Originally Posted by
ac-YUL
The two "bailouts" AC needs right now are not a cash infusion, but rather logic injected into the operating environment in which AC lives:
1) Adjustment of pension deficit repayment rules to allow 10 year repayment rather than 5 years, aligned to the economic cycle (and every other major economy in the world).
2) An immediate reduction of airport rent collected by the government, particularly at Pearson. This is ultimately is a tax on air travel and a huge burden on Air Canada due to higher landing fees etc - most of which is not recouped via higher fares. As has been much discussed, YYZ is the most expensive airport in the world to operate out of. And AC is obviously impacted more than any other carrier by this.
Outside of this, AC has a sound business model (with, I won't deny, customer service challenges that need to be fixed) and without these two heavy burdens the future looks brighter. No government cash required (or has ever been provided).
Another money-losing factor is the fuel contracts that were signed at top dollar. I recall that the fuel hedges accounted for about $90 million for one quarter in 2008 (I think it was reported in Nov or Dec). As the contracts go until sometime this year, AC will continue to put this in the loss column, adding to its woes. While this is only short-term, it would seem that this is the 'critical' period.
FWIW, I think AC will continue, especially if Canada does not get hit as badly as other countries do with the recession. It may end up being smaller, but then again, so will practically every other airline in the world!