it actually is) will suffer by flying folks on Rouge or OMNI instead of mainline.