My attempt to Liven up this Forum.

[Azure]

Ok, Virgin Air is lobbying Ottawa to set up as domestic carrier here, going head to head with AC. What do you all think? Good move, bad move? Will the Liberal government, who seems intent on holding AC back from competing with newbie Canjet, allow a foreign airline to compete too? What about the other newbies who plan to come out of the woodwork, like Roots Air "no auzie jokes now!" How involved will WestJet be? I believe I heard somewhere where they helped Branson set up Virgin Blue. Would Branson stab them in the back after being so helpful?

I like the name Virgin Ice Air. Then they can hook up with VIA rail, ha! I should go work for him....I'm full of ideas.

Let's hear your thoughts, ideas etc.

[AIRLIFT]

Azure Good joke, I like your sence of humor. But I sure hope it does'nt happen. We have enough airlines already the last thing we need is an other player. The canadian market can only handle so much one more is too many. I wandering if we will be able to support the ones we have for long.... (Royal, Canada 3000, Canjet, Westjet) they are all in the domestic bisness...Hmmmmmm http://www.pprune.org/ubb/NonCGI/confused.gif

[Rollingthunder]

I understand he doesn't actually have the operating authority for London-Toronto yet. He'll probably get it and Vancouver-London as well. He might find it difficult to turn a profit with daily frequencies. People in the industry think he won't ever, ever get to set up a carrier here. The 25% limit on foreign ownership is a big obstacle and we're not OZ where there was limited competition. Flash and showmanship won't impress Ottawa. There's a fair amount of competition here at the moment and some of it may not be around at the end of three years.

[m&v]

Rolling thun,I agree who is he going to get into bed with,in view of the 25% situ!!
I don't think the "LIb" gov't want another fiasco(Amer'/Air Canada buyout) just yet.He sure semm's to take on all the "main' Carriers: BA,Qantas,and now A/C.
It's official,according to the proposed equipement lists, put out today by Canadien/Air Canada,that Mr Milton is proceeding with his Low Cost Carrier(utilizing Canadien's 737's).This results in
quite a gathering of "cheap'fares:WestJet,CanJet,and RootsAir who's vieing for the continuation of "OneWorld"transcon'

[Azure]

Good ideas, great thoughts, keep them up!

[Azure]

Will AC's LCC ever fly? And why? If you owned a major airline, the whole country in your hand, why bother?

[paco]

Enough airlines? I don't think so! You try changing flights on C 3000! There's *always* room for more, and there shouldn't be any organisation is such a strong position as to dictate prices. We need more just to get away from that.

[Squawk 8888]

Azure, the last thing we need here is an airline hooking up with VIA rail. They derail passenger trains about once every six weeks and most of these accidents are caused by crew negligence; the worst was Hinton, AB where the crew disabled a faulty brake alarm and subsequently killed 23 pax. Do you really want an airline exposed to that kind of safety culture?

[TrueNorth]

Yorktown Securities aviation analyst in yesterday`s Globe (sorry can`t remember his name), said:

"No foreign company will ever provide domestic service in Canada. It`s just never going to happen."

He sounds pretty certain!

What I want to know is: why does everyone talk about AC`s domestic monopoly? Now, I admit that I`m a soft southerner and don`t know the situation in the North, but every flight I look at has competetion from CanJet or WestJet or Canada3000 or whatever. Even some of the Northern routes are plied by companies like FirstAir. But read the paper and the impression you get is that if you don`t want to take AC you have to drive. Is this inaccurate, or is there something I don`t know?

[AIRLIFT]

Paco, as long as they have monney to support there losses to keep flying because ther is not enough people in this country to keep five or six domestic airline in the air...

[Mulligan]

Seems to me Branflakes sold controlling interest in Virgin to Singapore Airlines didn't he? So is Virgin going to end up in STAR, like SA, and end up code sharing with AC instead of competeing with them? I hate it when some Brit can skate better than me!

[Squawk 8888]

Airlift, I don't buy into the notion that the market here is too small for competition- the Oz market is even smaller but I hear their two biggies are doing well. The problem here is twofold:

1. Even after privatization AC received a lot of favour from the government- not as obvious as the old days when CP and Wardair were not allowed more than one transcontinental flight per day, but when they were privatized the government wrote off their debt so they started with plenty of assets, lots of IPO cash and no debt. Quite a competitive advantage.

2. CP was grossly mismanaged after a too-rapid expansion. They financed their takeover of Wardair (itself in trouble for expanding too fast) through a sale & lease-back of their fleet, leaving them with not enough cash flow to support both operations and fleet renewal. CP management essentially strip-mined the company of its assets in an attempt to fulfill their ambitions. This is why many AC shareholders, myself included, rejected the Onex bid- they were planning to hand over AC to the same management team that ran CP into the ground.

[Rollingthunder]

Squawk8888 - not to mention the AC-CP cut throat competition over the years.
Mulligan, I believe Branson sold 49% and retains controlling interest.

[AIRLIFT]

Squawk 8888, this is all true but with that many people tring to get a peice of the market, some how I don't think AC will be the loser. They Already published a combine rate of occupency of about 70% for the last semester.... The losers will be the smaller companies.:P

[paco]

Hi TrueNorth - the problem is that AC (and maybe a couple of others like westjet) operate what I would call "true" scheduled services, the Brit definition of which is that the services are open to all customers and the flights must go regardless of whether they are empty or not. The others do indeed go at defined times, but they are not as open (you can't change schedules easily, because they do not sell single seats as such, instead the plane is chartered by a separate company which sells the seats on.

Maybe I should rephrase - we need more "proper" scheduled services.

cheers

phil

[Azure]

Hey! I was joking about VIA rail!...but I'm glad to see a lot of thoughts, reasons, etc.

Didn't (Gerald S) who started the whole thing in Canadian Aviation, just recently put in a bid for Chapters, the bookstore of bookstores? Is this man serious about any take over, or is he just driving up stock prices to make a killing? Just a thought.

[Azure]

Do any of you think LCC will fly? Will Milton get it off the ground? And why?

[flynfiddle]

OK folks .. time for a conspiracy theory, haha...
Does anybody out there ever wonder if the Onex-CAI-AC thing was all a big scam from the start to up the AC stock price, make some money and finally merge AC and CAI?

Think about it .. with one Quebec Judge's ruling on what had to be the easiest decision he had to make (the law was on the books in black and white for all to know, that no single shareholder could have more than 10% of AC stocks, Onex knew about it, AC knew about it, the Gov't knew about it, hell, half the damn country knew about it and yet Onex withdrew their offer in the blink of an eye with that one ruling. Seems kinda strange to me that the nasty feud that was brewing just petered out without a peep after that.

All the maneuvering and politics that went on made the final outcome easy on alot of people:
1) Ottawa is happy .. AC taking over CAI got the Gov't off the hook, this way they washed their hands to the whole CAI mess they were involved in for years by keeping the company afloat to keep 16,000 people employed. AC's offer would make AC the bad guy in the event of lay-offs.
2) Onex is happy .. Gerry and buddies still made a pile of cash by selling the AC stock they bought dirt cheap before the "takeover bid".
3) AC is deliriously happy ... now they are finally rid of that pain in their side CAI by taking them over and can control most of the Canadian market.
4) CAI is happy .. what else has to be said? The handout hunting has ended. Also most of the employees can sleep easier at night (tho this is debatable depending on who you talk to) knowing they are with a more stable company.

So what ever happened to the Low Cost Carrier? Wasn't that part of the "plan" Milton pitched to the Gov't and shareholders? Wasn't there also mention of some kind of a new Cargo Operation?

So what do you folks think, is it a plausible conspiracy theory? I want to hear what you folks think :)

[AIRLIFT]

You're soo much right on the nonney it's scrarry. I just wish I had seen them coming and bought a pile of AC's stock when they were around 6$ then I would be happy to. :)

It's a good theory and there could very much be alot of truth in that. Todays politicien are very slick about making those kinda move and since every body got sumthing outa of it why not go ahaead and make it happen, who will stop them... Who's got the power.

There is so much we don't know in those deals and why they all happen to fall in place like a carfully design dance of events.

---------------------
Show me the monney!!!!!!!!!!!

[CallYouBack]

flynfiddle's conspiracy theory is closer to truth than fiction. Overheard this a while back, and the more I've thought about it the more plausible it sounds. Think of these facts:

1- CDN had been living on borrowed time last couple of years thanks to financial handouts from Ottawa, a protected route structure in the Pacific, and was the favored airline for any government travel.

2- Ottawa could not outwardly give any more public money to CDN without the hope of ever getting it back because of CDN's ongoing financial crisis.

3- Ottawa could not force AC, a private, shareholder owned company to bail out CDN either financially, concession wise or by easing up on marketing ploys or outright head to head competition.

4- There was no other party interested supporting a failing CDN, and this includes AA who had milked that cow to the fullest.

5- Ottawa could not politically afford to let CDN fail and risk alienating the Western electorate with the potential loss of 15,000 jobs, many of which were western based.

The only viable solution was to create a scenario that would force the financially responsible AC into a rescue of their failing competitor.

A very elaborate plan was hatched and it involved the Liberal heirarchy including the Transport Minister, AA who wanted to rid themselves of the CDN attachement (no longer needed), CDN senior management (desparately trying to keep the company afloat....a losing proposition, by very commendable), and one G.S., a supposed Canadian living in the States, a long time Liberal hack and friend of the Ottawa inner circle as well as the Transport Minister, who ran a company that specialized in corporate take-overs. The jury is still out on AC management participation.

The plan was to scare AC into defending itself against a hostile takeover.

During the months preceeding the public announcement of the intended takeover, ONEX illegally purchased shares that amounted to more than the legal ownership limit by any one individual or company. At the public announcement they offered a higher share price than the then going rate. AC counter-offered, as did ONEX, and so on. Pie in the sky promises were made by both sides, and an unscheduled shareholders meeting was called for early November, where ONEX was to present their case. Remember, time was of the essence. CDN was forecast of being incapable of continued operation beyond that Christmas unless something was done.And all the while, AC had legally challenged the way in which ONEX had acquired the number of shares they did to force the issue at a shareholders meeting.

Ottawa had two options. They could have done what would have amounted to 'moving the goalposts with the ball in the air' by upping the ownership limit the a higher level. But they could not afford the political backlash from the financial community who had lots invested in AC under the existing rules. Or they could let the situation play itself out as had been pre-arranged. The two sides counter offered each other on share price, driving up to price. And they forced AC into promising no job loss for CDN employees under AC management.

The players knew all along that ONEX's acquisition of shares was illegal, and would not stand up in court. The whole process amounted to a bluff while the issue was before the courts. When AC had made all the promises necessary to safely keep CDN afloat, the Quebec judge rendered the only decision he could under the existing laws. G.S., his task now complete, and better than $60 million richer from all the shares he and his cronies had purchased, politely smiled, wished AC good luck and walked away. No appeal, nothing. Never to be heard from again in the airline sector.

If you look at the material that was sent out to the shareholders prior to the cancelled Nov.8th meeting, and look at who the proposed Board of Directors of 'the New AC" were to be, it is rather obvious that the ONEX gang never had any intention of takingover and running an airline. Only one person was known in the transportation sector. The rest were all lawyers or others who had no experience in the industry they were trying to become a part of.

So the whole affair appears to have been an elaborate set-up with the sole intention of forcing AC to defend itself from a hostile take-over bid, real or imagined, and to present an alternate plan to maintain their own corporate independence that had to reluctantly include the acquisition and absorption of CDN into their own operation.

Pity the powers that be could not have been so generous with the poor souls who were under the employ of EATON'S when they failed.

[This message has been edited by CallYouBack (edited 07 December 2000).]

[Azure]

Once the whole plan falls into place.... the (Liberal government) tries to wash it's hands by telling Air Canada how "bad" it is for being so strong.... and then saying Air Canada cannot compete with new rival, CanJet.

I thought we had open skies?

[Rollingthunder]

As far as the LLC goes, senior management are in place and planning start up actively and the aircraft are assigned. Just waiting on the time requirements.
Why do it? To bite into WJ's market share at the same level. Canjet's still a very small player, but WJ is not.

[pigboat]

CYB, that sounds pretty par for the course where the Liberals are concerned. Wonder how they would have gotten around the 10% law if the QC judge hadn't shot them down. Now it looks like the same gentleman wants to do for the Canadian book buyer what he did for the airline traveller
RT, I wonder how they're gonna operate AC lite. Use CPs' 73s with separate seniority lists for the employees? I can't think of an airline that runs a cheap version of itself using its' own aircraft and crews, and AC already has the connectors.

[This message has been edited by pigboat (edited 07 December 2000).]

[Azure]

Air Canada's connectors are too scoped (and rumor has it too expensive to operate) to go up against airlines like WestJet. Dash 8's don't compete well with 737's.

As for Chapters, I made a visit the other day, couldn't find my favorite mag, they no longer carry it! :mad: They must of had 100 Martha Stewart type magazines. What a waste of shelf space.

Anyway, there was no place to sit and have a coffee - all the tables were full of people reading magazines, newspapers, books - and there was nobody at the tills! I won't be back anytime soon, why buy a $6.50 magazine that 50 people have read for free? http://www.pprune.org/ubb/NonCGI/confused.gif

[Rollingthunder]

pigboat,

Unknown how crewing is planned. If it was me, the existing 737 pilots and F/As would go on to A320s, 767s etc. or remain with the rest of the 737s, attrition handling the surplus. Then with a legally separate company, new hire the crews on separate seniority lists and pay scales.
Didn't an American carrier start up a lite version?

[in limbo]

I heard a rumor that ROYAL was being considered for the LCC. :)