Air Canada

Air Canada and American Airlines: former Air Canada CEO on the 1980s UK-Canada bilateral dispute

On 30-Nov-2011, CAPA published an article by Chris Lyle entitled American Airlines Goes Broke: Can a National Airline be allowed to Fail?

Here former Air Canada President and CEO, Pierre Jeanniot, offers an alternative view of realpolitik and corrects the record on one of the more contentious bilateral disputes of all time - between Canada and the UK in the 1980s. The Canadian government has not always displayed the protectionist face it does today and in that confrontation, the UK government showed how it too could look after its own in a good old-fashioned tit-for-tat battle. One outcome was that Canada took the extreme step of withdrawing from the 1944 International Air Services Transit Agreement, thus removing British airlines' privileges to overfly Canadian territory en route to the US. Sanity eventually prevailed.

American Airlines goes broke: Can a 'national' airline be allowed to fail?

As American Airlines becomes the last major US airline to seek Chapter 11 Bankruptcy protection, the issue of airline reconstruction and the basic role of airlines in the national economic and social equation remains a very real one for policy makers. In this timely article, Chris Lyle of Air Transport Economics gives a Canadian perspective.

The vast majority of the world’s airlines are today privately owned. This includes most former “national” carriers which have been turned over by their governments to private ownership. And yet, in an era of globalization and transnationalism, when it comes to economic regulation, the “flag” carriers are still mollycoddled with a lean towards jingoism.

There are two principal reasons why this happens. The first is provisions in national law and notably in the vast majority of bilateral air services agreements which preclude majority ownership and effective control of a carrier from one country by parties from another country.

Chorus Aviation's Jazz Airlines outpaces US peers

While its US counterparts struggle to restructure, Chorus Aviation, the holding company operating Jazz Airlines, posted net income of CAD13.9 million in the third quarter on CAD411.7 million in operating revenues up 8.6%. Net income was down from the CAD16.3 million posted in the year-ago quarter.

But it is not all easygoing for the Canadian regional since it faces a benchmarking process on costs. Air Canada has already shocked its regional partner with its presumptions, playing with compensation definitions that could cost Chorus CAD26 million. Chorus warned that its controllable mark up may be reduced as a result of the process.

Air Canada posts loss in 3Q2011

Air Canada posted a CAD450 million swing in earnings in the third quarter when it reported a net loss of CAD124 million, down CAD441 million on foreign exchange losses of CAD281 million. It also reported earning an EBITDAR (earnings before interest, taxes depreciation, amortisation and impairment and aircraft rent) profit of CAD535 million, down CAD45 million year on year resulting in a 16.5% EBITDAR margin.

The company achieved its targeted CAD530 million in annual benefits from its cost transformation program (CTP), critical to reducing unit costs. The company also reduced adjusted net debt by nearly CAD500 million year on year.

Air Canada and Porter Airlines report load factor growth in Sep-2011 as WestJet load factors weaken

Air Canada, Canada’s largest carrier, and the much smaller Porter Airlines, reported improved load factors in the summer-winter transitional month of Sep-2011, while the nation’s second largest carrier and largest LCC, WestJet, reported weaker-than-expected load factors. This weakening load factor result occurred despite WestJet offering seat sales to stimulate demand and amid more aggressive growth in the month than at its larger rival. Porter Airlines’ load factor, while improving 12.2 points in the month, remains considerably weaker than its larger competitors.

While WestJet traffic growth was not able to keep pace with expansion in Sep-2011, it is widely expected that the carrier, with its lower operating costs than Air Canada, is better placed to weather potentially reduced travel demand amid an environment of global economic uncertainty. It is also expected that with capacity growth slowing in 4Q2011 and into 2012, and with healthy forward bookings, the load factor weakness in Sep-2011 could be rectified. 

Porter Airlines win surprisingly shuts Air Canada out of downtown Toronto airport slots award

A somewhat surprising awarding of the final 16 slots at Toronto City Island Billy Bishop Airport to incumbent Porter Airlines, which now holds 172 of the 202 available slots at the convenient downtown airport, comes with Porter's decision to once again shelve plans for an initial public offering (IPO) after failing in April 2010 to develop any interest in the CAD120 million (USD116 million) offer. An analysis of the slot issue tells the story of why Porter, which says it is profitable, was awarded the slots. Porter also shelved plans to raise private funding, adding that market conditions were little different than when it originally advanced its first IPO attempt.