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Air Canada Reports Record Third Quarter 2013  
User currently offlineSpaceshipDC10 From Canada, joined Jan 2013, 1785 posts, RR: 3
Posted (10 months 1 week 6 days 3 hours ago) and read 5845 times:

Today AC reports a 3Q net income of $365 million compared to $229 million a year ago. That is almost a 60% improvement. Wow!    And that, despite a lower load factor for October (-1.6%) and a capacity increase (+3.2%). Very impressive after a record 2Q.


http://aircanada.mediaroom.com/index.php?s=43&item=715


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28 replies: All unread, showing first 25:
 
User currently offlineSpaceshipDC10 From Canada, joined Jan 2013, 1785 posts, RR: 3
Reply 1, posted (10 months 1 week 5 days 22 hours ago) and read 5470 times:

Regarding Air Canada Rouge, the operations are small but exceeded Air Canada's expectations. They currently have four aircraft and should have 14 narrow-bodies by the end of winter and more 767s following the delivery of the first 787s.


http://www.ctvnews.ca/business/air-c...rd-third-quarter-results-1.1533740



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User currently offlineaircanada014 From Canada, joined Oct 2005, 1513 posts, RR: 0
Reply 2, posted (10 months 1 week 5 days 3 hours ago) and read 4756 times:

That's good news lets hope they keep it up

User currently offlineSpaceshipDC10 From Canada, joined Jan 2013, 1785 posts, RR: 3
Reply 3, posted (10 months 1 week 4 days 17 hours ago) and read 4462 times:

Quoting aircanada014 (Reply 2):
That's good news lets hope they keep it up

Well indeed. They are about to introduce a new aircraft in their fleet and will grow their European network/services next summer. We'll see how they fare in one year.



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User currently offlineyowza From Nepal, joined Jul 2005, 4887 posts, RR: 15
Reply 4, posted (10 months 1 week 2 days 1 hour ago) and read 3892 times:

I'm amazed that so few people have chimed in on this thread.

$365mm is not pocket change in any industry but in the airline game and in North America this is a big deal. There are lots of highlights to see but in particular I would say that the thing that pleases me the most is to see RASM growth of 1.8% from Q3 of 2012. Give the population distro of Canada pushing hard to drive RASM is crucial and it's nice to see AC have that in hand.

YOWza



12A whenever possible.
User currently offlineSpaceshipDC10 From Canada, joined Jan 2013, 1785 posts, RR: 3
Reply 5, posted (10 months 1 week 1 day 23 hours ago) and read 3801 times:

Quoting yowza (Reply 4):
I'm amazed that so few people have chimed in on this thread.

YVRLTN raised the same point three months ago, and Viscount724 replied that bad news generate much more interest than good news, which seems to be true.



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User currently offlinepnwtraveler From Canada, joined Jun 2007, 2241 posts, RR: 12
Reply 6, posted (10 months 1 week 1 day 22 hours ago) and read 3726 times:

Quoting SpaceshipDC10 (Reply 5):
Quoting yowza (Reply 4):
I'm amazed that so few people have chimed in on this thread.

YVRLTN raised the same point three months ago, and Viscount724 replied that bad news generate much more interest than good news, which seems to be true.

The strong group of people who chime in with negatives about AC are still in the wings and you will hear from them the next opportunity. Some people love to hate the carrier and constantly repeat inaccuracies such as calling them a flag carrier/government entity. Unfortunately it is one of the axioms in general of the internet. Negatives always have no trouble getting people's attention and comment. Good positives get much less attention and support. In general people love to complain rather than help find solutions. Sad but true.


User currently offlineyowza From Nepal, joined Jul 2005, 4887 posts, RR: 15
Reply 7, posted (10 months 1 week 1 day 22 hours ago) and read 3684 times:

Quoting SpaceshipDC10 (Reply 5):
YVRLTN raised the same point three months ago, and Viscount724 replied that bad news generate much more interest than good news, which seems to be true.
Quoting pnwtraveler (Reply 6):
The strong group of people who chime in with negatives about AC are still in the wings and you will hear from them the next opportunity.

I guess you're right. At the very least I would have expected some digs about how the numbers were arrived at and the fact that they haven't passed audit yet.

I don't consider myself an AC cheerleader at all but it's a very exciting time at AC; the 787 EIS is just around the corner, Rouge appears to be doing well too. I wonder if TD has any big surprises in store for Jan 1 when it launches its Aeroplan Visa.

YOWza



12A whenever possible.
User currently offlineyyz717 From Canada, joined Sep 2001, 16253 posts, RR: 56
Reply 8, posted (10 months 1 week 1 day 21 hours ago) and read 3667 times:

AC.B common shares are rocketing up, esp. in the last week since Q3 results were announced. Anyone who bought AC in July at just over CAD$2 will have seen their investment triple. Currently trading at $6.86. I'm in it and enjoying the ride. Although it's likely rising too quickly and will pause soon.

Still well below the $20 IPO but it's a start. Market cap is still only about half that of much smaller WJA.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineVC10DC10 From United States of America, joined Apr 2006, 1036 posts, RR: 3
Reply 9, posted (10 months 1 week 1 day 21 hours ago) and read 3629 times:

I didn't expect them to do THIS well. Congratulations, Air Canada!

Quoting yowza (Reply 7):
787 EIS is just around the corner

Have configurations and routes been announced yet? How many crew have been trained so far?

Quoting yowza (Reply 7):
Rouge appears to be doing well too

I'm still skeptical about Rouge in the long term, but hey, if it works, great.


User currently onlinerobsaw From Canada, joined Dec 2008, 240 posts, RR: 0
Reply 10, posted (10 months 1 week 1 day 18 hours ago) and read 3494 times:

Quoting VC10DC10 (Reply 9):
I'm still skeptical about Rouge in the long term, but hey, if it works, great.

As long as I don't have to fly it, it is great for AC.


User currently offlineirishayes From United States of America, joined Jan 2008, 2188 posts, RR: 15
Reply 11, posted (10 months 1 week 1 day 18 hours ago) and read 3456 times:

Quoting VC10DC10 (Reply 9):
I'm still skeptical about Rouge in the long term, but hey, if it works, great.

If done properly, then it can be a wise asset for AC. There is certainly a leisure niche AC can compete in as long as it does so with lower overhead costs, which Rouge provides the answer for. The key is that AC must avoid repeating mistakes it has made in the past, a la Tango, etc.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlineViscount724 From Switzerland, joined Oct 2006, 25311 posts, RR: 22
Reply 12, posted (10 months 1 week 1 day 17 hours ago) and read 3441 times:

Quoting robsaw (Reply 10):
Quoting VC10DC10 (Reply 9):
I'm still skeptical about Rouge in the long term, but hey, if it works, great.

As long as I don't have to fly it, it is great for AC.

I think most of Rouge's target market customers would much prefer a 7-abreast 763 on longhaul flights to a cramped 9-abreast Air Transat A310/A332 which comprises 80% of their fleet (except the four 8-abreast A333s).


User currently offlinewhiteguy From Canada, joined Nov 2003, 790 posts, RR: 0
Reply 13, posted (10 months 1 week 1 day 16 hours ago) and read 3340 times:
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Quoting irishayes (Reply 11):

Quoting VC10DC10 (Reply 9):
I'm still skeptical about Rouge in the long term, but hey, if it works, great.

If done properly, then it can be a wise asset for AC. There is certainly a leisure niche AC can compete in as long as it does so with lower overhead costs, which Rouge provides the answer for. The key is that AC must avoid repeating mistakes it has made in the past, a la Tango, etc.


next flights: msp-ord-cdg, msp-iah-dal, dfw-ord-msp

Who says Tango was a mistake? Or Zip? Tango lead the way in the "A la carte" pricing. It started the pay for what you want era which most airlines have adopted!

Zip, on the other hand was good at the time. With the excess capacity AC had in the B732 they had aquired in the CP takeover they were able to put them to work. At the same time they were able to use the Zip model and reduce the costs at mainline AC. Zip was shutdown because it was costing more to operate two entities since the mainline costs were at the same level. The B732 were also coming due for retirement.


User currently offlinenutsaboutplanes From United States of America, joined Jul 2010, 496 posts, RR: 8
Reply 14, posted (10 months 1 week 1 day 13 hours ago) and read 3183 times:

Great news! I am curious to see how Rouge will work out long-term. Congrats to the good folks at AC!


American Airlines, US Airways, Alaska Airlines, Northwest Airlines, America West Airlines, USAFR
User currently offlineSpaceshipDC10 From Canada, joined Jan 2013, 1785 posts, RR: 3
Reply 15, posted (10 months 1 week 1 day 5 hours ago) and read 3004 times:

Quoting Viscount724 (Reply 12):
I think most of Rouge's target market customers would much prefer a 7-abreast 763 on longhaul flights to a cramped 9-abreast Air Transat A310/A332

I think so too and wonder if Rouge stick to such configuration whether it will force TS to revise its strategy on that matter.



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User currently offlinezeke From Hong Kong, joined Dec 2006, 9099 posts, RR: 75
Reply 16, posted (10 months 1 week 1 day 4 hours ago) and read 2985 times:

Can someone explain the differences between net income and adjusted net income ? looking at the numbers in the link, the net income is 299 million in 2013 and 359 for the same period last year. The opposite trend of the adjusted net income numbers.


We are addicted to our thoughts. We cannot change anything if we cannot change our thinking – Santosh Kalwar
User currently offlinelostsound From Canada, joined May 2012, 225 posts, RR: 0
Reply 17, posted (10 months 1 week 1 day 3 hours ago) and read 2913 times:

Great news for our national airline.

The year is coming to an end which means we must soon be finding out what narrowbody will be selected for their new order!



"Our hands are full, our lives are not"
User currently offlineirishayes From United States of America, joined Jan 2008, 2188 posts, RR: 15
Reply 18, posted (10 months 1 week 1 day 1 hour ago) and read 2783 times:

Quoting whiteguy (Reply 13):
Who says Tango was a mistake? Or Zip? Tango lead the way in the "A la carte" pricing. It started the pay for what you want era which most airlines have adopted!

The concept was good, but the implementation was terrible. Therein lies your key difference. Tango has been retained simply to refer to AC's bargain fare buckets.

Rouge is designed to accomplish two things:

1. Compete with charter/other leisure-oriented airlines that have grown quickly in Canada (AirTransat, Sunwing, etc) by re-capturing this segment at a cost base AC can sustain and
2. Entice the traveling public by offering a Jetstar-esque concept by allowing the passengers to book these flights on the AC mainline website, connect onto other AC flights @YYZ/YUL, provide interline, FFP accrual, lounge access, pay-for-ancillaries and options to buy the premium product.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlineyyz717 From Canada, joined Sep 2001, 16253 posts, RR: 56
Reply 19, posted (10 months 1 week 23 hours ago) and read 2673 times:

Quoting nutsaboutplanes (Reply 14):
I am curious to see how Rouge will work out long-term.

It arguably can't fail. AC is moving routes from the higher cost mainline to the lower cost Rouge, and adding new routes to the lower cost Rouge that were not feasible with the mainline. Similar strategy to Jetstar v.v. Qantas. Lower costs and likely no loss of revenue. Sounds like a win-win unless AC messes it up somehow.

Quoting zeke (Reply 16):
Can someone explain the differences between net income and adjusted net income ?

Quoted from the results, is your answer:

"Adjusted net income (loss) and adjusted net income (loss) per diluted share are used by Air Canada to assess its performance without the effects of foreign exchange, net financing expense on employee benefits, mark-to-market adjustments on derivatives and other financial instruments recorded at fair value and unusual items."

IOW, adjusted net income is more indicative of operational performance, and makes YOY/MOM comparisons more valid.

Quoting irishayes (Reply 18):
Rouge is designed to accomplish two things:

1. Compete with charter/other leisure-oriented airlines that have grown quickly in Canada (AirTransat, Sunwing, etc) by re-capturing this segment at a cost base AC can sustain and
2. Entice the traveling public by offering a Jetstar-esque concept by allowing the passengers to book these flights on the AC mainline website, connect onto other AC flights @YYZ/YUL, provide interline, FFP accrual, lounge access, pay-for-ancillaries and options to buy the premium product.

I think the PRIMARY rationale for Rouge was to create a low-cost airline-within-an-airline to otherwise force down mainline costs. Your 2 points are valid but secondary.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlinelonghauler From Canada, joined Mar 2004, 4982 posts, RR: 42
Reply 20, posted (10 months 1 week 23 hours ago) and read 2644 times:

Quoting yyz717 (Reply 19):
I think the PRIMARY rationale for Rouge was to create a low-cost airline-within-an-airline to otherwise force down mainline costs.

What I find curious, is that most of that cost advantage was gained by putting 20%+ more seats in the aircraft. There is very little cost reduction from employees, as only pilots and flights attendants are making less ... and that is only marginal. Gate agents, baggage handlers, flight dispatchers, mechanics, et al .. are all making normal Air Canada wages.

In fact, if one were to put 180 seats into an A320 and fly it at mainline (paint whatever you want on the side), the seat mile costs would be less than the 142 seat A319s at Rouge!

And all of that can be done without all the associated costs of starting up a "new airline".

People mention Zip and Tango as failures, but they are/were anything but!

Tango still exists and with its ''a la carte'' pricing is now the basis for the way just about every North American airline does marketing and business. Zip is far more sinister! With a large YEG base, and lots of B737s, AC was faced with moving all of those pilots and closing the base. Somewhere around $10M cost. Far easier to make up an airline, purported to compete with WS, then in a better environment .... Close the base with the new pilot contracts at no cost, and convince an arbitrator that those new Zip cost savings should be transferred to the A320, which they were.

Zip may appear to be a failure on the outside, but to AC they were a big success. For the record, the wage reductions placed on the A320 from Zip's wind down still exist!



Never gonna grow up, never gonna slow down .... Barefoot Blue Jean Night
User currently offlineElPistolero From Canada, joined Feb 2012, 1019 posts, RR: 4
Reply 21, posted (10 months 1 week 17 hours ago) and read 2503 times:

Quoting pnwtraveler (Reply 6):
The strong group of people who chime in with negatives about AC are still in the wings and you will hear from them the next opportunity.

What? I was away. Quit picking on me  
Quoting pnwtraveler (Reply 6):
Some people love to hate the carrier and constantly repeat inaccuracies such as calling them a flag carrier/government entity.

Well, its difficult to look past the fact that the Government has recently intervened on AC's behalf several time in a manner that is far from common in the developed world. And then there's that whole ACPPA mess.

Not to mention an article I read earlier today, where Calin Rovinescu said he would oppose BC's push for Open Skies and, far more intriguingly, compared aviation protectionism to dairy supply management (no government intervention there, eh?)

I don't begrudge AC the success and I'm actually very pleased to see Rouge doing well. I figure the lower prices will generate more travel. And the more people travel, the more exposure they'll get and we'll eventually see a push for less...errr...dairy supply management and aviation protectionism. All in all, a good showing - very impressive indeed. However, one might legitimately wonder what things would look like if the Government hadn't intervened for the last 5 years.


User currently onlinerobsaw From Canada, joined Dec 2008, 240 posts, RR: 0
Reply 22, posted (10 months 6 days 20 hours ago) and read 2232 times:

Quoting Viscount724 (Reply 12):
I think most of Rouge's target market customers would much prefer a 7-abreast 763 on longhaul flights to a cramped 9-abreast Air Transat A310/A332 which comprises 80% of their fleet (except the four 8-abreast A333s).

Preferring something bad over something worse does not convert the "bad" into "good". Or put another way: better than terrible is still not good.


User currently offlinelonghauler From Canada, joined Mar 2004, 4982 posts, RR: 42
Reply 23, posted (10 months 6 days 19 hours ago) and read 2173 times:

Quoting robsaw (Reply 22):
Preferring something bad over something worse does not convert the "bad" into "good". Or put another way: better than terrible is still not good.

Air Transat has been in existence for more than 26 years. During that time, they have put 220+ into a B757, 180+ into a B727, 9 abreast in both the A310 and A330 and 10 abreast in the L1011.

What's my point? My point is that "good", "bad" or "worse" is irrelevant. All that matters is "cheap". And Air Transat owes its very existence to the fact that cost is more important than comfort. Strangely, for that market segment, it took Air Canada 26 years to figure that out!

For our benefit is the B767. 8 abreast is almost unworkable, so airlines are stuck with a very comfortable 7 abreast. Seat width on a 7 abreast B767 is the same on Rouge, as Air Canada, as Delta Air Lines, as Qantas, as Japan Air Lines, etc etc etc ... in other words .... "good".



Never gonna grow up, never gonna slow down .... Barefoot Blue Jean Night
User currently offlineSafeFlyer From Canada, joined Jan 2001, 627 posts, RR: 5
Reply 24, posted (10 months 6 days 8 hours ago) and read 1955 times:

Quoting Viscount724 (Reply 12):
I think most of Rouge's target market customers would much prefer a 7-abreast 763 on longhaul flights to a cramped 9-abreast Air Transat A310/A332 which comprises 80% of their fleet (except the four 8-abreast A333s).

Most of Rouge's target market customers don't even know the difference between a 767 and a 330. Besides, you could twist it around and say, "you'd think most of Rouge's target market customers would much prefer 32' of pitch (rather than the dreadful 29' on Rouge's 319s and 30-31' on the '67s), no charge for IFE instead of "bring your own device and pay to use our system" and professional, experienced crews, rather than a bunch of kids who got service-trained at Disney". Then again, a lot of people booking on aircanada.com won't even be aware they are on a Rouge flight until they get onboard. The reviews haven't been great so far...

Quoting longhauler (Reply 23):
What's my point? My point is that "good", "bad" or "worse" is irrelevant. All that matters is "cheap". And Air Transat owes its very existence to the fact that cost is more important than comfort. Strangely, for that market segment, it took Air Canada 26 years to figure that out!

Right on. Now that they're trying to market themselves as a "premium leisure airline" rather than a cattle class charter company, they're finding it hard to make money. Of course, flying 330s/310s to POP, SNU, HOG, etc, when your competitors are flying 319s/320s/738s doesn't help either. And then their crews had/still have VERY good working conditions too (pay and benefits).

Something no one has mentioned though (I think): If Rouge has exceeded expectations, that's excellent for AC. However, given they only had 3 a/c flying during Q3, you can be sure that's not where most of the cost-savings came from. AC produced very good results at mainline. That really begs the question: If AC was capable of producing "some of its best Q3 results in history" with a tiny LCC division, is Rouge really needed? As a marketing tool perhaps, but I have to wonder if using mainline crews rather that hiring brand-new FAs and separating pilots wouldn't have just been more simple and contributed to keeping the employee morale up, especially amongst the FA group. All newly-hired AC mainline FAs no longer have a defined-benefit pension plan, so the most expensive cost-item for the company was already eliminated in the last round of bargaining.


User currently offlinewillzzz88 From United States of America, joined May 2011, 150 posts, RR: 0
Reply 25, posted (10 months 6 days 3 hours ago) and read 1933 times:

Anyone listen on the conference call and find out the difference between the networks that made the most profit (e.g. Pacific/Atlantic/Latin/Transborder)?

Also I will note that as a traveler in Detroit (DTW), Air Canada revenue/pricing strategy is totally different for trans-border connecting markets and Canadian markets with the US market more competitive than the Canadian market and therefore they can sell the same seat at higher cost in a the CDN market! (Example is DTW-LHR via YYZ for example). Delta is getting expensive here in DTW on some monopoly routes where there is no LCC carrier!


User currently offlineElPistolero From Canada, joined Feb 2012, 1019 posts, RR: 4
Reply 26, posted (10 months 6 days 3 hours ago) and read 1919 times:

Quoting longhauler (Reply 23):
What's my point? My point is that "good", "bad" or "worse" is irrelevant. All that matters is "cheap". And Air Transat owes its very existence to the fact that cost is more important than comfort. Strangely, for that market segment, it took Air Canada 26 years to figure that out!

But its never been just about cost or 'cheap'. Its been about what you get for what you pay.

If you take a step back and look at whats happening, AC is removing IFE and an inch of legroom. Can't see catering being 'enhanced' any more than it already is (mainline AC even outdoes stingy US airlines - serving the same amout of food on YVR-LHR as it does on YUL-LHR). What's left? At the end of the day, the customer must ask himself if that IFE and one inch of legroom were worth the significantly higher fares that AC was charging (we're talking $150-$250). It is, indeed strange that it took AC this long to figure out that 1" of legroom and an industry average IFE weren't worth that much more.

Personally, I think its a terrific move. not least because the combination of Rouge 767s and the arrival of 787s is going to result in the first serious capacity increase in years. I expect that is when the lower labour cost will come into play - and be crucial.


User currently offlineyyz717 From Canada, joined Sep 2001, 16253 posts, RR: 56
Reply 27, posted (10 months 5 days 11 hours ago) and read 1743 times:

Quoting ElPistolero (Reply 21):
However, one might legitimately wonder what things would look like if the Government hadn't intervened for the last 5 years.

If the Feds had not intervened with their market-interfering and AC-favouring BTW legislation, AC would possibly have had 1 or 2 long strikes, with much weakened results and likely no Rouge. Indeed, they may have had to file for CCAA or even liquidate if the strike(s) was/were long.

So, these results are absolutely "tainted" with a heavy dose of government favouritism. Lisa Raitt is to be credited with these good results far more than Calin and his hapless mgmt team ever can be.



Panam, TWA, Ansett, Eastern.......AC next? Might be good for Canada.
User currently offlineViscount724 From Switzerland, joined Oct 2006, 25311 posts, RR: 22
Reply 28, posted (10 months 3 days 22 hours ago) and read 1426 times:

Quoting SafeFlyer (Reply 24):
rather than a bunch of kids who got service-trained at Disney

Disney has a very strong service reputation. They spend much more time on that aspect of their operations than virtually all airlines. If some of that can transfer over to Rouge, what's the problem?


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