Possible Bad news for Sunwing

[doo]

In todays UK Sunday Times, XL in trouble.
XL Leisure Group enters crisis funding talks - Times Online (http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article4641144.ece)

[Willie Everlearn]

Troubled skies for canadian aviation? :ugh:
Absolutely.
Sunwings....
Canjet....
Zoom will not be alone, the players flying under the Low Cost banner (including West Jet) must be holding their breaths in hopes of lower fuel prices.:{
When you see the immediate solution to their fuel cost crisis was to hit consumers (which is good economics) the reaction will likely be a reduction in consumers flying on those airlines (bad economics). Low Cost = Low Price, right? Until their low prices are the same as the legacy airlines. Then their raison d'etre evaporates. Economics kick in and increased costs measured against decreased income =
....you know the result as well as I do.
Ain't gonna happen my friend. Ain't gonna happen. The stronger of those three c(sh)ould survive. (IMHO, not that anyone asked) As for the others, it's anyones guess.
If I were handing out advise (which quite often is free) to pilots at any of those airlines, it would be, move. Move while overseas jobs are still available.
Don't want to leave Canada?
Maybe you want to consider EI vs Income. But then who am I to say?
:sad:
right now? the industry sucks :suspect:

[Speedboat]

WJA in trouble? You might want to review their quarterly numbers for the last 2 years, then check out their cash reserves and debt to equity ratio.

There are only three non-cpa airlines in North America that can be profitable with $120 oil. WestJet, Southwest and Allegiant.

[Rubberbiscuit]

Media jums the band wagon again!
Hope for XL after lenders spend the weekend in talks - Telegraph (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/01/cnxl101.xml)

Sounds like things are under control for now.

Willie Everlearn:
For the record, Sunwing is not a "low cost airline". Sunwing is a vacation company that has chosen to provide their own aircraft to get their customer to their holiday destinations. That is not to say anyone is immune to a sliding economy and rising fuel prices.... speaking of fuel prices! Some potentially good news.. $105 a barrel and predicted to fall below $100 again..... for now:D

[Willie Everlearn]

I should point out that SunWing and Canjet, like Air Transat...play the IT game and as such, aren't LCCs (by definition). But if you looked closely at these operations they are as close to an LCC as damn is to swearing.
What these three players rely on are 'package' tours. They also let the consumer pay for the gas hikes so they don't have much publicity that tells the consumer they're going to have to tack this increase onto the price of an inclusive tour. They leave that up to the tour operator. :eek:
This means eventually, the package price climbs to 'just beyond' the consumers reach. That just might impact the number of seats occupied on that Puerta Plata flight. :confused:

As for West Jet and Southwest. I'm inclined to agree here. I truly believe these guys are LCCs (by definition and history). With strong balance sheets. Unless the bean counters are cooking the books. But lets' face it. That never happens in the airline industry, does it? :eek:
The days of "fly West Jet" at all costs isn't the mindset of consumers, trust me. Consumers will postpone travel until the price fits their budget. But, that's nothing new.

Last time I checked WJ YUL-YHZ, the fare was the same as AC. Except I had to go via YYZ, which didn't make sense. But hey, it was searched as the lowest fare. Maybe their direct flight is a bit more expensive?
Wait a minute, isn't this website booking business suppose to be easy to use???:ugh:
I don't think WJ is in danger of going out of business anytime soon. But, if Zoom can tank, you gotta wonder about CJ and SW. I'm pretty sure Mr. Rowe will only go so far with losses in the balance sheet before he puts an end to it.
While it's nice to have a fleet of shiney new NGs, the monthly lease/finance charges add up.

Don't forget, I'm only speculating here. :ok:

[doo]

So how many airframes does Sunwing currently have on XL summer contracts?
I know of one.

[Latte tester]

An article in USA Today indicated that a one stop flight may be quite a bit cheaper than a non-stop.

[WJAPilot]

***REMOVED***



Planett - perhaps I saw a massive level of arrogance in Willies posts. you cant go around the industry shooting your mouth off and not have it come back at you one day.



WJP

[planett]

WJAPilot,

I've read Willie's posts, I don't think they deserved a bush league response like yours. Are you a fan of burning books too?

Would you now assasinate my character at the hiring board if you could?

[remarkablebean]

Sure WJA pilot won't throttle anyone looking for a gig ;)

XL might get swallowed by EZY - but rumours only at this point. If it goes through, the SWG 738s are westward bound at any rate.

Another interesting point - EZY took over GeeBee last year, so I guess another acquisition is not beyond the realms of fantasy...

With Futura and Gael about to go under, Europe looks unsteady, and some commentators think the Spanair MD-82 tragedy will even unhook SAS...

Thoughts anyone ?

[Willie Everlearn]

WJA Pilot
...assuming you're at WJA...I'm not looking to offend anyone with my remarks in this thread. A personal apology if I did.

However, I can assure you, I've been flying long enough to know 'arrogance' is not my M.O. (some of my short posts may suggest otherwise, sorry about that) If I want to tangle with anyone on this forum, there will be no doubts when I let fly.

WJA has had a great quarter.
WJA has a good management team.
WJA has a great group of employees.
WJA is good at what they do.
That puts them in the same basket as a good many other LCCs. PeoplExpress comes to mind, to mention just one. (maybe you're thinkin' Southwest? Different market, different population, different demigraphic to WJA altogether)

You should know however, there are no guarantees of a tomorrow for WJA, or any other carrier for that matter. No surprise in that statement. That's not arrogance as much as it is obvious. It's airline reality. Even in the great white north. Even in the great province of Oilberta. Margins at WJA are what they are. Thin. Passengers, whether or not you've been paying attention, are fed up with getting hosed by CATSA, GC, TC and Fuel surcharges, it ain't going to work much longer.

(by the way, I'm not making this up)

If you TRULY are a pilot with WJA, make sure you stay tuned to WJA performance. Don't fall asleep at the switch and continued success.

Willie
"Lord of the Flys"

[royalterrace]

WE

"Margins at WJA are what they are. Thin."

Westjet has the best margins in the business. They approach 14% , almost unheard of in this business.

You might want to research the facts before you regale us with your opinion.



.

[Major Cong]

It's all over for XL as of 0100 UTC. :\:\:\:\:\

[doo]

Hope XL loss doesn't affect u guys too much.

[CaptW5]

Sunwing announces enhanced agreements with aviation suppliers

Sunwing announces enhanced agreements with aviation suppliers: Financial News - Yahoo! Finance (http://biz.yahoo.com/cnw/080912/sunwing_expands_fleet.html?.v=1)

One quote:
Sunwing already has agreements in place with three other European airlines for seasonal movement of aircraft and crews, replacing previous agreements with XL Airways."

[J.O.]

They must have had this backup plan in the works to be able to announce it so fast. I wonder if those agreements will include Sunwing pilots being deployed to those European operators in the summer as they have for Excel for the past few years?

[Willie Everlearn]

royal terrace ...news flash.

This is an opinion Forum. I gave an opinion. I don't care if anyone agrees or disagrees. It's only my opinion. :ok:
I'm glad you disagree.

WJA had a very strong quarter. On a 14% margin (if that's the figure?) was quite impressive. If you think that's a cushy margin, great. Good for WJA. While they're not likely to go out of business anytime soon the potential is still there and that was part of my simple point. Rising fuel prices, rising ticket prices, additional charges for services, punitive CATSA charges. The consumer will/has reached the limit.
Air Canada could go out of business. Possible. But not likely. We'll see.
Not many expected to see the likes of TWA, Pan Am, Eastern, Sabena crash and burn. Did they? But you could almost see it coming. Particularly with deregulation. (I sometimes wonder if we all wouldn't be better off re-regulating or at least partially re-regulating)

Alitalia? Care to speculate on their future?

Sunwings, however, is not a WJA. Neither is CJA. I.T. is the slimmest margin in the industry. XL had a sample of it today. I'm not sure that picking up the remnants is a wise move as those slim margins only prolong the inevitable. The LCC isn't that far behind in margin or fate. WJA appears to be changing its' raison d'etre and many LCCs caution it's the changing of their lot in life that most threatens their existance.
You know as well as I, the low fuel ($$$) level warning is on for many of these carriers. It's just a question of who runs out and who almost runs out. Isn't it?

This is all purely speculation on my part. I could be so far off the mark it's ridiculous. But I might also be spot on the bullseye. For me, it's the speculating that's fun and the joy it brings when things turn out as predicted.
(it's also, the joy it brings when things don't turn out as predicted)

Willie :ok:

[Speedboat]

Wille.....I would agree that one quarter's profitability doesn't make an airline...however, if you are interested in reality rather than conjecture, here are the actual WJ operating margins for the past 10 quarters, based on KPMG audited numbers.

3Q 2008 (EST) 18%
2Q 2008 9.1%
1Q 2008 13.7%
4Q 2007 15.2%
3Q 2007 22.1%
2Q 2007 14.7%
1Q 2007 13.6%
4Q 2006 15.1%
3Q 2006 19.5%
2Q 2006 13.5%
1Q 2006 10.8%

Indeed, I think you will find that since 1996, WJ has had a total of 4 quarters where they didn't earn a net profit and one of those was when they wrote off the 737-200 fleet. They even made money in 4Q 2001.

Only Southwest in North America can match or beat that run. No one else is even close.

WJ has grown asm's 58% in the period. :D

The other major airline in Canada's margins in 2006 were 2.6%, in 2007 it was 4.6% and 2008 so far -.1%.

:ok:

[Willie Everlearn]

Speedboat

Thanks for the numbers. Sorry, EXCELLENT numbers. :ok: :ok: :ok:
I seriously doubt the Sunwings of this world are even close to those numbers.
We'll see.

As for WJA's future....we'll see. :D
Switching from LCC to major airline could be their demise. Which isn't going to be tomorrow, is it? Despite the "talk".

[Pardes]

Obviously the Sunwing CEO is gonna make a "positive" annoucement. What do you want him to say... "Sunwing is FU**ED!"

I dont think XL will effect Sunwing as much as the cost of fuel and the economic slow-down will, that to with 7 or 8 aircraft...

As for Diversifying... hahaha.... Does ExpressJet ring a bell to anyone!!!!

[Speedboat]

What constitutes switching to a "major airline"?

Southwest has 500+ aircraft, carries more domestic passengers in the single largest aviation market in the world than anyone else and flew 70% more ASM's than the largest airline in Canada. Is it a "major airline"?

WJA is a low cost carrier. There is nothing occuring that is changing that proposition. The reason WJ has the margins it has with the fares offered is because of the low costs.

Anyone can match the fares, and they do. The results are evident in the margins achieved as a result of matching the fares.

:ok:

[Willie Everlearn]

So, I conclude the reference to WJ as a "major carrier" is merely a slip of the tongue.
Let's put it this way. United Airlines is a Flag Carrier and Southwest isn't.
Air Canada is a Flag Carrier and West Jet isn't. Despite the number of aircraft in eithers' fleet and despite the number of revenue kilometers flown or revenue passenger kilometers.

...or is it strictly margin?

In the final analysis, WJA is strong, viable, and here for the long term.
Depending upon a few factors, of course. Do they change their goals? Do they change their reason for being? Do they modify their original business plan. Does fuel price go through the roof? Do people all of a sudden realise they're getting charged the same price for a ticket to Lethbridge as AC despite who follows whos lead?

For me, these are some of the things I think 'might' happen to WJ as the original leadership cashes in and moves on. (I've noticed a number have left recently, haven't you?) If it does then I DO think WJA could be in for a demise.
That's only an opinion.
If the brain trust at WJ leave to start a 'competitor' company knowing what they know, how is that going to impact WJ?
Again, I could be so far off the mark, it isn't even funny. (let's hope so cuz I have a lot of former colleagues at WJ)

I think as well, this running commentary on WJ is off topic. Because I made reference in a previous post (seemingly, to someones' disgust) it seems to have touched a nerve. (How dare I speak of WJ in such a manner?) TFB. This is an opinion based forum. Deal with it. :ugh:

[Rubberbiscuit]

Pardes:

XL's problems was nothing new. There was no surprise as far as Sunwing having a contingency plan. I am guessing Sunwing decided it would be unwise to put all eggs in the same basket considering the current economic climate in Europe and the state of the aviation industry in general, and was therefore already in talks with other European tour operators long before XL shut down.

As for "diversifying", Sunwing is to the best of my knowledge not altering its course or venturing into new and uncharted territories as far as flying goes. They have simply alligned themselves with new partners in terms of aircraft and crewing. This will ensure enough A/C and crew is in place this winter and allow allocating of redundant A/C and crew during the off season.

[J.O.]

As for "diversifying", Sunwing is to the best of my knowledge not altering its course or venturing into new and uncharted territories as far as flying goes.

Don't you think that increasing your fleet size by 50% in one year is venturing into new markets? More power to them, but I really question doing so in a very competitive (and possibly shrinking) marketplace. I guess we'll see if the higher ups have the stomach to slug it out for what could be a very long and tough couple of years. It is definitely not for the faint of heart.

[Rubberbiscuit]

J.O:

I can appreciate where you are coming from and do agree to a certain extent. 3 of my last 5 employers are no more, and I have first hand experience in seeing, how fast everything can go from appearing to be rosy red to lining up at the unemployment office. At this point I consider my self lucky every day I get up to find my self employed. That said..... Sunwing are using alot more airplanes this winter, sure. But it is not an expansion in a traditional airline sense. There are some new destinations, but I am pretty sure alot of the extra flying is due to incerased frequency to certain destinations. This would be based on package sales over the last few 6 - 12 months. Sunwing would have a pretty good idea of how many seats it will need to accomodate package sales in advance. That woulod govern how many crews and airplanes will be needed. I doubt they decided to double the fleet and hope for the best from the sales department.

On a different note it is nice to see oil closing below $100 again! I think XL and any other european vacation airline really felt the pain of increasing fuel prices in the spring early summer. In short, fuel prices jumped almost 50% just as the peak seson kicked in for the European vacation companies, while most packages where based on alot cheaper fuel. The Canadian vacation airlines might luck out a bit here as long as we do not see a nother dramatic jump in prices. I would venture to guess alot of package sales where based on $140 - 150 a barrel and now the prices have dropped. Lets hope they stay there for a while, for the sake of everyone in the aviation industry!!

RB

[IMC99]

JO -

Good arguments, but not really accurate.

Sunwing has not suddenly expanded by 50%. If you go back and look at the past 5 years of the tour company, you will see a massive list of other operator's chartered to fly for Sunwing.

This includes JetsGo, Flair, Kelowna Flightcraft, North American Airlines, Excel, Zoom, and the list goes on. In fact, even in the last year Sunwing has used Zoom, Flair, and AeroMexico.

All they are doing is utilizing their own airplanes on well-established routes. The amount of wet-leasing this year is dramatically lower than in years past, which is much more cost-effective than paying through the teeth to another airline.

In fact, what they are doing is lowering their costs as I see it.

Yes, they have expanded. However, looking at the fact that they will have 15 airplanes this year as opposed to 7 or whatever it was before is not the whole story.

Just my $.02.

[J.O.]

I stand corrected. Thanks for the clarification.

[Hamtarro]

As a spectator in this forum, and now Canadian aviation....maybe there is some wisdom in what WE is saying. I had the rug pulled out after 911, it was the same old story, money is not a problem here. Bigger operations than the likes of WJ or sunwing are in dire straits, in and outside of aviation. We never learn how cooked the books are until the rats have long gone. Be Freakin Careful!!! Have a bail out plan. Canada`s aviation scene isn`t so bad if you are logging jet time and it`s a win win situation at 25 years old.
You don`t want to be workin the Hadjj at 58 because you ODed on kool-aid. Most likely AC and WJ will be around for some time to come. Lets all hope. As for the rest, who knows. Gravity has a strong pull in Canadian Aviation.

H Man

[Tintin]

heuuuu what happen the november 9th???

[Speedboat]

The term "flag carrier" is anachronistic. It comes from an era where airlines were annoited by their respective governments to "carry the flag".
It means very little, if anything today, especially in North America.

There are numerous Canadian airlines, Transat and Skyservice come to mind, that fly into places the old "flag" carrier doesn't fly. To people in Austria, I would imagine Skyservice is Canada's "Flag" carrier. To people in Exeter, Transat is Canada's "Flag" carrier. Transat would definitely be the "Flag" carrier to Scotland. Who is the "Flag" airline to the Dominican Republic? WestJet? Air Canada? Transat? Skyservice?

It's slightly ironic that Transat, CanJet, Skyservice, Zoom and Sunwing all have Canadian flags on their livery. WJ has the flag and "Proudly Canadian" on it's livery. Other large Canadian based airlines do not carry the flag. Weird, eh?

:p

[Willie Everlearn]

Speedboat,
(this is not intended to slight anyone...)
Under the FARs, United is a FLAG carrier and Southwest is not. The CARs don't make a similar distinction. Having the canadian flag on your fuselage doesn't make you a 'designated' canadian FLAG carrier in the same context.

FYI SWA and UAL fleets all have the Stars and Stipes on their fuselage.
If you applied the same criteria in Canada, then Air Canada would be the ONLY FLAG carrier we have.

[spencer101]

Every Westjet aircraft has a Canadian flag on it :ok:

[Willie Everlearn]

spencer101

Westjet is a Domestic Carrier. Occasionally, it is a 'charter' carrier.
Since they don't yet fly to International destinations, like Europe or Asia, they haven't added the "FLAG" carrier arrow to their quiver.
Calgary to Hawaii, doesn't count. Neither does Winnipeg - Orlando.

Converted to FAR jargon, West Jet is a Domestic/Supplemental carrier. Again, we don't actually have the same differentiation in CARs. So, the fact WJA has a CDN flag on ALL its' aircraft is nice, but it doesn't make them a defacto 'flag' carrier when it comes to bilateral agreements between countries.

Hope this helps?
Willie :ok:

[wallygator]

WE, could you ellaborate please. It sounds as if you're definition is based upon percentage of International CASM's. Could you provide us with those percentages? Not quite sure what you mean by "occasional", either. WJ flies Calgary- Hawaii?:eek:

Thanks,

[Speedboat]

WJ has been flying sched into the Caribbean for a couple of years now, and for many years as a charter carrier.

This year, they are sched to St. Lucia, Barbados, Jamaica, Mexico and the DR.

Are these any less "international" than flights to Chile, Denmark or Indonesia?

Just wondering.

:8

[Willie Everlearn]

wallygator and Speedboat, you guys must be young! :D

Judging by your comments and questions it sounds to me like you've both missed a couple of things regarding the designation and use of the term "flag" carrier. (something we don't really use in Canada so I'm not surprised your comments are what they are) :sad:

Here's my glossover. (and I'm not trying to be smug or sarcastic)

When governments used to sit down to negotiate bilateral agreements (today as well) they negotiated on behalf of their State owned airlines. i.e., Canada-Air Canada, France-Air France, UK-British Airways, and so on. That was under an archaic protectionist regime. Deregulation hit the process like a bowling ball. You undoubtedly know that a good number of these former state owned airlines, including Air Canada have been sold into private hands so I won't elaborate. This changed the playing rules significantly over the last 15 years plus so we now live in a world of State owned airlines and Privately owned airlines. A complicated mix if ever there was. This makes the process more difficult while at the same time retaining the right to appoint or designate a "flag" carrier. :eek:

If Westjet wants to serve AMSterdam they make application. The Dutch Gov't looks at the current agreement, sees that Air Canada is the designated flag carrier for Canada and WJ gets turned down. They then go to the French and apply to provide regular scheduled services to Paris. The French Gov't looks at the bilateral agreement and says sorry, Air Canada is the present designate. However, if you wish to serve Paris on a charter basis, there is a way. As a charter carrier but not as the designated carrier. WJ then says we really prefer to serve AMS so they decide to apply to the Dutch Gov't for services to AMS as a charter airline. The Dutch Gov't says, we can do that.
The process is an ongoing negotiation between most countries to bring to and/or ensure stability in air services. :ok:

The point I was making in a previous post is that we (Canada) don't define Flag, Supplemental, or Domestic airlines in Canada as they do in the FARs. Because they fly to Hawaii, doesn't change much. Because they may fly to a Caribbean destination still doesn't make it a Flag Carrier either. West Jet provides scheduled domestic airline service and sells Charter capacity to the travel industry much like Air Transat (who I believe got WJA into the charter business, I could be wrong because I don't follow WJA that closely) :cool:

I'm thinking WJ has in their Ops Spec two authorities. One to operate Domestic and Transborder Ops plus the authority to provide "charter" flights to a list of "other" (including Int'l) destinations. But it's only a guess.
It still doesn't make them a flag carrier in the same context as Bilateral Agreements are concerned. :=

Putting a decal of the Canadian flag on the fuselage also doesn't make it a 'FLAG' carrier. :ugh: It's not that simple. :=l

Speedboat
If WJ are named in the bilaterals between Canada and St. Lucia, Barbados, Jamaica, Mexico and the DR, then it is a 'flag' carrier. However, this is something I'd have to look up. :confused:


I hope this clarifies my remarks a bit?
Willie

[Willie Everlearn]

I wish.:ok:

[McDoo the Irish Navigator]

If WJ are named in the bilaterals between Canada and St. Lucia, Barbados, Jamaica, Mexico and the DR, then it is a 'flag' carrier. However, this is something I'd have to look up.

I'd have to look this up to, but I can tel you WS offers SCHEDULED service to;
Mexico, The DR, Jamaica, The Bahamas, Barbados, St. Lucia and 5 states of the union other than Hawaii.

[yellowiron]

I understand were the term flag carrier came from, the one thing I find hard to understand is how Air Canada tells everyone there are Canada's flag carrier and you can't find a Canadian Flag on any of there aircraft...

Everyone else WJ - SunWing - Skyservice - AirTransat .. all fly the Canadian Flag..


MY 2 Cents

[Willie Everlearn]

McDoo

So it would appear some of WJ's skeds are through bilateral agreement wherein they've been designated as the carrier of choice by the GoC. I suspect AC got first dibs but that's an assumption on my part.

That being the case, the way the air carrier divisions within the FARs go, WJ would be defined as a 'flag' carrier. They are also a Supplemental carrier and a Domestic carrier. A three-in-one, which varifies one of my other suggestions that WJ are diverting from their true blue LCC model.

...just curious, do the U.S. destinations fall under the new U.S.-Canada agreement or are their flights scheduled charter flights?

Willie
(emoticons not used out of respect for the grown-ups on this thread)

[McDoo the Irish Navigator]

Far as I know, which is not a lot, Canada and the U.S. have an open-skies agreement, part of the NAFTA. (North American Free Trade Agreement). Why Mexico, as a NAFTA partner is not included, I don't know. By their own choice, I understand.
Westjet's transborder operations are all scheduled service. No bi-lateral agreement is necessary. Just pick your destination and fly there as many time a day as you like, local Airport Authority beauracracy notwithstanding.
Take care.

[Cuban.Cutie]

As of November 1st Sunwing is laying off 1000 employees.

They are in trouble!

[Willie Everlearn]

McDoo

I went through the Canadian Bilaterals (google search) and it's quite a list.
If we were to define West Jet under the FARs, they'd be a "Flag" carrier. So, obviously, I was wrong in my understanding having earlier said that WJ was an LCC. But in this day and age, it would appear as far as Canada is concerned, the international agreements allow a Country's government (in this case, Canada) to offer those negotiated routes to those who wish to fly them. The carrier must be a legitimate carrier under the CARs and overseen by TC. I guess WJ must wish to fly Barbados-Canada.

As for the Charter airlines, it is my understanding (and I certainly stand to be corrected on this one as well) that the charter airline receives nothing in terms of a cash payment until the flight leaves the ground enroute to its destination. I can't imagine the cash flow problems that might ensue having to operate like that but apparently, lots do so it's no surprise carrier assets are ceased for late payments. If the creditor senses you're in financial trouble he's going to protect his ASSets.

If this were true in Zoom's case, then having the assets seized by creditors left them in a not-so-nice position as far as collecting some of the fares sold if the flights couldn't depart. Hmmmm..... sticky wicket that.

That puts AT, CJ, Sunwings and any of the other players out there, in the same crosshairs. Since oil prices have dropped (maybe plummeted is a better word) these guys should be fine for now.

Anyone got a crystal ball?

[Left Coaster]

Don't need no ball...how about those who fail to learn from history...you get the rest?

[Willie Everlearn]

LC

So true.

[muckrucker]

What really disappoints me is vindictive unsubstantiated posts.

"Sunwing laying off 1000 people"
"Sunwing didn't make payroll"
"Sunwing won't make it past January"

All completely false. Found this on Airliners.net. Of particular interest is the post from a SunWing Captain near the bottom of the thread.

Sunwing About To Go Bust? — Civil Aviation Forum | Airliners.net (http://www.airliners.net/aviation-forums/general_aviation/read.main/4282313/)