Originally Posted by
a330pilotcanada
Good Evening All:
This is taken from today's Globe and Mail and I think the item that is bolded might be most succinct in nature.
Air Canada stock drops after CEO challenges ‘short-term investors’ to sell
Greg Keenan - AIRLINE INDUSTRY REPORTER
The Globe and Mail
Published Wednesday, Feb. 17, 2016 12:08PM EST
Last updated Wednesday, Feb. 17, 2016 4:56PM EST
Air Canada chief executive officer Calin Rovinescu challenged “short-term investors” to sell the airline’s shares Wednesday and it appears they took his advice.
Shares in the company fell 12 per cent Wednesday even though Air Canada announced adjusted financial results in 2015 that represented a record.
But Mr. Rovinescu had strong words when asked by analysts on a conference call about the airline’s decision to stop issuing monthly traffic figures and whether it considered offering more disclosure every month instead of less.
“To be very blunt, we’re not running this company for the benefit of short-term investors from a day-to-day basis or from a month-to-month basis,” Mr. Rovinescu said.
“We’ll see what the stock price does. If short-term investors don’t like this, I can encourage them to leave. We’re running this company for the benefit of our long-term stakeholders.”
Air Canada’s share price fell $1.02 to close at $7.39 on the Toronto Stock Exchange.
The airline reported annual adjusted profit of $1.22-billion or $4.18 a share in the year ended Dec. 31, up from $531-million or $1.81 a year earlier.
Those are the best financial results in the airline’s history, Mr. Rovinescu said.
But investors also appeared to focus on fourth-quarter results, which showed a final loss of $116-million, deeper than the $100-million final loss in the fourth quarter of 2014.
Instead of monthly traffic statistics, Air Canada will provide them quarterly and indicate how they stack up against Air Canada’s long-term targets and financial plan.
“That means we’re going to be providing information that we consider relevant to how we manage the company, not in terms of what somebody would like to see on a day-to-day basis or a month-to-month basis,” Mr. Rovinescu said.
“If we attract greater long-term investors, that should result in less [share price] volatility, not more volatility, and we’ll have the analysts starting to think about this in the way many pension funds [do].”
Air Canada stock drops after CEO challenges ?short-term investors? to sell - The Globe and Mail
AC's 2015 numbers were stacked with a 3Q when all the stars lined up. That occasionaly happens. It's a bit like a hole in one.
The world has changed quite a bit as evidenced by the precipitous collapse in the 4th quarter.
Few would have predicted 8 months ago that once interest expense was considered, AC, after all it's "transformational" cost cutting efforts, would produce operating margins of under 2%, break even loads still pushing 80%, stubbornly high unit costs, especially compared to its principal competitor and margins far below every other publicly traded airline on the continent.
AC is facing a lot of headwinds. Some are the same ones facing WJ, but there are many others that keen observers have identified.
For example, will the Edmonton TATL contagion spread? Huh? Just because the media hasn't picked up on it doesn't alter the current situation where last minute fares, the ones that build yield, from YEG to Europe have been running between 10 and 35% lower than from YYC for the last while.
The collapse of last minute high yield fares, where the real money is made, is a nightmare for legacy airlines. Those are the fares that underwrite the advance purchase, discount. "plane filler" fares.
There are also a couple of important markets that are traditional moneymakers that are going to see meltdowns well before the beginning of the summer.
Every publicly traded airline competes for capital and investors. Investors expect that the airlines provide timely information, in the good times and the bad, about performance, as well as guidance on how many widgets the company plans to produce in the future, ie ASM's.
To unilaterally simply opt out of this program is, at best, a gutsy move. To my knowledge, this makes AC the only publicly traded airline in North America, Mexico, much of South America and all of Western Europe to do this. It is unprecedented. Investors, be they individuals or institutions, don't like words like "unprecedented". They like words like "transparency".
Porter decided to stop releasing monthly loads a few years ago and we all know why they did that. They're privately held. They can do what they want.
Add the odd timing of the next couple of quarterly reports, (Friday's) and even the most optimistic, starry eyed, kool aide infuse band wagoneers should be asking some questions.
It is probably not a prudent time to be reciting the "damn the torpedos, full steam ahead" speeches.
Strange days ahead.