AC Provides Financial Update on COVID-19 (16Mar20); Long-term changes coming?
#47
Join Date: May 2015
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I would much prefer the government lend them money, with interest charged, and be in a better position to recoup money if things don't work out. They can take warrants if they want some equity upside. This was the model for many of the bailouts during the financial crisis.
Key thing is they should not get a free ride. If that tax payers help them out, the tax payers need to be compensated when life is back to normal.
WestJet and Air Canada are to big to fail and we need some domestic competition when this is all over. The other players not so much.
#49
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I can go along with warrants or convertible bond. Over the next year the government may have to force these guys to keep certain routes open. Any such intervention should be limited and only until the regular markets can take over.
Key thing is they should not get a free ride. If that tax payers help them out, the tax payers need to be compensated when life is back to normal.
Key thing is they should not get a free ride. If that tax payers help them out, the tax payers need to be compensated when life is back to normal.
WestJet and Air Canada are to big to fail and we need some domestic competition when this is all over. The other players not so much.
Your talking about a massive policy intervention - this would require massive effort too, which cannot happen in the time-frame necessary to move this along.
I was directly involved in the failed Canadian Airlines bail-out, and time is of the essence.
You are looking for perfection when speed to solution is what counts here.
I was directly involved in the failed Canadian Airlines bail-out, and time is of the essence.
You are looking for perfection when speed to solution is what counts here.
#51
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What I don't wanna see is some pricey bailout then watch AC (or anyone) go quickly-ish back to record profits and not have any repercussions. That KIND of thing seems to happen all too frequently.
My friends and I were spitballing today, just thinking out loud, and someone posed the idea that maybe instead of just giving private citizens a cheque, money could get given to companies to dole out...I don't trust that at all, I have no confidence that corporate greed would far outweigh corporate good. Any money from the govt too would need to come with serious conditions, no share buybacks, no bonuses, no raises, no dividends, just straight pay to front line employees.
My friends and I were spitballing today, just thinking out loud, and someone posed the idea that maybe instead of just giving private citizens a cheque, money could get given to companies to dole out...I don't trust that at all, I have no confidence that corporate greed would far outweigh corporate good. Any money from the govt too would need to come with serious conditions, no share buybacks, no bonuses, no raises, no dividends, just straight pay to front line employees.
Last edited by tcook052; Mar 18, 2020 at 7:29 am Reason: Off topic
#52
Join Date: May 2015
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I didn't say this shouldn't happen.
What I'm saying is while you may very well get fig-leaf to cover the complaints about corporate bail-outs, the reality is this ends up in front of Cabinet, and the funds will need to come out of Treasury Board - another Minister from Quebec.
policy vs politics - which wins even in these serious conditions?
To pretend politics is NOT going to matter in what comes forward is NOT realistic - and you can bet your bottom dollar that AC will use every method possible including engaging Quebec City to advance a preferable outcome - will they be successful, my bet is current jobs over future debt anytime (and I'm not saying this is right, just reality)
ps...and you will find many of my posts that decry the lack of competition in Canada, advocating open markets, etc...so don't count me as advocating policy intervention...btw...a bail-out is by definition a policy intervention
What I'm saying is while you may very well get fig-leaf to cover the complaints about corporate bail-outs, the reality is this ends up in front of Cabinet, and the funds will need to come out of Treasury Board - another Minister from Quebec.
policy vs politics - which wins even in these serious conditions?
To pretend politics is NOT going to matter in what comes forward is NOT realistic - and you can bet your bottom dollar that AC will use every method possible including engaging Quebec City to advance a preferable outcome - will they be successful, my bet is current jobs over future debt anytime (and I'm not saying this is right, just reality)
ps...and you will find many of my posts that decry the lack of competition in Canada, advocating open markets, etc...so don't count me as advocating policy intervention...btw...a bail-out is by definition a policy intervention
I think the critical factor is when we get to the other side of this for the rest of the free market to function there has to be some basic level of air travel that is functional. This is in the same camp as the electrical system, phone network, the railways, or the ports.
There needs to be two players that are strong enough to defend themselves against each other.
Where the head office is located is not material to the overall outcome. If one has its head office in Montreal and the other in Calgary that is a minor detail.
#54
Join Date: Mar 2019
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The Feds already don’t look good in handling this whole crisis so I doubt they’re keen to add corporate giveaways to the opposition’s arsenal.
#56
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As long as it isn't capitalize the gains while we socialise the losses I am all for government assistance. Banning stock buybacks post-bailout would be a great start. Too early to tell how this plays out.
#57
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I didn't say this shouldn't happen.
What I'm saying is while you may very well get fig-leaf to cover the complaints about corporate bail-outs, the reality is this ends up in front of Cabinet, and the funds will need to come out of Treasury Board - another Minister from Quebec.
policy vs politics - which wins even in these serious conditions?
To pretend politics is NOT going to matter in what comes forward is NOT realistic - and you can bet your bottom dollar that AC will use every method possible including engaging Quebec City to advance a preferable outcome - will they be successful, my bet is current jobs over future debt anytime (and I'm not saying this is right, just reality)
What I'm saying is while you may very well get fig-leaf to cover the complaints about corporate bail-outs, the reality is this ends up in front of Cabinet, and the funds will need to come out of Treasury Board - another Minister from Quebec.
policy vs politics - which wins even in these serious conditions?
To pretend politics is NOT going to matter in what comes forward is NOT realistic - and you can bet your bottom dollar that AC will use every method possible including engaging Quebec City to advance a preferable outcome - will they be successful, my bet is current jobs over future debt anytime (and I'm not saying this is right, just reality)
What's different now from the CP discussions you referred to earlier, or post-9/11, or AC's 2003 restructuring, is that the airline business has cleaned itself up. For decades, it was consistently unprofitable, with overcapacity and unsustainable costs for wages etc. That has changed significantly in the past 10-15 years as the industry has consolidated, negotiated better labour contracts, and generally made itself profitable. The cause of this crisis for airlines is a true externality, and the airlines might be happy to keep operating if not for all the travel bans and other restrictions placed on their business, so it's really a government decision to shut their business down that will hurt them.
What I don't wanna see is some pricey bailout then watch AC (or anyone) go quickly-ish back to record profits and not have any repercussions. That KIND of thing seems to happen all too frequently.
My friends and I were spitballing today, just thinking out loud, and someone posed the idea that maybe instead of just giving private citizens a cheque, money could get given to companies to dole out...I don't trust that at all, I have no confidence that corporate greed would far outweigh corporate good. Any money from the govt too would need to come with serious conditions, no share buybacks, no bonuses, no raises, no dividends, just straight pay to front line employees.
My friends and I were spitballing today, just thinking out loud, and someone posed the idea that maybe instead of just giving private citizens a cheque, money could get given to companies to dole out...I don't trust that at all, I have no confidence that corporate greed would far outweigh corporate good. Any money from the govt too would need to come with serious conditions, no share buybacks, no bonuses, no raises, no dividends, just straight pay to front line employees.
As such, do you really believe that the political strategists at AC are NOT advising on how AC can protect its balance sheet against gov't claw back. What I read here is AC will/should just roll-over and accept what might make for normal taxpayer protections - we are NOT in normal times, and AC shareholders looking forward will demand mgmt NOT give away the farm.
And this is where politics will come into play - with respect, it is NOT realistic to believe AC HQ location doesn't matter in the discussions to come.
And this is where politics will come into play - with respect, it is NOT realistic to believe AC HQ location doesn't matter in the discussions to come.
The logical solution is for the government to lend money with an equity kicker. AC would be bridged through the difficult period, the government would get some post-recovery upside, AC's shareholders and existing debtholders stay in place, and it costs shareholders some of their upside. What I'm advocating is a structure that was used a number of times in the financial crisis, this isn't rocket science.
As for location of HQ, it will be very hard for the government to give AC a better deal than WS.
#60
Join Date: May 2015
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Folks here are correctly looking beyond the current difficult circumstances - client just asked that I write article for immediate dispatch on Enterprise Recovery so what is posted here is useful fodder so I discount nothing, and look forward to more inputs by Monday when I must submit.
As such, do you really believe that the political strategists at AC are NOT advising on how AC can protect its balance sheet against gov't claw back. What I read here is AC will/should just roll-over and accept what might make for normal taxpayer protections - we are NOT in normal times, and AC shareholders looking forward will demand mgmt NOT give away the farm.
And this is where politics will come into play - with respect, it is NOT realistic to believe AC HQ location doesn't matter in the discussions to come.
ps...and the oil patch will tell you a Calgary HQ appears meaningless in Ottawa.
As such, do you really believe that the political strategists at AC are NOT advising on how AC can protect its balance sheet against gov't claw back. What I read here is AC will/should just roll-over and accept what might make for normal taxpayer protections - we are NOT in normal times, and AC shareholders looking forward will demand mgmt NOT give away the farm.
And this is where politics will come into play - with respect, it is NOT realistic to believe AC HQ location doesn't matter in the discussions to come.
ps...and the oil patch will tell you a Calgary HQ appears meaningless in Ottawa.
As for head office relocation that is something no one is going to touch. AC head office is in Montreal. It is not moving. The rules that fore it to be in Montreal are not changing. WS head office is in Calgary that rules that fore it to be somewhere in Canada are not changing. The government is not going to touch that Pandora box. The MPs and local politicians from Quebec will go to local media and claim how they saved local jobs as they should. However those jobs were never at risk of moving.
As for Calgary, the Liberals know they need to at a minimum not appear to be against Alberta. My gut instinct is the objections to the trans-mountain pipline will die down and it will quietly get built. It may be the only major oil project being run out of Calgary for the next year or two given where the price of oil is going. WestJet will be "saved" and no one is going to be pushing for its head office to move either.