tcook052

http://www.theglobeandmail.com/repor...ticle16532548/

Just when Air Canada has put its threatening pension deficit behind it, the sudden fall of the Canadian dollar has thrown the airline another curve ball.

“We have a massive exposure to the U.S. dollar,” said Calin Rovinescu, Air Canada’s chief executive officer, after a speech at the Canadian Club of Montreal.

Fuel is Air Canada’s single largest expense. It represented 30 per cent of the airline’s costs in the first nine months of 2013, and it’s sold in U.S. dollars. So are the planes that Canada’s biggest carrier has been eagerly ordering as it seeks to renew its fleet with fuel-efficient jets.

jlisi984

Should have hedged your currency!

margarita girl

Tried and true solution: introduce additional fuel surcharges. This should also preserve the integrity of the J cabin or some other such gobbledygook.

cooleddie

I think it has been reflected by the drop in stock price.... Canadians may think twice when travelling out of country

hydrogen

Why is it AC's issue? Obviously it's going to get passed to the customer.

YYCheap

Here comes the baggage fees, surcharges, and the end of free water

YYBGrinder

All my flights are billed back to customers at cost + 10% AND my salary is paid in US funds while I live in Canada. All I have to say is DIVE LOONIE DIVE

TemboOne

If that's your attitude to your fellow Canadians all I can say is "I hope to he** we tax you to the hilt - in U.S. dollars - and allow you a minimum of miniscule deductions and exemptions - in Canadian Loonies".

Enjoy your American dollars - and don't forget to convert your inflated income to CA$ when paying OUR taxes.

By the way, do enjoy AC while it still has lots of flights. A falling Loonie means lots less international travel with flights curtailed, cancelled or downsized.

Stranger

Nonsense. Fuel may be *priced* in US dollars. Does not mean anything though. Red herring.

In other words, if the US dollar goes up against most other currentcies, fuel price in US dollars should go down.

As to buying fuel efficient planes. looks like AC decide they would rather go for cheaper ones than more fuel-efficient ones, I think?

So does Calin already regret them being cheap? :

YYBGrinder

Easy tiger

I live in Canada so I pay OUR taxes. I just happen to work for a French company out of a Houston based office and am technically self employed in the eyes of the CRA. All income is reported as it should be.

I spent a few years working with a strong loonie so I've felt both sides of the coin, I'm just happy that it's swung my way for while.

Spounce

Isn't that a bit simplistic? Malaysia Airlines has just announced that it's pulling out of its one route to the USA and has cited current fuel costs (within the context of the current state of the US dollar, I'd assume) as one of the reasons.

ac777

why worry? There will be XD on your ticekt which will be a) USD surcharge b) it will be there to stay. On a more serious note AC probably uses hedging strategies to protect itself as the drop in the loonie was predicted months ago.

Stranger

The orginal statement was overly simplistic. Airlines have revenue in a number of countries and currencies. Same for expenses. Fuel is not really the issue: if the USD goes up, fuel price in USD should go down. Airplane lease or purchases may be the main issue. Or securities/loans denominated in USD.

But I suspect the main issue is differences in the balance domestic/US/overseas between revenue and expenses. Surely the main component of AC's costs is domestic, because of salaries etc. Should be similar for revenue, but perhaps not to the same extent? Or to a larger extent?

Anyway, the man looks more stupid than I expected him to be. Or is it just arrogance and he thinks a statement that he himself may not believe in is good enough for the rest of us?

Spounce

The original statement was that AC has massive exposure to the US dollar. I think it was accurate.

drvannostren

Agreed, I'd fully expect to see "Currency conversion" right underneath "fuel surchage"...problem is it'll be bull****. It'll be an arbitrary fee (say $12 per $100) attached to the ticket rather than any real representation of the current rates.

Not only that but then 10 years from now when the Canadian dollar is valued at $1.10 USD or whatever, that fee will STILL be there, much like the AIF that has been in effect at YVR for more than 10 years now, and well after the original project had been completed. "We can always charge the AIF as long as we're under construction". Hence, YVR literally being under construction every day for the 6 years I worked there, and still to this day a year later.