With WS costs continually rising relative to AC (squeezing in more seats, Rouge, = lower CASM), prices are probably going to increase in the future adding to revenue. So if they 'only' managed to lose X so far this year, AC should continue to improve quarter over quarter. That's probably the reasoning behind their stock closing up 25% a few minutes ago.

Obviously, much improved results.

Ahh. OK. These stats are meaningless. not as meaningful as the stats pointing to eroding Premium Yield that so many were happy to quote in Q1 supporting their "TPAC tango will doom AC", "Rouge will doom AC", "Obvious premium passengers have left AC in droves" sentiments .... When I get some time, I will be sure to review those threads to be sure you're not talking out of both sides of your mouth.

You are able to cut through increased RASM, faster-than-expected decreased CASM, Premium Class revenues rising 3.3%, and a 25% jump in share price.

That is some spin from AC. Sure is fooling a lot of people. Not you though.

(as a side note, I'm not long on AC.TSX (and would never go too long on an airline stock) but saw a great opportunity ahead of their results release today).
Bottom line, an impressive quarter for AC and they deserve it.

I am not sure I agree with you. Canadian dollar has dropped 3-4%. That is probably $10m right there. And the markets have had a huge upswing. I would bet a loonie that the other $110m is in increased value of pension fund holdings. But given the "quality" of the earnings press release, there is just no way to know. Other than they used non-GAAP ways to get there. Which is suspicious as heck. Especially since every other time I see non-GAAP numbers used, companies are explicit as to what and why. AC wasn't.

But heck--I didnt bet on them today either. And I guess you are whatever x 125% richer. And I am not. So you get the last laugh anyway!

I can save you the time. I don't really care about those statements, and I don't recall ever making any even similar. I've always maintained that the kind of statements made about loads, etc, are of virtually no significance compared to the actual financials. And that applies to any airline.

One stat that might be of interest is OTP, as that directly affects passengers.

My concern about rouge is that it will inevitably dilute and degrade mainline service for all kinds of operational reasons. The use of rouge flights for mainline while repositioning from YVR to YYZ is an example. The first time that happens and someone who paid for a real J ticket only to find themselves sitting in a rouge plane, I'm sure we'll hear howls about how they paid for a ticket and nothing else, and that they should count themselves lucky 'cause Air Canada threw in a flight for no extra charge.


"Impresive quarter for AC" maybe. But I still think back to Delta earning a $4 billion profit in a single quarter. To me, that's impressive.

As for what I'm able to "cut through", I don't care about RASM, CASM, revenue sources,etc, 'cause as a passenger (former) they don't affect me at all.

As for the spin, I'm just always amazed at Air Canada's ability to spin almost anything as an "enhancement."

And I wonder how much of that 25% stock price gain will roll back over the next week or two.

I also note, as I did elsewhere, that so far this year they've still lost money, even using their magic accounting.

Of course, perhaps the single most important line from the financials is the

"Net loss from continued operations $23 (million)"

Do you think AC made up these non-GAAP metrics?
Have you read the other airlines' quarterly reports?

I'm not an accountant but do people really think AC is cooking the books and simply applying some obscure application to turn their red to black??

It's AC!

AC is a public company. If you were a shareholder, they would affect you deeply

I don't think much if any will be given back in coming weeks ........ but, let's just say I'm not sticking around to find out


There's nothing magical or unique (in the airline business) about AC's accounting

No of course not. The liability of cooking the books is probably so huge they wouldn't dare. Nor am I accusing them of that. My only observations are: a) PR beat the accountants on this one. Calling a $23m operational loss a $120m profit is cool, if you can get away with it. Judging by the market reaction and their stock price, they did get away with it. And, b) it is unfortunate they weren't specific about what non-GAAP measures allowed them to do this. Just because it is non-GAAP doesn't mean it is illegal at all. It is just different than the norm. It makes me curious as to why they would do this (other than marketing and PR, that's obvious). And being a curious guy I am interested in the specifics. I am not accusing them of anything, it really is nothing more than curiosity. It is unusual, and I want to know why!

(As a point of reference, I work for a company that often reports both GAAP and non-GAAP numbers. But when we report non-GAAP, it is perfectly transparent where the differences are, and we usually disclose why the non-GAAP numbers are relevant, in our opinion. I don't pursue a lot of quarterly reports, but the few that I recall with non-GAAP numbers included tend to more clarity than AC provided.)

Perhaps the following link can shed some light on the reporting practices of airlines - Specifically page 44-46

http://www.aircanada.com/en/about/in...013_MDA_q2.pdf

You have things backwards...
The company had a net loss of $24 million. Through the magic of non-GAAP accounting, the company was able to report a non-GAAP profit of $115 million. That means that these non-GAAP items were losses to the company, so not increases in pension fund holdings. Per page 46 of AC's fine print the two major "losses" that AC scrubbed away were:
- $74 million in foreign exchange losses
- $52 million in "financing expense related to employee benefits" - i.e. likely something tied to the underwater pension plan

The non-GAAP measure does in some ways mask the fact that the company still lost money, but what it also does is serve to show that excluding items that the company can't really control, they have improved operating earnings and cash flow considerably.

You forget to look at the non operating expense which is typically depreciation and Interest plus possibly some back pension catchup. They also stated their profit AND LOSS was non GAAP.

BINGO!!! And don't forget depreciation which is a large non cash liability on their BS as they are now adding more planes to the fleet.
cash reserves are holding steady at just over $2BB which is very good considering they purchased one new B777 in the quarter

Can I assume when, for example, the CAD appreciates vs USD AC would call down results accordingly?

Did they? I thought it was leased, in which case there should be no depreciation since they don't own the asset. I'd be very surprised if AC actually owns any airplanes outright.

Well, if nothing else, the stock price has gained back half of what it lost since April.