rising
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Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 5:22 am

According to Bloomberg, the yields on the bonds for Air Canada are approaching that of bankrupt AMR Corp. , raising concern that the company will need to seek protection from creditors.

Management is grappling with high fuel costs, labor unrest, the poor world economy and pension burdens.

Can Calin Rovinescu stop Air Canada's descent?

http://www.sfgate.com/cgi-bin/articl...bloomberg_articlesLVKYSG6S972C.DTL
If it doesn't make sense, it's probably not true.
 
rj777
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 5:38 am

Geez.... the entire North American Continent. Mexicana's gone (Mexico), American (USA) just filed CH11, and now Air Canada's on the brink.
 
LV
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:09 am

Quoting rj777 (Reply 1):
Mexicana's gone (Mexico), American (USA) just filed CH11, and now Air Canada's on the brink.

So maybe the lesson is not to name your airline after your home country   
 
AR385
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:22 am

Quoting LV (Reply 2):
So maybe the lesson is not to name your airline after your home country

Boy, you made my day with that comment, thanks!

Quoting rj777 (Reply 1):
Geez.... the entire North American Continent. Mexicana's gone (Mexico),

I don´t think it´s the same issue. MX is gone because the market required consolidation. In those circumstances, the worst managed company will go. AC is THE one and only flag carrier so I´m not sure how they got themselves in a bankruptcy situation. AM better watch out. Being the biggest or the one with "flag carrier" status does not mean survival.
 
ba319-131
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:23 am

Quoting Rising (Thread starter):
According to Bloomberg, the yields on the bonds for Air Canada are approaching that of bankrupt AMR Corp. , raising concern that the company will need to seek protection from creditors.

- It was only 6 years ago they emerged from the last bankrupcy protection, what a way to run an airline!
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JU068
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 9:40 am

Grrr... I was planning on flying them from BRU to DCA next summer, I hope that they are still around by that time!
 
staralliance85
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 3:04 pm

This does not shock me at all! Their frequent flier program Aeroplan just started charging ridiculous fuel surcharges on award tickets. Aeroplan use to be the Best frequent flier program and now they are the Worst! I feel before the UA/CO merger AC picked up many passengers from the US to go to Asia and Europe. Now they seem to be slacking in that. Their high labor costs is the biggest piece of the pie. I hope AC comes through it because they are a pretty good airline.
brad Fitzpatrick
 
LGWflyer
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 3:44 pm

If Air Canada were to go, would we see Air Transat take over as the national airline for Canada?
3 words... I Love Aviation!!!
 
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rikkus67
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 3:48 pm

Does anyone think that the 2000 purchase of Canadi>n, and the long-term integration with all the challenges of many labour groups, might still have had some residual effect?

Also...that little LCC called Westjet has really ballooned domestically and continentally...

I hate seeing our flag carrier struggle, and I have friends that work for both airlines. Of course a historic problem with any Canadian airline is large distances between major cities, and a small population to have to support the airline. We CANNOT compare to the USA, yet no one up here gets that!
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aamd11
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 3:54 pm

Quoting LGWflyer (Reply 7):
If Air Canada were to go, would we see Air Transat take over as the national airline for Canada?

Can't see AC being allowed to go out of business, they'll surely be propped up should they run into proper trouble again.
 
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Revelation
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 4:06 pm

Quoting rikkus67 (Reply 8):
Does anyone think that the 2000 purchase of Canadi>n, and the long-term integration with all the challenges of many labour groups, might still have had some residual effect?

Could be.

I wonder if a lot of the fleet issues (dropping A340s for 777s, putting money into 787s that are delayed, putting money into new interiors) caused expenditures it really could not afford?

Quoting rikkus67 (Reply 8):
Also...that little LCC called Westjet has really ballooned domestically and continentally...

Which shows AC needs to get its cost structure in line with them otherwise Westjet will keep eating their lunch.

Quoting rikkus67 (Reply 8):
Of course a historic problem with any Canadian airline is large distances between major cities, and a small population to have to support the airline. We CANNOT compare to the USA, yet no one up here gets that!

One issue is that one can just cross the border to the US from major CA cities and use US airlines if AC gets too expensive, so AC is in competition with the US airlines to a fair extent.
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ZBBYLW
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 4:47 pm

It is not skilled labour that is at fault here. Compare the narrow body pilot pay at AC and then WS's pay scale and you will soon realize that this is not the problem at all. The major problem is the line up of "investors" who are trying to scam every last cent out of AC and into their pocket. Look at everything they have spun off. The investment into the 777 I feel were a good idea. While some people do notice that they are sometimes fairly empty they really pack in a lot of cargo. AC was able to get rid of some cargo contracts and do the flying for themselves.

All in all I feel it is time that AC gets a CEO in charge whose sole goal is not to line his own pocket, but do what is best for the airline as a whole.
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YXD172
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 4:53 pm

Quoting Revelation (Reply 10):

One issue is that one can just cross the border to the US from major CA cities and use US airlines if AC gets too expensive, so AC is in competition with the US airlines to a fair extent.

You're bang-on with this one, although most of the traffic that AC looses to the US airlines is lower-yielding, it does make a difference! For example, I was looking for tickets for my dad for a business trip to BWI, would be $700 from YYZ on AC or $120 from BUF on WN (and WN includes checked bags and has no change fees!)

So even north of the border, we can feel the effects of US airlines. Of course, this isn't helped by the much lower taxes and fees at most US airports compared to ours (although I'm not sure how many of our 'extra fees' are usually rolled into the price of tickets in the US - for example our 'ATC fee')
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Kaiarahi
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 4:57 pm

Quoting zbbylw (Reply 11):
CEO in charge whose sole goal is not to line his own pocket

What evidence do you have of this?

Quoting LGWflyer (Reply 7):
If Air Canada were to go, would we see Air Transat take over as the national airline for Canada?

Ummm - have you ever compared their fleets?
Empty vessels make the most noise.
 
BestWestern
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 5:04 pm

Quoting zbbylw (Reply 11):
All in all I feel it is time that AC gets a CEO in charge whose sole goal is not to line his own pocket, but do what is best for the airline as a whole.

Divisions were spun off to pay for the last bankruptcy. This time around, its more complicated.

Quoting zbbylw (Reply 11):
The major problem is the line up of "investors" who are trying to scam every last cent out of AC and into their pocket.

They rescued the airline last time around... looks like that investment wasn't enough.
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ytz
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 5:14 pm

AC's situation is the management's fault. The only reason they have a pension issue is because they robbed the employees when times were bad and refused to pay up when times were good. The management has a terrible habit of not investing when they have the cash.

Sure they have to get their cost structure down. And they have issues (like having to have French-speaking cabin crew) that Westjet doesn't have. But given that they are for all intents and purposes the default international airline for this country and the only alliance carrier in Canada, there should be no excuses for going bankrupt.
 
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yyz717
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 5:42 pm

Quoting ba319-131 (Reply 4):
It was only 6 years ago they emerged from the last bankrupcy protection, what a way to run an airline!

Exactly. It's time to replace the entire Quebec-based management team.

Quoting staralliance85 (Reply 6):
I hope AC comes through it because they are a pretty good airline.

The only "good" airline is a profitable one....AC is not in that group.

Quoting LGWflyer (Reply 7):
If Air Canada were to go, would we see Air Transat take over as the national airline for Canada?

Let's hope not. Replacing one Quebec-based and Quebecois-staffed long haul carrier with another would not go down well in much of Canada.

Quoting rikkus67 (Reply 8):
I hate seeing our flag carrier struggle,

Canada does not have a flag carrier any more. AC is just one more airline like Westjet, Air Inuit, First Air, Bearskin Airlines, etc. That it is so large is a legacy of its favoured status by the Fed Govt for decades.

Quoting zbbylw (Reply 11):
The major problem is the line up of "investors" who are trying to scam every last cent out of AC and into their pocket.

Investors deserve a decent return on their investment. If AC is unable to generate investment grade returns, then the investors are correct to demand the smaller profitable units be spun off. Remember....without these investors, AC would be a distance memory like Eastern, Braniff, Ansett, etc.


Quoting YTZ (Reply 16):
AC's situation is the management's fault.

Exactly.

[Edited 2011-12-03 14:13:42 by srbmod]
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Skywatcher
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:32 pm

The existing defined benefit pension plan at AC is the single largest factor that may doom them in my opinion. It is increasingly unsustainable and must be changed if AC is to survive.

As far as I know Westjet doesn't have a defined benefit pension plan. In fact, I recently read that 83 out of the top 100 U.S. companies have terminated/modified their defined benefit plans in order to reamin competitive. The rest are likely to follow.

The fact that there are more retirees collecting guaranteed pensions at AC (no matter that the investments in the plans have tanked) than current employees is simply a recipe for disaster.

As much as I hate the idea that this issue has become such a big problem it must be dealt with at AC specifically and western society in general. There just aren't enough young people and/or growth in our economies to sustain the obligations of these types of pension plans. To make things even worse, retired employees and the company didn't set aside enough funds over the past number of decades to cover their own pensions, particularly since retirement ages have decreased while lifespans have increased.

It's a mess and I predict that AC will continue to struggle until the issue is definitively dealt with. It will probably take another bankruptcy to bring the issue to resolution. The next one will be far worse than the last.

The mother of all battles will be the U.S. government pension crisis. That pension debacle is jeopardizing the financial wellbeing of an entire superpower.
 
threepoint
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:32 pm

Quoting Revelation (Reply 10):

I wonder if a lot of the fleet issues (dropping A340s for 777s, putting money into 787s that are delayed, putting money into new interiors) caused expenditures it really could not afford?

Those are actually examples of good investments that have or are in the process of paying dividends (er, so to speak) for the company.

Quoting Revelation (Reply 10):
Which shows AC needs to get its cost structure in line with them otherwise Westjet will keep eating their lunch.

That's why they're attempting to launch their own low-cost division, which was the primary irritant with the FA near-strike we just observed.

Quoting YTZ (Reply 16):
And they have issues (like having to have French-speaking cabin crew) that Westjet doesn't have.

That is but a tiny cost in the grand scheme of things. Even the publication of all their public & internal literature in both official languages, while burdensome, is not sinking the airline.

Quoting yyz717 (Reply 18):
That it is so large is a legacy of its favoured status by the Fed Govt for decades.

(yawn). That argument grew tired in the late 80s.
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LGWflyer
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:40 pm

Quoting Kaiarahi (Reply 13):

Ummm - have you ever compared their fleets?

Yes I know what the size of the Air Transat fleet is! Im just saying though if AC did go, they would be probably the only airline in Canada to take they're place. Maybe even if it came to it, Air Transat could merge with WestJet...
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AR385
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:46 pm

Quoting Skywatcher (Reply 19):
There just aren't enough young people and/or growth in our economies to sustain the obligations of these types of pension plans.

I agree. That is a big problem, but what do you think the solutions are? The two evident ones (having more babies and immigration) is frowned upon by most Western economies.

Quoting Skywatcher (Reply 19):
It's a mess and I predict that AC will continue to struggle until the issue is definitively dealt with. It will probably take another bankruptcy to bring the issue to resolution. The next one will be far worse than the last.

What kind of airline would emerge if AC goes into bankruptcy?
 
N1120A
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:47 pm

Quoting ju068 (Reply 5):

Grrr... I was planning on flying them from BRU to DCA next summer, I hope that they are still around by that time!

You will be fine.
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Oroka
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 6:52 pm

Air Canada (A Division of Westjet Airlines)
 
Kaiarahi
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 7:16 pm

Quoting yyz717 (Reply 18):
Exactly. It's time to replace the entire Quebec-based management team.
Quoting yyz717 (Reply 18):
Let's hope not. Replacing one Quebec-based and Quebecois-staffed long haul carrier with another would not go down well in much of Canada.


Five of AC's 21 senior executives are Quebecois. !7.2% of its employees are francophone (and this includes Néo-Brunswickois and Franco-Ontariens).

Let's stick with the facts, rather than spewing gratuitous ethnic insults. There's no correlation whatsoever between race/ethnicity and managerial competence.

[Edited 2011-12-03 11:18:24]
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solarflyer22
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 7:18 pm

Quoting LV (Reply 2):

It seems like the cost structure is just too high. Canada has a very travel friendly culture especially in light of the cold winters.
 
flyyul
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 7:33 pm

Quoting yyz717 (Reply 18):
Let's hope not. Replacing one Quebec-based and Quebecois-staffed long haul carrier with another would not go down well in much of Canada.

Neil we've been over this so many times. People who speak French are not second class citizens.
 
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czbbflier
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 7:55 pm

Okay, Chicken Licken. The sky is not falling. Or in this case, Air Canada is not falling out of the sky.

It may go into bankruptcy but it will continue to operate. In the Canadian economy, Air Canada is too big to fail. There will be government intervention if that should happen.

Westjet, while a competent competitor of Air Canada is simply not equipped or structured to take over the global routes that Air Canada operates. Air Transat even less so.

It certainly has its warts but Air Canada is a going concern. It won't be disappearing anytime soon.

There's the political element too.... too many Quebec jobs at stake.

If Air Canada does declare bankruptcy and then dissolves the pensions, there will be a battle the likes of which in labour we have not ever seen here in Canada.

Canada Post will be next followed by all the other privatized Crown Corporations.
 
flyyul
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 7:57 pm

Quoting czbbflier (Reply 31):

There's the political element too.... too many Quebec jobs at stake.

Air Canada employs more people out of Quebec than in Quebec.
 
ytz
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 8:08 pm

Quoting yyz717 (Reply 18):
That it is so large is a legacy of its favoured status by the Fed Govt for decades.

You know this is not true. This is just typical Canadian AC bashing.

Quoting yyz717 (Reply 18):
Investors deserve a decent return on their investment. If AC is unable to generate investment grade returns, then the investors are correct to demand the smaller profitable units be spun off. Remember....without these investors, AC would be a distance memory like Eastern, Braniff, Ansett, etc.

Sure investors deserve a decent return. But if the board keeps choosing dividends over re-investment, they will eventually bankrupt the company. Their short-term greed is clearly costing the company in the long run.

Quoting Skywatcher (Reply 19):
As far as I know Westjet doesn't have a defined benefit pension plan.

Westjet may not have a DB pension plan but they do match employee contributions, up to 20% of pay towards an employee stock purchase plan, if I'm not mistaken. May not cost as much as AC, but it's not small potatoes either.
 
ytz
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 8:11 pm

Quoting flyyul (Reply 32):
Air Canada employs more people out of Quebec than in Quebec.

Doesn't mean that there aren't a ton of jobs in YUL at stake and that Quebec won't go to bat for the airline.

I would think that this government would be hostile to AC. However, balancing that is the severe consequences of battering a serious employer in Quebec and Ontario and the only airline with government mandates to serve remote communities, provide service in French nation-wide, etc.
 
ytz
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 8:16 pm

Quoting AR385 (Reply 22):
I agree. That is a big problem, but what do you think the solutions are? The two evident ones (having more babies and immigration) is frowned upon by most Western economies.

Canada is far from hostile to immigration.

Quoting Skywatcher (Reply 19):
The mother of all battles will be the U.S. government pension crisis. That pension debacle is jeopardizing the financial wellbeing of an entire superpower.

Don't conflate south of the border problems with ours. We don't have the same issues. CPP is quite solvent and fiscally sound. Most private sector pension plans are too. The courts letting AC defer its obligations was a serious mistake.

Quoting flyyul (Reply 29):
Neil we've been over this so many times. People who speak French are not second class citizens.

True. But that's an added cost and a serious limiter on AC's human resources pool. The imposition on AC is without precedent for any other private enterprise in Canada. It's not like Canada Post or Bell Canada have obligations to provide bilingual services in Alberta.
 
connector4you
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 8:22 pm

Quoting rikkus67 (Reply 8):
I hate seeing our flag carrier struggle, and I have friends that work for both airlines. Of course a historic problem with any Canadian airline is large distances between major cities, and a small population to have to support the airline.

Than the obvious solution for Air Canada's future is to restructure itself and start operating as a world airline just like KLM, Qatar, Sigapore, Emirates, Cathay etc
 
flyyul
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 8:25 pm

It's easy to point the finger at Air Canada management, but look what it has to work with;

-Airports that are self-financed through not for profit entities that literally imposes rate and charges that are quadruple of American airports. At Air Canada's largest hub (and Canada's economic powerhouse), the rates and charges are completely uncompetitive with it's peers. This also applies to YUL, YVR etc.

-Governments that impose taxes and surcharges that equates to 60-100% of total base fares (depending on destinations). (why do so many Canadians go to Buffalo and Burlington to catch flights)? This further dilutes AC (and WS's) revenue streams.

-An archaic pension system that was inherited prior to Air Canada's privatization, and the complete unwillingness of union's to reform the system.


Air Canada has the highest RASM of any North American operator. This is really a key metric when we look at revenue generation. Unfortunately, it also has one of the highest CASM's on any North American carrier, and much of this is out of the control of AC's management.

So before we ridicule AC management and use emotional arguments, let's look at the facts. AC is often praised by analysts for having the best North American product, and the highest unit revenue in North America. Everybody at HQ is aware of our cost challenges, nobody is oblivious to this.

There are numerous stakeholder's that surround AC, governments, airports, local communities, unions etc. It's in their best interest that AC remain a healthy and profitable operator, but it's also up to them to facilitate the conditions for this to occur.
 
AR385
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 8:40 pm

Quoting YTZ (Reply 35):
Canada is far from hostile to immigration.

Sure. To certain types. Besides, I did not referr to Canada in particular.
 
ytz
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 9:22 pm

Quoting AR385 (Reply 38):
Sure. To certain types.

What's that supposed to mean?
 
yyzame
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 9:27 pm

Quoting Skywatcher (Reply 19):
As far as I know Westjet doesn't have a defined benefit pension plan. In fact, I recently read that 83 out of the top 100 U.S. companies have terminated/modified their defined benefit plans in order to reamin competitive. The rest are likely to follow.

WestJet does not have a pension plane, but they do have their employee purchase plan.
 
DaveT
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 10:08 pm

I really don't believe Air Canada would collapse for the simple reason that the Canadian government won't allow it too... Say what you wish, but Air Canada is not your normal publicly traded company.
Few public companies have "their own" federal statute. Yes, a federal act of parliament. The Air Canada Public Participation Act. As most know, Air Canada is lawfully required to maintain it's head office in Montreal. Air Canada is also required to maintain MTCE bases in Montreal, Toronto and Winnipeg. No foreigner may own more that 25% of the shares, etc. I believe that the Minister also has a share(s) and on behalf of the Queen, is the only one who may assume all outstanding shares, but I'm not a lawyer so don't quote me on the last point..

When the Flight Attendants were about to go on strike, who intervened with back to work legislation. The government. If the government won't even permit an Air Canada employee group to strike, they sure as heck will not allow the airline to collapse.

The government alone, for their own survival needs Air Canada. The government has to travel and needs to be in places WJ doesn't even serve, nor will they likely ever. The provincial governments, too need to travel and by default, Air Canada is normally taken over WJ. It just doesn't look good when the Canadian taxpayer is paying for federal (and provincial) employees from management positions to high ranking bureaucrats and Ministers as well flying on a foreign airline, including U.S. airlines... There are hundreds of these people flying Air Canada daily and who keep the government operating.

Anyway, the government also will have to accept some fault here and so that they don't end up being partly (or fully) blamed for an Air Canada collapse, they would save the airline. Canada's airlines are taxed to death.. passenger tickets are taxed heavily.. The major Canadian airports are forced to pay a ridiculous annual "rent" to the government even though they (the feds) don't put one darn dollar back into the airports... I don't know too many things you pay "rent" on and it comes with no support or service.
 
ytz
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 10:47 pm

A bankruptcy might not be a bad thing. It would really force the government to review their airport rents policy, all those aviation taxes and the imposition on Air Canada to support jobs outside of their major hubs.
 
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Revelation
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 11:44 pm

Quoting flyyul (Reply 33):
why do so many Canadians go to Buffalo and Burlington to catch flights

This USAian just flew BOS-SEA and rented a car to go to Vancouver because it was cheaper that way.

And besides it gave the a.net nut in me a chance to visit the museums at KBFI and KPAE!  
Quoting flyyul (Reply 33):
An archaic pension system that was inherited prior to Air Canada's privatization, and the complete unwillingness of union's to reform the system.

Of course the workers will never voluntarily give up a defined benefits pension. And the politicians would never force them to do so, since almost all government workers get a defined benefits pension. So it would seem the only way to get rid of such a program would be by convincing a bankruptcy judge that AC isn't viable if it has to keep funding it. I'm not sure of the odds of that working in Canada, but it is one of the main reasons most US legacies took a trip through BK over the last decade.

AA's bankruptcy is largely about getting rid of a defined benefits pension. I hate the fact that the pensioners become just another creditor when an entity goes BK. To me, a pension should become before paying off the company that supplies the peanuts they give out in coach, and in fact should come before everyone else. However, that's not how it works.

One of the big reasons AA took BK protection before Dec 1 was to avoid having to pay out the pensions in lump sums to all the pilots who filed for retirement in November.

The same thing happened with other recent bankruptcies: a wave of pilot retirements was soon followed by BK to stop the run on the company's coffers.
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einsteinboricua
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 11:46 pm

Quoting LV (Reply 2):
So maybe the lesson is not to name your airline after your home country

Well, American is not named after a country. More likely, US Airways's name has more to do with the United States than American.
"You haven't seen a tree until you've seen its shadow from the sky."
 
UA191
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RE: Air Canada Struggling To Avoid Bankruptcy

Sat Dec 03, 2011 11:50 pm

Quoting Rising (Thread starter):

According to Bloomberg, the yields on the bonds for Air Canada are approaching that of bankrupt AMR Corp. , raising concern that the company will need to seek protection from creditors.

Management is grappling with high fuel costs, labor unrest, the poor world economy and pension burdens.

Can Calin Rovinescu stop Air Canada's descent?

http://www.sfgate.com/cgi-bin/articl...bloomberg_articlesLVKYSG6S972C.DTL

AC needs restructuring.
Bankruptcy would not be a bad idea.
Their customer service stinks & every one of my fellow frequent flyers wishes there was another option.
It's funny because AC really has a monopoly on all of Canada - we have no other major intercontinental airline.
UA Global Services, DL Platinum Medallion, AC Super Elite - I love flying!!!
 
canuckpaxguy
Posts: 1482
Joined: Sat Sep 06, 2003 2:31 pm

RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 12:15 am

Quoting LGWflyer (Reply 19):
Yes I know what the size of the Air Transat fleet is! Im just saying though if AC did go, they would be probably the only airline in Canada to take they're place. Maybe even if it came to it, Air Transat could merge with WestJet...

I don't see it. Air Transat is an LCC / tourist airline.
It's not designed for the type of travel Westjet offers on the majority of its routes.

Neither are equipped to handle AC's international routes.

G
 
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yyz717
Posts: 15775
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RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 1:11 am

Quoting Kaiarahi (Reply 23):
Five of AC's 21 senior executives are Quebecois. !7.2% of its employees are francophone (and this includes Néo-Brunswickois and Franco-Ontariens).

Yet they are all based in Quebec, by law. This discriminates against English Canada.

Quoting Kaiarahi (Reply 23):
Let's stick with the facts, rather than spewing gratuitous ethnic insults.

...and with spewing out far-reaching emotional interpretations.

Quoting flyyul (Reply 28):
Air Canada employs more people out of Quebec than in Quebec.

Yet disproportionally far more in Quebec.

Quoting flyyul (Reply 33):
It's easy to point the finger at Air Canada management, but look what it has to work with;

-Airports that are self-financed through not for profit entities that literally imposes rate and charges that are quadruple of American airports. At Air Canada's largest hub (and Canada's economic powerhouse), the rates and charges are completely uncompetitive with it's peers. This also applies to YUL, YVR etc.
WS operates under the same environment and yet can generate profit....why can't AC?

Quoting flyyul (Reply 33):
-Governments that impose taxes and surcharges that equates to 60-100% of total base fares (depending on destinations). (why do so many Canadians go to Buffalo and Burlington to catch flights)? This further dilutes AC (and WS's) revenue streams.
WS operates under the same environment and yet can generate profit....why can't AC?

Quoting flyyul (Reply 33):
-An archaic pension system that was inherited prior to Air Canada's privatization, and the complete unwillingness of union's to reform the system.

This is for AC management to tackle. They have failed.

Quoting flyyul (Reply 33):
Unfortunately, it also has one of the highest CASM's on any North American carrier, and much of this is out of the control of AC's management.

Nope....it's 100% within AC management control.

Quoting flyyul (Reply 33):
There are numerous stakeholder's that surround AC, governments, airports, local communities, unions etc. It's in their best interest that AC remain a healthy and profitable operator, but it's also up to them to facilitate the conditions for this to occur.

Yawn....a meaningless, feel-good platitude full of nothing-ness as AC continues to lose $ and is fast lurching from its 2nd to a 3rd bankruptcy. Nice one.

"remain" a healthy and profitable operator......don't you mean "become" a healthy and profitable operator ??

[Edited 2011-12-03 17:14:21]
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WestJet747
Posts: 1950
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RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 1:26 am

Quoting yyz717 (Reply 43):
Yet they are all based in Quebec, by law. This discriminates against English Canada.

Isn't the CEO Duncan Dee based in Ottawa?

Quoting yyz717 (Reply 43):
Yet disproportionally far more in Quebec.

It's not disproportional if that is where the company headquarters are. You can make this argument for ANY company.

Quoting connector4you (Reply 32):
it also has one of the highest CASM's on any North American carrier, and much of this is out of the control of AC's management.

How is it out of their control? Management has full control over cost.
Flying refined.
 
GregsterYUL
Posts: 23
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RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 1:36 am

Sorry but this article is complete BS. Having shown this article to a few friends that work for AC in finance dept they laughed it off. People love to hate Air Canada
 
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czbbflier
Posts: 866
Joined: Fri Jul 07, 2006 1:28 pm

RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 1:42 am

Quoting flyyul (Reply 28):
Air Canada employs more people out of Quebec than in Quebec.

Absolutely true. However, certainly out West, Air Canada could completely disappear and in certain quarters it wouldn't rate a comment at the barber shop much less a political crisis like it would in Quebec. And Quebec would raise a massive stink. Should the Conservatives wish a Hell's-chance at getting elected over the "Pinko-Communist-Separatist-Bloc-NDPers" currently in there (I figure that would be the Conservative's description of those who currently hold most the seats there) they would do whatever it would take to save Air Canada.

Quoting YTZ (Reply 29):
Quoting yyz717 (Reply 18):
That it is so large is a legacy of its favoured status by the Fed Govt for decades.

You know this is not true. This is just typical Canadian AC bashing.

It is true as I see it. Who had the best routes right up until the Asian tigers really made a difference? Who had the frequencies? Who had no troubles raising capital? For years, decades even, after deregulation, who had the best gates, the best counter-space? Who had the established clientele? All this goes back to the days of Air Canada versus CP Air.

Yes, there have been many changes since and the pre-eminent "favoured" status is much reduced but there is still a "legacy".

Is it hair splitting or semantics? I guess it depends on which side of the AC debate you fall.

Quoting DaveT (Reply 37):

I really don't believe Air Canada would collapse for the simple reason that the Canadian government won't allow it too... Say what you wish, but Air Canada is not your normal publicly traded company.
Few public companies have "their own" federal statute. Yes, a federal act of parliament. The Air Canada Public Participation Act. As most know, Air Canada is lawfully required to maintain it's head office in Montreal. Air Canada is also required to maintain MTCE bases in Montreal, Toronto and Winnipeg. No foreigner may own more that 25% of the shares, etc. I believe that the Minister also has a share(s) and on behalf of the Queen, is the only one who may assume all outstanding shares, but I'm not a lawyer so don't quote me on the last point..

When the Flight Attendants were about to go on strike, who intervened with back to work legislation. The government. If the government won't even permit an Air Canada employee group to strike, they sure as heck will not allow the airline to collapse.

The government alone, for their own survival needs Air Canada. The government has to travel and needs to be in places WJ doesn't even serve, nor will they likely ever. The provincial governments, too need to travel and by default, Air Canada is normally taken over WJ. It just doesn't look good when the Canadian taxpayer is paying for federal (and provincial) employees from management positions to high ranking bureaucrats and Ministers as well flying on a foreign airline, including U.S. airlines... There are hundreds of these people flying Air Canada daily and who keep the government operating.

Anyway, the government also will have to accept some fault here and so that they don't end up being partly (or fully) blamed for an Air Canada collapse, they would save the airline. Canada's airlines are taxed to death.. passenger tickets are taxed heavily.. The major Canadian airports are forced to pay a ridiculous annual "rent" to the government even though they (the feds) don't put one darn dollar back into the airports... I don't know too many things you pay "rent" on and it comes with no support or service.

Couldn't have said it better myself. Thanks Dave!
 
rising
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Posts: 176
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RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 1:56 am

Quoting GregsterYUL (Reply 45):

What part of the article is inaccurate? Is Air Canada in a much better position than their bond ratings, finances, labor relations, stock price, and statements by executives let on.

Perhaps your friends at the Air Canada finance department could help us to understand.
If it doesn't make sense, it's probably not true.
 
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Revelation
Posts: 22696
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RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 2:07 am

Quoting yyz717 (Reply 43):
Quoting flyyul (Reply 33):
-An archaic pension system that was inherited prior to Air Canada's privatization, and the complete unwillingness of union's to reform the system.

This is for AC management to tackle. They have failed.

How do you suggest AC management could have achieved significant pension reform?
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cslusarc
Posts: 553
Joined: Wed May 04, 2005 2:29 pm

RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 2:15 am

I like the idea of having Air Canada as our national airline, but should it remain a for profit company is the big question. If most airlines around the world can't make a profit, should it restructure as an independent non-profit public benefit corporation?
--cslusarc from YWG
 
multimark
Posts: 458
Joined: Sat Jul 29, 2006 1:53 pm

RE: Air Canada Struggling To Avoid Bankruptcy

Sun Dec 04, 2011 2:17 am

There are rumours this story is some sort of EK plant, designed to stir up trouble for AC. It does make you wonder why SF Gate would be running a story on AC?

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