Guest Virtual Posted May 11, 2003 Share Posted May 11, 2003 Maybe THAT'S the new business plan!! Link to comment Share on other sites More sharing options...
E-HANDLE Posted May 11, 2003 Share Posted May 11, 2003 I got my info on AC's cash burn from the press. Air Canada flying on credit: CEO Nicolas Van Praet CanWest News Service Wednesday, May 07, 2003 ADVERTISEMENT MONTREAL -- Air Canada has blown all its own cash on hand and is now flying on credit, the airline's chief executive officer has disclosed. In a letter to Air Canada employees, Robert Milton indicated the carrier has tapped out the $375 million unrestricted cash the company said it had April 1, the day it filed for bankruptcy protection. "Today we are funding our operating requirements out of credit provided by our suppliers and lenders,'' Milton said in the letter. "Before long, if we don't make any changes, we will have borrowed every penny this company will be able to through the recently announced Debtor in Possession financings.'' I was sure I read that an AC lawyer argued before Judge Farley that the Competition Tribunal report be suppressed. I'll see if I can't dig up a newspaper article. Link to comment Share on other sites More sharing options...
Guest Airmail Posted May 11, 2003 Share Posted May 11, 2003 You got it from the press! No wonder you're wrong! Link to comment Share on other sites More sharing options...
dagger Posted May 11, 2003 Share Posted May 11, 2003 I said lawful competition. Lawful is a question only now being defined by the Competition Tribunal. It surrounds the definition of avoidable cost. If reporting an overall profit is the only criteria, you would be saying that all competition is lawful when a company is profitable, and all competition is unlawful when a company is un profitable. By that yardstick, Air Canada could compete during the summer schedule, but not during the winter schedule, which is kind of the reverse of normal market conditions. You would normally expect more competition in the winter. If you used a definition of lawful competition that was based on each route, you would similarly find that some Westjet or Jetsgo routes are unprofitable for at least a few months a year. After all, if WJ just eked out a small profit for the first quarter, it stands to reason that some of its routes were profitable, and some had to be unprofitable. Does that mean Westjet must suspend competition where and when it isn't carrying compensatory loads. As you can see, it's a very complex question. Link to comment Share on other sites More sharing options...
Guest manwest Posted May 11, 2003 Share Posted May 11, 2003 Whatever the number is $360 million for April or $375 million 0r whatever. AC is still bleeding. http://biz.yahoo.com/djus/030508/1156001018_1.html Link to comment Share on other sites More sharing options...
dagger Posted May 11, 2003 Share Posted May 11, 2003 I don't know what AC is paying or not paying. It can't go through $382 million in a month on wages and benefits alone. It can't spend more than $240 million a month on wages and benefits, but even in the SARS environment, there are some revenues. Clearly, the Pacific - normally a very profitable area for Air Canada - has been devastated, but assuming it recovers, you would expect Air Canada to be flying it again, proftably. Therefore, it is a little disingenious for you to link the April loss and the "broken model". The model refers to the domestic market in particular,and there is little doubt that in that area the change will be profound. Link to comment Share on other sites More sharing options...
E-HANDLE Posted May 11, 2003 Share Posted May 11, 2003 Okay, if I'm wrong, and the press is wrong, then what do you base that pronouncment on? Has AC not burned through that cash? Why would RM say they have? Did they just make it up? Link to comment Share on other sites More sharing options...
E-HANDLE Posted May 11, 2003 Share Posted May 11, 2003 Disingenious, moi? You are correct that speculation reigns supreme, but there is not a lot of information to work with. AC has not released April traffic numbers, and even if they did, there are no yield numbers. AC has discounted continuously since entering CCAA. Also, any idea when AC's first quarter results will be released? Link to comment Share on other sites More sharing options...
Guest Airmail Posted May 11, 2003 Share Posted May 11, 2003 RM said that AC is currently operating through the credit that is being extended under the CCAA process. He didn't say anything about going through all the cash on hand. He told employees that AC would have to dramatically reduce costs in order to reverse the situation and become viable again. Link to comment Share on other sites More sharing options...
Guest Airmail Posted May 11, 2003 Share Posted May 11, 2003 WJ continues to discount -- are they the only ones allowed to do so? Jestgo gives away free seats -- are they the only ones allowed to do so? This is a low yielding environment. People need to be stimulated to travel. So what do you expect? AC to just charge high prices so WJ can continue to undercut AC? For a low fare airline, WJ sure complains a lot about low fares! Link to comment Share on other sites More sharing options...
wizard Posted May 11, 2003 Share Posted May 11, 2003 SORRY Zipped but e-handle has no clue and i have been in this industry since 1991. Why is the transport minister renegotiate the military contracts with Westjet when the contracts were always with AC? could this be that the minister like most canadians do not like companys that have a monopoly look what happend to bell Canada. Link to comment Share on other sites More sharing options...
E-HANDLE Posted May 11, 2003 Share Posted May 11, 2003 Well, therein lies the problem, IMO. There really is no change in the AC business plan. It remains focused on market dominance, not profit. Until AC/Zip started the $37 one-way fares YYC-YWG, the lowest price I remember WJ charging was $99. WJ went into the YYC-YYZ market with a bottom price of $205, now Tango offers it at $99. If that's not a scorched earth policy, I don't know what is. It may be that AC is trying to inflict as much damage on it's competitors as it can while it is not paying the usual operating costs. But if that's the plan for after emerging from CCAA, then I think it will be revisting creditor protection again. Link to comment Share on other sites More sharing options...
Maverick Posted May 11, 2003 Share Posted May 11, 2003 NEWS STORY Air Canada is out of cash on hand, CEO says Carrier spent its funds faster than expected, meaning SARS-related losses could be worse than first thought NICOLAS VAN PRAET The Gazette Wednesday, May 07, 2003 ADVERTISEMENT Air Canada has blown all its cash on hand and is now flying on credit, the airline's chief executive officer disclosed yesterday. In a letter to Air Canada employees, Robert Milton indicated the carrier has tapped out the $375 million unrestricted cash the company said it had April 1, the day it filed for bankruptcy protection. "Today, we are funding our operating requirements out of credit provided by our suppliers and lenders," Milton said in the letter. "Before long, if we don't make any changes, we will have borrowed every penny this company will be able to through the recently announced Debtor in Possession financings." Air Canada secured up to $700 million U.S. in financing from GE Capital Canada Inc. to allow it to emerge from creditor protection. A $350-million loan promised to the airline by the Canadian Imperial Bank of Commerce upon final court approval of their contract to continue the Aerogold credit-card program is in limbo. That Air Canada is funding operations from credit indicates "the ratio of expenses to revenue is way higher than it should be," said Sam Barone, an airline consultant with Transportation Partners in Ottawa. Milton's letter is dated May 2. In court documents filed April 1, Air Canada said it believed it would have a net cash outflow of $351.4 million for the month from April 1 to May 2. That amounts to burning through $11 million a day on average. It now appears Air Canada burned through more than that, meaning the impact of severe acute respiratory syndrome on the airline's business could be much worse than first thought. Several industry watchers estimate Air Canada will lose between $100 million and $200 million in revenue because of the SARS outbreak. A lawyer for Air Canada recently insisted the airline is losing only $2 million to $3 million a day. Air Canada's shares continue to gain, closing yesterday in Toronto at $1.84, up 24 cents on the day. nvanpraet@thegazette.canwest.com © Copyright 2003 Montreal Gazette Link to comment Share on other sites More sharing options...
Guest Virtual Posted May 11, 2003 Share Posted May 11, 2003 If this is so, perhaps then WestJet will have to spend the $ to become the 'bilingual' airline. Link to comment Share on other sites More sharing options...
wizard Posted May 11, 2003 Share Posted May 11, 2003 Yes it's true i was told about this last year in YVR i was on union business with CAW leaders. Link to comment Share on other sites More sharing options...
Guest b52er Posted May 11, 2003 Share Posted May 11, 2003 Yes it is complex, however, it becomes apparant based on past behavior of the company. IE: WJ into CYMM.....no profit....WJ out of CYMM.....later.....when fares shot back up....WJ into CYMM....fares declined.....guests flocked to the airline and it is now permanently making money. Same can be said for CYWG. AC on the other hand.....Into a city....no profits....as long as someone else is there....AC stays....REGARDLESS of load, yield or profit....IE: Abottsford. That dagger is where it is blatantly obvious. Link to comment Share on other sites More sharing options...
Guest b52er Posted May 11, 2003 Share Posted May 11, 2003 It will change.......and for the better......once AC completely is out of the picture. Link to comment Share on other sites More sharing options...
Guest b52er Posted May 11, 2003 Share Posted May 11, 2003 Real competition? The most obvious was when AC flooded the YYC-YEG corridor in 1999 with all the RJ's. Soon afterward, stuck their tail between their legs an we never saw an RJ west of CYWG. Only after losing miliions and millions. As a matter of fact, if you look at it, that was the first time AC ever acknowledged that they got their a _ _ kicked and quite frankly, that was the beginning of their floundering. They obviously never learned anything then and they have not proven that they will ever learn that they can't have everything as they think they are entitled to. Link to comment Share on other sites More sharing options...
Guest Labtec Posted May 11, 2003 Share Posted May 11, 2003 B52: You are SOL. There are only five recognized categories of compensable pure economic loss in Canada. Your proposed suit doesn't meet the criteria of any of them. Given the floodgates argument that would be made before the courts I don't think you could find a Justice any where that would allow your proposed statement of claim into their court. Nice try though. Westjet started the race to the bottom Air Canada will finish it. I hope airline employees enjoy Kraft Dinner. Labtec Link to comment Share on other sites More sharing options...
dozerboy Posted May 11, 2003 Share Posted May 11, 2003 It will change.....and for the better....once WJ completely is out of the picture. (Jetsgo pilot thought) It will change......and for the better.....once Jetsgo completely is out of the picture. (Walmartjet pilot thought) It will change.....and for the better......once Walmartjet completely is out of the picture. (Via rail driver thought) And before ya know it we are paying the airlines the priveldge to fly their aircraft!!! Link to comment Share on other sites More sharing options...
dozerboy Posted May 11, 2003 Share Posted May 11, 2003 It will change.....and for the better....once WJ completely is out of the picture. (Jetsgo pilot thought) It will change......and for the better.....once Jetsgo completely is out of the picture. (Walmartjet pilot thought) It will change.....and for the better......once Walmartjet completely is out of the picture. (Via rail driver thought) And before ya know it we are paying the airlines the priveldge to fly their aircraft!!! Link to comment Share on other sites More sharing options...
Guest Labtec Posted May 11, 2003 Share Posted May 11, 2003 Dagger: In simple terms the Charter does not apply between private parties it is only applicable in respect of government action. I can stomp all over your s.15 equality rights until the cows come home and there isn't a court in the land that would hear your case on those charter grounds. B52 doesn't know what the hell he/she is talking about. Labtec Link to comment Share on other sites More sharing options...
dagger Posted May 11, 2003 Share Posted May 11, 2003 past behaviour is irrelevant to determining a violation. You have to prove the case at hand on its merits. Link to comment Share on other sites More sharing options...
Azure Posted May 11, 2003 Share Posted May 11, 2003 I'll agree WJ did snatch a few of Canadian's customers away as well as AC's however I remember those days well and it was most certainly a battle between AC and CDN over our skies. Canadain had a strong core of customers who were devestated by their demise, and as much as they loved the staff there, refuse to fly AC. Why? It's simple, if you were treated badly by a mechanic would you take your car back to the same garage? Even if that shop hired a mechanic you liked in the past, you would always associate bad service with that garage. I'm sure many of CDN's customers gave WJ a try and didn't like it. I'm almost as sure that they don't have to fly as much as they did in the 80's and 90's on business, the breadbasket of the airlines. So who's fault is that? Bill Gates. So now the battle starts for single moms, grandparents on fixed incomes, ex-airline pilots with families, all just wanting the cheapest flight home to visit. This industry is just not going to get any better, it's hit it's peak, a peak that happened way before 9/11 and it's been downhill from there. PS: Happy Mothers Day! I'd love to fly in to see my mother, but what the heck, a few minutes in front of the video cam, almost like the real thing. :$ Link to comment Share on other sites More sharing options...
Guest b52er Posted May 11, 2003 Share Posted May 11, 2003 Well labtec, it is apparant that their is certainly interest here on the forum......and if their is interest here, I'm sure their is merit to it. So you never know, if and when.......Someone may find themeselves in another type of battle. And just FYI, I could eat Kraft Dinner and finish off with caviar 3 times a day for the rest of my life, and still have buckets full of money in the end. So If thats your vision of racing to the bottom, then I wish my type of prosperity on all employees in this industry. (smile and and beer glass). Link to comment Share on other sites More sharing options...
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