Another airline gone bust

[J.O.]

It's pretty complicated but it is true that TCX put Skyservice into receivership (our version of administration). This comes from the filings with the bankruptcy court.

[bmibaby319]

Sad Day, This is were most of the UK Charter/Holiday Airlines Aircraft spent there time in the winter. But also, I heard they were going to pack in the company after troubule with Crediters, but oviousaly not.

[STN Ramp Rat]

It's pretty complicated but it is true that TCX put Skyservice into receivership (our version of administration).

http://cfcanada.fticonsulting.com/sk...t%20Report.pdf gives the details.

It would appear from this court document that

1) SSV were doomed from the moment that TUI acquired Sunwing and decided to transfer the flying to SWG. (Point 16 in the report)

2) Thomas Cook Canada Inc (TCCI) took over the SSV some of the SSV debts in Feb 2010. It is not stated how much they paid for the debt. It is a guess on my part but I suspect they were propping up SSV until the end of the peak winter flying program to avoid disruption to the TCCI flying program (point 15 and point 27 in the report)

3) TCCI acted when the 94% owners, Gibralt (a Private equity company) issued a demand for payment on their secured debt and received CAD8.8 Million from SSV. TCCI then issued a demand for payment on their secured debt and received nothing. (Point 18 and 19 in the report)

4) TCCI knew they were going to pull the plug, TUI did not (point 23 on the report)

5) TCCI has the SSV headquarters and the SSV hangers at YYZ as security for their debt. (Point 28b on the report)

It would be interesting to have been a fly on the wall during the discussions around my point 3) did TCCI know that Gibralt was going to run away with CAD 8.8 Million or was this agreed in advance.

TCCI are left with a secured debt on the SSV headquarters and hangers at YYZ.

TCCI have a need to find a provider of lift for the peak W2010/11 season.
SWG are owned by TUI, TSC are owned by Transat, there are no other serious players in the Canadian charter market

My guess would be that TCCI will use the summer to form a new Canadian charter company.

[J.O.]

STN Ramp Rat;

You have summed it up very well. While the TUI Sunwing deal was the death blow, Gibralt's highly leveraged purchase of SSV in 2007 put the patient on permanent life support (a corporate raid worthy of Carl Icahn, IMHO). It made the business unsustainable in any sort of economic downturn or difficulty with a primary customer. TUIs troubles, i.e their $40 + million CDN loss in FY 2008 left them no choice but to make their move on Sunwing in an effort to curb their losses. As we now know from the court documents, that deal set the final wheels in motion. It would have ended sooner had TCCI not agreed to assume the debt from Roynat Capital.

To your question regarding point # 3, the court documents mention that Gibralt's secured debt took precedence over that taken by TCCI. They probably had to agree to that to save the winter season. They also had to agree to keep SSV's financial difficulties in strict confidence. Their numbers aren't in yet, but it sounds like this turned a small winter loss for them into a significant one. The documents show that they are owed just north of $12 million CDN.

No one in the charter market made money in Canada this winter, but TCCI may end up with the smallest loss when all is said and done. As to their plans for next winter, they need someone to fly their lift. They have brought in a mix of A320s and 757s for several years now and I don't think they can change that very quickly. No charter operator here currently operates both types. They will probably want to take a similar stake in their lift provider like TUI has done (49%). How that will eventually play out is the big question.

[STN Ramp Rat]

sorry

I forgot to mention Canjet, they may be able to provide TCCI with the lift. and maybe as J.O. sugests they will buy a stake in them. one issue with this though is that Canjet are Boeing and TCCI are Airbus.

[clunckdriver]

Very in depth look at the situation!however the real problem is that Canadians belive its their God given right to fly to Cuba , stay drunk for a week and fly back, all for $400, the charter outfits to fulfill these expectations are all engaged in a "race to the bottom" to make it happen. If my math is right this is the number twelve to go down the tube in ten years! Thear are other players in this mess now, US outfits picking up Canadian pax at airports just South of the border, I was clearing customs last winter at one of these places, the runways were quite contaminated with the white stuff and I noted that the aircraft picking up the Canadian pax did not have the "M Chine" nose tires as required in such conditions, {this to prevent crud being projected into the engines} I mentioned this to the crew, only to be told they had never heard of such a requirment, so we dug into the books and there it was in bold red print under "limitations!" You get what you pay for folks!

[J.O.]

One further thing - Skyservice's annual revenues were in the range of $700 million CDN. When Gibralt called in their debt on March 30th, it was for approx $8 million. That's chump change in the airline business. Somebody wanted to kill it.

[LIMA OR ALPHA JUNK]

Saskatoon, what a load of tripe. Monarch are not TCXs main competitor, TUI are. TCX subs work out to Monarch and has done for years as it suits their business model. As for Paddy Power conspiracy theory, I'm speechless. Thomas Cook were actually quoted at a shorter price than TUI as I recall to go bust.

Thomas Cook made over £400m last year so one of their worst years ever ? I don't think so somehow.

If you want the correct version of what has happened to SkyService google it and read up before posting such uninformed nonsense. It seems TCX wanted it to survive and even bought up its debts to try to help it.

I despair sometimes at what cr*p gets written on here. TCX will go to Transat now I would imagine.

[J.O.]

TCX and Transat - I highly doubt that unless they were to purchase some or all of the Transat tour group.

[steveperrywood]

Hope Saskatoon knows a good libel lawyer

[gatbusdriver]

Care to post any links? I personally think you are posting a load of s###e, but will quite happily be proven wrong.

Regards

GTB

p.s.good luck to the great crew I have had the good fortune of working with at skyservice

[gatbusdriver]

Saskatoon

I have googled for all my worth, I cannot find anything that supports the rubbish that you spout.

I believe we have a conspiracy theorist in our midst.

I do believe that TCX propped up the debt in Feb (approx 9mil), as it suited them at the time. Once the end of the season was upon us I believe they called it in.

The most sensible post about this sad state of affairs is from STN Ramp Rat.

[N707ZS]

Has the exec/medivac side of the buisness also been closed down?

[LIMA OR ALPHA JUNK]

I see Saskatoon that you have now put the knife to your post this morning and changed what you wrote.

Here's Thomas Cooks accounts to pick you up on one of the points you made.

Thomas Cook Group plc - Annual Report & Accounts 2009 - Directors’ Report - Business Review - Financial review

And to accuse TCX of being involved of trying to bring Monarch down by using Paddy Power bookmakers is complete and utter nonsense.

Try this

Skyservice unexpectedly folds its wings

[LIMA OR ALPHA JUNK]

I too thought the market was very distasteful but the inference you draw by implying that because someone is on the board of Paddy Power and TCX, that he is somehow trying to engineer the collapse of another airline using a bookmaker is quite wrong.

I seem to recall BA was trading at as low as around 6-1, was he trying to bring them down too ? Conspiracy theory bulls**t.

[LIMA OR ALPHA JUNK]

Well I remember BA trading at one point at 6-1, and TCX at a lower price than TUI. I actually wonder what input a board director has into the day to day operation of betting markets. Not much I would imagine. I think your imagination is running a little too wild

As for SkyService, I don't think TCX wanted them to go under. They had a mutually beneficial and reciprical arrangement for crews and aircraft that had been in place for years. On top of 28 SkyService pilots who were contracted to fly G reg a/c for TCX this summer, the company had also made provision for 2 additional C reg aircraft to fly out of GLA and LGW with SkyService pilots to fly lines of work for TCX much to the irritation of BALPA (flagging out). The evidence I hope stacks up for you that TCX is not the airline version of THE TERMINATOR you wish to portray it as

[Rollingthunder]

Evolution in the air: Skyservice falls prey to shift in travel business - The Globe and Mail

[stansdead]

Saskatoon,

BA were in fact "trading" in single figures in the market mentioned. I saw BA at 8/1.

As for Non Executive Directors of Bookmakers knowing EXACTLY which betting markets their trading ops are involved in on a daily basis.... not realistic I'm afraid.

Your point may well be valid that a Non Exec Director should guide a business towards best practice and corporate governance. However, it's most unlikely that he/she would be involved in any day to day running of the actual bookmaking operation.

As Lima/Alpha says, TCX is far from a terminator. More like a toothless Sheep in my experience.

Anyway, everyone knows the betting market was hot air and hype. Hardly any money changed hands.

[windytoo]

Stansdead exactly right, very little money did change hands. For the amazing outlay of £20 one could alter the odds from 10 to 1, to 4 to 1. I know because I did it. This showed the stupidity of the whole betting scandal that was associated with this scheme. Many thousands of peoples jobs were threatened by such a schoolboy prank. Several airlines suffered, a couple are no longer trading. Quod erat demonstrandum. There are said to be two culprits involved, one of whom is the person mentioned by Saskatoon. Whether he personally started it, I am fairly sure he didn't, but he certainly did nothing to stop it getting out of hand, so you can draw your own conclusions. Just shouting about "bags of manure" however, adds nothing to any reasonable argument.

[javelin]

Anyhow.............. Back on thread



Jazz Air links with Thomas Cook, Sunquest

CBC News

Jazz Air LP will operate flights to the Caribbean, Mexico and Central America on behalf of Sunquest Vacations under a new partnership with Thomas Cook Canada Inc., the companies announced Monday.

Sunquest Vacations is Thomas Cook's tour operator.

Jazz will begin serving those destinations on Nov. 1, 2010, in time for the busy winter travel season. As of next January, it will operate a fleet of up to 11 B757 jets from airports across Canada under the name Thomas Cook Airlines.

"Through the combined operational and financial strength of Thomas Cook and Jazz, we will offer Sunquest customers innovative and dependable vacation packages," Michael Friisdahl, CEO of Thomas Cook North America, said in a release.

The announcement comes less than a week after charter airline Skyservice filed for receivership. Sunquest Vacations had used the carrier for many of its destinations.

Jazz currently flies to over 80 destinations in North America on behalf of Air Canada. Thomas Cook operates 93 aircraft around the world.

The agreement is conditional on Jazz Air receiving the required regulatory approvals.

Read more: CBC News - Consumer Life - Jazz Air links with Thomas Cook, Sunquest