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AC Provides Financial Update on COVID-19 (16Mar20); Long-term changes coming?

AC Provides Financial Update on COVID-19 (16Mar20); Long-term changes coming?

Old Mar 16, 20, 10:47 am
  #1  
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AC Provides Financial Update on COVID-19 (16Mar20); Long-term changes coming?

https://aircanada.mediaroom.com/2020...se-to-COVID-19
  • Withdraws 2020 and 2021 guidance
  • Current liquidity level of $7.3 billion
  • Capacity reduction of 50 percent in the second quarter versus the prior year's quarter
.....
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Old Mar 16, 20, 11:01 am
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The projected capacity reductions seem... optimistic given that nearly all international travel will probably halt coupled with significant demand reductions domestically.
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Old Mar 16, 20, 11:02 am
  #3  
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Originally Posted by eigenvector View Post
The projected capacity reductions seem... optimistic given that nearly all international travel will probably halt coupled with significant demand reductions domestically.
In the context of their financial position, these optimistic projections are actually pessimistic...
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Old Mar 16, 20, 11:18 am
  #4  
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Originally Posted by eigenvector View Post
The projected capacity reductions seem... optimistic given that nearly all international travel will probably halt coupled with significant demand reductions domestically.
Cargo?
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Old Mar 16, 20, 2:48 pm
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Airline operational reductions as in the stock market(s) they fall fast but take along time to resume back to normal, probably a new normal will be the outcome, whatever that may look like.
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Old Mar 16, 20, 4:57 pm
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Change to Aeroplan in Future? Points Devaluation?

Wondering if anyone thinks we may see a points devaluation or other issues if Air Canada suffers major financial losses and doesn't want to cover the costs associated with all the points liabilities it bought.
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Old Mar 16, 20, 5:03 pm
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Way to early to even speculate on this, the situation is still changing hourly imo. Probably very low on the AC/AE priority list as well.
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Old Mar 16, 20, 6:01 pm
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Originally Posted by Admiral Ackbar View Post
Way to early to even speculate on this, the situation is still changing hourly imo. Probably very low on the AC/AE priority list as well.
Agreed. Way too early to know. Who knows, it could go the other way too. If bookings are down they might offer more inventory to get people to book flights via points and try and make some revenue on ancillary fees/surcharges/etc. If AC were simply to make everyone's point balance worthless, it wouldn't generate much goodwill when the airline is trying to ramp up its customer base again...
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Old Mar 16, 20, 6:03 pm
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Anyway, isn't there an entire thread somewhere where this is being discussed (or better, subject of speculation)?
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Old Mar 16, 20, 7:59 pm
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The theory of AP and most other FFP's is that they're never giving away seats that they feel, based on statistical modelling, are saleable for revenue. Inventory management policies reflect such.

So AP doesn't 'cost' the airline anything to offer to its customers. Hence, AP points don't have to be recorded as huge liabilities as the carrier retains the legal right of devaluation and limitation. These 'worthless' seats also allow the allusion to be maintained in the eyes of the CRA that AP points are worthless and hence not an employee benefit that needs to be T4'ed.

However, the claim of being able to redeem for free flights has to be credible enough that the customers actually believe such. So they have to match redemption levels with demand for that limited subset of unsaleable seats.

Most AP-linked credit cards have earnings that are fixed as a percentage of dollar spend, such as 1 point per dollar, or 2 points per dollar. If prices in the economy deflate significantly, AP points earning from the partner credit cards will fall, and hence, AP points earned through the use of AC services will become more dominant in terms of the overall points earning and redemption.

Despite the big FF'ers on FT who have 200, 300, 400k balances, the average points balance is not all that considerable.
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Old Mar 16, 20, 8:08 pm
  #11  
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When money is tight (and, as far as airlines go, AC is not in that boat), one way to for sure make matters worse is to annoy your bankers.

.....

The same bankers who underwrote the AE acquisition for the obvious selfish purpose of not having points be devalued.

I think we are safe.
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Old Mar 16, 20, 8:27 pm
  #12  
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Originally Posted by Stranger View Post
Anyway, isn't there an entire thread somewhere where this is being discussed (or better, subject of speculation)?
Well...

Air Canada to Launch Its Own Loyalty Program in 2020

This one was closed

Altitude 2020/21 Program Benefits Speculation Thread

......

And yes, before someone comes along and points out whatever, I'm aware the OP asked Change to Aeroplan in Future? Points Devaluation?

i am also aware that we still have 2 separate entities, AC and Aeroplan and of course, the angst of the new yet-to-be-announced program, which I'm sure will generate a few more threads.
.

Last edited by 24left; Mar 16, 20 at 8:46 pm Reason: add info
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Old Mar 16, 20, 9:26 pm
  #13  
 
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Honestly I kinda think this was already coming at least a little bit with the new program. We've already seen the Mini-RTW get nerfed. I kinda thought that the program might have a good first year, or TWO, to try and pump it's tires and show off, but then that it would get cut a bunch in the year after.
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Old Mar 16, 20, 10:53 pm
  #14  
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Originally Posted by drvannostren View Post
We've already seen the Mini-RTW get nerfed.
In what way? Aeroplan.com says the change was temporary, and I'm pretty sure Mark Nasr is on record that they'll bring back the second stop with the new system.
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Old Mar 16, 20, 11:06 pm
  #15  
 
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Originally Posted by Rundosrun View Post
Wondering if anyone thinks we may see a points devaluation or other issues if Air Canada suffers major financial losses and doesn't want to cover the costs associated with all the points liabilities it bought.
I think changes to the program in 2020 is going to be off the table. They have far more important things to focus on just now.

My prediction is for the next couple of months we are going to see a subset of the 777 fleet flying around to a few international destinations like Narita, and London to move high value cargo around. Lots of empty seats to fill at rock bottom prices with cash or points.
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