dagger Posted October 22, 2003 Share Posted October 22, 2003 I can't see Air Canada making ANY money in the fourth and first quarters if they can't make money in the two most profitable quarters - the second and third. > Air Canada concluded concessionary labor agreements with its unions between May 26 and June 1, and ratifications were completed by the end of June except in the case of US and UK workers whose ratifications followed in June. Implementation of largescale layoffs only began in the third quarter. You may remember the brouhaha Air Canada created by laying off CAW people in late August before the summer peak had died down. Those laid off workers were only then going off the job. In some bargaining units, as has been noted here, there are voluntary severance packages being offered and layoffs will only occur if insufficient volunteers come forward. As Mitch Cronin posted on the weekend, there have been recent layoffs of good young people in recent days in the maintenance bases. In July, management announced a cut of a further 300 managers who will go by the end of the year. So in terms of labor cost, I would expect there to be gradual reduction. The staff reductions did not take effect immediately upon ratification of the collective agreements. Notice periods had to be observed. The full saving from staff reductions won't be attained until well into 2004. As for leases, the airline made announcement of successful lease renegotiations on July 3, July 21, Aug 26, Sept 19 and October 3. Payments at the lower rates resumed upon signing of the memoranda of agreemet. Until those memoranda took effect, the airline continued to book, for accounting purposes, the old lease rate, which is what is reflected in quarterly profit/loss (but not cash flow since no rent was paid, the unpaid lease payments became part of what creditors are owed and will convert into shares in the Newco). Therefore, the benefit for estimating profit loss using lower lease rates is only really beginning now only really began in mid-summer and is continuing to grow as lease deals are completed. The most accurate reflection of both Air Canada's costs, labor and otherwise, will likely begin in the first quarter of 04, but especially the second quarter of 04 when substantially all concessions are fully implemented for a full quarter.By that time we will also see how large the airline is going to be, with what fleet and staff. I expect some cost-cutting to continue through 2006 before the plan as envisioned now - whatever it is - is fully implemented with a new class of 70-110 seat aircraft. Link to comment Share on other sites More sharing options...
CanadaEH Posted October 22, 2003 Share Posted October 22, 2003 Informative post, thanks for clearing a sh*tload of that up!! Link to comment Share on other sites More sharing options...
Guest neo Posted October 22, 2003 Share Posted October 22, 2003 Now that's the kind of hardcore skinny that makes you a legend. Thanks for verifying the details. RR Link to comment Share on other sites More sharing options...
John S. Posted October 22, 2003 Share Posted October 22, 2003 Down below proview posted the following: "The first point is that the $98 M is not an option. That would buy the “old” company, which would have all the old debts, binding contracts, pension obligations, and whatever. The value of that company is essentially zero. The new investors are interested in a “new” company without this baggage. Dagger, what are your thoughts on proview's statement? For what it's worth I doubt the new investors would be able to alter labour contracts or reduce the pension obligations. It would be up the CURRENT management to do so before the new investors take over. Link to comment Share on other sites More sharing options...
Guest Simcoe Posted October 22, 2003 Share Posted October 22, 2003 If I had a dime for every dire prediction of WestJet's stock price since it went public in 1999 at $10, I'd be a gadzillionaire. Here's the facts, bomberdud. WestJet has never had more cash, lower costs, and higher margins than in the recent third quarter. The airline has a higher growth rate than all but jetblue, and trades at a substantial p/e discount. Adjust for 2 3-2 splits, a $10,000 investment in 1999 is now worth $61,740. If you bought $10,000 worth of AC on the July 14 2000, your investment would be worth $622 today. If you'd spent the $10,000 on 1,000 6 packs of Corona's, the empties would be worth about $600. Investors who snapped up the $150m in shares issued less than a month ago are already ahead about 13%. Are you making 13% a month, Bomberdud? No investor with a brain is going to entrust $750m to the existing brain trust at AC that have one of the most miserable records in Canadian corporate history of mismanagement and the destruction of equity and shareholder value. Keep dreaming down at the Union Hall, bummerdud. Your nightmares haven't even started yet. Link to comment Share on other sites More sharing options...
Guest Simcoe Posted October 22, 2003 Share Posted October 22, 2003 ..and with 85% of WestJet employees being shareholders as well, they recognize that if its good for Clive, it's good for their bank accounts too. You want to follow perpetual losers like the management at AC, or perpetual winners? You don't get it, do you? Link to comment Share on other sites More sharing options...
Guest neo Posted October 22, 2003 Share Posted October 22, 2003 I am even-handed, or at least strive to be. That's why I have detractors on every side, Maverick. Be it my union, my former union, my employer, dagger, my CFO, or sundry ministers and national governments, if it's warranted I challenge what they do or say. You don't have to talk to anyone to see what bills Air Canada is or is not paying. You can see for yourself in the Monitor's report. If you don't think Air Canada is paying its bills, then perhaps you could explain what the tens of millions of dollars in outflows to various suppliers and lessors are doing on the balance sheets included with those reports. The issue of pricing of any given seat on an aircraft has been explained to death on this forum. Do I have a prediction on our third quarter? Sure, for what it's worth. AC's third quarter will be terrible. Why would anyone in their right mind expect anything different? Did we suddenly pull out of CCAA while I was tending my grapes? Did the aftermath of SARS and Gulf War end overnight? Did WestJet's phenomenal results come at no expense to AC? What am I missing here, Maverick, that would lead me or anyone else to think that AC's third quarter won't be bad? neo Link to comment Share on other sites More sharing options...
Guest neo Posted October 22, 2003 Share Posted October 22, 2003 Thanks for your info, E-HANDLE. The information that I have at hand states that AC's total UNSECURED debt last summer was $2.3 billion, of which bondholders are only a part. So clearly there is a discrepancy in our respective data. Hopefully someone such as dagger can clear up the matter. I don't expect ot have much opportunity to post over the next few days, so should my data be incorrect, I provisionally and sincerely apologize for the misinformation. Having said that, all this merry chase through AC's debt doesn't make a shred of difference to my opinion of Mr. Beddoe's statements. Coming as they do on the heels of a windfall result, Mr. Beddoe's dubious and speculative statements are in poor taste. neo Link to comment Share on other sites More sharing options...
Guest Operation Bomberclad Posted October 22, 2003 Share Posted October 22, 2003 No, but what Klyde said is patently absurd, since just about everybody at the airline knows by now that things have been pushed back several months (here we go again.) Klyde is obviously jumping all over it to curry favour in the press, though he gets a free ride in the americanized Nat. Post.(Canada.com) Possibly because there is vested interest in boosting the stock, imo. :[ OB Link to comment Share on other sites More sharing options...
Guest Simcoe Posted October 22, 2003 Share Posted October 22, 2003 Nailed. Bummerdud is the same goombah who's been posting nonsense on Stockhouse.ca for years as joejoe. Watch the denials start...... Link to comment Share on other sites More sharing options...
Goonybird Posted October 22, 2003 Share Posted October 22, 2003 Simcoe, your first statement, "There are only three guys on the Planet Earth that run airlines that have enjoyed 27 consecutive quarters of profitability." is a bit misleading. I now think what you meant is the last 27 quarters. Not just 27 quarters in a row. FYI, CX will post a handsome profit for the 2003 financial year, and it's the year as a whole that really counts is it not? Link to comment Share on other sites More sharing options...
CanadaEH Posted October 22, 2003 Share Posted October 22, 2003 Can you explain to me why pushing back things is a bad? Wouldn't it be in the companies best interests to wait until there is money to use before projects/expansion are started? I think Air Canada needs to take a lesson from Westjet in money management. Er, well, Air Canada seems to have ignored that and taken their own route -- straight into bankruptcy protection. As for your comment about everybody at the airline knowing that things have been pushed back.. Everybody does know, your right, and you know what? Everybody is cool with that because those "pushed back" projects have been revived and are a go again. Amazing what only two of the best quarters in company history can do for you to turn things around. Keep getting angry, you have nobody to blame but yourself. Link to comment Share on other sites More sharing options...
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