Air Canada: Be afraid of the cash crunch

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Redwine
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Air Canada: Be afraid of the cash crunch

Post by Redwine »

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...Seems they are going to remove the axe and the control column from the cockpits for security reasons.
L39Guy
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Re: Air Canada: Be afraid of the cash crunch

Post by L39Guy »

I would not characterize that as a rigorous analysis whatsover. In fact, it is a pathetic job.

That would earn a D on his report card in business school.
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rudder
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Re: Air Canada: Be afraid of the cash crunch

Post by rudder »

Pretty clear that the X factor is industry targeted government aid.

Will it be subsidies? Deferred payments? Conditional loans?

That is what everybody is waiting to hear.

US airlines just got 6 months total employee cost recovery courtesy of Uncle Sam. No layoffs permitted. No concessions. DL signed up for US$6B. Same for UA. Same for AA. There is zero chance that level of support will happen here.

Second opportunity in US is government backed loans. AA has already said it will partake. That is another US$6B.

Trudeau/Garneau/Morneau have been noticeably silent on airline specific aid. Same for the airline CEO’s (although they have taken a collective position via industry lobby group).

I am wondering what the Liberals are waiting for? Perhaps it is a done deal that has simply not been publicly revealed.
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Redwine
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Re: Air Canada: Be afraid of the cash crunch

Post by Redwine »

IMO, if virus contained in 18 months, we will see slow recovery in fall 2022 to early 2023
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...Seems they are going to remove the axe and the control column from the cockpits for security reasons.
altiplano
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Re: Air Canada: Be afraid of the cash crunch

Post by altiplano »

Yeah, that analysis is pretty generic/weak.

Not only is this a different crisis than 2008, this is a different airline.

It's interesting he singles out AC because they perhaps are in a better position than most legacy competitors.

Everyone in this industry is burning cash, and AC has more to burn than most, they have also cut their burn rate substantially between layoffs, reduced schedule, stock buybacks stopped, plus capital expenditures are being deferred.

I remember in an earnings call a few years ago Mike Rousseau was also very proud of the flexibility of the fleet structure in terms of own/lease and the airlines ability to be responsive in a down turn. I don't know the exact details but you know leases are being parked and cut.

There's a few more balls in the air yet... but AC has never been in better shape to face something like this.
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BTD
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Re: Air Canada: Be afraid of the cash crunch

Post by BTD »

But I'm not sure if this is enough to stave off a cash squeeze.
My suspicion is these flights are operating at a loss....I'm not sure if the returning flights are full
I can't see when that slow period is going to end so I anticipate...
I had assumed aircraft fuel to be a percentage of revenue (21.52%) and arbitrarily cut 7.5% to reflect a drop in gas prices:
The caveat to these numbers is I am assuming services will be cut for the rest of 2020 which is not realistic
Given the circumstances Air Canada is in, I'm not quite sure if it would still move ahead and acquire Air Transat...
Seems there is not much he is "sure" about and lots of "arbitrary".

He may end up being right, but that would just be luck IMHO.
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Squid
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Re: Air Canada: Be afraid of the cash crunch

Post by Squid »

It’s a pretty dynamic and fluid situation. Not at the bottom yet but does have items to consider and think about.
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Caterpillar
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Re: Air Canada: Be afraid of the cash crunch

Post by Caterpillar »

AC as a stock will become a very good investment in the next weeks!! :prayer:
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