Layoff Numbers

Discuss topics relating to airlines.

Moderators: sky's the limit, sepia, Sulako, North Shore

Gilles Hudicourt
Rank 10
Rank 10
Posts: 2227
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Layoff Numbers

Post by Gilles Hudicourt »

Let's stay respectful and polite please. We can do it.

The aircraft leases when they are leased, or bank payments when they are purchased, are very high.

As I recall, correct me if I am wrong, airliners are leased somewhere between 2% and 8% of their value (per year), according to their age, condition and demand. So a 50 million dollar aircraft at 5% can be leased for about $200,000 per month. if you have a fleet of identical 150 aircraft, you are looking at 30 million per month in leases.......

Some larger newer aircraft are over a million per month...... they pay themselves off very well with the fuel they save when they are flying a lot, but become an anchor around your neck when they are idle.....
---------- ADS -----------
 
Eric Janson
Rank (9)
Rank (9)
Posts: 1243
Joined: Thu Feb 08, 2007 10:44 am

Re: Layoff Numbers

Post by Eric Janson »

I suspect that Leases will be renegotiated.

No Leasing company wants to have huge fleets of aircraft they cannot do anything with.

If set up correctly there are Termination Clauses built into Leases.

I have heard of large jets being leased by the hour.

There may not be very much said publicly but I'm sure there are discussions taking place.


Employee costs may be a lower priority right now - but that will probably change imho.
---------- ADS -----------
 
Always fly a stable approach - it's the only stability you'll find in this business
DHC-1 Jockey
Rank 8
Rank 8
Posts: 821
Joined: Mon Jan 28, 2008 6:41 pm

Re: Layoff Numbers

Post by DHC-1 Jockey »

boeingboy wrote: Thu Apr 16, 2020 9:38 pm
At SWG, we have only just received word that the company will participate in the CEWS program. We definitely won't be getting a top-up though.
Source?
Sunwing wasn't taking part...
I am the source. I work for Sunwing and read the memo.
---------- ADS -----------
 
goldeneagle
Rank (9)
Rank (9)
Posts: 1177
Joined: Mon Jan 02, 2006 3:28 pm

Re: Layoff Numbers

Post by goldeneagle »

Gilles Hudicourt wrote: Fri Apr 17, 2020 4:51 am Let's stay respectful and polite please. We can do it.

The aircraft leases when they are leased, or bank payments when they are purchased, are very high.

As I recall, correct me if I am wrong, airliners are leased somewhere between 2% and 8% of their value (per year), according to their age, condition and demand. So a 50 million dollar aircraft at 5% can be leased for about $200,000 per month. if you have a fleet of identical 150 aircraft, you are looking at 30 million per month in leases.......

Some larger newer aircraft are over a million per month...... they pay themselves off very well with the fuel they save when they are flying a lot, but become an anchor around your neck when they are idle.....
An under capitalized company lives on cashflow and payments, when the cashflow dries up, they are dead. A well capitalized company owns the assets. They may not generate revenue when parked, but they dont drain cash at a significant rate either. These are two different philosophies for running a business. Anybody can make money in a booming economy running an under capitalized business, just have to keep cashflow net positive. It takes a completely different management style to weather the downturn and come out the other side with a viable business.

For publicly traded airline company, there is no excuse for running on skinny cashflow margins with respect to leased aircraft. Do like WestJet did when they first went public. Very tightly controlled limited release of public float shares at the IPO. Then over the next few years they released more shares into the market, usually by selling a large block of shares with one year restrictions to a pension fund, and those monies were used to pay for airplanes. This option is available to all public companies, so there is no excuse for a downturn to leave them sitting on huge lease payments they cant cover. Parking airplanes you own wont bankrupt the company, parking airplanes locked into large lease payments will. Anybody who has spent any amount of time in aviation knows that the downturn comes on average once a decade. Recent history shows 2001, 2008 and now 2020. The true sign of how well an airline is managed is not how they did in 2019, it's how they will look at year end 2020 and beyond.

We are one month into the downturn, nobody knows yet how long and how deep it will really be. But if the company is already in a state they need government money to stay afloat, I would posit then it wasn't a viable company to begin with. They aren't burning fuel, and government funds are covering payroll, so the two largest ongoing expenses are not draining cash reserves. If cash reserves and available credit cant keep the lights on for a couple months, then it isn't and likely never was a viable company. Bankrupt, just didn't realize it yet.
---------- ADS -----------
 
goldeneagle
Rank (9)
Rank (9)
Posts: 1177
Joined: Mon Jan 02, 2006 3:28 pm

Re: Layoff Numbers

Post by goldeneagle »

Eric Janson wrote: Fri Apr 17, 2020 7:43 am I have heard of large jets being leased by the hour.
A bunch of years back I had a couple clients that were operating that way. Airframes leased from a company on a per flight hour basis. Engines on power by the hour from a different company. The only thing actually owned by the airline was the paint for the logo. The interior was interesting, if you knew where to look you could find logos from at least 3 different companies that had that airframe before the current operator at the time.
---------- ADS -----------
 
User avatar
chipmunk
Rank 8
Rank 8
Posts: 993
Joined: Mon Mar 01, 2004 1:14 pm
Location: Canada

Re: Layoff Numbers

Post by chipmunk »

DHC-1 Jockey wrote: Fri Apr 17, 2020 8:08 am
I am the source. I work for Sunwing and read the memo.
Heh, I was waiting for you to come back and say that! :lol:

While I'm here - Porter is also using the CEWS program.
---------- ADS -----------
 
GoinVertical
Rank 3
Rank 3
Posts: 148
Joined: Sat Jan 19, 2019 1:12 pm

Re: Layoff Numbers

Post by GoinVertical »

CEWS is a good start but for someone making living in a major city center and has been making $100k or more a year and has the expenses to match, dropping down to $44k a year is a huge hit.

While I expect most of the older guys to have some cash reserves, I really feel for some junior captains with a young family that probably only just got on their feet over the past few years. House in Toronto, student loans, and everything else...
---------- ADS -----------
 
User avatar
Ash Ketchum
Rank 5
Rank 5
Posts: 399
Joined: Sun Dec 29, 2019 11:52 am

Re: Layoff Numbers

Post by Ash Ketchum »

GoinVertical wrote: Fri Apr 17, 2020 12:47 pm CEWS is a good start but for someone making living in a major city center and has been making $100k or more a year and has the expenses to match, dropping down to $44k a year is a huge hit.

While I expect most of the older guys to have some cash reserves, I really feel for some junior captains with a young family that probably only just got on their feet over the past few years. House in Toronto, student loans, and everything else...
I'm in that exact boat. Sad to say but I was living paycheque to paycheque as junior regional captain trying to raise my family in the Toronto area. Now that I am laid off I will quickly run out of savings unless I can get another decent paying job in the next few months.
---------- ADS -----------
 
Fanblade
Rank (9)
Rank (9)
Posts: 1693
Joined: Mon Mar 28, 2011 8:50 pm

Re: Layoff Numbers

Post by Fanblade »

HavaJava wrote: Thu Apr 16, 2020 10:46 am CEWS is just a way for the government to cook the books and keep the unemployment numbers artificially low. If/when the general public starts to wake up to the real impact of our reaction to this crisis there is bound to be backlash against government/healthcare officials.

Flame away if you must.
As pointed out elsewhere CEWS does not help companies. They could just lay-off and shed the cost.

Since we are in a pandemic a medical metaphor might be appropriate. What the CEWS does is essentially put the economy into an Induced coma. It allows companies to delay reactions until there is better vision on the future. The idea is not that it will stop unemployment. The idea is to give employers enough breathing room to avoid knee jerk reactions or over reactions that aggravate the situation. That trigger knock on consumer retractions and further unemployment.

In the end though every company will right size for the new reality that is awaiting us. Some companies will pick up where they left off. Some won’t. Those numbers will show in the unemployment rate by early fall. Those employment numbers would be significantly worse without CEWS.

Travel is one of the industries that won’t come back fast. The barber, dentist, family doctor, anything people have been putting off due to social distancing will be swamped.
---------- ADS -----------
 
alkaseltzer
Rank 5
Rank 5
Posts: 311
Joined: Thu Apr 26, 2018 6:16 pm

Re: Layoff Numbers

Post by alkaseltzer »

Any word on whether CEWS will get extended?
---------- ADS -----------
 
Babar350
Rank 4
Rank 4
Posts: 214
Joined: Sun Apr 12, 2015 5:36 pm

Re: Layoff Numbers

Post by Babar350 »

alkaseltzer wrote: Thu May 07, 2020 10:43 am Any word on whether CEWS will get extended?
Only the government can answer this question, I wish someone knew.
---------- ADS -----------
 
indieadventurer
Rank 5
Rank 5
Posts: 339
Joined: Fri Dec 05, 2008 7:59 am

Re: Layoff Numbers

Post by indieadventurer »

It’s being discussed and pushed for by a number of individuals involved with the process to date.
---------- ADS -----------
 
User avatar
flying4dollars
Rank (9)
Rank (9)
Posts: 1289
Joined: Mon Jul 09, 2007 8:56 am

Re: Layoff Numbers

Post by flying4dollars »

DHC-1 Jockey wrote: Thu Apr 16, 2020 5:11 pm
rudder wrote: Thu Apr 16, 2020 2:24 pm The only operator that I have heard (anecdotally) is topping up to 100% is Flair.Anybody else?
I've heard Flair filed a grievance about the CEWS. I'm not sure of the details though.
No grievance was ever filed about the CEWS. In fact it meant recalling all furloughed pilots and paying them a full salary again.
---------- ADS -----------
 
mbav8r
Rank 10
Rank 10
Posts: 2325
Joined: Sun Jul 02, 2006 8:11 am
Location: Manitoba

Re: Layoff Numbers

Post by mbav8r »

CEWS being extended past June
Emergency wage subsidy being extended beyond June: PM Trudeau
https://www.ctvnews.ca/health/coronavir ... -1.4930655
---------- ADS -----------
 
"Stand-by, I'm inverted"
rudder
Rank 11
Rank 11
Posts: 3848
Joined: Wed Mar 08, 2006 12:10 pm

Re: Layoff Numbers

Post by rudder »

On the analyst call, Rousseau said that AC was receiving $35-40 million per month from CEWS.

It is a de facto subsidy, albeit paltry compared to daily cash burn rates.
---------- ADS -----------
 
MrAviator19
Rank 3
Rank 3
Posts: 144
Joined: Sat Mar 18, 2017 2:11 pm

Re: Layoff Numbers

Post by MrAviator19 »

mbav8r wrote: Fri May 08, 2020 9:17 am CEWS being extended past June
Emergency wage subsidy being extended beyond June: PM Trudeau
https://www.ctvnews.ca/health/coronavir ... -1.4930655
Is the Government simply trying to buy its way out of an actual bailout of the airline industry as a whole? :roll:

MrA
---------- ADS -----------
 
rudder
Rank 11
Rank 11
Posts: 3848
Joined: Wed Mar 08, 2006 12:10 pm

Re: Layoff Numbers

Post by rudder »

MrAviator19 wrote: Fri May 08, 2020 10:10 am
mbav8r wrote: Fri May 08, 2020 9:17 am CEWS being extended past June
Emergency wage subsidy being extended beyond June: PM Trudeau
https://www.ctvnews.ca/health/coronavir ... -1.4930655
Is the Government simply trying to buy its way out of an actual bailout of the airline industry as a whole? :roll:
MrA

AC is arguing for ‘proportional support’ compared to other global carriers.

The CEWS will add up to $140-160MM if it runs 4 months. $175-200MM if 5 months. $210-240MM if 6 months.

In the US, the big 3 are looking at eligibility for US$10B each in government assistance (that is C$14B). Also government assistance of Euro10B+ for large European carriers. Using annual revenue as the metric, AC is probably looking for C$4-6B. Highly unlikely.

AC looks to be implementing a survival plan that will work with or without meaningful government assistance.
---------- ADS -----------
 
Gilles Hudicourt
Rank 10
Rank 10
Posts: 2227
Joined: Thu Mar 22, 2012 5:51 am
Location: YUL

Re: Layoff Numbers

Post by Gilles Hudicourt »

Delta Mainline 885 aircraft
United mainline: 806 aircraft
American Mainlinte : 1026 aircraft
Even Southwest : 740 aircraft

These numbers, I think, illustrate the reason Air Canada calls for "proportionate support".

Air Canada mainline and Rouge 255 aircraft including the recently parked Aircraft and the 737 Max

We should look at the kind of aid a similar size airline received like KLM who with 122 aircraft is to receive a 2 to 4 Billion Euros in State aid or Air France with 224 aircraft which is getting 7 billion Euros.

https://news.klm.com/klm-grateful-for-2 ... overnment/

https://www.reuters.com/article/us-heal ... SKBN22G0I3
---------- ADS -----------
 
goldeneagle
Rank (9)
Rank (9)
Posts: 1177
Joined: Mon Jan 02, 2006 3:28 pm

Re: Layoff Numbers

Post by goldeneagle »

rudder wrote: Fri May 08, 2020 10:25 am In the US, the big 3 are looking at eligibility for US$10B each in government assistance (that is C$14B).
The US also puts strings on the money, nobody laid off till October, and all destinations continue to get service. It's neatly set up so that no town loses service entirely, and no airline employee goes without a paycheque before they go into the voting booth in November. But after the election, it'll be a no holds barred list of layoffs and reality starts to sink in.

Using the Air Canada example, why should taxpayers of Canada be forking up some billions of dollars to safeguard the investment of an Air Canada share holder ? Our government has already fired up the printing press to print money for the employees. If the company needs more money to stay afloat, let them fire up their own press, print up share certificates and sell them to investors on the open market. That's what the markets are for, sell the risk to folks who take risks. If the company cant survive, that shouldn't be a problem of the taxpayer, not unless it's a crown corporation where taxpayer is the shareholder.

Me thinks all you airline folks want your cake and eat it too. Listen to yourselves, you want to keep the money and funnel it to shareholders when times are good, but stick the bill on the taxpayer when times are bad.. That's just WRONG.
---------- ADS -----------
 
trey kule
Rank 11
Rank 11
Posts: 4762
Joined: Fri Aug 19, 2005 7:09 pm

Re: Layoff Numbers

Post by trey kule »

Agree with you 100%. With share prices in the tank, a debenture or bond with options would maybe be a better vehicle right now. The problem is the uncertainty, and the timeline to recover, if ever.

I would not object to a government loan to tide them over until they can refinance at more favourable terms. ( similar to what the US govt did for the auto and bank industries in 2008). And I dont mean a never going to pay back, Bombardier loan.

But...by act of parliament...Air Canada is headquartered in Quebec....so all bets are off.

The auto industry worldwide is getting decimated...and what they have sold has a high percentage of poor loan quality. Ontario is going to be crying for billions as well
---------- ADS -----------
 
Accident speculation:
Those that post don’t know. Those that know don’t post
Post Reply

Return to “General Airline Industry Comments”