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CAI Stands For 'Calling Assistance Immediately'  
User currently offlineBush From Canada, joined May 1999, 153 posts, RR: 0
Posted (15 years 5 months 4 weeks 1 day 13 hours ago) and read 890 times:

Canada's much-loved underdog is again staring bankruptcy in the face. Canadi>n Airlines has said it needs a $500 million cash injection by the end of the year, or it will simply run out of operating capital. Since the airline has virtually no assets, an equity exchange is the only realistic way for them to raise cash. Rumour has it that AA or BA may pump new life into Canadi>n, but foreign ownership laws must be changed for that to happen.

At the shareholders meeting, CEO Kevin Benson stated that it was looking for co-operation from Air Canada to end 'mindless' domestic competition. Obviously Air Canada will not be interested. The most attractive option for them is to have the market to itself, not to share it.

So we have the weak bowing down to the almighty, begging for mercy. And scouring the world begging for cash. And after cheating death so many times, has its luck run out? If anyone has any information that may brighten this picture, let me know.

-Bush



9 replies: All unread, jump to last
 
User currently offlineHiker From , joined Dec 1969, posts, RR:
Reply 1, posted (15 years 5 months 3 weeks 6 days 18 hours ago) and read 888 times:

Speaking for myself only, I for one as an AC employee have no desire to see an end to CAI. Good competition breeds good service. Monopolies a are poor way to run any business.

User currently offlineAC183 From Canada, joined Jul 1999, 1532 posts, RR: 2
Reply 2, posted (15 years 5 months 3 weeks 6 days 17 hours ago) and read 891 times:

I think to save CAIL they should sell off Canadian Regional and what share they have in Calm Air. Along with Regional, they should sell about 10 or so 737's to Regional and offload some more of their CP coded domestic flights to Regional, allowing the main airline to concentrate on US and overseas flights, and major transcontinental runs. What they really need is to reduce their debt. In my opinion their purchase of Wardair put them over the limit as to how much debt they could take on and remain viable. They got greedy, and wanted to increase market share rather than compete to win over customers. The problem is right now that I'm not sure how much AA wants to pump more money into Canadi>n, and for that matter whether any capital markets have any interest in more stock. Maybe BA would be interested?

As far as competition, I think there is more than people acknowledge, and perhaps room for more of a niche market operators. Basically Westjet, Canada 3000, Royal, Air Transat, and Skyservice all have some potential to expand to fill a gap left by Canadi>n. But then again, I don't think it will come to that.

Another problem with Canadi>n. Basically it evolved between the late 70's and late 80's being formed out of Nordair, Wardair, CPAir, Pacific Western, Transair, Eastern Provincial, Quebecair, and a few others such as Time Air and Ontario Express (I believe this is accurate, but maybe not complete). Several of these operators ran 737's, but all of different configuration. Thus, it seems to me that I read somewhere that CAI's 737's are in about 25 different configurations-out of a fleet of 44 aircraft!

Oh, and one last thing. I sometimes have heard stirrings that CAI, as a last ditch, could merge with AC. That is worse than CAI dropping out altogether, considering the debt, fleet, and competition scenarios. If CAI died, everybody would scramble to expand. If CAI was forced by the government to merge, to me that would seem even more anticompetitive.

Anyways, that's my thoughts on CAI, and some of the speculation I've heard from elsewhere. Feel free to correct any mistakes I've made.

Matt in YWG


User currently offlineBush From Canada, joined May 1999, 153 posts, RR: 0
Reply 3, posted (15 years 5 months 3 weeks 6 days 15 hours ago) and read 889 times:

Thanks for the support, Hiker. I'm sure a lot of AC employees want to keep the competition around. Too bad the same can't be said for its management.

You're right on AC183. I agree with you that Canadi>n Regional needs to be sold off, much like Inter-Canadi>n was in 1997. Finding a buyer may be tough, though. Canadi>n Regional competes directly with Air Canada on the blood-splattered Eastern Shuttle routes, and has a few dozen ancient F28s that need replacing.

Now, about the 737 fleet. Thirty-three of those operating today were originally purchased by CP Air or Pacific Western. A handful are from Nordair, and a few others from other unrelated companies. AC183, I'm not sure where you heard that they were operating under 35 different configurations. As far as I know, the vast majority are in a 12J / 88Y configuration, and the remaining four or five are in an all-economy class layout.

Whatever happens will certainly be dramatic. Lets hope a wealthy OneWorld relative will dig them up some spare change.

-Bush


User currently offlineCedarjet From United Kingdom, joined May 1999, 8199 posts, RR: 54
Reply 4, posted (15 years 5 months 3 weeks 6 days 9 hours ago) and read 888 times:

I don't understand why aviation in Canada is so unprofitable. I don't know what their situation is like now but Air Canada have been notorious in the past for being state-subsidised and losing lots of money. Surely the market exists to sustain two healthy and profitable airlines?


fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
User currently offlineAC183 From Canada, joined Jul 1999, 1532 posts, RR: 2
Reply 5, posted (15 years 5 months 3 weeks 6 days 2 hours ago) and read 888 times:

That was 25 different configurations. I specifically remember reading it somewhere. That doesn't necessarily refer to passenger configurations, though. There are some combi's that were converted back to passenger use, for instance. There are some 737-217's, -275's and so on that were a little different in equipment. It is possible the information I had is a little old, as Canadi>n doesn't have as many 737's as it used to, maybe sold off some of the older and less standardized ones. The point is, there is alot of little variances in their 737's that make them harder to maintain as a fleet, and just plain not as consistant.

In the newspaper a few days ago Jim Pattison was rumoured to be interested in buying Canadian Regional. Also, not that long ago Canadian North was sold off.

Also, I don't think I'd call Air Canada a notorious money loser, don't forget that right now it wants all the bargaining power it can get with the attendants, mechanics, and so forth all negotiating new contracts, so its current books are not supposed to look enourmously profitable to the unions. And I don't think it has a terrible history for it, save for the industry as a whole everywhere losing money in the early '90's. The way I see it, if AC can afford lots of good new airplanes, it can't be in that bad of a shape. CAI, of course, is under such a heavy debtload it is having these problems. But as far as other airlines, PWA used to be consistently profitable before CAI was formed, Westjet is in a great position, charters seem to do alright in general. I think it's a matter of losing money when they declare open war and try to steal passengers at any cost.


User currently offlineGnomon From , joined Dec 1969, posts, RR:
Reply 6, posted (15 years 5 months 3 weeks 6 days 1 hour ago) and read 888 times:

The dangers of a fleet that is solely leased are rearing their ugly heads now with the CAI fiasco. Let's look at Canadian's fleet: about 4 or 5 different types of 737-200s, all of them leased, the expensive long-haul DC-10-30s, 747-400s, and 767-300ERs all leased, the medium-haul A320s all leased...no assets whatsoever in a dangerously mixed fleet. Therein lies the bane of Canadian, and quite possibly its death. Nothing to sell, everything to lose...

User currently offlineSlawko From Canada, joined May 1999, 3799 posts, RR: 9
Reply 7, posted (15 years 5 months 3 weeks 6 days 1 hour ago) and read 888 times:

I agree that CAI problem lies within it's all leased very mixed fleet. But This country (CANADA) is to small for 2 major airlines. The smaller charters are great because the offer relatively cheap flights. But having 2 major airlines in Canada will not work, we only have about 30 million people in this country. I don't think Canadian airlines will last much longer. The charter airlines lirke Royal, C3, and AT should start eyeing what they want from the scraps that are left behind after the end of Canadian. They should ba able to pick some A320's and 767's from the Canadian fleet, and I am sure that at least one of the charter airlines would be happy to take over some of Canadian's old routs. If Canadian were to disappear today, I don't think that anyone would pay much attention.


"Clive Beddoe says he favours competition, but his actions do not support that idea." Robert Milton - CEO Air Canada
User currently offlineBush From Canada, joined May 1999, 153 posts, RR: 0
Reply 8, posted (15 years 5 months 3 weeks 5 days 21 hours ago) and read 888 times:

Thanks for clearing this whole situation up, Slawko. For a moment there I was concerned that the loss of 17,000 jobs, and a major driver of the western Canadian economy would be noticed. Glad to hear that it won't be missed by anyone.

User currently offlineCedarjet From United Kingdom, joined May 1999, 8199 posts, RR: 54
Reply 9, posted (15 years 5 months 3 weeks 5 days 20 hours ago) and read 888 times:

I think a (highly) developed country of 30 million people with a thriving tourism industry and one of the most lucrative VFR (Visiting Friends & Relations) markets in the world can easily sustain two major airlines. Australia is half that big, and has two major airlines (Qantas and Ansett), both profitable (not the case for QF in the state-owned 70s admittedly). Canadi>n should be earning big money.


fly Saha Air 707s daily from Tehran's downtown Mehrabad to Mashhad, Kish Island and Ahwaz
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