AC reports highest Oct. load factor ever
 

MONTREAL, Nov. 4 /CNW Telbec/ - Air Canada reported a system load factor
of 77.7 per cent in October 2004, the highest ever for October. The mainline
carrier flew 7.7 per cent more revenue passenger miles (RPMs) in October 2004
than in October 2003, according to preliminary traffic figures. Overall,
capacity increased by 1.5 per cent, resulting in a load factor of 77.7 per
cent, compared to 73.2 per cent in October 2003; an increase of 4.5 percentage points. In the domestic market, capacity decreased by 8.3 per cent while traffic increased 1.7 per cent resulting in a domestic load factor of
80.1 percent - a 7.8 percentage point increase year over year.
Jazz, Air Canada's regional airline subsidiary, flew 4.3 per cent more revenue passenger miles in October 2004 than in October 2003, according to preliminary traffic figures. Capacity decreased by 17.1 per cent, resulting in a load factor of 72.4 per cent, compared to 57.5 per cent in October 2003; an increase of 14.9 percentage points.
"In October we again achieved record system and North American load factors as traffic continued to grow and capacity was tightened. The decrease in North American capacity reflected the elimination of our Boeing 737 fleet as well as the redeployment of some aircraft to the rapidly growing Latin America market," said Rob Peterson, Executive Vice President and Chief
Financial Officer. "Our simplified web fares, now also fully available in the
Transborder US market, continue to grow in popularity. We have clearly become the airline of choice for the lowest fares to the greatest number of
destinations on an everyday basis."

http://www.newswire.ca/en/releases/a.../04/c8959.html

So Westjet reports on the same day that capacity increases have outstripped RPM increase again and their load factor is down.

Air Canada has decreased domestic and transborder capacity and RPM's have increased.

Yet the one that is complaining about 'over-capacity' is Clive!!! :rolleyes:

The one intriguing question to ask is "Why is the Atlantic traffic so far down as compared to the ASM decrease". I thought that all of these new South American destinations were going to feed all of these people by-passing the USA. Now if this is happening, what else is causing the drop in Trans-Atlantic traffic???

Maybe and simply, Europeans and us Canadians are staying home more or travelling to Asia? Or maybe Canadians are taking alternative airlines to Europe and vice versa?

How are Zoom's loads? (I highly doubt they have such an effect on AC...) And also, how are the competitor's loads for transatlantic traffic? If they are down too, then maybe it is a general macro trend... If not, then your guess is just as good as mine.

What's interesting to me is that AC's domestic traffic continues to grow. The theory should be that as Westjet, Canjet and Jetsgo expand domestically, AC's RPMs should be going down, not up. So that begs the question: What are the economy-only carriers going to do with all of the extra jets they are acquiring in 2005. We have already seen WJ pull off YYZ-LAX, and WJ's fares on the eastern triangle and YYZ-LGA remain very low, suggesting those routes aren't doing very well, especially YYZ-LGA. WJ can talk all it wants about good loads, but with $65 fares, how do you make a go of YYZ-LGA? You don't.

That's a huge drop in Jazz capacity, is that due to the 146 being withdrawn?

[QUOTE=YOWkid]Maybe and simply, Europeans and us Canadians are staying home more or travelling to Asia? Or maybe Canadians are taking alternative airlines to Europe and vice versa?


I was in Germany in March.The strength of the Euro vs Cdn dollar makes everything very expensive.What was a 100DM hotel room a couple years ago,is now 100Euro's.I saw similar situations at a number of hotels I stayed at from a previous visit.Food ,gas and car rentals are also much more expensive.

My 2 cents worth.

Definitely the 146 departure is a factor, but there is no way that it accounts for all 18% ASM decline.

Have the Dash 8s been receiving more mtce? I have noticed more of the new paint schema's around the western reqion and originally assumed that the aircraft were being cycled from the east.

I any event, there will be a net increase in flying once the CRJs start to arrive in November.

The market is definitely expanding on the domestic and TB fronts. Prices at all carriers have reduced so much that it is stimulating the market.

What Clive is lamenting is a change in their expectation from January to March time frame. His original expectation to the analysts was that WS would steal the capacity as AC reduced their presence. Clearly this isn't happening.

The real problem is that WS counted on AC not being able to reduce the cost structure enough to make the difference in CASM between WS and AC equal to the yield difference AC enjoys because of international network feed, Aeroplan, priority standby, City/Latitude/Sun passes for bulk purchasing, and J class.

WS' strategic problem is what to do when the market quits expanding. How does WS continue to attract passengers away from and AC that can match their lowest fares on any market? Further, at some point WS will have to play the yield enhancement game because the CASM reduction game is played out.

As my Roll Call on Who Flies WS? thread from a couple of days ago can attest to, the frequent traveller (at least the FT community) is moving back to AC because of greater benefits for a similar fare. AC is also able to hold its own in the East because the fares are price matched. WS can only sell to frequent traveller when the price is rock bottom and the tango benefits are nonexistent. Hint to AC, moving the RIG fares to Tango could alienate the frequent traveller back to WS. Thankyou to all who replied to the thread. ^

Who is responsible for the market expansion? WS could claim the title as they have the largest year over year market increase. However, is it really Jetsgo that is stimulating the market through anchoring fares at rock bottom prices. Clive has told the analyst comunity in the lasdt three quarters that WS would llike to move fares up the ladder but is constantly hampered by other carrier seat sales. The rejuvenated AC is also responsible, as the new fare structure appears to be stimulative to the domestic and transborder markets. Further AC moved the new fare structure into the transborder marketplace ahead of WS, and they are reaping the benefits of market retention and expansion. I wonder what WS traffic numbers would look like if they split out transborder, domestic, and charter like AC currently does?

With regard to the Atlantic drop in RPM and ASM, my supposition is that fall vacation travellers are switching to the USA in droves. The USD has drop but the Euro is at all time record highs compared to the CAD. Simply put, the Euro has priced out many travellers and TAs are able to switch people into USA. Tcook, what has been your recent experience?

EXCELLENT job by AC matching capacity and demand!

Will reserve comment on AC's actual CASM until we have a couple of quarters in, "post CCAA" and we can see the full effects of wage reductions and high fuel prices.

Most of the effects are reflected in the Operating Income before Restructuring Charges line.

The wage reductions will be reflected in the Q3 numbers out on Nov 15th.

The lease reductions are reflected at the new rates for the expense line items and any adjustment to the old rates are reflected as a restructuring charge. This is big component of the line item for restructuring charges.

Fuel fluctuations are fact of life and should always be accounted for as part of CASM. Fuel is the same for all airlines, the trick is how the expense is managed.

Wage reductions from the separation packages will be reflected over the next several years, and this will cause a further decline in CASM. The packages that will be handed out over the next two years will be provided for on Q3 as a restructuring charge. This will leave an adjustment to cash as the only effect of the packages.

Not to be under estimated is the effect of the massive retirements in the union payrolls will significantly reduce CASM. In addition, several unions now have a B scale to further reduce CASM.

The ERJ190s, well liked by FTers and Accountants will reduce the trip by a good point or two. Accountants who are FTers are jumping up and down, counting down the months until they arrive. One consideration. The ERJ will likely cause a rise in CASM it has higher CASM than the A319. However, AC cannot fill the extra seats afforded by the A319 so the lower trip costs of the ERJ will win out from a finance perspective. Look for a new term Cost per Revenue Mile, a better cost indicator than CASM.

Phase one of the restructuring, all work completed in CCAA, will be reflected in the Q4 numbers due in January. However the subsequent phases of the restructuring will further reduce costs.

The Euro has hardly moved a sausage compared to the Canadian dollar, still about $1.61. 18 months ago $1.58. I don't track Pound Sterling very closely, but it looks to be less than what it was in recent memory $2.25.

Sounds great!!!!

Now let's see them get a few quarters under their belt (so far 35 days out of CCAA) and see how the costs shake out!

I suspect you will find that the 3Q numbers will still contain susbtantial "restructuring charges".

Hint: How would those accountants feel if there were EMB-175s (not 170s) coming even earlier, like Spring 05? news pending.

I thought they were going to order (15?) more CRJ705s? :confused:

Who is going to fly them? Each pilot gets a chance to decide if they want that flying. It is a totally new aircraft type so have they had the bid? When is the next equipment bid?

Training takes awhile to orginize, they better hurry up.