dhc# wrote: ↑Mon May 04, 2020 4:26 am
Based on this news, how much more downsizing can be expected at AC Express going forward?
There was no future fleet plan provided in the Management Discussion and Analysts. Which is unusual. The 79 fins getting parked are just the sum of aircraft that are older. IOW it appears like that is the number solely for the sake of having to show something.
My read is they don’t know what the fleet will look like moving forward.
dhc# wrote: ↑Mon May 04, 2020 4:26 am
Based on this news, how much more downsizing can be expected at AC Express going forward?
There was no future fleet plan provided in the Management Discussion and Analysts. Which is unusual. The 79 fins getting parked are just the sum of aircraft that are older. IOW it appears like that is the number solely for the sake of having to show something.
My read is they don’t know what the fleet will look like moving forward.
The Fleet Plan was the first thing I looked for too. Interesting.
dhc# wrote: ↑Mon May 04, 2020 4:26 am
Based on this news, how much more downsizing can be expected at AC Express going forward?
There was no future fleet plan provided in the Management Discussion and Analysts. Which is unusual. The 79 fins getting parked are just the sum of aircraft that are older. IOW it appears like that is the number solely for the sake of having to show something.
My read is they don’t know what the fleet will look like moving forward.
Not to turn this in to an Express thread but..... the theme at AC is to exit older owned aircraft first. I would expect to see the same theme at Express when the dust settles.
I don’t think a lot of you are understanding the cash burn rate or the major shit the industry is in as a whole. AC only requires about 300 pilots right now. You should be talking about avoiding CCAA rather then duty regs.
whipline wrote: ↑Mon May 04, 2020 8:17 am
I don’t think a lot of you are understanding the cash burn rate or the major shit the industry is in as a whole. AC only requires about 300 pilots right now. You should be talking about avoiding CCAA rather then duty regs.
The industry will recover, yes next months are going to be dirty but it doesn't change the fact that Canada still has some of the worst duty regs.
whipline wrote: ↑Mon May 04, 2020 8:17 am
I don’t think a lot of you are understanding the cash burn rate or the major shit the industry is in as a whole. AC only requires about 300 pilots right now. You should be talking about avoiding CCAA rather then duty regs.
neophyte wrote: ↑Mon May 04, 2020 1:33 pm
On the call today it was stated that AC has access to just over $6 Billion.
They gave a few different #s for cash burn but $20 Million was the median.
6 billion/ 20 million per day = 300 days of cash to operate.
And the CFO said that the cash floor was around $2.5B.
Know what you do when you hit $2.5B? Find more cash via secured debt, unsecured debt, asset sale, equity issue.
So, the answer is not 300 days. Potentially more, but in all likelihood less. Once you run out of options to generate cash you proceed to CCAA with cash in the bank, not with the bank account at zero.
neophyte wrote: ↑Mon May 04, 2020 1:33 pm
On the call today it was stated that AC has access to just over $6 Billion.
They gave a few different #s for cash burn but $20 Million was the median.
6 billion/ 20 million per day = 300 days of cash to operate.
In the question and answer section Rousseau explained the numbers further. Net of credit draw down the cash burn is about 2 million a day. Essentially liquidity is dropping at 2 million a day and debt increasing at 20 million a day.
He also stated that number is the bottom. There is almost zero revenue currently. As the economy opens the cash burn will slowly shrink.
Of interest 1/2 of the 79 aircraft being parked are being back filled with A220/737. The remainder are 767 and are not being back filled.
Over a decade, CR created and implemented a business plan that doubled revenues. The majority of that revenue growth was derived from international expansion. The WB fleet and utilization expanded dramatically. The NB fleet was expanded to feed greater numbers of connecting passengers in to the domestic overseas hubs from both Canada but increasingly from the US. And this resulted in a greater than doubling of the pilot population. Over 2000 pilots hired since 2015.
And now the consensus is that the COVID event will have the most dramatic impact on international/intercontinental passenger travel leaving AC greatly exposed. This was confirmed by yesterday’s announcement in terms of forecast travel recovery pattern and timeline. But the net reduction of airframes did not factor in what will happen with the WB fleet.
It was pointed out that some mainline WB capacity will be deployed to replace the retiring Rouge 767 fleet. But with no announcement of any fleet reductions in 777/787/330 fleets the unanswered question will be utilization. The utilization rate will directly impact pilot staffing requirements.
US legacy carriers are estimating that their overseas operations will be last to recover. Most seem to be setting pilot staffing plans based on summer 2021 (example is the recently announced UAL displacement bid). Consensus estimates are 70-80% of 2019 capacity. Several of the US carriers have the benefit of dramatic age 65 retirement rates over the next 4 years. UA is lowest at just 1500. DL closer to 3400. Even with early retirements at AA it will be another 3000+. AC is only in the hundreds.
It will be interesting to see where the AC staffing forecast goes. Huge growth leaves AC exposed to potential significant contraction.
rudder wrote: ↑Tue May 05, 2020 8:47 am
AC is in part a victim of its own success.
Over a decade, CR created and implemented a business plan that doubled revenues. The majority of that revenue growth was derived from international expansion. The WB fleet and utilization expanded dramatically. The NB fleet was expanded to feed greater numbers of connecting passengers in to the domestic overseas hubs from both Canada but increasingly from the US. And this resulted in a greater than doubling of the pilot population. Over 2000 pilots hired since 2015.
And now the consensus is that the COVID event will have the most dramatic impact on international/intercontinental passenger travel leaving AC greatly exposed. This was confirmed by yesterday’s announcement in terms of forecast travel recovery pattern and timeline. But the net reduction of airframes did not factor in what will happen with the WB fleet.
It was pointed out that some mainline WB capacity will be deployed to replace the retiring Rouge 767 fleet. But with no announcement of any fleet reductions in 777/787/330 fleets the unanswered question will be utilization. The utilization rate will directly impact pilot staffing requirements.
US legacy carriers are estimating that their overseas operations will be last to recover. Most seem to be setting pilot staffing plans based on summer 2021 (example is the recently announced UAL displacement bid). Consensus estimates are 70-80% of 2019 capacity. Several of the US carriers have the benefit of dramatic age 65 retirement rates over the next 4 years. UA is lowest at just 1500. DL closer to 3400. Even with early retirements at AA it will be another 3000+. AC is only in the hundreds.
It will be interesting to see where the AC staffing forecast goes. Huge growth leaves AC exposed to potential significant contraction.
The growth at AC was facilitated by not retiring aircraft as their replacements arrived, namely the 767's at both rouge and mainline. AC is actually well positioned given the severity of this slow down. It used its success to secure the pension funds and build a healthy balance sheet. Most of the 79 aircraft being retired were slated for retirement this year and are on short-term leases and had been kept in service due to the MAX grounding. The A220's can be introduced as demand recovers and although the timeline of the Max is unknown, you have to agree that not having them in service is beneficial at this point.
rudder wrote: ↑Tue May 05, 2020 8:47 am
And now the consensus is that the COVID event will have the most dramatic impact on international/intercontinental passenger travel leaving AC greatly exposed. This was confirmed by yesterday’s announcement in terms of forecast travel recovery pattern and timeline. But the net reduction of airframes did not factor in what will happen with the WB fleet.
It was pointed out that some mainline WB capacity will be deployed to replace the retiring Rouge 767 fleet. But with no announcement of any fleet reductions in 777/787/330 fleets the unanswered question will be utilization. The utilization rate will directly impact pilot staffing requirements.
I agree that anything beyond domestic is a real unknown at this point. One issue no one seems to be talking about yet, is medical insurance. Currently Covid or anything that has its symptoms is an exclusion. I’m not so sure insurance companies will be changing this in the medium term as questions remain about a second wave.
I know I won’t be doing any leisure travel outside our boarders without medical. Especially not to the US.
TheStig wrote: ↑Tue May 05, 2020 10:13 am
The growth at AC was facilitated by not retiring aircraft as their replacements arrived, namely the 767's at both rouge and mainline. AC is actually well positioned given the severity of this slow down. It used its success to secure the pension funds and build a healthy balance sheet. Most of the 79 aircraft being retired were slated for retirement this year and are on short-term leases and had been kept in service due to the MAX grounding. The A220's can be introduced as demand recovers and although the timeline of the Max is unknown, you have to agree that not having them in service is beneficial at this point.
I agree.
But 25/30 of the 767 retiring were at Rouge. The Rouge utilization was secondary European markets and sun destinations. The point-to-point North America to smaller/seasonal European destinations will probably be last to recover requiring enough aggregate demand to make a profit on each flight. Therefore, removal of WB capacity was imperative and done at lowest cost due to older owned airframes.
The issue is the primary overseas markets and when they will recover. Canada to Europe/Asia/South America/South Pacific/South Asia. These are the main service points for 777/787/330. I don’t think that even AC Commercial has a good handle on recovery or demand for next summer but that is most likely what staffing will be based on.
Perhaps crew planning will use the lowest DMM to set staffing on the WB with a view that it can flex up DMM by fleet type if demand recovers faster than expected.
