Business History Books » Business Plans » Canadi>n in deeper trouble?
Canadi>n in deeper trouble?
Question:
says… >CP did not go to AC asking for investment. It was about routes, slots, etc.
And according to CP’s re-structuring plan, the 3rd year (1999) is the year for re-capitalization. So, nothing unusual about looking for investors.
Response:
says… >As for Ottawa allowing foreign investors more than 25% , count on it. >Who could be? AA, BA, or the entire Oneworld group.
There is even rumors that Canadian Pacific (Energy-Transportation-Hotels) "www.cp.ca" (-also based in Calgary-) and in the Railway/VIA Rail, Hotels, Ships bussines and owners of Pan Canadian and Fording, might buy back Canadian Airlines. The price is right, dirt cheap, now. >CP plays an important role in canadian consumers, the country’s economy, >some communities, 16,000 families, American Airlines, and in Oneworld.
Not that will change or improve anything but it is worth to note, that according to ATW, Canadian Airlines is usually ranked 15th to about 18th in the top RPK’s (Revenue per Kilometer) airlines in the world, doing better than many others world known airlines. That shows, once the company iron some wrinkles, Canadian is a viable/profitable world class airline. The potential is there.
Response:
>If you read the business section of the Calgary Herald on Sat, it would >appear that things are going to catch up to CP sooner than later. The stock >just keeps going down day after day. The government may not change the >foreign ownership rules just for them. How bad is this? Let’s hear from you, >Ken H., Captain, Mr.Dodsworth,etc. I have this terrible feeling I may have >paid the big bucks for this new AMEX card to possibly lose the great perks, >and that I may soon end up flying AC and having to put up with the >condescending FA’s and counter people, not to mention the crappy food. >Even worse, the "knee knockers" (i.e. Canada 3000, Air Transat, Royal) will >get to move their seat pitch even smaller and squeeze more $$ out of the >Canadian flyer. Am I going to start a new war of words with this? Or has >that last one finished yet?
* * * This is a recent article, from the Financial Post.- Canadian’s goose isn’t cooked. say analysts. No liquidity crisis- BY PETER FITZPATRICK Canadian Airlines Corp. will survive its calamitous fourth quarter, but ‘that isn’t easing concerns about the carrier. The Calgary-based airline shocked everyone with a $150 million loss on Wednesday, surpassing even the most dire forecasts. -(actually 136 m.)- However, analysts said the carrier isn’t about to collapse because it’s making payments on its more than $1.billion debt and the $3oo million it has in the bank due to last years debt issues is enough to last into 2000. "The cash usage this past year was a little higher than expected, but they still have cash on hand because they refinanced when the market was right," said Mark Mettrick, an analyst at Standard & Poor’s rating agency. Ray Neidl, a debt analyst at ING Barings,. agreed, adding he had spoken to debt-holders and there is no sense of a liquidity crisis. Ted Larkin, an analyst at HSBC Securities, said that apart from its equity investors the carrier is performing. It is covering its debts, steadily employing 15,000, -(correct number is over 16000)- playing a significant role in the Canadian transport network, and generating significant money for governments in taxes and fees. * * * As you can see, there you have the opinion of three reliable independent analysts; quite different from what "the other publicity seeker analyst" has been saying. In regard to what Mr. Buzz Hargrove, president of CAW and representing 3600 employees from Canadian, about the fed. gov. investing 300 million in the next 3 years.- I don’t think it will happen. A loan,… may be. As for Ottawa allowing foreign investors more than 25% , count on it. Who could be? AA, BA, or the entire Oneworld group. CP plays an important role in canadian consumers, the country’s economy, some communities, 16,000 families, American Airlines, and in Oneworld. CP did not go to AC asking for investment. It was about routes, slots, etc. That’s why AC downplayed the conversations. Otherwise, imagine how they would be trumpeteering it, if it were something else. The loss for last year 4th Q, was unexpected. The loss for this year 1st Q, it is expected, and in the plans. CP has cash/money on hand and the good 2nd and 3rd Q’s are coming. They have done many adjustments in their operations, routes, and Services as well. And the public had noticed it, and they are flying CP more than before. The yields are still not strong, but the number of people flying CP and specially business class/people choosing Canadian Airlines is increasing. Don’t worry, you made a good investment in that Amex. CP will be flying for years to come. Have a many nice trips. Btw. Mon 19 April is the exact 50th anniversary, of CP’s first flight to Asia.
Response:
> I think it highly unlikely that the federal and western provincial > governments would let it happen. The political fallout would just be > too great. That combined with the perception (a reasonable one, I > think) that an Air Canada monopoly would be even worse than bailing out > CP makes it doubly likely that one or both levels of government will do > whatever it takes to keep CP afloat.
Agreed; monopolies just don’t fit with the Canadian psyche and there are too many jobs at issue. The most I can see is that they will allow CP to drop a lot of unprofitable routes (perhaps by setting up a new gov’t airline or allowing AC to have a monopoly over those as opposed to the lucrative routes). I’ve been watching this b/c I too have the Amex which means OneWorld points (CP) which I prefer over Star Alliance for the reasons you mention (I suppose I’m biased b/c I got stomped out on AC stock too, to the tune of about twelve grand); I’m confident Amex would do something if AC folded, such as allowing a transfer of points to CO or the other OneWorld partner of choice; it would make sense, as technically what you get are Membership Rewards which can be redeemed directly or transferred to CP or another airline. What would then count is what kind of lounge perks they would substitute… > As far as stock prices go, I don’t think they are indicative of anything > other than investors’ belief about whether they can make a short term > speculative profit. After all, Air Canada shares have also declined > significantly over the last year, losing about 60% of their value > between 97 and 98.
It was actually narrower than that – the decline was over a period of around 9 mos, in 1998.
Response:
- Hide quoted text — Show quoted text – > If you read the business section of the Calgary Herald on Sat, > it would appear that things are going to catch up to CP sooner > than later. The stock just keeps going down day after day. The > government may not change the foreign ownership rules just for > them. How bad is this? Let’s hear from you, Ken H., Captain, Mr. > Dodsworth, etc. I have this terrible feeling I may have paid the > big bucks for this new AMEX card to possibly lose the great perks, > and that I may soon end up flying AC and having to put up with > the condescending FA’s and counter people, not to mention the > crappy food. Even worse, the "knee knockers" (i.e. Canada 3000, > Air Transat, Royal) will get to move their seat pitch even smaller > and squeeze more $$ out of the Canadian flyer. Am I going to start > a new war of words with this? Or has that last one finished yet?
I think it highly unlikely that the federal and western provincial governments would let it happen. The political fallout would just be too great. That combined with the perception (a reasonable one, I think) that an Air Canada monopoly would be even worse than bailing out CP makes it doubly likely that one or both levels of government will do whatever it takes to keep CP afloat. As far as stock prices go, I don’t think they are indicative of anything other than investors’ belief about whether they can make a short term speculative profit. After all, Air Canada shares have also declined significantly over the last year, losing about 60% of their value between 97 and 98. Ken H
Response:
If you read the business section of the Calgary Herald on Sat, it would appear that things are going to catch up to CP sooner than later. The stock just keeps going down day after day. The government may not change the foreign ownership rules just for them. How bad is this? Let’s hear from you, Ken H., Captain, Mr. Dodsworth, etc. I have this terrible feeling I may have paid the big bucks for this new AMEX card to possibly lose the great perks, and that I may soon end up flying AC and having to put up with the condescending FA’s and counter people, not to mention the crappy food. Even worse, the "knee knockers" (i.e. Canada 3000, Air Transat, Royal) will get to move their seat pitch even smaller and squeeze more $$ out of the Canadian flyer. Am I going to start a new war of words with this? Or has that last one finished yet?