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longhauler
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Air Canada's April Results

Thu May 13, 2004 3:16 am

Air Canada reports April traffic. According to preliminary traffic figures, Air Canada mainline flew 22.3 per cent more revenue passenger miles (RPMs) in April 2004 than in April 2003. Overall, capacity increased by 9.5 per cent, resulting in a load factor of 77.7 per cent, compared to 69.6 per cent in April 2003; an increase of 8.1 percentage points. Also according to preliminary traffic figures, Air Canada Jazz flew 12.5 per cent more revenue passenger miles in April 2004 than in April 2003. Capacity increased by 6.3 per cent, resulting in a load factor of 61.1 per cent, compared to 57.7 per cent in April 2003; an increase of 3.4 percentage points.

It looks like maybe things are on the upswing!
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
fraT
Posts: 996
Joined: Wed Oct 01, 2003 4:32 am

RE: Air Canada's April Results

Thu May 13, 2004 4:00 am

You're right, it looks ok.
But it would show more if they would compare the numbers to April 2002 as well. The April numbers from 2003 were heavily affected by SARS and the war in Iraq.
 
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longhauler
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RE: Air Canada's April Results

Thu May 13, 2004 5:40 am

Exactly, it was SARS, and the Middle East that put Air Canada, and for that matter, just about every legacy carrier into trouble. Hopefully this is an indication of a recovery from at least the SARS part of the problem.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
astral
Posts: 151
Joined: Thu Mar 11, 2004 3:50 am

RE: Air Canada's April Results

Thu May 13, 2004 6:11 am

OK, it looks fine. But no one can tell the most important issue - YIELD !!!
Its useless even if the load factor is 100%, if the yield is below cost, or can't match expenses. Why AC is losing money even if load factor is over 70% is simply its cost and expenses are way too high. Remember they are under bankruptcy protection, and they don't have to pay a lot of bills. With that plus a high load factor, AC can still rack up over CA$4 million a day loss !!!
You can also look deeper into why there are more seats, and higher load. More seats available could means you are losing passengers to other airlines. Higher load can means AC is cutting fares to match competition, and could be selling ticket at a lost. The combine end result can still be negative yield, i.e. loss money big time. The higher the load factor, the more money AC can loss. With AC's very high cost, they will loss money on some of its major trunk routes like YVR/YYZ. WJ and JG sold YVR/YYZ as low as CA$129 one way, a basic flying cost on a B737 is at about CA$145 o.w., with AC it can be as high as CA$175 o.w. If AC match and sell at CA$139 o.w., every ticket it sold, it loss CA$36, and this is only flying cost, not counting overhead, etc. etc.
When you read an airline report, think first about YIELD, then reason why they have a higher load, and seat miles. Figures on the surface can be very misleading.
 
Olympus69
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Joined: Sat Jun 15, 2002 11:21 pm

RE: Air Canada's April Results

Thu May 13, 2004 10:04 am

Astral,

More seats available could means you are losing passengers to other airlines.

That makes no sense. A gain in ASMs plus an increased load factor can only mean an increase in passengers.

 
robsawatsky
Posts: 477
Joined: Thu Dec 18, 2003 7:07 am

RE: Air Canada's April Results

Fri May 14, 2004 3:10 am

"That makes no sense. A gain in ASMs plus an increased load factor can only mean an increase in passengers."

Correct, but AC is growing ASMs at a lower rate than the competition and is losing domestic market share, including business passengers.


[Edited 2004-05-13 20:11:00]
 
Olympus69
Posts: 1571
Joined: Sat Jun 15, 2002 11:21 pm

RE: Air Canada's April Results

Fri May 14, 2004 8:53 am

Correct, but AC is growing ASMs at a lower rate than the competition and is losing domestic market share, including business passengers.

With all the new capacity from WS and SG that was bound to happen. In any event AC was virtually ordered by the government to lose market share.
 
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longhauler
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RE: Air Canada's April Results

Fri May 14, 2004 12:40 pm

Considering that Air Canada has 6% less DOMESTIC market share that the same time last year, understand that all of this growth was on International and Transborder routes.

It is the fact that AC has less domestic market share that indicates they are NOT sacrificing yield in the name of market share.

Air Canada does not normally publish monthly yield results. But the last quarterly yield results indicate that Air Canada's yield per RPM has steadily climbed since 9/11. (when all airlines took a huge hit).

Now, look at Westjet's yield, it is 40% LESS than it was 4 years ago! This is a direct result of their entry into low yield transcon and Atlantic routes. Yes, their costs per ASM also dropped, but not as quickly, and the margin is far tighter. This was reported in a recent article in Air Transport World.
Just because I stopped arguing, doesn't mean I think you are right. It just means I gave up!
 
robsawatsky
Posts: 477
Joined: Thu Dec 18, 2003 7:07 am

RE: Air Canada's April Results

Sat May 15, 2004 2:37 am

AC's number do seem to indicate that they are improving their operations from an efficiency/yield perspective. My concern is that their continuing drop in domestic market share could have negative implications once Westjet starts running transborder routes. AC so far appears to have retained a profitable segment of domestic market that feeds the transborder and international routes that others don't offer at the moment. But that is changing.

The so far revealed business plan with respect to RJs and more point-to-point domestic and low capacity transborder routes could turnaround some of their domestic market share deterioration but the RJs are still out in the future pending exit from CCAA.

I really do hope AC succeeds and Westjet et al are becoming a bit stretched in how much thinner they can cut their margins in the face of rapid expansion. So perhaps some evening out of market dynamics will be coming soon.

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