[QUOTE=Sebring]
Well I guess there is a sucker born every minute
Do they all wear speedos?
a) based on 12 months a year, not a one-quarter analysis, and unless you lived on Uranus the past year, you would know that ACE made money in 2005, therefore basing the future on a one-quarter analysis is rather stupid. Coffeebean does it to misdirect - those who accept it at face value need help.
Its the old black magic thing of creating something from nothing. What CB's analysis tells me is that AC is making very good money in the peak months because their annual profits are fine for year one of a newco. Imagine when they do learn to smooth out their weak quarter a little better which I'm sure is a key management strategy.
b) airline profits are the excess of total revenues over total expenses, not costs alone. If an airline makes more per seat mile than it spend per seat mile, irrespective of the competition's seat-mile cost, it can make money. Coffeebean doesn't tell you that part
Right on and he does not tell you that WS probably cooked the books to show that petty profit they did make in Q4. You can readily move numbers from one Q to another easily and make them GAAP legal. I do it for my clients all the time and I'm not even a CA. Even then the maket has seen through it and punished their stock a lot more than it has ACE.
Also, the reason WS didn't hasn't added a smaller jet is because it doesn't want to break up its one-fleet type pay scale. A smaller jet would only make sense if the pilots were paid less than their colleagues to fly it. For WS, with its now increasingly small and erratic profit sharing, that would be deadly. Can you imagine trying to recruit pilots offering $25,000 in base pay a year? Can't do it, and they know it, and they can't pay the 737 rate to fly a smaller plane.
Hell, if they did that I couldn't call them the one trick pony any longer
When WS considered the E190, it never had any idea of final pricing. Therefore any cost analysis of what AC paid is bogus. Coffeebean doesn't know AC's ownership cost on the 190, and he knows now - but didn't know at the time- that AC would get a special low wage rate for the E-Jets, made even lower by the CCAA cuts. And they didn'ty know that Embraer would build a longer-range version called the AR. It is likely for many reasons that the E-Jet wasn't for Westjet, but that doesn't mean it was "dumb" for Air Canada.
Those jets are going to make Point to point flying in NA very interesting. They might even be able to bypass expensive airports like YYZ more often as well.
And don't tell us about inefficient aircraft, when the 737-600 is an overweight flying PIG that is being shunned by the smart airlines, even the smart discounters.
The operative word here is "smart"
