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AC Posts Q4 Net Income  
User currently offlineChrisA330 From Canada, joined Oct 1999, 636 posts, RR: 0
Posted (9 years 9 months 2 weeks 3 days 12 hours ago) and read 2715 times:

  • Net Income of $15 million
  • Operating Loss of $3 million


http://micro.newswire.ca/release.cgi...ey=1303092698&view=13213-0&Start=0

[Edited 2005-03-09 14:16:32]

16 replies: All unread, jump to last
 
User currently offlineYVRtoYYZ From Canada, joined Mar 2004, 668 posts, RR: 0
Reply 1, posted (9 years 9 months 2 weeks 3 days 10 hours ago) and read 2646 times:

Good news for AC and its employees. Things continue to look up for Air Canada and the Canadian aviation industry in general.

-YVRtoYYZ


User currently offlineKLMA330 From Canada, joined Feb 2005, 697 posts, RR: 2
Reply 2, posted (9 years 9 months 2 weeks 3 days 9 hours ago) and read 2607 times:

Yeah, I guess being a monopoly has its advantages, eh?  Wink

User currently offlineSebring From Canada, joined Jul 2004, 1666 posts, RR: 14
Reply 3, posted (9 years 9 months 2 weeks 3 days 8 hours ago) and read 2565 times:

I guess being a little behind the times has its advantages, eh? Ignorance is bliss.

User currently offlineAC7E7 From Canada, joined Oct 2004, 666 posts, RR: 22
Reply 4, posted (9 years 9 months 2 weeks 3 days 8 hours ago) and read 2568 times:

Quoting KLMA330 (Reply 2):
Yeah, I guess being a monopoly has its advantages, eh?



Oh bull. Monopoly means complete control of the market. AC does not control the aviation industry in Canada. Westjet is acting more like a "dominant" player than AC now with its announcement of protecting its market share at all costs. No airline in Canada has a monopoly. Passengers have a choice to go on any carrier: AC, Wesjet, Jetsgo, Canjet, etc. A monopoly would be Hydro-Quebec.


User currently offlineYyz717 From Canada, joined Sep 2001, 16365 posts, RR: 56
Reply 5, posted (9 years 9 months 2 weeks 3 days 8 hours ago) and read 2528 times:

What a terrible quarter. Yet ANOTHER operating loss. Despite AC's much vaulted cost cutting, it STILL has yet to demonstrate it is a going concern.

And yet Milton claims to be "satisfied with these results". Absolutely incredible. No CEO should EVER be satisfied with a loss.

With Canjet, Jetsgo & Westjet continuing to grow, downward pressure on AC yields will continue. AC needs strong operating profits NOW (not a narrow loss) to buttress itself.

I am completely astounded that ANY CEO would be "satisfied" with a loss. Clearly the commentary of an incompetent CEO with no strategic plan and no bottom line focus.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineN1120A From United States of America, joined Dec 2003, 26795 posts, RR: 75
Reply 6, posted (9 years 9 months 2 weeks 3 days 8 hours ago) and read 2513 times:

Quoting Yyz717 (Reply 5):
What a terrible quarter. Yet ANOTHER operating loss. Despite AC's much vaulted cost cutting, it STILL has yet to demonstrate it is a going concern.

And yet Milton claims to be "satisfied with these results". Absolutely incredible. No CEO should EVER be satisfied with a loss.


AC made money. That is the key. They had an operating loss, a small one, but made far more on other concerns. That net number is the one that counts, unless there is a huge writedown or writeoff.



Mangeons les French fries, mais surtout pratiquons avec fierte le French kiss
User currently offlineYyz717 From Canada, joined Sep 2001, 16365 posts, RR: 56
Reply 7, posted (9 years 9 months 2 weeks 3 days 8 hours ago) and read 2502 times:

That net number is the one that counts, unless there is a huge writedown or writeoff.

The key number is operating profit, no net profit. Net profit is not indicative of underlying operating performance. AC reported almost $100M in currency gains over the previous Q4 due to favourable exchange rates. Without this, they would have reported a net loss of over $80M, rather than a small net profit of $15M.

AC reported an operating loss. THAT is the news here, and the news is bad.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineSebring From Canada, joined Jul 2004, 1666 posts, RR: 14
Reply 8, posted (9 years 9 months 2 weeks 3 days 7 hours ago) and read 2467 times:

A $3 million operating loss in a quarter where AC regularly showed losses as high as $250 million is a major improvement, good news. And since AC is implementing another $400 million annual cost reductions this year that were part of the restructuring plan, as well as additional cost reductions identified since the plan was adopted, the path to four-quarter profitability is clear, even with current fuel costs.

User currently offlineLawgman From Canada, joined Feb 2005, 71 posts, RR: 0
Reply 9, posted (9 years 9 months 2 weeks 3 days 6 hours ago) and read 2420 times:

Why is Milton bashed in every single thread dealing with Air Canada? Every single legacy carrier in the US struggling. This includes a carrier that is now in its second restructuring attempt (US Air). Air Canada's results are pretty good considering where they have been previously and the cost of fuel. Even the once invincible Westjet is losing money.

This monopoly stuff coming from the media and government is nonsense. Canjet, Jetsgo and Westjet will continue to kill each other. Canada is not big enough to support 4 airlines that fly regular service domestically.


User currently offlineACYWG From Canada, joined Feb 2005, 265 posts, RR: 0
Reply 10, posted (9 years 9 months 2 weeks 3 days 6 hours ago) and read 2410 times:

Quoting Yyz717 (Reply 5):
What a terrible quarter. Yet ANOTHER operating loss. Despite AC's much vaulted cost cutting, it STILL has yet to demonstrate it is a going concern.

And yet Milton claims to be "satisfied with these results". Absolutely incredible. No CEO should EVER be satisfied with a loss.

With Canjet, Jetsgo & Westjet continuing to grow, downward pressure on AC yields will continue. AC needs strong operating profits NOW (not a narrow loss) to buttress itself.


I think you need to take another look at the figures here. I've always amazed myself how some people can have such a negative point of view on things, and to me your just another case of that. This is an airline that has gone from posting half billion dollar losses, to a teensie little 3 million dollar loss. Westjet, which is orders of magnitude smaller than Air Canada has lost more in the last quarter, yet you had little to say about that! You should be encouraging them rather than calling them down, cause at this point, their the only real flag carrier we have, and I'd rather have them than not have them. They've cleaned up their business practices quite nicely, and I'm proud to say that I fly with them, and hope to fly for them in the future!


User currently offlineYyz717 From Canada, joined Sep 2001, 16365 posts, RR: 56
Reply 11, posted (9 years 9 months 2 weeks 3 days 5 hours ago) and read 2360 times:

I think you need to take another look at the figures here. I've always amazed myself how some people can have such a negative point of view on things, and to me your just another case of that. This is an airline that has gone from posting half billion dollar losses, to a teensie little 3 million dollar loss.

A "teensie little 3 million dollar loss"? Nice verbage.  Smile

I don't deny that AC has improved, but it continues to lose money. AC LOST money. Why is Milton satisfied? Basically, any financial result with below grade returns are unacceptable to shareholders. I have never, ever met a shareholder who was "satisfied" with an operating loss. So why is Milton?

Why is Milton bashed in every single thread dealing with Air Canada?

He is a failed airline CEO who inherited a profitable airline and ran it into bankruptcy within 5 years, destroying shareholder value. That's why.

Every single legacy carrier in the US struggling. This includes a carrier that is now in its second restructuring attempt (US Air).

The proper comparison for AC is against PROFITABLE carriers, not other dinosaurs.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineAC7E7 From Canada, joined Oct 2004, 666 posts, RR: 22
Reply 12, posted (9 years 9 months 2 weeks 3 days 3 hours ago) and read 2266 times:

Considering the 4th and 1st quarters are the worst for the airline industry, these results are not bad.

Things will only continue to get better for AC as new regional jets are introduced into service that will allow the airline to fill the seats to near-capacity and improve on operating costs.

I'm looking forward to 2005 Q1 and Q2 results.


User currently offlineYyz717 From Canada, joined Sep 2001, 16365 posts, RR: 56
Reply 13, posted (9 years 9 months 2 weeks 3 days 3 hours ago) and read 2265 times:

Things will only continue to get better for AC as new regional jets are introduced into service that will allow the airline to fill the seats to near-capacity and improve on operating costs.

I disagree. These E175/E190 aircraft will be smaller than the current average AC mainline aircraft, and hence seat-mile costs will increase, not decrease. There is also no corresponding reduction in other AC aircraft so these 60 new E-jets will literally FLOOD the market place with unneeded capacity and drive down yields. Combined with the addl capacity being added by Canjet, Westjet, & Jetsgo, I only see AC yield dropping further while unit costs rise.

These factors suggest the future is very dim for AC.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineAC7E7 From Canada, joined Oct 2004, 666 posts, RR: 22
Reply 14, posted (9 years 9 months 2 weeks 3 days 2 hours ago) and read 2222 times:

I disagree. There will be a reduction in the A32X fleet starting next year (or was it later this year?). 3 A321s are leaving the fleet shortly. The Embraer jets will allow AC to fly to destinations it could not fly to profitably with half-empty A320s. These jets will not flood the market, but will allow AC to open new routes that could not be operated profitably before.

If anyone is driving down yields, it is Westjet. Westjet has been the one lowing ticket prices in the west to battle Jetsgo. AC has been rather conservative with ticket prices and has only been responding to the ongoing price war between Westjet and Jetsgo.


User currently offlineYyz717 From Canada, joined Sep 2001, 16365 posts, RR: 56
Reply 15, posted (9 years 9 months 2 weeks 2 days 7 hours ago) and read 2043 times:

The following article in today's National Post shows that most analysts are disappointed in the AC results, amd more importantly the coming quarters look even worse. One again, it raises the question why was Milton "satisfied" with the results? I guess when you have no accountability like Milton, you'll be satisfied by anything.

http://www.canada.com/national/natio...0fd4cd-e14e-46a6-abe3-e3c48ec8f0e3

Ace Aviation results lag expectations
Air Canada parent: High fuel prices, competition limit first profit since '02

Chris Sorensen
Financial Post

Thursday, March 10, 2005

Air Canada is flying into reality as high fuel prices and fierce competition drag down expectations about the airline's revamped business model.

Although Robert Milton, chief executive, yesterday stressed Air Canada's fourth-quarter performance was better than most of its North American competitors, the company's first three months outside of bankruptcy protection yielded results that were less impressive than many had hoped.

ACE Aviation Holdings Inc., the newly created holding company for Air Canada, said it had a $3-million operating loss in the quarter, compared with heavy losses last year, as traffic increased and the company recorded a $98-million foreign exchange gain. Without the exchange rate gain, which contributed to earnings of $15-million on sales of $2-billion, ACE lost $70-million during the period.

Nevertheless, it's the first time Air Canada has made money since 2002 and it's a vast improvement over the $768-million the carrier lost in the year-ago quarter while it was under bankruptcy protection.

"I don't think the results were bad, but I think sentiment would have been a bit better if they had managed to squeak out an operating profit," said Ben Cherniavsky, an analyst at Raymond James. "Some people were wildly optimistic, so this probably fell a little bit shy of most people's expectations."

Investors reacted by pushing down ACE's stock, which has risen by about a third since the airline exited bankruptcy protection in September. Shares of ACE fell 30 cents to close at $32.45 on the Toronto Stock Exchange yesterday.

Some of the recent optimism has been linked to the possibility that ACE is poised to sell or spin off part of its popular Aeroplan loyalty program, which has been valued as high as $1.9-billion by two analysts.

Mr. Milton confirmed yesterday during a conference call that ACE is considering options for Aeroplan and is looking to pay down an onerous loan from GE Capital Corp., but offered no other details on when the deals might be reached.

Air Canada emerged from creditor protection last year with a much lower cost structure, less debt, reduced domestic capacity and a new focus on expanding its higher-margin international business.

Mr. Milton said the carrier's focus on "relentless cost-cutting" and growth in international markets helped ACE beat its 2004 target of $1.1-billion in earnings before interest, taxes, depreciation and aircraft rental. He added he remained committed to boosting the figure to $1.6-billion for this year -- a goal that will be helped along by implementing further cost saving measures, including 800 previously negotiated job cuts.

But that target may be harder to attain than previously anticipated.

While Air Canada is doing a much better job at filling its planes -- the result of reducing its domestic capacity and competing more effectively with fares offered by low-cost carriers like WestJet Airlines Ltd. and Jetsgo Corp. -- intense competition and high fuel costs are making it increasingly difficult for Air Canada to make money on its fares.

"There are limits to what they can do. Filling up their planes is a good strategy, but it's not as though everyone is clamouring to get on Air Canada's planes at a premium," Mr. Cherniavsky said.

Air Canada recently moved to keep costs down on domestic flights by transferring a big chunk of that business to its lower-cost regional carrier Jazz.

On the international side, James David, an analyst with Scotia Capital, noted in a recent research report there are limits to the gains Air Canada can expect to receive through the expansion of routes to Asia and South America. "Deploying capacity internationally is not a free-for-all," warned Mr. David, who has a "sector underperform" rating on ACE's stock.

Karl Moore, a business professor at McGill University, agreed there are challenges, but said the airline is much healthier after its restructuring. "Air Canada has certainly got itself in much better shape over the last couple years."



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineViveLeYHZ From Canada, joined Dec 2004, 194 posts, RR: 9
Reply 16, posted (9 years 9 months 2 weeks 2 days 5 hours ago) and read 2004 times:

Like yyz717 mentioned earlier, AC has "technically" made an operating income of 15 million, but that does not tell the whole story about the health of the airline.

Southwest is making a profit, not from passenger yields, but from fuel hedging. If it were not for the soaring value of the Canadian dollar, and my guess most of AC's international debt and lease liabilities are in US Dollars, AC would have posted a big loss for the quarter.

To me, the most important numbers about the health of AC are the passenger Yield per available seat mile (12.1 cents) and the Cost per available seat mile (15.0 cents), a loss of about three cents for every available seat mile. Clearly, AC needs to bring its cost down further.


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