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Is there a safe airline right now? This is so widespread it's going to be hard to say who will survive.  The biggest concern is going to be whether governments are capable of saving airlines in dist

Is “Airbii” the new plural form of Airbus? I like it! 😃

There were never notices given out to individuals, but a notice to the union was given to start the clock on our contractual timelines before individual notices are given out. An MOA was reached last


“Based on how doctors expect the virus to spread and how economists expect the global economy to react, we expect demand to remain suppressed for months after that, possibly into next year,” CEO Oscar Munoz and United’s president, Scott Kirby, who’s scheduled to take the helm in May, wrote in a message to employees. “That means being honest, fair and upfront with you: if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”
 

https://www.cnbc.com/2020/03/27/corovanirus-fallout-united-airlines-warns-aid-isnt-enough-to-avoid-workforce-cuts.html

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46 minutes ago, rudder said:

“We’re going to be smaller coming out of this,” Chief Financial Officer Paul Jacobson he told employees during an internal webinar. “Certainly quite a bit smaller than when we went into it, and we’ll have the opportunity to grow.”
 

https://www.yahoo.com/finance/news/delta-big-gamble-without-dividend-134044216.htmlThere’s

Link just takes one to Yahoo news...copy and paste is the same result

 

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Delta stock has been bushwhacked along with the rest of the airline industry in recent weeks, seeing its stock plunge 45% year-to-date – and that’s even taking a recent positive surge into account.

The board earlier this month suspended dividend payments for the immediate future. And numerous media reports indicate Delta and other companies that receive federal bailout money will be restricted from offering dividends as long as they have outstanding loans from the government.

Without its dividend, how does Delta stock rate among airlines? Let’s take a closer look.

DAL Stock at a Glance

Delta CEO Ed Bastian has already said Delta’s revenues will plunge about 80% – or roughly by $10 billion – in the second quarter. The company grounded more than 600 of its 1,340 aircraft as it cut capacity by 70%.

On the payroll side, Bastian says more than 10,000 of Delta’s 91,000 employees have taken a voluntary unpaid leave package.

Even after those cuts, however, Delta says it is burning through about $50 million a day.

Looking at Delta’s debt obligations, the company reported at the end of 2019 having $2.9 billion in cash against $11.2 billion in debt and finance leases, $6.1 billion in operating lease liabilities and $14.4 billion in adjusted net debt. Delta’s adjust net debt as a percentage of 2019 revenue was 31%.

This week, S&P Global Ratings downgraded Delta’s credit rating to junk territory, moving it from BBB- to BB. Delta recently secured a new $2.6 billion credit facility and drew down $3 billion from existing facilities.

Delta says it should close this quarter with “at least” $5 billion in liquidity, which will help it remain afloat. It also has airlines to borrow against – assuming it can find a customer in this climate.

Delta Will Be Smaller After It Recovers

Famed investor Warren Buffett of Berkshire Hathaway (NYSE:BRK.A, BRK.B) hasn’t been scared off by the airline industry’s downturn, and recently increased his stake in DAL by close to a million shares.

In fact, Berkshire now owns nearly 72 million shares of DAL stock, or roughly 11% of the company.

If you’re a disciple of the Oracle of Omaha, that’s an investment that gets your attention. But what will Delta look like after the COVID-19 coronavirus threat fades and people start flying again?

“We’re going to be smaller coming out of this,” Chief Financial Officer Paul Jacobson he told employees during an internal webinar. “Certainly quite a bit smaller than when we went into it, and we’ll have the opportunity to grow.”

Delta’s fleet is one of the oldest in the industry, averaging about 15 years. According to The Points Guy, a travel site that focuses on credit cards and loyalty programs, Delta planned to retire its McDonnel Douglas MD-88 and MD-90 jets this year as it becomes a “more modern, more nimble” fleet.

The company also has 100 Boeing (NYSE:BA) 757-200s and 56 767-300s, with many of them suitable for retirement.

“I would not be surprised to see not only Delta return as a smaller airline, but also American(NASDAQ:AAL), United (NASDAQ:UAL) and even Southwest (NYSE:LUV) use this as an opportunity to cull some aircraft from their fleet,” Atmosphere Research president and founder Henry Harteveldt told TPG. “The question every airline will wrestle with is ‘what is the right number.’”

The Bottom Line for DAL Stock

Delta’s dividend made it unique among its peers. With a yield of more than 5% and an annualized payout of $1.61 per share, Delta’s dividend was more generous than American (2.6%) or Southwest (1.8%). United didn’t even offer a dividend. But those payments are sadly at an end.

And although the coronavirus downturn is destroying DAL’s dividend as well as its profitability this year, the company appears to have a solid plan to rebuild its business.

Dividend investors will surely miss DAL stock’s dividend, but in this case, all good things must come to an end. In the long term, Delta has the best potential amongst its peers to come out of this downturn in decent shape.

There will be a lot of short-term pain with airline stocks in 2020 and into 2021. But if you are looking at a long investment window, then Delta’s deeply discounted shares can’t be ignored.

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There is a consistent theme circulating amongst the US carriers - they are going to be smaller out the back side of this. No V-shaped recovery for passenger demand.

Only question now is whether it will be this side or the other side of a CH11 filing.

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The airline business will be smaller but will there be ANY cruise business left.

It would be hard right now to give away a trip on a floating petri dish.

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4 hours ago, Fido said:

The airline business will be smaller but will there be ANY cruise business left.

It would be hard right now to give away a trip on a floating petri dish.

A few of AC's routes to Europe look to me (based only on my own observations of the pax demographics) to be heavily dependant on the cruise business.

Bring on the vaccine.  

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Emergency legislation bolsters Ottawa’s ability to buy troubled assets of companies in order to stabilize economy

'Part Eight of Bill C-13 offers the government a way to act directly to prop not only financial institutions but other companies that might be deemed to have strategic economic value, such as airlines.'

 

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10 minutes ago, J.O. said:

The precedent was set when he bought Alberta a pipeline.

In actual fact, he bought Canada a pipeline from which the taxes / jobs generated in Canada will be a great benefit. 

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Class action launched after airlines give vouchers, not refunds for cancelled trips

Suit targets major Canadian airlines and travel companies, could affect hundreds of thousands of people

Tue Mar 31, 2020 - CBC News
Yvonne Colbert

A British Columbia woman is launching a class-action lawsuit against several major Canadian airlines and travel companies over their decision to issue credits and vouchers instead of refunds for flights and vacations cancelled due to the COVID-19 pandemic.

The legal action by Janet Donaldson, whose Vancouver-New York round trip on WestJet in April was cancelled, was filed last week in Federal Court against Swoop, WestJet, Air Canada, Air Transat and Sunwing. The suit has not been certified.

Sébastien Paquette, a Montreal lawyer representing passengers in the suit, said Donaldson paid by credit card and was "disappointed" when she could not get a refund, "which she was allowed to receive by law."

"This is a consumer-protection class action seeking to enforce each passenger's rights to a refund for monies paid for their air tickets, when they are not able to travel for reasons outside of the control of the passengers," the statement of claim said.

It said companies should not be permitted to keep passengers' money for an indefinite period of time, whether they want to travel in the future or not. The class action applies to an unknown number of passengers, but it's estimated it could affect hundreds of thousands of people.

It includes anyone "residing anywhere in the world" who has not received a refund and who bought a ticket with one of the companies before March 11 for a trip scheduled between March 13 and whenever the federal government withdraw's COVID-19 travel advisories.

Airlines defend vouchers

Airlines have slashed routes during the pandemic and cancelled many flights as the Canadian government urges people to avoid all non-essential travel outside the country. Many passengers have been frustrated at being offered travel vouchers instead of refunds.

Paquette said part of the claim is asking that the money paid for the cancelled tickets be placed with the court until the case is settled.

"We want to secure the class members their money. At this point it literally is their money, so there's no reason it should be kept in the airlines' accounts," Paquette said.

Air Canada and WestJet did not respond to requests for comment before publication and Swoop had no comment. Sunwing said the decision "to suspend all flights was made as a last resort, in response to the exceptional circumstances faced across the industry and around the world."

In an email, Air Transat's vice-president of human resources and corporate affairs, Christophe Hennebelle, said the situation "has placed an extraordinary burden on the industry, which puts its very existence into question."

He said the company believes "that in such a force majeure situation, way beyond our span of control, we do not have to issue a full refund for travels that have not been completed."

He called the 24-month credit voucher "an acceptable solution," saying Italy, Belgium, France and the U.K. have passed legislation to "secure that solution."

'It's the right thing to be done'

Paquette said the airlines are forcing people to fly at a later date, when they may not wish to travel and could face a "substantially different price." He points out the companies are saving money on fuel and other operating expenses because of the cancelled flights.

The lawsuit is being welcomed by people like Halifax resident Katie Gillis, one of those denied a refund after Sunwing cancelled vacations she, her fiancé and 30 others planned in Mexico for her wedding. Collectively, they spent more than $57,000 on the trip.

"I'm super-pleased to hear that," Gillis said of the lawsuit. "It's the right thing to be done."

Class-action lawsuits can take years to wind their way through the courts unless the defendants agree to a settlement. Paquette said he can't predict how the companies will respond, but lawyers are preparing in the event it goes to a trial.

"We feel that this is wrong and class members should definitely get their money back," he said.

Those who were denied a refund during the specified period are automatically qualified as part of the class action and do not have to do anything at this point.

Paquette is urging people to keep their documentation, including ticket bookings, charges and emails, since it may be required in the future to prove a claim.

None of the allegations in the statement of claim have been proven in court.

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Assuming we continue on our relatively low impact trajectory through COVID-19, Canada needs to be in a strong position to support the rest of the world. We have resources, expertise and people who excel at those things and I hope we'll continue to invest in our country to be ready, including being able to provide oil to parts of the world that will need it. In the longer term we can still prepare for a world that is less reliant on oil. The world won't be ready for a while. 

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An Air Canada bailout should stick in the craw of Canadian taxpayers
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Tue Mar 31, 2020 - The Globe and Mail
by Konrad Yakabuski

Until the coronavirus crisis stuck, Air Canada had been on an unprecedented roll. In 2019, Canada’s flag carrier posted record revenues, record liquidity and a record stock price. Indeed, since emerging from court protection from its creditors in 2004, the Montreal-based carrier had gone from industry laggard to one of the world’s top performing airlines.

“The agility and consistency we displayed in 2019 gives me the confidence that we will successfully execute on the several key opportunities before us,” chief executive Calin Rovinescu said in February as Air Canada reported a year-end profit of $1.48-billion.

Now, Air Canada has lined up with the rest of the Canadian air transportation industry in seeking a government bailout. On Monday, Mr. Rovinescu announced the “extremely painful decision” of temporarily laying off more than 15,000 unionized employees and reducing capacity for the second quarter that begins on Wednesday by as much as 90 per cent.

What’s more, Air Canada’s pending takeover of Transat AT Inc., which has also laid off most of its work force as the COVID-19 pandemic grounds most international flights, is now in question due to a precipitous decline in global air travel that could last far beyond the current crisis.

The coming months promise to be painful for workers. However, no one should shed a tear for Air Canada’s shareholders or top executives. They’ve been richly rewarded in recent years, which will make the thought of their airline now getting bailed out by taxpayers hard to swallow for many Canadians.

One reason Air Canada’s stock had outperformed the market had to do with the company’s share repurchase program. Since 2015, Air Canada has spent more than $800-million buying back its own shares. Last year alone, the airline spent $378-million on share buybacks, which had the effect of boosting a company’s stock price by reducing the number of shares in circulation. The company suspended its share buyback program on March 2.

On Monday, Air Canada said Mr. Rovinescu and chief financial officer Michael Rousseau have agreed to forgo their salaries for the second quarter, while other top managers will take a pay cut of between 25 per cent and 50 per cent. Last August, however, Mr. Rovinescu pocketed a whopping $52.7-million profit by exercising Air Canada stock options originally issued in 2013. That was on top of a 2018 compensation package of more than $11.5-million.

In the United States, Democratic politicians have sought restrictions on share buybacks and executive compensation packages as part of the rescue packages approved under legislation that passed Congress last week. The US$2-trillion bill signed by President Donald Trump provides for tens of billions of dollars in aid to the country’s airline industry, prompting a major push back from left-leaning Democrats and other critics of corporate largesse.

“To what extent are taxpayers being asked to bail out wealthy creditors, and to reward companies that, during the years when they made enormous profits, spent their money propping up their own stock prices?” Columbia University law professor Tim Yu wrote last week in a New York Times Op-Ed, arguing that the relief package “amounts to a bailout of private capital and the endorsement of a decade of self-enriching practices.”

Whether the sacrifices being made by Air Canada’s top management now will be enough to prevent a similar backlash here may depend on whether Ottawa imposes stiff restrictions on share buybacks and executive compensation in exchange for providing a lifeline to the airline. The goal of the airline bailout, of course, is to ensure Air Canada and Onex Corp.'s WestJet are able to resume normal operations once the current crisis has passed. Without government aid, both airlines could face crippling cash shortages that threaten their very survival.

As it stands, global air travel is unlikely to return to precrisis levels for several months after current travel restrictions are lifted. Some of the capacity now being cut by Canada’s airlines may not be fully restored in coming quarters if the economy fails to rebound quickly and unemployment levels remain high for the rest of the year.

Air Canada’s takeover of Transat was already expected to lead the combined airline to cut some capacity on seasonal transatlantic and Caribbean routes. But with 2020 shaping up as a washout, the cuts needed for a return to profitability on those routes could approach or exceed Transat’s entire capacity. So why would Air Canada pay $720-million for Transat now?

With Transat’s stock trading at less than half of the $18-a-share Air Canada offered last year to buy the struggling carrier, Mr. Rovinescu will face pressure to renegotiate – if not kill – the deal.

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DL employee town hall meeting March 31st - company estimated loss rate of US$5B per quarter. DL was previously considered very healthy.

AA has already applied for $10B+ in government financial aid. AA considered most likely to file CH11.

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1 hour ago, rudder said:

DL employee town hall meeting March 31st - company estimated loss rate of US$5B per quarter. DL was previously considered very healthy.

AA has already applied for $10B+ in government financial aid. AA considered most likely to file CH11.

is that a year over year loss or an actual expense vs revenue for the period loss?

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