Canada isn't ruling out taking a stake in Canadian airlines: Leblanc

[rudder]

Sounds like Rocketman is bringing quite the shopping list to the table.

AC has already cancelled orders for a dozen A220’s (but has options to restore those positions if desired). Are those fins built in Canada or Alabama? Not sure any other carrier has any outstanding orders for “Canadian built” airframes (CHR will consummate deliveries on 5 already built CRJ900’s in Q4 2020).

AC would have to take $2.3B in low interest loans just to cover prepaid fare refund liability. Would have to think about whether that swap would affect the balance sheet as both sit on the liability column, although one simply represents forfeit future revenue (if for cancelled flights that are eventually rebooked) and would not accrue interest.

I have a feeling that AC will play hardball unless Garneau and the CTA threaten to enforce licence obligations. AC will be reminded of the amount of CEWS compensation that it has and will continue to receive as the largest airline subscriber.

Seems both sides have already staked out turf. The “open the books” requirement will be meaningless to the publicly traded airlines but may be consequential to the privately held operators, some of whom may already be facing significant liquidity challenges.

[rudder]

Seems the game of ping pong has begun.....

 

Air Canada’s chief executive officer said the airline is open to providing refunds for cancelled flights in exchange for government aid, adding that the company has no interest in offering Ottawa an equity stake.

President and CEO Calin Rovinescu said the airline would have no qualms about giving customers holding unused tickets their money back, so long as the terms for such a deal are “appropriate and reasonable.” Air Canada has so far paid back more than $1.2 billion in refundable fares amid travel restrictions throughout the pandemic, but the company has not yet provided refunds for non-refundable tickets.

“[Transport Minister Marc Garneau] has made it clear that refunds would be required and, based on the size and scale of the program, we have no issue, no quarrel with that at all,” Rovinescu said in an interviewWednesday.

Compared to its global counterparts, Canada remains an outlier and has not granted sector-specific aid to the airline industry, which has been badly hit by the COVID-19 pandemic. Rovinescu said he has not seen any suggested terms from Ottawa so far.

He added Air Canada has ”decent” levels of liquidity to meet refund requirements, but that government aid would have to be sizeable enough for the airline to agree on a deal.

“Our objective has been not only to survive, but to be competitive coming out of the pandemic,” Rovinescu said. “We’re competing with carriers around the world that have been supported by their government, so we’d hope the terms would be on a reasonable basis.”

Rovinescu also ruled out offering Ottawa a stake in Air Canada as part of a deal, saying government equity ownership in airlines has a poor track record.

“State ownership of airlines has been a colossal failure elsewhere around the world and we’re certainly notadvocating for it,” Rovinescu said.

[Guest]

Federal Court says class action on COVID-19 airfare refunds a matter for other courts

26 November 2020Canadian Aviation News

From CityNews1130.com – link to source story

BY THE CANADIAN PRESS | Nov 26, 2020

OTTAWA — The Federal Court has punted consideration of airfare refunds, which customers say they are owed following hundreds of thousands of cancelled flights, to provincial courts.

Justice Michael Manson says in a decision today that a proposed class-action lawsuit seeking certification is outside the Federal Court’s jurisdiction, even though air travel is a federal area of responsibility.

Plaintiff Janet Donaldson launched a proposed class action against Air Canada, Air Transat, WestJet Airlines and its Swoop subsidiary after the COVID-19 pandemic struck in March and triggered a global travel industry collapse.

The British Columbia resident says WestJet cancelled her flight but initially gave her no reimbursement options, offering travel vouchers instead.

Manson’s ruling strikes her claim on jurisdictional grounds, but avoids weighing in on the merits of the refund issue itself.

A handful of proposed class-action suits are ongoing in provincial courts, including in B.C. and Quebec, as frustrated customers seek refunds for trips they paid for but never took.

This report by The Canadian Press was first published Nov. 26, 2020.

The Canadian Press

[Airband]

Airlines Seek Salvation in Tests With Trudeau Keeping Border Locked

Wed Dec 02, 2020 - Bloomberg News
by Sandrine Rastello 

Canadian airlines haven’t gotten much of what they asked for from Justin Trudeau during the pandemic. With airports nearly empty, they’re now pinning their hopes on a testing experiment to convince the prime minister to relax some of the world’s strictest Covid-19 travel rules.

A new program in the western province of Alberta is testing international travelers for the virus on arrival. Participants who receive a negative result are allowed to get back to a near-normal life in about two days, though a second test is required several days later. Everyone else entering Canada must quarantine for 14 days, a rule that has not changed since March.

The lengthy quarantine and other restrictions -- including a ban on almost all foreign tourists -- have been a contentious point for a battered industry that Trudeau has balked at bailing out. Traffic at airport security checkpoints in Canada was just 14% of last year’s levels in the first 29 days of November, versus 37% in the U.S., according to data by the countries’ transport security authorities.

Trudeau said Tuesday his government has no plans to open Canada’s borders soon. With widespread vaccination still months away, airlines are hanging on the testing experiment by the Alberta and federal governments as a ray of hope.

“It has taken some time but we’re starting to see some footsteps in the snow,” Andrew Gibbons, director of government relations for Calgary-based WestJet Airlines Ltd., said in an interview. The goal is to turn the program into a national one that will allow shorter quarantine times, he said, relieving pressure on financially-stressed airlines.

WestJet says international bookings have grown by double-digit rates since the announcement of the Alberta test. Yet about 135 of its 181 planes remain parked, a sign of anemic demand for air travel.

‘Global Outlier’

The relationship between airlines and Trudeau’s government has been a frosty one. Canada, unlike some other Group of Seven countries, has given no bailout to airlines, though it has given the industry other financial support such as wage subsidies and said it’s willing to negotiate further aid.

“Canada remains a global outlier and is ostensibly stuck at Stage Zero on the government planning process,” the National Airlines Council of Canada said Monday after the government’s economic update offered nothing new on financial help for large airlines.

Other countries are using tests to get more passengers in the skies. England last week unveiled an option to shorten self-isolation for travelers from high-risk countries to five days. Italy will open its borders to quarantine-free flights from the U.S.

Meanwhile, Hawaii is letting some foreign travelers bypass quarantine all together with proof of testing from an approved lab.

Canada is moving at a slower pace. The experiment in Alberta, which takes place at the Calgary airport and at one land border crossing with Montana, enrolled 7,800 travelers in a little more than four weeks. Edmonton’s airport may be added next year.

The program should continue regardless of progress on a vaccine, said Dean Blue, a senior adviser for Alberta’s health department. Trudeau has estimated it could take until September to inoculate a majority of Canada’s population.

In Ontario, Premier Doug Ford told reporters on Wednesday he’s pushing for a similar trial with the federal government at Toronto’s Pearson airport.

Politically, it’s not the time for Trudeau to appear lenient, as the country battles a second wave of infections that’s leaving no region untouched.

That makes testing the best bet for businesses like Jill Curran’s travel agency, Maxxim Vacations, which organizes tailored tours to rural communities in the northeastern province of Newfoundland and Labrador.

In addition to Canada’s restrictions, Newfoundland had its own rules, including a quarantine, that made it hard even for most Canadians to visit. None of Curran’s clients who had booked this summer made it.

The Alberta testing plan “is something we are very anxious to see the outcome of,” Curran said. “Peak season is many months away, but we have to send a very strong signal to our customers that we are going to be open in 2021.”

Testing Capacity

To sway the government, airlines are also doing their own research. WestJet is sponsoring a project to investigate rapid testing for domestic travelers at the Vancouver airport.

In Toronto, Air Canada helped finance a study that had incoming international travelers take three virus tests during their quarantine. According to an interim report released last month, 1% of participants had Covid, with 70% of cases detected on the first day and almost all of them by the seventh. That suggests quarantine times could be shortened.

“What this shows if that if we want to get travel restored we have to have more testing capacity and we have to start working on building it up now,” said Vivek Goel, the co-principal investigator of the study at McMaster HealthLabs.

One pending question is who will pay. WestJet passengers traveling from Alberta to Hawaii, for instance, will each disburse C$150 ($116) for tests, a price the airline negotiated with a lab.

Testing may not be the game changer the industry is hoping for if passengers have to shell out for it, said David Gillen, the director of the Centre for Transportation Studies at University of British Columbia. Economic uncertainty is already keeping a lid on domestic travel, even though it faces fewer restrictions than international flights, he said.

“The demand is not going to be back probably for a couple of years,” Gillen said.

[rudder]

“As passengers pushed for refunds, Air Canada got more than $400 million from wage subsidy“
 

https://www.cbc.ca/amp/1.5824950

[Guest]

7 minutes ago, rudder said:

“As passengers pushed for refunds, Air Canada got more than $400 million from wage subsidy“
 

https://www.cbc.ca/amp/1.5824950

It evidently provided wages for quite of few AC Staff.

And WestJet is not saying how much they got as not being a publicly traded company   they don't have to. 

[Turbofan]

Two thoughts.

First, I’m pretty sure it would be cheaper to give CEWS back than refund non refundable tickets.

Second. I had to chuckle at the following.  I guess they just met Calin.  Of course he is playing strong arm.  In order to do so you need to find leverage.  He has but one stick.  That stick is refunds. He will use it.  

Poor JT.  He’s being Bullied.   I wonder if we can use that in negotiations next time?

Some experts argue the carrier is using travellers' demands for refunds for cancelled flights as leverage to pressure the government during the negotiations.

John Gradek, a former Air Canada executive and lecturer at McGill University's global aviation leadership program, claims the airline industry is "bullying" the government into bailing out the sector, arguing that other countries have already done so. He said Air Canada is playing a "shell game" of its own.

"I think it's a little bit of gamesmanship that's being played by Air Canada," Gradek said. "They're insisting that those refunds will only be processed if the Canadian government, through the Canadian taxpayer, is providing the funds for those refunds. Not a good thing."

[moeman]

Bitter much? May a well have asked Mark Hill for his thoughts.

 

Quote

John Gradek, a former Air Canada executive and lecturer at McGill University's global aviation leadership program, claims the airline industry is "bullying" the government into bailing out the sector, arguing that other countries have already done so. He said Air Canada is playing a "shell game" of its own.

"I think it's a little bit of gamesmanship that's being played by Air Canada," Gradek said. "They're insisting that those refunds will only be processed if the Canadian government, through the Canadian taxpayer, is providing the funds for those refunds. Not a good thing."

 

[st27]

What a joke!! The government and Trudeau bragging they have the workers backs, working hard for the middle class and those working hard to join it......they were the ones who started the support programs and now they are seeing just how much it costs to support the workers, not the industry. It just illustrates how big this airline is wrt to Canadian economy.
 

[Bobcaygeon]

2 hours ago, st27 said:

What a joke!! The government and Trudeau bragging they have the workers backs, working hard for the middle class and those working hard to join it......they were the ones who started the support programs and now they are seeing just how much it costs to support the workers, not the industry. It just illustrates how big this airline is wrt to Canadian economy.
 

AC and Jazz received almost $600 million, that's about half of all the money given to the industry. The US industry received a large amount of funding but it was conditional on keeping employees on payroll until September. The Canadian airlines weren't required to do that. 

 

I'm a fan of keeping the industry alive but AC continues to be a bully which most of the general public has no time for.

[boestar]

But the Canadian Carriers did keep people on the payroll.  Until the CEWS ran out.  Besides the CEWS was not just for the airlines, it was for all large corporations who CHOSE to partake in it.  AC chose to because it kept their people working... for a time.

AC, WestJet and everyone else should not be required to refund the NON REFUNDABLE fares to get support to remain viable.  Those flights were cancelled through NO FAULT of the airline.  The airlines were forced to cancel the flights by the Canadian government.  The Government should be on the hook for the refunds.

Remember the FIRST thing they did was suspend the passenger bill of rights when this all began so they can not use that as an argument.

 

[dagger]

Let's take a real world look at this all. First, any government's approach would be mindful of political appearances. So what are the political appearances? 1) Make passengers happy (or less angry) about vouchers; 2) Drag this out until the arrival of vaccines makes aid look limited rather than the first tranche of several (see the EU and US); 3) avoid politically sensitive bankruptcies (See Transat with out thew AC merger); 4) help the aerospace sector in the process.

Probably more out of timidity, the feds have delayed help to a lot of large industries like airlines, tourism and hospitality, aerospace, etc because of the large, open-ended nature of what aid would have looked like six months ago. A little help was extended to the oil & gas sector, especially the oil-field component, but aside from that, the government has been reluctant because outside of Alberta/Sask, the optics are bad. Fortunately for all concerned, crude prices are rising for the sector and could rise enough in a return-to-normalcy scenario where all large producers and even the intermediates, will be cash flow positive if not profitable. I suspect the government has taken the same approach with other large industries. This may be the time it feels safe to act. Whatever deals are possible for aviation will likely take shape after next Tuesday's Transat vote. They could include loans big enough for voucher refunds, possibly re-instated AC's A220 cancellations, etc. I've always been more intrigued about how the feds deal with Westjet and Sunwing, since they aren't publicly traded. Everyone has a thought about what Calin wants, but no one has much info about Onex.

[rudder]

38 minutes ago, dagger said:

Let's take a real world look at this all. First, any government's approach would be mindful of political appearances. So what are the political appearances? 1) Make passengers happy (or less angry) about vouchers; 2) Drag this out until the arrival of vaccines makes aid look limited rather than the first tranche of several (see the EU and US); 3) avoid politically sensitive bankruptcies (See Transat with out thew AC merger); 4) help the aerospace sector in the process.

Probably more out of timidity, the feds have delayed help to a lot of large industries like airlines, tourism and hospitality, aerospace, etc because of the large, open-ended nature of what aid would have looked like six months ago. A little help was extended to the oil & gas sector, especially the oil-field component, but aside from that, the government has been reluctant because outside of Alberta/Sask, the optics are bad. Fortunately for all concerned, crude prices are rising for the sector and could rise enough in a return-to-normalcy scenario where all large producers and even the intermediates, will be cash flow positive if not profitable. I suspect the government has taken the same approach with other large industries. This may be the time it feels safe to act. Whatever deals are possible for aviation will likely take shape after next Tuesday's Transat vote. They could include loans big enough for voucher refunds, possibly re-instated AC's A220 cancellations, etc. I've always been more intrigued about how the feds deal with Westjet and Sunwing, since they aren't publicly traded. Everyone has a thought about what Calin wants, but no one has much info about Onex.

I see only one likely outcome of these discussions - low interest/no interest loans. And there will be conditions.

The impact this will have is enhancing near term industry liquidity and perhaps a vehicle to stimulate refunds of tickets for trips purchased but subsequently cancelled.

The ‘industry specific’ aid should be for the Feds to take their foot off the throat of the airlines in terms of fees. Defer them. Cancel them. Create a moratorium. Whatever.

If a carrier or two fail, so be it. You cannot fight market forces. If there is overcapacity, it must come out.

[conehead]

3 hours ago, boestar said:

But the Canadian Carriers did keep people on the payroll.  Until the CEWS ran out.  Besides the CEWS was not just for the airlines, it was for all large corporations who CHOSE to partake in it.  AC chose to because it kept their people working... for a time.

 

Absolutely correct. But the media will not report this, as everyone loves to hate AC.

[Fido]

5 hours ago, rudder said:

If there is overcapacity, it must come out.

Take a look at the schedules

The capacity being flown is a small fraction of what it was a year ago and then it is not near full.

[Turbofan]

23 hours ago, moeman said:

Bitter much? May a well have asked Mark Hill for his thoughts.

?  Did I miss something?

Not sure how you got Bitter.  I found the part I quoted humourous.  My chuckle was because CR can be quite predictable.  He looks for leverage and then tries to use it like a crowbar.  It’s how he operates and It works very well for him.  It’s hard to argue with his success rate using this approach.  Those that got out maneuvered aren’t that happy. But hey you get over it.

But calling the behaviour Bullying?  Really?  
 

That’s like calling a game of Chess Bullying.  I can see it now the game will be banned.

All in jest.........I hope.

[Canoehead]

12 hours ago, Turbofan said:

?  Did I miss something?

I took that as moeman calling John Gradek, the "former" AC Exec bitter.

Because that's what I was thinking as well about Gradek.

[Turbofan]

Yup.  Missed it completely then. 

Cheers.

[Fido]

4 hours ago, Canoehead said:

I took that as moeman calling John Gradek, the "former" AC Exec bitter.

Because that's what I was thinking as well about Gradek.

John Gradek may not have a right to be bitter but he does have reasons.

He was caught up in the "You were former Air Canada so you must not have a future here anymore".

[Guest]

38 minutes ago, Fido said:

John Gradek may not have a right to be bitter but he does have reasons.

He was caught up in the "You were former Air Canada so you must not have a future here anymore".

A future where exactly? If talented the field is still open. 

[Turbofan]

Air Canada’s cancellations in the last 48 hours tells me the negotiations with the government went south.  Or are at a stalemate of sorts.

 

https://globalnews.ca/news/7508603/air-canada-service-cuts-station-closures-atlantic-canada/

“Station closures are the worst-case scenario for some of our region’s smaller airports, and the result will further fracture the viability of people who need to efficiently move in and out of these communities,” the statement reads.

The association said it could be looking at the end of some of its small regional airports if solutions are not found.

“This is the third major round of cuts to air service for our region in the last six months,” Derrick Stanford, president of the ACAA and CEO of Saint John Airport, said in a press release.

“Service has been whittled down to an unsustainable level for our airports. Our industry cannot survive and operate in these conditions, and we are seeing the worst-case scenario playing out here today.”

 

[MCPSPEED]

The last line of this article says, negotiations haven’t even started with the government. 

[rudder]

4 minutes ago, MCPSPEED said:

The last line of this article says, negotiations haven’t even started with the government. 

There is a quote from the spokeswoman for Minister Garneau in the G&M article summing up the government’s pre-conditions for any possible Federal financial assistance for the industry.

The quote pretty well sums up why it remains unlikely negotiations will be starting anytime soon.

[airbrake]

Here they talk about how negotiations will start as well.  
 

https://www-cbc-ca.cdn.ampproject.org/c/s/www.cbc.ca/amp/1.5835953

[MCPSPEED]

Could Air Canada be deemed an “Essential Service” and be told, not allowed to pull out of some of these communities?  
Whats the difference between pulling out and striking?