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


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1 hour ago, rudder said:

 

LEEFF loans start with an interest rate of five per cent, rising to eight per cent the following year. They would also allow the government to take a stake in public companies, and would require restrictions on executive compensation, among other things.”

https://www.cdev.gc.ca/leeff-factsheet/

Shylock the money lender would be proud. 

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"Can you explain to Canadians why a corporation with billions of dollars cannot provide a refund to customers for a service that was not provided?”

No refunds without a bailout, Air Canada executive says

Thu Feb 04, 2021 - The Globe and Mail
Eric Atkins - Transportation Reporter

Air Canada said it needs government aid before it can give refunds to customers whose flights were cancelled in the pandemic.

An executive from Canada’s largest airline told federal politicians on Thursday the airline has followed the guidance of the Canadian Transport Agency and offered vouchers or credits instead of refunds for the thousands of flights cancelled during the COVID-19 pandemic.

Under questioning, David Rheault, Air Canada’s managing director of government affairs, was unable to say how many tickets the non-refunded fares amount to, but said the airline is trying to preserve its cash amid a collapse in demand for air travel. Air Canada has already refunded about $1.2-billion in fares, where required, he said.

“From the outset we complied with the order of the Canadian Transport Agency,” Mr. Rheault told the House of Commons transportation committee. “If we get some aid from the government, we’ll be able to refund” the fares.

Taylor Bachrach, a NDP member of Parliament from British Columbia, noted Air Canada’s latest financial results showed it had $7.7-billion in liquidity, including almost $3.7-billion in cash.

As of Sept. 30, Air Canada had $2.3-billion in advance ticket sales.

The airline has collected almost $500-million in wage subsidies from the taxpayer-funded emergency program designed to prop up people sidelined in the pandemic, Mr. Bachrach said. “That would make it the largest recipient of the wage subsidy in Canada,” he said.

“Can you explain to Canadians why a corporation with billions of dollars cannot provide a refund to customers for a service that was not provided?” he asked Mr. Rheault.

Air Canada is burning through $15-million a day and has laid off 20,000 employees – about half its work force – as it cuts routes and pulls out of smaller airports to save money. Mr. Rheault said the carrier is operating 20 per cent of its network with 50 per cent of its employees.

“This situation cannot carry on,” he said.

The federal government is in talks with the aviation sector on aid that is expected to include loans, grants and breaks on fees. The government has said any airline that wants financial help from taxpayers must refund customers’ money. The airlines have lamented the slow pace of the talks, and noted their international rivals have enjoyed state aid worth about $200-billion.

WestJet Airlines Ltd. in October said it would give refunds for flights that the airline cancelled, reversing its policy amid public pressure from customers who said a credit was useless, given many people do not want to travel.

The plight of Canada’s airlines shows no sign of improving as governments in Canada and elsewhere impose new travel restrictions to contain a resurgent pandemic.

The government announced plans to require travellers to take a COVID-19 test on arrival in Canada, and a three-day stay at a quarantine hotel, at a cost of about $2,000, while waiting for the test results. Those who test negative can continue their 14-day quarantine at home, while anyone who tests positive will be transferred to a government facility.

Canada’s airlines last week agreed to suspend all flights to Mexico and the Caribbean between Jan. 31 and April 30. As a result, Sunwing, Air Transat and Air Canada Rouge have suspended operations. Porter Airlines has been grounded since March.

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9 minutes ago, conehead said:

Followed by CCAA.

If that were the expected outcome of refunds I think the airline would need to file for CCAA first and let the trustee decide who gets what.

So I would argue CCAA would come first.  Either way the end result becomes no refunds on non refundable tickets.

The government must know this though.  It is why to me the stalemate looks rather manufactured.

 

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1 minute ago, Turbofan said:

If that were the expected outcome of refunds I think the airline would need to file for CCAA first and let the trustee decide who gets what.

So I would argue CCAA would come first.

 

Well, that may come yet.

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  • 2 weeks later...

Airlines COVID-19 rescue negotiations at critical stage, sources say

Mon Feb 15, 2021- The Globe and Mail
Robert Fife - Ottawa Bureau Chief

The federal government and Canada’s airlines are at a critical stage in backroom negotiations that could soon end months of haggling and result in a multibillion-dollar rescue plan for the pandemic-hobbled industry.

Michael Sabia, the veteran corporate executive recently recruited as deputy minister of finance, is close to finalizing a bailout package, according to one government and three industry sources briefed on the talks.

The Globe and Mail is not identifying the sources because they were not authorized to discuss the negotiations.

Talks between Mr. Sabia and the industry have been going on for weeks, with all the participants signing non-disclosure agreements as Finance Department officials delved deeply into the financial records of airlines both big and small.

One of Canada’s biggest business lobbies is urging Ottawa and the airlines to wrap up their negotiations quickly.

“Support for the airline sector amounts to relief for the entire supply chain that is fed by it, including small businesses. Action by the federal government is needed now. Time is not our friend,” said Goldy Hyder, president of the Business Council of Canada.

Any government rescue package would require the airlines to refund customers for flights cancelled because of the pandemic, an amount estimated to be in the billions of dollars, the government source said.

Ottawa is also demanding that no bailout money go to executive bonuses; that key regional routes be maintained; and that airlines not cancel orders for aircraft that would affect jobs in Canada. It remains unclear if equipment purchases remain part of the talks, according to the government source.

The government has taken off the table its demand for board seats, but it remains open to some form of equity ownership in return for low-interest loans to the industry, the government and two industry sources said.

Mr. Sabia, the former chief executive officer of Caisse de dépôt et placement du Québec, took the reins for the negotiations from Transport Canada after he was recruited as the deputy minister to Finance Minister Chrystia Freeland in mid-December.

Canadian Chamber of Commerce president Perrin Beatty said Sunday it is critical that Mr. Sabia and the airlines conclude a deal as spring approaches and the general rollout of vaccinations begins.

“If you look at the impact on local communities across the country who have seen air service reduced or cancelled altogether, the economic and social impact is devastating,” Mr. Beatty said. “It is clear that the travel and tourism sector will be one of the last, if not the very last sectors to come back, and that means we need to provide assistance that is tailored to the assistance they need.”

As part of a possible package, Ottawa has also set aside $207-million to help smaller airports adjust to the upheaval in the industry, which could see smaller airlines take over remote routes.

One industry source said the airlines are counting on Intergovernmental Affairs Minister Dominic LeBlanc to work out an agreement with the provinces on nationwide pandemic travel rules. This is not only crucial for the airlines but for the hospitality and tourism industry, which is dependent on airline travel, the source said.

“Given global uncertainty, Canada must prioritize domestic travel and negotiate a transparent and clear policy with provincial governments,” Andrew Gibbons, WestJet’s director of government relations and regulatory affairs, told the Commons transport committee on Feb. 4. “This could be based on COVID levels or a percentage of the population vaccinated.”

The Calgary-based airline was not happy with the federal cabinet’s recent decision to approve the takeover of Transat by Air Canada, which gives Canada’s largest airline an even more dominant position.

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I'm not sure what point there would be for the government to, in effect, buy stock in passenger airlines since we have only four publicly traded passenger airline companies, soon to be three, and only one of those three (Air Canada) is a pure airline play. Porter, Sunwing, Flair and Westjet are privately owned. Chorus is publicly traded, but largely a creature of Air Canada's network with a sideline in leasing . Exchange Income owns several small carriers, but also has other businesses. If the government wants shares in AC, it would likely demand something else of the privately owned carriers, who would object. So I assume the share ownership issue is moot, unless the feds want to bribe AC with some free money to reinstate the cancelled A220 orders for political reasons.

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3 hours ago, dagger said:

I'm not sure what point there would be for the government to, in effect, buy stock in passenger airlines since we have only four publicly traded passenger airline companies, soon to be three, and only one of those three (Air Canada) is a pure airline play. Porter, Sunwing, Flair and Westjet are privately owned. Chorus is publicly traded, but largely a creature of Air Canada's network with a sideline in leasing . Exchange Income owns several small carriers, but also has other businesses. If the government wants shares in AC, it would likely demand something else of the privately owned carriers, who would object. So I assume the share ownership issue is moot, unless the feds want to bribe AC with some free money to reinstate the cancelled A220 orders for political reasons.

What's the benefit to ordering A220s now? Are they still made in Canada? I thought that the manufacturing was moved to the USA. 

I've heard that WJ settled with Boeing over the Max and that part of the deal involved delaying the delivery of the next 4 787's and pushing out delivery dates for further Max aircraft. I've heard that the 737-600's will be leaving the WJ fleet and I've heard that WJ is looking at adding new aircraft to the fleet. If that's the case what aircraft would WJ need and for what mission? 

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30 minutes ago, CanadaEH said:

What's the benefit to ordering A220s now? Are they still made in Canada? I thought that the manufacturing was moved to the USA. 

I've heard that WJ settled with Boeing over the Max and that part of the deal involved delaying the delivery of the next 4 787's and pushing out delivery dates for further Max aircraft. I've heard that the 737-600's will be leaving the WJ fleet and I've heard that WJ is looking at adding new aircraft to the fleet. If that's the case what aircraft would WJ need and for what mission? 

No, only those A220s ordered by US airlines (Delta, JetBlue, etc) are assembled in Alabama. All others are assembled in Montreal, or is it Mirabel? I have no idea whether WestJet would consider the A220. That would obviously be a break in the single manufacturer practice the company has followed since its inception. Southwest is looking at it the A220, as well as at the Max 7, for a big expansion of the lower end of its fleet. However, there is almost a universal view that Southwest is using the A220 to leverage a huge discount from Boeing, even if the A220 specs out as the better choice. As to what WS needs, I'd guess it would want a more economically competitive aircraft that the 737-600 which was always a bit of a financial dog. AC is making heavy use of the A220 right now on the transcontinental network, it's the most cost-effective choice for the current environment, and likely would show well in normal times on somewhat secondary long-hauls.

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2 hours ago, CanadaEH said:

I've heard that the 737-600's will be leaving the WJ fleet and I've heard that WJ is looking at adding new aircraft to the fleet. If that's the case what aircraft would WJ need and for what mission? 

Maybe something smaller than a 787 for TATL routes if WS is interested in operating them.  321neo LR unless the MAX 9 or 10 has the range?

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3 hours ago, FA@AC said:

Maybe something smaller than a 787 for TATL routes if WS is interested in operating them.  321neo LR unless the MAX 9 or 10 has the range?

I believe WJ has or had Max 9 or 10 ordered already. 

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2 hours ago, CanadaEH said:

I believe WJ has or had Max 9 or 10 ordered already. 

I see the max 9 is only 10 feet longer and will come with an ancillary tank, I wonder that that will do to the useful payload on an long haul route.  

here are the stats, I can not see any +++ for the Max  9 or 10 other than increased passenger load but with a reduced range and I guess belly load.

Technical Specs

 

  737 MAX 7 737 MAX 8 737 MAX 9 737 MAX 10
Seats (2-class) 138 – 153 162 – 178 178 – 193 188 – 204
Maximum seats 172 210 220 230
Range nm (km) 3,850 (7,130) 3,550 (6,570) 3,550 (6,570)* 3,300 (6,110)*
Length 35.56 m (116 ft 8 in) 39.52 m (129 ft 8 in) 42.16 m (138 ft 4 in) 43.8 m (143 ft 8 in)
Wingspan 35.9 m (117 ft 10 in) 35.9 m (117 ft 10 in) 35.9 m (117 ft 10 in) 35.9 m (117 ft 10 in)
Engine LEAP-1B from CFM International LEAP-1B from CFM International LEAP-1B from CFM International LEAP-1B from CFM International
    210 seats: 737-8-200 *one auxiliary tank *one auxiliary tank
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  • 4 weeks later...
1 hour ago, Specs said:

Meanwhile in the US.....

When Congress passed and the president signed into law today the American Rescue Plan, airline workers secured a $14 billion extension of the Payroll Support Program (PSP) through September 30, 2021. Thanks to your commitment and engagement, our union has helped obtain a total of $63 billion in pandemic relief directly for aviation workers through this historic pro-labor, job-saving program.”

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Canada’s aviation industry needs a total overhaul, not just a bailout

Fri Mar 12, 2021 - The Globe and Mail
by Mike Arnot
Mike Arnot is a New York-based airline and aviation consultant and former policy adviser to Canada’s Trade Minister.

Cost-savvy Canadians used to cross the border to New York State and fly south on the cheap with Spirit Airlines and JetBlue. Ever wonder why those airlines have never flown to Canada and likely never will? It’s not for lack of demand but because it’s a pain to operate such a business in Canada.

Ignore Canada’s size and sparse population and current pandemic restrictions. Canada needs a more competitive aviation industry and creative solutions to attract tourists.

The ‘Passenger Pays’ model doesn’t work with no passengers
For every $100 in airfare, your ticket includes a whopping $24 in various fees. Want to fly to Smithers, B.C., Saskatoon or St. John’s? You’ll pay about $35 for airport “improvement” fees, which fund airport operations and capital projects. No funding comes from Ottawa. These fees are much higher in Canada than in Europe and the U.S. (where they’re capped at US$4.50 per leg). For this reason alone, Southwest Airlines will never fly from Calgary to Phoenix or from Vancouver to Hawaii. (If it did, fares would drop substantially.) As for Smithers, tourists may never get to visit, as the airlines have cut service to that destination; airlines know where they can and can’t make money and how much passengers are willing to pay. The fees take a quantifiable bite out of demand.

Most bizarre are the fees to cover the cost of air traffic control, which increased 30 per cent last year. WestJet Airlines Ltd. chief executive Ed Sims previously ran the New Zealand equivalent of Nav Canada, which manages Canada’s air traffic control system. Trust him when he says those fees are “scandalous.” Safe airspace and operational control towers are a public good. Ottawa needs to step in.

You can’t have an airport in Smithers or a control tower in Regina without direct subsidy from the federal treasury. Ottawa should cut domestic user fees, increase them for international flights that overfly Canada and reduce and cap airport improvement fees. Otherwise, voters should ask the government why it’s letting airports bleed to death.

Stop charging major airports rent until traffic returns 
Ottawa is the landlord of Canada’s airports – and a bad one at that. It charges rent of up to 12 per cent of airport gross revenues. The formula punishes success. And like an absentee landlord, Ottawa makes no capital investments in airports. It should permanently eliminate ground lease rents at smaller airports such as Charlottetown and Saskatoon. At larger airports, it should cut rents until passenger traffic returns to at least 2019 levels.

Airlines and airports have made painful cuts. So too should Transport Canada
Airlines and airports have laid off tens of thousands of employees, and many of those jobs aren’t coming back. Take a hard look at Transport Canada’s budget and cut some redundant, high-cost jobs in Ottawa. It’s a bitter pill, but Transport Canada has proportionally more employees than the U.S. Department of Transportation, which includes the Federal Aviation Administration.

Air Canada and WestJet provide competition. So do the small carriers
The two major Canadian airlines take up a lot of airtime. But the likes of Porter, Sunwing, Air Transat, Flair, Canadian North or Harbour deserve a disproportionate share of any bailout if they want it. The two largest airlines can sell their aircraft and lease them back, which immediately injects precious cash. It’s not so easy for the others. Don’t allow the smaller airlines to fail.

Brand Canada: Learn from the Portuguese
TAP Air Portugal and the Portuguese tourism authority made the country a must-visit destination through a strong advertising campaign and stopover program. Learn from them. Few Americans know of Mont Tremblant, Fogo Island or Smithers and its steelhead. (It would help if the fares weren’t so high to fly there.) United Airlines launched a bus service to shuttle skiers from Denver to the slopes. Canadian carriers and partners could take it one step further and offer airside pickup plus service to the Rockies or Tremblant, for example. When travel comes back, Canada and its carriers need to be creative to attract tourists.

Allow for arrivals-level duty-free shopping
To the extent you recall walking through an airport, you would find a shiny duty-free store past security before your flight. Flip the model. Ottawa should allow for duty-free stores as passengers exit from Canadian airports (with an emphasis on Canadian products, too). It has worked well in Australia and would help airports and the government earn precious revenue.

Make the phone call for pre-clearance
It’s taking far too long to secure U.S. Customs and Border Protection pre-clearance at Toronto’s Billy Bishop Airport and Quebec City. The physical space is already built, and U.S. authorities love the idea of creating 50 jobs there. When Porter Airlines comes back, business travel out of Toronto’s island airport to the U.S. will be critical. The ministers should pick up the phone, call their U.S. counterparts and make it happen.

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