tcook052

https://www.bnnbloomberg.ca/air-cana...says-1.1524424

Air Canada’s chief executive officer said the airline is open to providing refunds for cancelled flights in exchange for government aid, adding that the company has no interest in offering Ottawa an equity stake.

hoipolloi

So he's basically saying:

• we have a decent/enough amount of cash (translation: we have enough cash to refund passengers for flights they paid for but didn't receive)
• we predict we can survive through the pandemic without government help
• since no one is forcing us to, we're not gonna issue the refunds. (translation: it's not in our interest to do the right thing, so we won't do it)
• we will only refund passengers voluntarily if the government offers an incentive for us to do so

expert7700

I didn't think corporations could be this evil--or bold--until I read this article.

-Plenty of capital already
-Won't repay cancelled tickets (many legally required via US DOT and thousands were sold with AC never intending to operate all the flights)
unless government sues them
unless government pays them for the refunds
unless government pays them for the refunds PLUS substantial additional money. for, umm, reasons.
-With nothing offered in return. No airline equity.
​​​​​
They not only unafraid of government sanctions or legal ramifications. They are doubling down and telling the government to pay Air Canada.

//Competing airlines should run commercials showing people calling police in tears to report a theft of a family's yearlong savings. Have police show up in full force before cancelling the call... "false alarm, it's just Air Canada. Everyone knows we let them rob you blind and might even pay them for doing so."
​​​​​

Sopwith

Calin talks about “government aid” and “support by government”. Why would they need or want this? Because the commercial lending markets won’t touch them, at least not without reasonable security, and even then they’ll expect a decent rate that reflects the risk. So he wants an unsecured, low or zero interest loan from “government”, which actually means vicariously from each and every one of us, whether we agree to take the risk or not. My fear is the “the government” might just be stupid enough to lend them my money with no security, no equity, and a fairly shaky prospect of getting it back. So I’m perfectly okay if Calin wants to go it alone without my backing.

FlY2XS

Lord knows I am not an AC fanboy - just read any of my posts, but dang that guy is good when he has to be the face of the company!
His job is to maximize profits for his shareholders, and he served them well. His isn't there to be a nice guy or do the right thing, which I wish people would, but rarely do. He truly pushed AC through an unprecedented growth, and when the inevitable collapse occurred, he had the company prepared, and now is looking Gov't in the eye and asking, 'Who will blink first?'

tcook052

Since the start of the COVID-19 pandemic in the first quarter of 2020, Air Canada has raised $5.5 billion of liquidity.

Sopwith

Yes, exactly my point: secured and decent rates. Looks to me like they don’t need a government bailout but they’ll take it if they can bamboozle them into better terms than they can get from the market. Good strategy if you can pull it off.

EdmFlyBoi

From the interview with Calin:

“Our objective has been not only to survive, but to be competitive coming out of the pandemic,” Rovinescu said. “We’re competing with carriers around the world that have been supported by their government, so we’d hope the terms would be on a reasonable basis.”

I would suggest there is little doubt that AC will be able to return to profitability when travel returns to pre-COVID levels. Their management team has been able to create a pretty robust carrier over the last 10 years that seems to be able to manage even the most severe downturn. Porter may not survive (they haven't been able to restart), AC is gobbling up Transat (if they get approval), and they have pretty robust JV's and interline agreements with multiple carrier partners around the world. The next 12 months will be really tough, but if they can keep their burn rate below 8 million dollars a day, they may be able to hold losses to well under a billion dollars a quarter. Although that is a lot over 4 quarters, with the amount of liquidity raised already, they will definitely be able to weather 2021.

canadiancow

If you replace the bolded word with "if", then I agree with you. But that's far from certain.

EdmFlyBoi

That's a very fair comment. It seems likely that inoculation with the vaccine will begin by the second quarter of 2021. As a healthcare worker in Alberta, and with the 650K doses purchased by the Alberta government, I suspect I will likely be immunised by the end of the second quarter at the latest.

What will be interesting will be what various entities require as proof of vaccination (such as AC) and how the interplay between this and privacy laws pan out. I would assume (although I certainly could be wrong) that if you are vaccinated, and can provide proof of it, that international travel may be possible again. Big assumption however.

tracon

PD has been able to restart. They have chosen not to for economic reasons.
A large portion of their business is to regions that require 14 day quarantine either at destination or upon return.
I'm suprised they haven't been running a few flights to YOW/YUL.
Apparently there isn't enough business traffic on those routes to profitably run a few planes.

canadiancow

That's not even my point.

A lot of companies have realized certain types of business travel is pointless, given the current state of technology. Some business travel is gone forever. If that represents 5% of AC's lucrative travel, they'll be profitable again in short order. If it's 50%, that could be much more challenging, and AC will have to figure out how to adapt.

EdmFlyBoi

And they will adapt I suspect. Face time with clients/prospective business partners is still important. There is definitely a role for virtual platforms for a lot of work (I do a lot myself and will continue to do so). When the pandemic is behind us it seems unlikely that our desire to be mobile will not return. While somewhat anecdotal, I know a fair number of people who cannot wait to get back to traveling. I certainly miss the travel I once did and conferences and research presentations are not the same over Zoom.

YOWgary

Or enough traffic, period.

WS and AC usually combine for about 30 YOW-YYZ non-stops a day.

Tomorrow, it's a total of five, and that's one of the busier routes in the country.

Resurrection

Perhaps, but he better not whine about competing with carriers who did take advantage of the "massive failure" of giving governments an equity stake in return for state aid.