Air Canada CEO lands a $52.7-million payday
Aug 10, 2019, 11:52 am
#46
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AC is moving its platform. And in any case, this does not cost the company anything. He pays a fixed amount for his new shares that he can then sell into the open market at the current valuation. It means nothing to AC or its balance sheet. You could have done just as well had you bought AC stock at between $1 and $2 when the company came out of bankruptcy protection. AC also put almost $2 billion into the employee pension fund, modernized the fleet and gave decent contracts to employees. What's your complaint again?
Aug 10, 2019, 12:00 pm
#47
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Bingo, in fact, if I was a Canadian frequent flyer patronizing AC - I'd be furious that the guy flying from small town USA pays half the premium fare, and quarter of the economy fare to Asia/Europe.
How many USA-China $400 pax are loyal to AC and "brand aware", and how many would ditch them as soon as someone else offered $395
How many USA-China $400 pax are loyal to AC and "brand aware", and how many would ditch them as soon as someone else offered $395
And what has this to do with Calin's options?
Aug 10, 2019, 3:20 pm
#48
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And the general public pay rock bottom fares and get service commiserate with the fares they pay. Basic fare = basic service.
Go ahead - what airlines? I'd argue that for customers with status that are loyal to an airline, the service they receive at some of these other carriers isn't that much better.
Go ahead - what airlines? I'd argue that for customers with status that are loyal to an airline, the service they receive at some of these other carriers isn't that much better.
And by the way, the service you're going to get for buying a "comfort" fare over a "basic" fare on Air Canada is identical. Even PY is essentially identical as well. The only place you're going to get better service by paying for it is in J, usually. And there are plenty of airlines who manage to provide better service and clean their planes and they're not charging twice what Air Canada does. Their stock might not be performing as well mind you.
Aug 10, 2019, 4:39 pm
#49
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Go fly SQ economy and get back to me.
And by the way, the service you're going to get for buying a "comfort" fare over a "basic" fare on Air Canada is identical. Even PY is essentially identical as well. The only place you're going to get better service by paying for it is in J, usually. And there are plenty of airlines who manage to provide better service and clean their planes and they're not charging twice what Air Canada does. Their stock might not be performing as well mind you.
And by the way, the service you're going to get for buying a "comfort" fare over a "basic" fare on Air Canada is identical. Even PY is essentially identical as well. The only place you're going to get better service by paying for it is in J, usually. And there are plenty of airlines who manage to provide better service and clean their planes and they're not charging twice what Air Canada does. Their stock might not be performing as well mind you.
Aug 10, 2019, 9:53 pm
#50
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But coming back to compensation: the latest stats for July show that AC ranks 31st/41, or roughly 25% of the top performer, in terms of on-time arrivals, with 68% of flights arriving on time. So maybe the compensation shoulda been $68M, not $25m.
Aug 11, 2019, 7:07 am
#51
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Nice strawman. You'll notice every single post I've made in this thread points out that, from an entirely financial perspective, the decisions Air Canada take make sense.
Apart from Singapore Airlines, the majority of the top service airlines - Cathay, Lufthansa, Etihad - are not performing well financially. The margins in the airline business are razor thin. Healthy carriers running a sound business model is preferred to the constant churn of Chapter 11 in the US and CCAA in Canada that plagued the industry prior to the rationalization. The options are the healthy carriers we have now, the basket cases we used to have, or regulation of the industry (with the accompanying high prices).
My business is working on its 2020 plan for our board, and almost every decision is about trading off shorter term financial performance for longer term growth and improvements for our customers. Fortunately we are not (yet) publicly traded, but the fundamental principles are the same. From where I sit, entirely as a frequently flying passenger, Air Canada has gone too far in one direction - I'm happy that they're not at risk from bankruptcy, but I think their cost cutting to make that happen impacts their ability to deliver service in a way that could hurt them long term, especially if a competitive market in Canada ever materializes.
I'm entitled to simultaneously decide Air Canada is the best option for me and also have a nuanced opinion about the level of service they provide. Black tags on my rollboard don't prevent me from looking at things objectively, which is apparently more than we can say for you.
Last edited by RatherBeInYOW; Aug 11, 2019 at 7:13 am
Aug 11, 2019, 7:27 am
#52
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I'm entitled to simultaneously decide Air Canada is the best option for me and also have a nuanced opinion about the level of service they provide. Black tags on my rollboard don't prevent me from looking at things objectively, which is apparently more than we can say for you.
I am glad that AC is doing so well financially. It gives them room to maneuver and add back in some services in the future should they choose to. Many airlines have service as bad or worse and are still barely in the black.
Aug 11, 2019, 7:43 am
#53
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the latest stats for July show that AC ranks 31st/41, or roughly 25% of the top performer, in terms of on-time arrivals, with 68% of flights arriving on time. So maybe the compensation shoulda been $68M, not $25m.
Wait till February, they willbe 41/41 again
Clearly OTP is irrelevant to the financial success of this airline, so why bother doing anything about it?
Aug 11, 2019, 8:11 am
#54
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Remember it's the little guy that pays higher taxes so the fat cats can receive their tax deductions.
Aug 11, 2019, 8:54 am
#56
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Nice strawman. You'll notice every single post I've made in this thread points out that, from an entirely financial perspective, the decisions Air Canada take make sense.
Ah, so I provided an example for you, and you decided that example doesn't count. And literally none of what you wrote here is true, the world is not so black and white - it isn't either bankruptcy or amazing financial performance. The margins in the airline business are not somehow "razor thin" by default, they just operate in a climate of highly unpredictable costs and fickle demand, making it very hard to run a business successfully from a financials perspective long term - which again, from a financial perspective, makes what Calin has done impressive and it is why he's earned what he's received.
My business is working on its 2020 plan for our board, and almost every decision is about trading off shorter term financial performance for longer term growth and improvements for our customers. Fortunately we are not (yet) publicly traded, but the fundamental principles are the same. From where I sit, entirely as a frequently flying passenger, Air Canada has gone too far in one direction - I'm happy that they're not at risk from bankruptcy, but I think their cost cutting to make that happen impacts their ability to deliver service in a way that could hurt them long term, especially if a competitive market in Canada ever materializes.
I'm entitled to simultaneously decide Air Canada is the best option for me and also have a nuanced opinion about the level of service they provide. Black tags on my rollboard don't prevent me from looking at things objectively, which is apparently more than we can say for you.
Well then maybe you should offer up you "expertise" in advising AC how to run its operations. I'm not ignoring Singapore at all - they have also moved to a structure similar to AC whereby they have an airline within an airline (Scoot) to deal with their cost structure. Their service may be better (although robotic in my experience) but they operate in a wholly different environment to AC - one hub with no domestic operations. Cathay, who operates in a much more competitive environment in Hong Kong, has been densifying its aircraft and reducing services in an attempt to compete. Many of their frequent flyers report a reduction in the quality of the service provided.
Margins are small in the industry - the best margins, such as Southwest, are about 15%, whereas carriers such as American, are at closer to 5%. AC was at 9% in the second quarter. Suggesting what I have said as being untrue ignores the history of the North American airline industry since deregulation. How many carriers have gone under trying to compete in the challenging Canadian market with its small population, massive distances, and unpredictable weather. Even Westjet has had its struggles recently. It wouldn't take much to push the profits back to a loss (as history has shown). Being disciplined in the approach to running the business, as you have pointed out, has led to commendable performance by AC in the past few years, and is a credit to their CEO (as you also point out).
You can be nuanced in your feelings - the OTP is certainly an ongoing issue that is frustrating for passengers. I suspect that their ongoing cost transformation will ultimately lead to changes targeted to customers once there is consistent solid financial performance for multiple consecutive years (such as what Delta has done).
It's easy to be critical - what would you offer up as a solution to your "nuanced" concerns?
Aug 11, 2019, 9:18 am
#57
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And the products I am responsible for generate an order of magnitude less revenue than Air Canada. Again, my perspective is that of a consumer of their services.You can be nuanced in your feelings - the OTP is certainly an ongoing issue that is frustrating for passengers. I suspect that their ongoing cost transformation will ultimately lead to changes targeted to customers once there is consistent solid financial performance for multiple consecutive years (such as what Delta has done).
It's easy to be critical - what would you offer up as a solution to your "nuanced" concerns?
It's easy to be critical - what would you offer up as a solution to your "nuanced" concerns?
In my experience some small changes can go a long way - I don't think improving OTP and cleaning planes needs to put AC in to the red.
Aug 11, 2019, 11:48 am
#58
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Customers put me on AC, I do my 100K time, and then opt for other carriers as much as possible.
Aug 11, 2019, 1:03 pm
#59
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I could be considered a top-tier flyer as well, and my experience with Air Canada has been different from yours. AC is consistently mediocre from many perspectives, whether the often indifferent crew, the average catering (with occasional exceptions, to be fair), mostly disinterested customer service, and the watering down of the concierge service.
Customers put me on AC, I do my 100K time, and then opt for other carriers as much as possible.
Aug 18, 2019, 11:21 am
#60
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Although recognizing that this is a discussion about the CEO cashing in on his shares, over the last week I have had the concierge proactively protect me on a earlier flight due to an IRROP, and have had three excellent flights with very gracious SD’s, and very good service. This certainly supports AC working hard to look after their higher end travellers. Kudos to the very conscientious staff that I have interacted with lately.