Calin and the Feds

[AIP]

https://beta.canada.com/transportation/airlines/air-canada-ceo-pleads-more-flights/wcm/e99700d4-09cc-4743-a239-2421ad6e285d/

[boestar]

These articles always say "a return to 2019 levels"  2019 was an exceptional year in aviation and most definitely NOT an average year.  Growth in the sector was unprecedented.  I think the best we  can hope for in the short term is a return to 2016 levels.

 

[rudder]

2019 was the high water mark. Pre-COVID, planned 2020 capacity would have exceeded 2019 by a meaningful amount globally.

Every capacity metric will now be measured against 2019. It is nearly pointless to estimate 2020 since so much is still in flux regarding the epidemic, travel restrictions, and demand. Consensus is 2021 at 70-80% of pre-COVID capacity presuming some level of control over the virus and less dire health outcomes for 99.9% of the exposed population. Some markets will recover faster than others (for example the US domestic market).

Clearly, many airlines would like to get more of their metal back in the air. And global carriers (of which AC is one) would like to restart many of those routes at reduced capacity. However, CDN federal restrictions render that initiative as futile from a revenue perspective.

CR seems extremely frustrated with government actions as it applies to passenger airlines. And that frustration will likely continue for the foreseeable future. JT/BM/MG are all demonstrating that they either do not understand or do not care about the fate of the industry.

 

 

[Maverick]

Until the opposition parties stop rubber stamping everything the Liberals bring forward nothing will happen. 

Trudeau's morning bunker chats are going over well with his base, even breaking his own social distancing rules for a photo op had no effect.

It's nauseating, I can't imagine a worse government to have in power with this going on.

[dagger]

14 minutes ago, Maverick said:

Until the opposition parties stop rubber stamping everything the Liberals bring forward nothing will happen. 

Trudeau's morning bunker chats are going over well with his base, even breaking his own social distancing rules for a photo op had no effect.

It's nauseating, I can't imagine a worse government to have in power with this going on.

Oh I can - it's called the Conservative party, which is so eager to open up it's doing it haphazardly in some cases. In Ontario, there is widespread criticism of the government for allowing day care centres to reopen without guidance or support - most, in fact, won't - and churches without a mandatory masking rule. It's all Doug Ford's gut - the director of public health for Ontario is rarely seen or heard. If we had had a proper lockdown in Ontario for 2-3 weeks at the outset, instead of Swiss cheese lockdown we myriad exceptions, we would be close to zero cases today.

[Maverick]

4 minutes ago, dagger said:

Oh I can - it's called the Conservative party, which is so eager to open up it's doing it haphazardly in some cases. In Ontario, there is widespread criticism of the government for allowing day care centres to reopen without guidance or support - most, in fact, won't - and churches without a mandatory masking rule. It's all Doug Ford's gut - the director of public health for Ontario is rarely seen or heard. If we had had a proper lockdown in Ontario for 2-3 weeks at the outset, instead of Swiss cheese lockdown we myriad exceptions, we would be close to zero cases today.

That's provincial. I'm a Conservative but I agree with you in the case of Ontario, everything was too haphazard with no real long term goal.

I am really not fond of the NDP but I can't fault how they've handled the situation here in BC.

Federally the Liberals are a shitshow, endless pandering to the people that elected them while spending us into oblivion. When interest rates go up and they will, we are in big, big trouble.

If an election were called today they'd be re-elected because they've haven't been held to account in parliament. It's all about the votes, it always is.

[Guest]

12 minutes ago, dagger said:

Oh I can - it's called the Conservative party, which is so eager to open up it's doing it haphazardly in some cases. In Ontario, there is widespread criticism of the government for allowing day care centres to reopen without guidance or support - most, in fact, won't - and churches without a mandatory masking rule. It's all Doug Ford's gut - the director of public health for Ontario is rarely seen or heard. If we had had a proper lockdown in Ontario for 2-3 weeks at the outset, instead of Swiss cheese lockdown we myriad exceptions, we would be close to zero cases today.

You are closer to your Ontario party than I am. However here is Alberta it seems that our Conservative Government is / has taken the right actions re the virus.  Other things not as well (education, doctors etc) but no government ever makes everyone happy, not even our Federal Liberal Government with their shovels full of cash. 

[rudder]

Not to stray too far off topic but.....  YUL/YYZ are the NYC of Canada when it comes to COVID. International arrival ports that were exposed to COVID before anybody figured it out. I was in the customs hall in YYZ after Justin summoned everybody home. No restrictions. No masks. Thousands of arriving passengers stood shoulder to shoulder for many days in a row. Proper protocols not implemented in customs halls until the arrival flow hand dwindled to a trickle. And YUL had a direct pipeline of people doing business and visiting family from the metro New Jersey and New York areas. Direct transmission.

That is all rear view mirror now. Canada needs to decide if it thinks it wants to be zero-case New Zealand (impossible given our neighbour to the south) or it simply wants to ensure that COVID hospital admissions remain at a manageable volume that also permits the normal functioning of the health care system.

Current Federal policy appears to be New Zealand.

[Guest]

1 hour ago, rudder said:

Not to stray too far off topic but.....  YUL/YYZ are the NYC of Canada when it comes to COVID. International arrival ports that were exposed to COVID before anybody figured it out. I was in the customs hall in YYZ after Justin summoned everybody home. No restrictions. No masks. T

Vancouver on the other hand was also a international arrival port with heavy traffic from the Orient and seems to have avoided the problems plaguing YYZ and YUL. Looking back on the forum, the firsts posts with Toronto being mentioned started in Jan.  https://theairlinewebsite.com/topic/544787-coronavirus_20200128/

 

The restricted entry ports of YVR, YYZ, YUL AND YYC were not so designated until Mid March.  

[dagger]

2 hours ago, rudder said:

Not to stray too far off topic but.....  YUL/YYZ are the NYC of Canada when it comes to COVID. International arrival ports that were exposed to COVID before anybody figured it out. I was in the customs hall in YYZ after Justin summoned everybody home. No restrictions. No masks. Thousands of arriving passengers stood shoulder to shoulder for many days in a row. Proper protocols not implemented in customs halls until the arrival flow hand dwindled to a trickle. And YUL had a direct pipeline of people doing business and visiting family from the metro New Jersey and New York areas. Direct transmission.

That is all rear view mirror now. Canada needs to decide if it thinks it wants to be zero-case New Zealand (impossible given our neighbour to the south) or it simply wants to ensure that COVID hospital admissions remain at a manageable volume that also permits the normal functioning of the health care system.

Current Federal policy appears to be New Zealand.

No, it's not New Zealand. We can't have New Zealand because each province controls its health destiny. No one seems to believe zero is possible, so I don;'t know why you'd assume otherwise. If the EU designates Canada as a non-EU country whose citizens are admissible to its territory, there is a good chance Canada will reciprocate. That ought to be known by sometime in the next few weeks. The EU plan is to select countries which don't represent a threat; our current situation would normally make us eligible, so long as the US border remains closed.

 

[FA@AC]

The 14 day quarantine requirement is still a hurdle.  In Canada it's in effect, I think, until June 30 for now.  Some EU countries are currently requiring quarantine and some aren't.

[rudder]

1 hour ago, dagger said:

......., so long as the US border remains closed.

 

And you don’t think that is hugely consequential?

I understand that the US is a COVID hotspot and therefore deserves unique scrutiny. However, the deliberate choice by the Feds to maintain the US entry restrictions AND maintain 14 day quarantine (essential workers excepted) are extremely onnerous and have a debilitating impact on ability to travel by air, irrespective of demand.

The Feds need to state clearly what their goals are. Is it ‘manageable’ volume of COVID hospitalizations or attempt to eradicate?

[Guest]

54 minutes ago, rudder said:

And you don’t think that is hugely consequential?

I understand that the US is a COVID hotspot and therefore deserves unique scrutiny. However, the deliberate choice by the Feds to maintain the US entry restrictions AND maintain 14 day quarantine (essential workers excepted) are extremely onnerous and have a debilitating impact on ability to travel by air, irrespective of demand.

The Feds need to state clearly what their goals are. Is it ‘manageable’ volume of COVID hospitalizations or attempt to eradicate?

Which airline does this impact the most, WestJet or Air Canada?

[Specs]

 

6 hours ago, FA@AC said:

The 14 day quarantine requirement is still a hurdle.  In Canada it's in effect, I think, until June 30 for now.  Some EU countries are currently requiring quarantine and some aren't.

Why though.  Why not just test people on arrival.  Charge em $200.  I'd pay that to avoid a 14 day quarantine and I'm pretty sure many others would as well. 

[FA@AC]

9 minutes ago, Specs said:

 

Why though.  Why not just test people on arrival.  Charge em $200.  I'd pay that to avoid a 14 day quarantine and I'm pretty sure many others would as well. 

Some countries are doing that.  Iceland plans to do it free of charge, presumably in order to stimulate tourism.  I'm sure our airlines are lobbying the Canadian government to do similar or to adopt other measures to make travel viable again.

[UpperDeck]

What exactly do you fear from our southern neighbours? Will they pull to the side of the road in order to confront and breathe upon you? I live in a border town. Many support continued closure of the border notwithstanding that of our total of 270 known cases, almost all derive from senior citizen residential or ALF homes. I feel confident in suggesting that no passengers in vehicles coming over the bridge from Michigan directed the driver to pull over forthwith so they could get up close and personal to a local " elder".

The Ontario government has reportedly relied primarily upon County health care units in deciding where and when staged re-opening should occur. It is clear that political support was not a determining factor.

In my opinion, attributing fault for any positive cases to a chosen tactic is both unfair and unreasonable. As I am constantly reminded, this is a "new" virus and no one....repeat no one....knows how it will react over time. Similarly, no one knew with any certainty in January how the virus would react to measures adopted.

Just as we adopt tactics to achieve a strategical goal of elimination so also does this virus assess its tactical options to achieve a goal of maximizing infections.

Social distance...wear a mask....and as they said in Seinfeld, you will remain master of your domain.

As an aside....just came home from a two week trip to Florida. A totally different world than that to which I returned.

 

[FA@AC]

4 minutes ago, UpperDeck said:

As an aside....just came home from a two week trip to Florida. A totally different world than that to which I returned.

 

That's for sure.  A rapidly worsening situation in Florida as opposed to an improving one in Ontario.  And Ontario is a hotspot by Canadian standards.

[dagger]

Back to topic: Can anyone remember when the federal government last gave money or loan guarantees to a Canadian airline to deal with a situation of distress like the industry is experiencing? (I exclude aircraft finance loans, which are available to all buyers of Canadian aircraft, domestic and foreign; that's not crisis support.)

I don't believe AC got any cash or loans in 2010, just more flexibility to deal with its pension deficit. I know in the 2003 bankruptcy reorganization, the feds were not part of it - first Victor Li tried, then ACE Aviation succeeded with a structure that burned the furniture to repay (handsomely) the new shareholders. I can't remember if the feds supplied aid after 9/11. All I can remember is that back in the 1990-92 timeframe, there was a fuel tax rebate option where airlines could claim the fuel taxes they had paid in exchanging for foregoing some of their tax losses. I think the ratio was 10 to 1 - ten dollars of foregone losses for each dollar of fuel tax rebated. The federal excise tax is 4 cents a litre, and presumably applies to fuel uploaded in Canada, not the US or overseas where local taxes, if any, would apply. AC has used about 17 billion litres of fuel the past four years (2016-2019). I don't know if there are exceptions to the excise tax like their are for aviation-specific taxes like Ontario bloody high aviation fuel tax, but if for sake of argument half of the 17 billion was subject to the excise tax, that would be $340 million, and a rebate at a rate of 10 to 1 would mean foregoing $3.4 billion in current and future losses, which are likely to be substantial anyway. I believe the tax rebate had a component where the airlines could repay the rebate and have the tax losses reinstated if they felt it had become advantageous to do so.

 

[AIP]

2 hours ago, dagger said:

Back to topic: Can anyone remember when the federal government last gave money or loan guarantees to a Canadian airline to deal with a situation of distress like the industry is experiencing? (I exclude aircraft finance loans, which are available to all buyers of Canadian aircraft, domestic and foreign; that's not crisis support.)

I don't believe AC got any cash or loans in 2010, just more flexibility to deal with its pension deficit. I know in the 2003 bankruptcy reorganization, the feds were not part of it - first Victor Li tried, then ACE Aviation succeeded with a structure that burned the furniture to repay (handsomely) the new shareholders. I can't remember if the feds supplied aid after 9/11. All I can remember is that back in the 1990-92 timeframe, there was a fuel tax rebate option where airlines could claim the fuel taxes they had paid in exchanging for foregoing some of their tax losses. I think the ratio was 10 to 1 - ten dollars of foregone losses for each dollar of fuel tax rebated. The federal excise tax is 4 cents a litre, and presumably applies to fuel uploaded in Canada, not the US or overseas where local taxes, if any, would apply. AC has used about 17 billion litres of fuel the past four years (2016-2019). I don't know if there are exceptions to the excise tax like their are for aviation-specific taxes like Ontario bloody high aviation fuel tax, but if for sake of argument half of the 17 billion was subject to the excise tax, that would be $340 million, and a rebate at a rate of 10 to 1 would mean foregoing $3.4 billion in current and future losses, which are likely to be substantial anyway. I believe the tax rebate had a component where the airlines could repay the rebate and have the tax losses reinstated if they felt it had become advantageous to do so.

 

Wasn't there some governement money from either SARS or 9/11  ???

[Guest]

11 minutes ago, AIP said:

Wasn't there some governement money from either SARS or 9/11  ???

Air Canada Gets Bailout From Ottawa

BY DEALBOOK

 JULY 30, 2009 8:05 AMJuly 30, 2009 8:05 am

Air Canada has secured a 1.02 billion Canadian dollar ($922 million) lifeline with some help from the federal government, giving the carrier a crucial infusion of cash to help it survive the recession and avoid another trip through bankruptcy protection, The Globe and Mail reported.

The centerpiece of the financial package is a 600 million dollar loan from a syndicate of lenders. Ottawa will kick in 250 million dollars — 150 million through Export Development Canada and 100 million dollars from the government’s Canada Account.

The Canada Account is used for financing that is considered to be in the “national interest,” but is either too risky or too large for Export Development Canada to accept on its own, the newspaper said.

Getting the money has been a top priority for Calin Rovinescu, Air Canada’s new chief executive, ever since the airline secured a series of labor deals this summer to avoid a strike.

Go to Article from The Globe and Mail »
Go to Air Canada Press Release »

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[conehead]

Calling it a loan would suggest they paid it back? Does anyone know?

[dagger]

50 minutes ago, conehead said:

Calling it a loan would suggest they paid it back? Does anyone know?

The $600 million was certainly repaid because it had a %12.75 total interest rate. Repayment was scheduled to be completed by 2014 the latest, although AC had the ability to repay it faster, and likely did - I just don't have the inclination to go through annual reports to find out when. AC ultimately repaid all of its high cost debt.

[Homerun]

3 hours ago, dagger said:

The $600 million was certainly repaid because it had a %12.75 total interest rate. Repayment was scheduled to be completed by 2014 the latest, although AC had the ability to repay it faster, and likely did - I just don't have the inclination to go through annual reports to find out when. AC ultimately repaid all of its high cost debt.

It was repaid early.  2011 id I recall.

[rudder]

Feds are lender of last resort. Unlikely that AC will use any Fed loan program (other than EDC) for sourcing cash requirements.

CR is looking for something to be done universally, although AC stands to benefit significantly due to scale.

He is dumping 20000+ employees from AC payroll to the taxpayer funded rosters because he has no other reasonable option.

Ball back in JT’s court.
 

 

[AIP]

5 hours ago, rudder said:

Ball back in JT’s court.
 

 

That is one scary proposition.  No one can feel good about those prospects.