5T/7F Merger called off

[bmc]

bmc: you have some insight with the players involved. Correct me if I'm wrong, but isn't this the second failed attempt by a new 7F president at either selling or merging the airline? What's next?

I don't know on both questions. If the cause of the abrupt halt on this transaction is caused by the 7F president, I draw a couple of possible conclusions. One, it obviously didn't make sense for either or both parties for whatever reason. There could be no sound business case. Second, if it's a because of a failing by a second 7F CEO, I'd have to look at the competency of the 7F board and less so at CEO's. The current CEO is a bright guy with an impressive record. Strategy is his forte. He was previously SVP Strategy and CFO at Star Alliance. To hold such a senior position at Star, you're getting buy in from the CEO's at member airlines (SQ, UA, LH, AC, TG, etc). That said, he will succeed or fail based on the willingness of the board to accept the proposed changes.

[Liquid Charlie]

Having been a "Rainbow Warrior" for almost 30 years and seeing the inner workings of 7F through several CEO's and 2 owners I can only sum it up by saying First Air always seemed to be a day late and a dollar short -- they always under reacted, very slow to change and when they did corners were cut and we were caught trying to make a silk purse out of a sow's ear - in most ways it was a great gig for us as pilots but very frustrating as well -- I now have the luxury of sitting on my deck by the lake and watch the drama unfold - it will be interesting to see if my inner speculations become realities --

[bmc]

Having been a "Rainbow Warrior" for almost 30 years and seeing the inner workings of 7F through several CEO's and 2 owners I can only sum it up by saying First Air always seemed to be a day late and a dollar short -- they always under reacted, very slow to change and when they did corners were cut and we were caught trying to make a silk purse out of a sow's ear - in most ways it was a great gig for us as pilots but very frustrating as well -- I now have the luxury of sitting on my deck by the lake and watch the drama unfold - it will be interesting to see if my inner speculations become realities --

I was in YRB from 82-84. Do we know each other?

[Brantford Beech Boy]

.. I can only sum it up by saying INSERT COMPANY NAME HERE always seemed to be a day late and a dollar short -- they always under reacted, very slow to change and when they did corners were cut and we were caught trying to make a silk purse out of a sow's ear - in most ways it was a great gig for us as pilots but very frustrating as well...

pretty much sums up every airline I've worked for....

(and I was a "Rainbow Warrior" for almost a decade too..)

BBB

[Liquid Charlie]

I was in YRB from 82-84. Do we know each other?

Just a little before my start -- 1986 was my first year with 7F coming from Austin's

[casey]

I started in 83 at Austin up in YPL fun times

[thirdtimecharm]

bmc: you have some insight with the players involved. Correct me if I'm wrong, but isn't this the second failed attempt by a new 7F president at either selling or merging the airline? What's next?

I don't know on both questions. If the cause of the abrupt halt on this transaction is caused by the 7F president, I draw a couple of possible conclusions. One, it obviously didn't make sense for either or both parties for whatever reason. There could be no sound business case. Second, if it's a because of a failing by a second 7F CEO, I'd have to look at the competency of the 7F board and less so at CEO's. The current CEO is a bright guy with an impressive record. Strategy is his forte. He was previously SVP Strategy and CFO at Star Alliance. To hold such a senior position at Star, you're getting buy in from the CEO's at member airlines (SQ, UA, LH, AC, TG, etc). That said, he will succeed or fail based on the willingness of the board to accept the proposed changes.

I think that this depends on who's idea the merger was. I realize that some view this as Canadian bashing but there is no way you can have a "Merger of Equals" when one company has such a horrible balance sheet and the other has faltered but still has a strong one. Unless the Inuvialuit were kicking big bucks Makivik's way, this whole excersize was an extreme waste of energy on 7Fs part and it bought some time for 5T.

In the past, it was the owners that was either trying to sell or merge, but not sure if this was the case this time. Owning First Air makes sense if you're kicking some big profits back to the ownership group, but when that dried up after Nutrition North was introduced, then the owners seemed less interested when they have Air Inuit to look after at home.

[tbaylx]

bmc: you have some insight with the players involved. Correct me if I'm wrong, but isn't this the second failed attempt by a new 7F president at either selling or merging the airline? What's next?

I don't know on both questions. If the cause of the abrupt halt on this transaction is caused by the 7F president, I draw a couple of possible conclusions. One, it obviously didn't make sense for either or both parties for whatever reason. There could be no sound business case. Second, if it's a because of a failing by a second 7F CEO, I'd have to look at the competency of the 7F board and less so at CEO's. The current CEO is a bright guy with an impressive record. Strategy is his forte. He was previously SVP Strategy and CFO at Star Alliance. To hold such a senior position at Star, you're getting buy in from the CEO's at member airlines (SQ, UA, LH, AC, TG, etc). That said, he will succeed or fail based on the willingness of the board to accept the proposed changes.

I think that this depends on who's idea the merger was. I realize that some view this as Canadian bashing but there is no way you can have a "Merger of Equals" when one company has such a horrible balance sheet and the other has faltered but still has a strong one. Unless the Inuvialuit were kicking big bucks Makivik's way, this whole excersize was an extreme waste of energy on 7Fs part and it bought some time for 5T.

In the past, it was the owners that was either trying to sell or merge, but not sure if this was the case this time. Owning First Air makes sense if you're kicking some big profits back to the ownership group, but when that dried up after Nutrition North was introduced, then the owners seemed less interested when they have Air Inuit to look after at home.

There was no reason for 5T to pay up anything for 7F..the only assets they have worth acquiring are the northern routes to avoid a fare war and the real estate/hangars they have in a few choice cities. Other than that 7F needed the merger a whole lot more than 5T did. Most of 5T's revenue doesn't come from the northern routes anymore so I would bet that their interests in merging with 7F were to avoid another company buying up 7F and their assets. 5T could certainly use an eastern base and the hangar and real estate in YOW would have been nice.
7F would have gained an awful lot more. A more modern fleet, access to contracts that would diversify them out of the northern flying etc.

Pretty sure it isn't 5T with the "horrible balance sheet" out of the two companies. But hey since we both have no idea really this speculation and $1.50 will get you a cup of coffee.

[dhc#]

With all the "southern" charter work keeping 5T alive, maybe they should change the company name to "Canadian (sometimes) North" At least they are pro-active in finding new markets...something 7F lost long ago.

[palebird]

What real estate/hangars would that be in which "choice" cities? They lease everything.

[FICU]

From everything I have heard coming from 5T and 7F, 7F was on the lower end of the "equal" side of the merger and the folks at 7F were looking at us as their saviour.

Of course all talk is only rumour.

[tbaylx]

What real estate/hangars would that be in which "choice" cities? They lease everything.

YZF and YOW are what were of interest I believe. No idea whether they are leased or owned, either way they had them and 5t would have access to them should a merger have occurred

[midwingcrisis]

After review of postings albeit scribblings here, I am asking if anyone on this post really understands the mechanics of M&A, separate of the ability of either or both Balance Sheets to consummate a deal.

[bmc]

After review of postings albeit scribblings here, I am asking if anyone on this post really understands the mechanics of M&A, separate of the ability of either or both Balance Sheets to consummate a deal.

This is a pilot's forum.

[Meatservo]

After review of postings albeit scribblings here, I am asking if anyone on this post really understands the mechanics of M&A, separate of the ability of either or both Balance Sheets to consummate a deal.

Sorry if I'm misinterpreting your post, and I certainly don't have an opinion about First Air or Canadian North, but are you seriously using a sentence with that kind of grammar to condemn the intelligence of other peoples' "scribblings"?

[URC]

anyone on this post really understands the mechanics of M&A, separate of the ability of either or both Balance Sheets to consummate a deal.

It would appear that the respective senior managements of either company didn't understand it either when they announced the merger back in April.

From a pilots perspective I suspect there is a lot experience on this board with respect to M&A's. How many pilots here have NOT had to "endure" a merger at one point in their career ?

[bmc]

anyone on this post really understands the mechanics of M&A, separate of the ability of either or both Balance Sheets to consummate a deal.

It would appear that the respective senior managements of either company didn't understand it either when they announced the merger back in April.

From a pilots perspective I suspect there is a lot experience on this board with respect to M&A's. How many pilots here have NOT had to "endure" a merger at one point in their career ?

Both airlines are privately owned. How would they have access to their financial statements? Furthermore, how can you do a proper valuation of either company without doing a proper due diligence.

Just because pilots have endured the impact of a merger does not qualify them to understand the mechanics and process. I have flown on the A380 many times. I guess that should qualify me for at least right seat, right?

[ymxnewbie]

I think there have been valid points raised on both sides of this little chat you guys are having but there are a few points missed..

1. Revenue does not equal profits, so even if you're running all the charters you can to the oil patch, the 5 percent profit can disappear in one day of having to ferry planes all across the country due to an AOG on the east coast. It takes twenty flights with no surprises or added expenses to make up for one bad day at the office no matter what kind of utilization you're getting and how good your planning is.
2. The CNRL contract does require more airplanes that 5T was able to commit on it's own, and it would have been nice to have the 7F fleet to provide the extra lift, especially with their 737-400 all passenger machine, considering their previous provider, Flair, bid against them in the contract.
3. 5T have picked up a huge chunk of charter business but the rates are about 40% below what they were two years ago. ( I know, I bid against them)
4. Anyone who thinks Thirdtimecharm is a rampie is an absolute idiot who knows nothing about Northern Aviation.
5. I'm sad for the folks at First Air, because although they do have more assets, they're no longer the dominant carrier in Northern Canada, and they now need to pull a rabbit out of a hat to return to profitability.
6. The CEO at 7F is incredibly intelligent, and has made some great moves, but only those at the top could tell us if he came in way too late.
7. Someone said 5T could just go grab another airplane... that they're easy to find. He or she is right, they're just not easy to import. Most of the 400's available would take a minimum of 90 days to import due to the difference in maintenance programs, and getting repairs that were already made to the airplanes approved by TC, the FAA, and whomever is the regulator where the plane came from. It's a delicate balance of pushing bureaucrats that seldom goes as planned.

Back to work now...

[FICU]

Another one with inside knowledge of 5T's financials...

1. Revenue does not equal profits, so even if you're running all the charters you can to the oil patch, the 5 percent profit...

And you know what 5T's profit margin is with Esso, Conoco, and CNRL?

The CNRL contract does require more airplanes that 5T was able to commit on it's own...

More inside information on the details of 5T's CNRL contract bid?

5T have picked up a huge chunk of charter business but the rates are about 40% below what they were two years ago. ( I know, I bid against them)

You know for a fact 5T had to bid 40% less for CNRL than they did 5 years ago? How about the CFL and Celebrity Cruise Lines contracts... you know what 5T bid on those? What contracts did you bid against them on?

Anyone who thinks Thirdtimecharm is a rampie is an absolute idiot who knows nothing about Northern Aviation.

You're an idiot if you think people on an anonymous forum know who other people are with pseudo names. He stated he was doing de-ice training in Rankin. What would you assume? I have spent 15 years flying in the north and have never heard of "Thirdtimecharm" until this forum.

Someone said 5T could just go grab another airplane... that they're easy to find. He or she is right, they're just not easy to import. Most of the 400's available...

We have had no problems bringing new tin online other than getting the STC done for the combi-300 which will be online with another full chair -300 with a unique livery before the end of the year and why do you think we need 400s? I would think NGs will be next or maybe 757s.

[ymxnewbie]

Removed.