airbus320

Edited because i am having problems bringing upt the link to Yahoo Business news. My apologies.

[This message has been edited by airbus320 (edited 02-08-2001).]

Andrew Yiu

Here it is:
http://biz.yahoo.com/rf/010208/n08157358.html

Fly Boy

AC worries me. I fear history is repeating itself

Shareholder

If history is repeating itself it is likely because this country's marketplace cannot sustain more than one carrier, and with charter carriers and various startups eating away at AC's bread and butter routes and forcing it to sell tickets at uneconomical fares [for its overhead and cost structure], what else can you expect?

Monopoly is not popular, but it may be the only way a private company can operate a full service, full destination airline and return anything to its investors. One can ..... all one likes about the drawbacks of a megacarrier like AC (including the coercive power yielded by a certain union at the company), but that is the reality in a small market country like Canada, with great spaces to cover and high operating costs to be recouped.

Competition keeps prices down, but it may also have other consequences.

Fly Boy

I just thought of how Wardair, amazing service, excellent airline, but with a s*** load of debt, merged with 'big bad' CPAir. Sometimes I wonder if Milton would have been better off taking a more Darwinian approach to all this

Shareholder

And what of the total chaos that would have reigned for months as AC tried to accommodate CP travellers if he had let everything collapse? It would make what we went through with integration look like a picnic and not enhance AC's reputation with anybody. And Canadians just don't look the other way when 16,000 people are put out of work in one fell swoop and it could have been avoided. Anyhow, we've been through this hundreds of times, Fly Boy. Maybe you and Conrad Black can appreciate Thatcherism, but I think Canadians demonstrated overwhelmingly at the last election they are quite happy with "the Liberal way" of doing things. [Except for those in western Canada, but as the PM says, they don't really count... ]

In any case, the markets seem to still like AC: stock was up 55-cents yesterday, and they actually placed $250 million [instead of the intended $100 million] of debt with no problem the demand was so high. I suspect many aviation analysts don't give the competition much of a chance for long term survival.

Fly Boy

IMO Canadian's were given no real choice in the last General Election. If Conrad Black, Peter White and David Radler were running AC, we would see a top rate product both for passengers and shareholders. If only we could be so lucky as to have them running this airline...

AC*SE

Why do you think the likes of Black, White and Radler aren't in the airline business?

Airlines are, by and large, fabulous ways to tie up gobs of capital with little or no yield and growth.

Even worse, the AC business model simply cannot be compared to the few success stories out there. It must maintain service over a vast area, with very small market density, in an environment of price hyper-sensitivity.

As for issuing the notes, it was actually a very well timed move. The market is screaming for yield products right now, and a debenture at 9% is a pretty attractive product.