Hypothetical Question about AC - CCAA again or Liquidate

[tonysoprano]

When the economy goes sour, so does AC. Load factor and prices is not the problem. We have a very substantial loyalty basis. The problem is the model. AC runs under a model that has never been recession proof. Most legacy carriers have felt the crunch. Those that made a profit in '08 made a significantly less profit than 07. None in N.America made any money. Only some European and recession proof countries had their flag carriers make a humble profit in '08. And don't expect any better in '09. The problem is the model but at the same time it's a model inherent with legacy carriers. The only one that seems to be available to legacy carriers. I have yet to see a true low cost legacy/flag carrier. And so, big bucks can be made, but only in certain times. Give it another two years. We won't be having this discussion.

[ivanhoe]

TS

Agree with what you post.

The only question for legacy carriers is can their credit lines and asset sales outlast the recession? If this one is as long and deep as some think , it could get dicey.

[tonysoprano]

It will get dicey.

[c170b53]

We are now switching over from teletype to some new electronic (web based) tools to track aircraft (flights, maintenance checks, turns) requirements. How progressive! These tools are hand me downs from LH, they no longer use them we are told. In keeping with how we operate, the old systems were shut down without any training on the new systems. Makes those that no very little a bit more important for a little while longer until we self teach ourselves. We are not efficient, as usual (I'm a union member(mechanic) ) my fellow members want other departments to be efficient but do not want it for themselves because that might cost jobs. The company is inefficient in that it does not make an investment it the skills of its workers and their tools. That would cost money but the primary reason that policy has not been adopted is because an efficient work force would cause job losses in management.

[c170b53]

Its like being behind the power curve and low to the ground. You don't want to do it but you know to survive, you must lower the nose and clean up your act.

[WetJet]

I'm suprised there have not been any more bites than this. AC fares are comparable to WJ, sometimes more. So I'll ask the question another way, where are WJ's costs so much less than AC's?

[balfour]

I'm suprised there have not been any more bites than this. AC fares are comparable to WJ, sometimes more. So I'll ask the question another way, where are WJ's costs so much less than AC's?

cause we groom our own aircraft and pack our own lunches and give a shit about how OUR company is run. And I personally wouldn't change a f@#kin' thing. I love my job, and what's more is so does every one I work with. Nothing more.



.........and we have crew love in's on our layovers, well I have anyway.


not like old fella and TS though, real man and women shit.

[Al707]

How come AC is bleeding like a stuck p*g?

8.38 cents X 122900000 units paid out monthly to Jazz unit holders is $10.299 million per month! Just over $1.00 per unit/ per year for a (now) 25% return on investment at current valuations! Thats pure (and pretty much guaranteed) profit after all expenses paid by none other than Air Canada!!

Perhaps we are being fleeced on this CPA

How else could ACE have pocketed so much by spinning off Jazz? That same 122.9m units were spun off at $10.00 per unit netting a handsome 1.229 Billion.

How to sell something with little intrinsic value? Draw up a long term CPA at rates pretty much guaranteeing an 8.7% annual return. 7.29 cents per unit/ per month on a $10.00 unit initially. This initial 7.29c dividend has also been increased by 15% to the current 8.38c

SNAPSHOT OF JAZZ AIR INCOME FUND (JAZ_U)

DILUTED EPS TTM
C$-0.08
SHARES OUTSTANDING
122.9M
EX-DATE
02/25/09
P/E TTM
NM
DIVIDEND
C$1.01
DIVIDEND YIELD
24.53%

2008 revenues at Jazz Air Income Fund totaled C$1.6B, while annual earnings equaled C$1.10 per share.

Jazz Air Income Fund's Quarterly Earnings.

Jazz Air Income Fund reported 4th quarter 2008 earnings of C$0.28 per share on 02/10/2009. This beat the C$0.25 consensus of the 7 analysts covering the company.

AC is loosing piles of money because it's been structured to do so.

[rudder]

AC is loosing piles of money because it's been structured to do so.

AC is a $10B/yr enterprise - it's current financial circumstance has nothing to do with the commercial agreement with Jazz. Or Cara catering or Consolidated fueling either, all of whom are suppliers to AC. This attempt to deflect attention is akin to GM blaming Magna International for it's $9.6B loss this quarter

Why does WJ make money while AC does not? Among other reasons, because WJ employees are more productive than AC employees.

There is something that the unions can focus on in 2009.

[Al707]

Didn't say it was the only reason but it's certainly one off the many reasons.

The CPA is a terrible deal. 1.6B of that 10B in revenues is being given away at a guaranteed profit!

Why?

[Squid]

virtually a near worthless company with the stock hitting a new low today at .96 cents/share. (ac.b)

[rudder]

Didn't say it was the only reason but it's certainly one off the many reasons.

The CPA is a terrible deal. 1.6B of that 10B in revenues is being given away at a guaranteed profit!

Why?

Some number either slightly above or slightly below that $1.6B is being collected by AC in the form of ticket revenue from Jazz operated flights on behalf of AC, Jazz contracted services from ACTS/AVEOS, ACGHS, and the leasing of aircraft owned by AC or its subsidiaries to Jazz. It certainly looks to be a productive relationship to AC and those AC employees who are required to meet the contractual requirements provided for in the CPA with Jazz. A margin is paid by AC to Jazz for its services (historically $150M/yr). That is a drop in the bucket for a $10B/yr enterprise.

AC's problems have nothing to do with Jazz. However, if AC continues to suffer from liquidity issues, Jazz will be affected.