Skyservice in trouble ?
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Skyservice in trouble ?
Just heared a nasty rumor that Sky is in trouble. Seems Sunwing is eating its lunch. Hope its not true but we are due for another airline failure around here.
Anybody care to comment ?
D.
Anybody care to comment ?
D.
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Skyservice renewed their Signature Vacations contract recently and have a contract to fly for Sunquest which gives them a large winter programme. They are also due to fly from Belfast Dublin and Amsterdam this summer plus providing crew for Thomas Cook in the UK. The Canadian tour market is very seasonal with a very small summer programme so the potantial crew lay off is nothing new. I understand that Sunwing pilots were having a meeting with their directors today to discuss current trading and future prospects any news from that meeting?
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With CanJet's new commitment with Transat, the screws are tightening at Sunwing. CASM at CanJet is less than WestJet's because there are 23 more seats on board CanJet's 800s vs WestJet's. That is more than 10% additional margin for Transat.
Bye Bye SW.
Bye Bye SW.
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23 more seats than WJ's -800's? That borders on abuse.
The cabin comfort advantage gives WJ a huge selling point against the carriers that cram 'em in with Ryan-Air seating in -800's. The problem is, the average Canadian is quite a bit larger than the average European, and so to are our North American baggage allowances.
The Canadian marketplace is full of the "get 'em once airlines", but you need to get the repeat business if you plan to be around long term.
Promising cheap fares, then nailing the customer at the airport for huge excess baggage fees as they check in for for their once in every few years winter sun vacation is not a way to endear yourself to your customers in a market of 32 million.
Contracting out your customer service functions pretty much ensures that when things go sideways, it'll turn into a gong show pdq.
WJ's growth proves that customers keep coming back to their product. This is not necessarily so with the others who trade their capacity around on a seasonal basis. One year airline A is up, the next year they are down with airline B under cutting them.
This is not a great pattern for those people with long term, single employer career aspirations.
The cabin comfort advantage gives WJ a huge selling point against the carriers that cram 'em in with Ryan-Air seating in -800's. The problem is, the average Canadian is quite a bit larger than the average European, and so to are our North American baggage allowances.
The Canadian marketplace is full of the "get 'em once airlines", but you need to get the repeat business if you plan to be around long term.
Promising cheap fares, then nailing the customer at the airport for huge excess baggage fees as they check in for for their once in every few years winter sun vacation is not a way to endear yourself to your customers in a market of 32 million.
Contracting out your customer service functions pretty much ensures that when things go sideways, it'll turn into a gong show pdq.
WJ's growth proves that customers keep coming back to their product. This is not necessarily so with the others who trade their capacity around on a seasonal basis. One year airline A is up, the next year they are down with airline B under cutting them.
This is not a great pattern for those people with long term, single employer career aspirations.
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Just noticed that Skyservice has just sold its medevac business to an American company....Hmmmm Why?
Need to generate some cash ? Why?
So many questions.
Good luck to us all in this crazy business.
Need to generate some cash ? Why?
So many questions.
Good luck to us all in this crazy business.
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The Skyservice Air Ambulance is a completely separate business from the airline. The airline was actually sold to investors a couple of years ago. It's still curious why investors would want to bother with a charter airline in Canada knowing the thin margins and cyclical nature of the business. What do they see that others don't?
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The airline business is like a round of golf.
You can crap the bed for 17 holes, but if you birdie the 18th with everyone watching, (think the 3rd quarter), you can't resist but return for another 17 holes of abuse.
There are serial airline guys out there that can't resist the lure either.
That's why there is the Triple Crown of Executives Presiding over Airline Bankruptcies.
It's a small group, but the roster of people waiting to join grows annually. So far, only Mr. TheWhite is the only Canadian member.
You can crap the bed for 17 holes, but if you birdie the 18th with everyone watching, (think the 3rd quarter), you can't resist but return for another 17 holes of abuse.
There are serial airline guys out there that can't resist the lure either.
That's why there is the Triple Crown of Executives Presiding over Airline Bankruptcies.
It's a small group, but the roster of people waiting to join grows annually. So far, only Mr. TheWhite is the only Canadian member.
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Skyservice trouble
Skyservice was started approximately 15 years ago when it offered to fly solely for Sunquest Vacations. Basically the tour operator would pick up the tab for the aircraft and all associated expenses and consequently the tour operator also withstood the entire risk. A novel idea at the time.
Nowadays I don't believe tour operators wish to be on the hook for these costs and unfortunately I firmly believe that unless Skyservice can come up with some new ideas or lower their costs substantially to maintain or possibly attract new tour operators or clientele, their economic sustainability could indeed be in jeopardy.
Nowadays I don't believe tour operators wish to be on the hook for these costs and unfortunately I firmly believe that unless Skyservice can come up with some new ideas or lower their costs substantially to maintain or possibly attract new tour operators or clientele, their economic sustainability could indeed be in jeopardy.
Last edited by pacificwind; 28th Sep 2009 at 06:39.
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Interesting timing on your post pacificwind. You posted this before the Sunwing and Signature Vacations merger was announced. Did you know about it ahead of time?
I tend to agree with you unfortunately. This winter will likely be status quo, but I don't see any Signature Vacations business going forward, despite the 5 year contract. There are always escape clauses in such contracts. I am curious to see what will happen now with Thomas Cook/Sunquest, and whether they will increase their business with Skyservice or walk away. They have been in bed with Canjet and Transat for a while now, and slowly drifting away from Skyservice. Interesting times, but the mergers and acquisitions were long due IMHO.
I tend to agree with you unfortunately. This winter will likely be status quo, but I don't see any Signature Vacations business going forward, despite the 5 year contract. There are always escape clauses in such contracts. I am curious to see what will happen now with Thomas Cook/Sunquest, and whether they will increase their business with Skyservice or walk away. They have been in bed with Canjet and Transat for a while now, and slowly drifting away from Skyservice. Interesting times, but the mergers and acquisitions were long due IMHO.
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I would think Sunwing/TUI group are looking to Gain market by growing not by eliminating one or another.They need the lift,so as neither Airline could probibly grow that fast,under the short term both may be ok.
My two cents...
My two cents...
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Tour rival merger pressures Transat - The Globe and Mail
Tour rival merger pressures Transat
BRENT JANG
From Wednesday's Globe and Mail Last updated on Wednesday, Sep. 30, 2009 03:00AM EDT
TRANSPORTATION REPORTER
Sunwing Travel Group is solidifying its position as Canada's second-largest tour operator by merging with Signature Vacations, putting pressure on leader Transat A.T. Inc. as the industry struggles with an excess of holiday packages.
Analysts have been concerned about the ability of Transat and Sunwing to maintain profit margins amid intense competition, pointing to the "economic slack" in the industry - tens of thousands of unsold holiday packages during the economic downturn, despite sharply discounted prices.
But Stephen Hunter, Sunwing's chief operating officer, said he's starting to see rosier advance bookings - signs of an uptick in consumer confidence as tour operators prepare for the fall and winter travel season to sun destinations.
"Every week that goes by, we're seeing year-over-year improvements, and of course, cold Canadian weather wouldn't hurt, either," Mr. Hunter said in an interview yesterday after announcing Sunwing's merger with the Canadian operations of TUI Travel PLC.
British-based TUI, through its money-losing First Choice Canada division, owns tour operator Signature and the SellOffVacations retail arm.
"The consumer will benefit with better pricing and improved product lines in the next six to 12 months," he said. "People don't want to stay at a dump. They want a nice hotel, but they don't want to pay a lot. There will be deals."
Sunwing, privately owned by the Hunter family of Toronto, is effectively selling a 49-per-cent equity stake in the combined entity to TUI, but will relinquish only a 25-per-cent voting interest.
Under the transaction set to close by mid-November, TUI is offering Signature, SellOffVacations and $101-million in return for the equity stake. Mr. Hunter, 38, will become president and chief executive officer of Sunwing, replacing his father, Colin, who remains as chairman. The Sunwing, Signature and SellOffVacations brand names will be retained.
Toronto-based Sunwing runs a packaged holiday unit and also operates a fleet of 14 leased Boeing 737-800 jets through its airline division. Sunwing is pledging to honour its contract to charter Skyservice Airlines Inc. to fly on behalf of Signature, but could switch to Sunwing's fleet within two years. Skyservice also flies on behalf of Sunquest Vacations, the country's third-largest tour operator.
Federal rules limit foreign ownership of Canadian airlines to a 25-per-cent voting interest, although Ottawa plans to raise the cap to 49 per cent.
Montreal-based Transat posted a $43.7-million profit for the nine months ended July 31, but it is warning about the "abundant supply" of holiday packages on the market. Sunwing said its annual revenue surpasses $660-million and its earnings before interest, taxes, depreciation and amortization in the current fiscal year should exceed the $42-million posted for the year ended Oct. 31, 2008. By contrast, TUI's Canadian operations are forecast to lose $38-million for its current fiscal year.
The combined Sunwing entity will have revenue of $900-million a year.
"The Canadian tour operator market has been plagued in recent years by too much capacity and too many players," Versant Partners Inc. analyst Cameron Doerksen said in a research note yesterday. "As a result, margins for all operators, Transat included, have been squeezed."
In April, Conquest Vacations Inc. shut down after 37 years in business, blaming slow sales and cutthroat pricing in the industry.
Signature has strength in Mexico, complementing Sunwing's clout in Cuba, Mr. Doerksen said. The Sunwing-Signature team plans to crank up its promotion of Mexico, whose tourism industry got crushed last April after the outbreak of H1N1 influenza.
Other leading players in the sector include Air Canada Vacations and WestJet Vacations. Gregg Saretsky, formerly at Alaska Airlines Inc., was named vice-president for WestJet Vacations in June, signalling parent WestJet Airlines Ltd.'s plans to expand its tour division.
Transat A.T. (TRZ.B)
Close: $14.59, up $1.09
***
At a glance
SUNWING
Owns tour operator Sunwing Vacations and charter carrier Sunwing Airlines.
TUI TRAVEL
Owns tour operator Signature Vacations and retail division SellOffVacations.
MARKET SHARE
Sunwing currently has an estimated 18 per cent of market share and Signature has 12 per cent. Combined, the merged entity will have a 30-per-cent share, second only to Montreal-based Transat A.T. Inc. at more than 40 per cent.
EMPLOYEES
Fast-growing Sunwing has 900 workers while TUI's First Choice Canada division, with Signature and SellOffVacations, has 350 staff.
Tour rival merger pressures Transat
BRENT JANG
From Wednesday's Globe and Mail Last updated on Wednesday, Sep. 30, 2009 03:00AM EDT
TRANSPORTATION REPORTER
Sunwing Travel Group is solidifying its position as Canada's second-largest tour operator by merging with Signature Vacations, putting pressure on leader Transat A.T. Inc. as the industry struggles with an excess of holiday packages.
Analysts have been concerned about the ability of Transat and Sunwing to maintain profit margins amid intense competition, pointing to the "economic slack" in the industry - tens of thousands of unsold holiday packages during the economic downturn, despite sharply discounted prices.
But Stephen Hunter, Sunwing's chief operating officer, said he's starting to see rosier advance bookings - signs of an uptick in consumer confidence as tour operators prepare for the fall and winter travel season to sun destinations.
"Every week that goes by, we're seeing year-over-year improvements, and of course, cold Canadian weather wouldn't hurt, either," Mr. Hunter said in an interview yesterday after announcing Sunwing's merger with the Canadian operations of TUI Travel PLC.
British-based TUI, through its money-losing First Choice Canada division, owns tour operator Signature and the SellOffVacations retail arm.
"The consumer will benefit with better pricing and improved product lines in the next six to 12 months," he said. "People don't want to stay at a dump. They want a nice hotel, but they don't want to pay a lot. There will be deals."
Sunwing, privately owned by the Hunter family of Toronto, is effectively selling a 49-per-cent equity stake in the combined entity to TUI, but will relinquish only a 25-per-cent voting interest.
Under the transaction set to close by mid-November, TUI is offering Signature, SellOffVacations and $101-million in return for the equity stake. Mr. Hunter, 38, will become president and chief executive officer of Sunwing, replacing his father, Colin, who remains as chairman. The Sunwing, Signature and SellOffVacations brand names will be retained.
Toronto-based Sunwing runs a packaged holiday unit and also operates a fleet of 14 leased Boeing 737-800 jets through its airline division. Sunwing is pledging to honour its contract to charter Skyservice Airlines Inc. to fly on behalf of Signature, but could switch to Sunwing's fleet within two years. Skyservice also flies on behalf of Sunquest Vacations, the country's third-largest tour operator.
Federal rules limit foreign ownership of Canadian airlines to a 25-per-cent voting interest, although Ottawa plans to raise the cap to 49 per cent.
Montreal-based Transat posted a $43.7-million profit for the nine months ended July 31, but it is warning about the "abundant supply" of holiday packages on the market. Sunwing said its annual revenue surpasses $660-million and its earnings before interest, taxes, depreciation and amortization in the current fiscal year should exceed the $42-million posted for the year ended Oct. 31, 2008. By contrast, TUI's Canadian operations are forecast to lose $38-million for its current fiscal year.
The combined Sunwing entity will have revenue of $900-million a year.
"The Canadian tour operator market has been plagued in recent years by too much capacity and too many players," Versant Partners Inc. analyst Cameron Doerksen said in a research note yesterday. "As a result, margins for all operators, Transat included, have been squeezed."
In April, Conquest Vacations Inc. shut down after 37 years in business, blaming slow sales and cutthroat pricing in the industry.
Signature has strength in Mexico, complementing Sunwing's clout in Cuba, Mr. Doerksen said. The Sunwing-Signature team plans to crank up its promotion of Mexico, whose tourism industry got crushed last April after the outbreak of H1N1 influenza.
Other leading players in the sector include Air Canada Vacations and WestJet Vacations. Gregg Saretsky, formerly at Alaska Airlines Inc., was named vice-president for WestJet Vacations in June, signalling parent WestJet Airlines Ltd.'s plans to expand its tour division.
Transat A.T. (TRZ.B)
Close: $14.59, up $1.09
***
At a glance
SUNWING
Owns tour operator Sunwing Vacations and charter carrier Sunwing Airlines.
TUI TRAVEL
Owns tour operator Signature Vacations and retail division SellOffVacations.
MARKET SHARE
Sunwing currently has an estimated 18 per cent of market share and Signature has 12 per cent. Combined, the merged entity will have a 30-per-cent share, second only to Montreal-based Transat A.T. Inc. at more than 40 per cent.
EMPLOYEES
Fast-growing Sunwing has 900 workers while TUI's First Choice Canada division, with Signature and SellOffVacations, has 350 staff.
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The next IT casualty....
I predict will be Sunquest...as the consolidation filters through the market.
Thoughts anyone ?
Thoughts anyone ?
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Skyservice jet's sized
WINNIPEG — Two Canadian airport authorities have seized aircraft belonging to defunct vacation charter provider Skyservice and are holding them in an effort to recover unpaid bills from the company.
The Greater Toronto Airports Authority is owed $221,038 and it has seized six Skyservice planes that were parked at the Pearson Airport in Toronto.
The Winnipeg Airports Authority has also seized two of Skyservice's Boeing 757 jets and is suing Skyservice Airlines for $451,491, money owed from unpaid landing and terminal fees, as well as airport improvement fees that the airlines collected on the airport's behalf.
The two jets seized in Winnipeg were parked at Richardson Airport when the company was placed into receivership late last week.
Barry Rempel, the CEO of the Winnipeg Airports Authority, said that because an airport cannot refuse to allow airlines to use the facilities, it has the right to seize assets when airlines do not pay their bills.
The Boeing 757 seats 180 passengers.
Skyservice folded suddenly at the end of March after 25 years in the highly competitive Canadian travel-tour business.
The Toronto-based charter airline abruptly halted its operations and filed for receivership in the Ontario Superior Court of Justice after its majority stakeholder, Gibralt Capital Corp., and one of its key partners, Sunquest Vacations, a division on Thomas Cook PLC, called in their loans with the carrier.
One thousand people were thrown out of work in Canada and the U.S. by the move.
Skyservice was the latest victim in the industry, joining the ranks of Zoom Airlines and Conquest Vacations, which folded last year.
At issue is an excess of packaged tours in the market that has been a drag on prices and the profitability of the players. Market leader Transat A.T. said recently it expects a loss in the second quarter, traditionally its strongest point of the year, for the first time in its history.
Skyservice also was saddled with a sizable debt stemming from a leveraged buyout in 2007 by Vancouver-based Gibralt, which owns 94 per cent of the company through a numbered Canadian account.
Skyservice's costs are 30 to 40 per cent higher than its competitors Canjet, WestJet and Sunwing. Almost three-quarters of its workforce was unionized.
Skyservice's fleet of 20 planes was leased.
With files from Canwest News Service
The Greater Toronto Airports Authority is owed $221,038 and it has seized six Skyservice planes that were parked at the Pearson Airport in Toronto.
The Winnipeg Airports Authority has also seized two of Skyservice's Boeing 757 jets and is suing Skyservice Airlines for $451,491, money owed from unpaid landing and terminal fees, as well as airport improvement fees that the airlines collected on the airport's behalf.
The two jets seized in Winnipeg were parked at Richardson Airport when the company was placed into receivership late last week.
Barry Rempel, the CEO of the Winnipeg Airports Authority, said that because an airport cannot refuse to allow airlines to use the facilities, it has the right to seize assets when airlines do not pay their bills.
The Boeing 757 seats 180 passengers.
Skyservice folded suddenly at the end of March after 25 years in the highly competitive Canadian travel-tour business.
The Toronto-based charter airline abruptly halted its operations and filed for receivership in the Ontario Superior Court of Justice after its majority stakeholder, Gibralt Capital Corp., and one of its key partners, Sunquest Vacations, a division on Thomas Cook PLC, called in their loans with the carrier.
One thousand people were thrown out of work in Canada and the U.S. by the move.
Skyservice was the latest victim in the industry, joining the ranks of Zoom Airlines and Conquest Vacations, which folded last year.
At issue is an excess of packaged tours in the market that has been a drag on prices and the profitability of the players. Market leader Transat A.T. said recently it expects a loss in the second quarter, traditionally its strongest point of the year, for the first time in its history.
Skyservice also was saddled with a sizable debt stemming from a leveraged buyout in 2007 by Vancouver-based Gibralt, which owns 94 per cent of the company through a numbered Canadian account.
Skyservice's costs are 30 to 40 per cent higher than its competitors Canjet, WestJet and Sunwing. Almost three-quarters of its workforce was unionized.
Skyservice's fleet of 20 planes was leased.
With files from Canwest News Service
