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Canadian Operators

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SUMMARY: A small airline in Thunder Bay, Ontario, North Star Air Ltd. has been bought for $C 31M ($US 23M) by Winnipeg based North West Company (NWC), a large Canadian grocery and retail company with +218 stores, many in remote and isolated communities across Canada’s North. The driver of this deal was to control its distribution by having its own cargo airline, and not being dependent on what is basically a air cargo monopoly by Calm Air in the Manitoba, Nunavut and Kivalliq regions, where NWC has many stores, and where the First Nations communities are totally dependent on aircraft for all their local needs for most of the year. The acquisition raises the problem of a lack of competition in many parts of the North, where communities and suppliers have all but one choice of airline in and out of many communities, which in many cases allows for high margin “monopoly” pricing. Canada has no Essential Air Service (EAS) like the USA, which subsidizes scheduled air services to 150 markets of which 44 are in remote parts of Alaska with single engine turboprops like the CE-208B to SF340’s and CRJ-200’s at a cost of $250M a year (President Trump looking to cut that). Canadian passengers and suppliers in the North have no choice but to pay the very high fares and freight rates demanded by air operators. Time for a new fresh look at affordable air access in the North ? if we are to develop the North as Ottawa says, then we cannot burden and punish the people there with high fares and freight rates, that make life their very expensive as everything in most communities goes by air, from groceries, lumber to even fuel for electric generators.

It has been pretty quite on the Canadian airline mergers and acquisition front since the late June, 2016 acquisition of Transwest Airlines (Prince Albert, Saskatchewan) by local rival West Wind Aviation (Saskatoon, Saskatchewan). That deal created another Provincial regional airline monopoly, just as EIC (Exchange Income Corporation) has in neighboring Manitoba, where it now owns … Continue reading

SUMMARY: Lots of talk about Bombardier’s Turnaround, 14,500 layoff announcements this year, or 21,450 in the past 3 years. The Global G7000 flew for the first time and Bombardier expects big things from it to boost Bombardier’s bottom line along with the struggling CSeries, which today still has only 320 orders (NO 40 x CS300’s for Republic Airways, just PR not wanting to reduce the meager order book) and still +/- 86 “questionable” orders (representing 26% of the current 320 orders). Lots of effort in reducing labor costs, yet no one is noticing that the top line (revenue) at Aerospace is a coming disaster, and unsustainable with an old product line (1970’s Learjets and Canadair CL-600/Challenger 650, plus the Global G5000/6000) that is facing new and better competition. The CRJ line has no more than 48 orders in backlog, only 18 orders this year (50% from Canada) good for 12 months of production (February, 2018) with no new orders. The Q400 is down to around 34 orders in backlog and only 25 orders this year (50% also from Canada), good for 14 months (March, 2018) with no new orders. The 2020 Turnaround Plan calls for Aerospace to generate $15 billion in revenue (60% of total revenue planned of $25 billion), with just 2 products ? The Plan requires $5 billion from Commercial aircraft, which by 2020 means only the CSeries (CS100/CS300) is left, and that will require at least 140 deliveries at the current highly competitive low prices to hit the “target”, really ? (2020 production is planned at 90-120 aircraft today). Meanwhile, Business jets are to generate $10 billion by 2020, and that will fall on the $75 million Global G7000 (NO Learjets, Challenger 650 and Global G5000/6000’s by 2020) and that means 133+ G7000 deliveries to hit their “target” ? seriously ? has anyone looked at single aisle ACJ and BBJ sales for the past 15 years ? (+/- 15 a year at best). Canada is providing “state aid” (aka taxpayers money) to Bombardier again ($2.5 billion in 2016 from Quebec), in fact of the $3.39 billion of cash on hand as of Sept 30, 2016, $2.5 billion (71% of cash on hand) came from the Government of Quebec, soon another $1.0 billion will most likely come from Ottawa (PM is from Quebec, and they always “help” Bombardier), and then Quebec and Ottawa will be 66.7% owners of the CSeries program (CSALP – CSeries Aircraft Limited Partnership, a separate company, spun off from Bombardier ??). How did we the Canadian taxpayers become “owners” again of a commercial aircraft program that NO commercial aircraft OEM wanted in 2015 when it was for sale for “a song” ? Especially after we the Canadian taxpayers “SOLD” Bombardier, our government owned Canadair in 1986 (for $120 million) and government owned de Havilland in 1992 (for $100 million) with the rights to the Challenger business jet, later stretched into the CRJ line, and the DHC-8 turboprop airliner later stretched into the DHC-8-Q400 line. Meanwhile, Embraer is going to the WTO again to complain about Bombardier’s “illegal state aid”, while Boeing may go to President-elect Donald Trump and get import tariffs applied on the CSeries and then ? Oh, it is going to be an interesting 2017 for sure, stay tuned to the never ending Bombardier/Quebec/Ottawa “gong show”, as they find new ways to screw Canadian taxpayers to keep Bombardier alive at any cost.

Bombardier has now delivered its first CS100 to Swiss and CS300 to airBaltic and talks confidently of a turnaround next year and a bright future in 2020 as per its 5 year Transformation Plan, that should see company become a $US 25 billion a year company by the end of 2020, with Aerospace to provide … Continue reading

UPDATE: Transwest Air is now a fully owned subsidiary of WestWind Aviation, now there is only 1 large regional airline in Saskatchewan, and 80% owned by 2 First Nations economic development corporations (EDC’s). These First Nations EDC’s now pretty much own ALL airlines in Canada’s north, usually through Aboriginal economic development corporations (EDC’s), with a few family and corporate hold outs in the Northwest Territories, especially at Yellowknife (Summit Air, Discovery Air-Air Tindi/Great Slave Helicopters, Buffalo Airways) and in Fort Smith Northwestern Air Lease Ltd. Is this a good thing or a bad thing where First Nations own all air services in Canada’s north ? Is this the only viable exit strategy available in the north or are there “pressures” to sell to local First Nations ? and Can the EDC’s create long term financially sustainable airlines ? First Air (Makivik Corp.) and Canadian North (IDA), have tried to merge several times but each time it has failed, even though it makes lots of economic sense to do it, or is more cooperation among the EDC’s needed, like the recent cooperation between Air North and First Air ?

As to my blog of August 21, 2016, the Transwest Air deal is done and it is now a fully owned subsidiary of WestWind Aviation, which itself is owned 55% by the Athabasca Basin Development (ABD) and 25% owned Prince Albert Development Corporation (PADC), in short 80% First Nation owned with 20% owned by the … Continue reading

UPDATE: Canadian regional airline consolidation continues as the once fragmented industry starts to consolidate around a single provincial operator. After 11 months under Canada’s CCAA (+/- Chapter 11 bankruptcy/reorganization), Quebec based regional airline, Pascan Aviation is acquired by 2 senior executives in a management buyout (MBO). Meanwhile Saskatchewan based WestWind Aviation, fresh from its acquisition of Osprey Wings last November, looks to takeover its main local competitor, Saab 340 operator Transwest Air, itself the product of two old local airlines and their pioneers (Athabasca Airways of Floyd Glass and La Ronge Aviation of Pat Campling) coming together in 2000, leaving WestWind Aviation a monopoly in Saskatchewan, much like Manitoba with Perimeter Airlines, Calm Air, Keewatin Air and Bearskin Airlines, all under one ownership. Times are changing for regional airlines in Canada, as the second generation of airline owners retire or sell of the businesses that their fathers and mothers built from scratch, usually with nothing more than a single Cessna 180 aircraft. Sad to see the old names disappear, it is the “circle of life”, but the legacies of our Canadian aviation pioneers will always remain with us.

UPDATE: As I wrote this, I found out that WestWind Aviation (80% First Nation owned) has bought Transwest Air for an undisclosed amount, now only 1 airline exists in Saskatchewan, like it or not.   This is my follow up to the January 5, 2016 article “Consolidation in the Canadian Regional Airline Industry”, as the … Continue reading

SUMMARY: The 1st Half 2016 numbers are out for Air Canada and Westjet Airlines, the “duopoly” that controls +85% of the Canadian market, where Canadians still have NO domestic or transborder access to a low cost airline. A brief analysis of the financial performance of the 2 Canadian airlines this year with a introduction to airline economics on how a few key numbers drive operating profit. Seems Air Canada does not make an operating profit from passenger services alone, and why its LCC (low cost carrier) rouge has not really cut costs, with the vast majority of savings being higher density seating, and like other Major airline attempts at an in-house LCC in North America like TED (United), Song (Delta #2), Lite (Continental), Express (Delta #1) the cost cutting has NOT gone deep enough, and hence why ALL the North American in-house LCC “experiments” ultimately failed. Lastly, Air Canada’s decision to buy 45 x CS300’s was a politically coerced deal with legal and legislative changes promised by Quebec and Ottawa, and the recent Air Canada threat to “walk away” from the deal if promised legislation was not forthcoming soon, said it all, Air Canada’s EVP Kevin Howlett said it best, “there are alternatives to the CSeries, there are other manufacturers that make comparable airplanes”, meaning we can take it or leave don’t matter as they do have 61 x B737Max firm orders (33 x Max8’s and 28 x Max9’s) to replace its older A319/320’s and E190’s in due course.

The 1st half 2016 numbers are in for Air Canada and WestJet Airlines, and it’s worth looking at how the 2 airlines that control 85% of the Canadian domestic market, which also has NO low cost airline as of yet (the only OECS) whose citizens have no access to a domestic or transborder LCC (low … Continue reading

SUMMARY: Once infamous Wasaya Airways is out of bankruptcy proceedings after owing $35 million, and now looking to become the 1st commercial operator of the $US +/- 28 million Airbus C295W aircraft to serve the 12 First Nations of Northern Ontario that own 100% of the airline. Under new President and CEO Michael Rodyniuk, the once poorly run airline finally has potentially a ” bright” future ahead. But what does a Northern Ontario First Nations airline need 5 x C295W’s costing $US +/- 140 million ? there are much cheaper options, especially when cargo does not care what aircraft it flies in. Recent addition to Wasaya Airways Board is Stephen Smith, the once high flying airline executive at Air Toronto, WestJet and Air Canada, a much needed boost to the Board that oversaw lots of mismanagement and chaos over the past 10+ years. Why would any regional airline become the first and only commercial buyer of any aircraft ? What about support for a high utilization operation ? what about resale value one day ? what about certification ? the price ? military maintenance program ? especially when you can get good used ATR-72 freighters ? and when will Canada stop operating 40+ year old B737-200’s and HS 748’s ? as for a modern country we operate older aircraft fleets than many third world nations. Lastly, with only 9 x HS 748’s left in Canada and 15 at best in the world, it will be sad to see the old workhorse fade away after 55 years after production began.

In June, Airbus demonstrated its C295W transport plane to Northern Ontario based First Nation owned Wasaya Airways (“it is bright” in oji-cree), which comes just as the airline gets creditors approval for its $C 35 million debt restructuring plan, giving just 10% of unsecured debt value to its long list of creditors. The airline has … Continue reading

UPDATE: Canada’s first ULCC (ultra low cost carrier) is Winnipeg based NewLeaf, which will launch services to 7 Canadian destinations on February 12, 2016 with Boeing B737-400’s operated by Kelowna based Flair Airlines. It is not a perfect business model to start with, but given that Naked Jet/Enerjet and Canada Jetline have not been able to get their business plans executed for the past 2 years, it is better than nothing. In fact, this model was used to run Greyhound Air between July 1996 and September 1997, when Kelowna Flightcraft operated 7 x B727-200’s under its AOC for Greyhound Air, and Winnipeg was the hub, so it has been done before, but today the market landscape is different and it just may work. NewLeaf will offer fares as low as $99 one way but also will need to supplement it’s low fares with “non-ticket” revenue from baggage, seat selection, exit row, food and beverage fees, that today at US based ULCC’s make up around 45% of total revenue or 79% of the ticket price (i.e. Spirit Airlines), so expect that on average that $99 one way ticket will become on average a $+145 one way ticket when all is done and paid, still much lower than what Air Canada and WestJet charge today. Some people still think of WestJet Airlines as a low cost airline, but that story is long gone, as WestJet realized it did not have to be a low cost airline, just come close to Air Canada’s fares and the service would win over. Today Air Canada and WestJet Airlines have roughly the same passenger yields ($/RPM) at around $cents 0.192, both have the same average load factor of +/-81%, their PRASM (passenger revenue per available seat mile) are pretty much the same at $0.155, and Air Canada is reducing its units costs while WestJet’s keep going up. It is time for Canadians to have access to LOW airline fares, and have another choice over the duopoly that runs our airline industry, as we are the ONLY country in the developed world today without a low cost airline, and while Air Canada’s ‘rouge’ is a low cost subsidiary (mostly just due to higher seating density on its aircraft) it’s fares are the same as Air Canada’s, as its role is to make more money for Air Canada and not to reduce air fares to Canadians. It is estimated that 4.8 million Canadians fly each year from US airports that are close to our border (e.g. Buffalo, Detroit, Bellingham, etc.) to save on airfare ! This is the Canadian ULCC opportunity and challenge, to get some of those passengers back. With low frequencies and just 7 airports served, NewLeaf will not threaten Air Canada or WestJet but then 20 years ago WestJet started with 3 B737-200’s and 5 destinations and look at its evolution, every company has to start somewhere. Lastly, Iceland based ULCC operator WOW Air is coming to Canada in May, 2016 and is offering great deals to Iceland at $C 99 one way and $C 149 to Europe, it is about time Canadians had low cost options and let’s hope the low cost trend spreads fast and forces the duopoly to stop ‘milking’ Canadian air travelers !

Well, Canada finally has another low cost champion, as NewLeaf Travel Company Inc. (http://www.FlyNewLeaf.ca) announces it will begin operating Boeing B737-400 commercial flights to 7 Canadian cities for as little as $99 one way under the AOC of Flair Airlines of Kelowna, B.C. on Friday, February 12, 2016, only 1 week short of the 20th … Continue reading

SUMMARY: Consolidation in the Canadian regional airline industry is slower than I expected, but recent acquisitions by West Wind Aviation of Osprey Wings and Harbour Air (aka “World’s Largest Seaplane Airline”) acquisition of Salt Spring Air on top of EIC acquiring Provincial Aerospace and Chorus Aviation acquiring Voyageur Airways earlier in 2015 gives me some hope for more mergers and acquisitions (M&A) activity in this sector over the next 1-3 years. In fact, Harbour Air itself has sold 49% of it’s equity to a Chinese investor in 2015, and is now planning to enter the highly questionable Chinese seaplane market , just as it solidifies it’s dominant market position in and around the Vancouver area having also acquired Whistler Air (in 2012) and West Coast Air (in 2010), and then divested itself off Prince Rupert based North Pacific Seaplanes (in 2013). There are 6 privately owned Canadian regional airlines that could be in play in the next 2-3 years, as several airlines are well into their 2nd generation of management by owners and most do not have a 3rd generation waiting to take control and few are actually growing and basically stuck in their traditional market. Publicly owned Exchange Income Corporation (EIC) with 5 airlines now has shown that you can make money with regional airlines as long as you have good management, a good market position/niche and financing behind you. The industry is changing, in the north, most airlines are now First Nation owned and the remaining privately owned airlines will find eager investors if they truly want to sell and are prepared for suitors before they need a buyer, as most small airlines are unprepared to generate interest with potential buyers, as they don’t even know how to value their business’s worth, what are its attributes and how to attract a broader pool of investors willing to pay more for the company. Last, I will discuss the growth of seaplane airlines around the world and the need for new aircraft beyond just old landplanes with bulky and heavy floats attached, for the industry to really grow.

I have previously discussed the Canadian regional airline market, and that consolidation is coming as family run airlines are looking to sell their airlines, as witnessed by Exchange Income Corporation (EIC) of Winnipeg (TSX:EIF), which has bought 5 Canadian private family regional airlines in the past 12 years, and surely eyeing more: Perimeter Aviation in … Continue reading

SUMMARY: Another Canadian airline has shut its doors again, as IMP Group’s CanJet Airlines has packed it in after 15 years of trying everything to be successful, from being sold to Canada 3000 and then revived, then went into scheduled services, then went into charter flying for tour operator Sunquest followed by ACMI flying for Air Transat and when that ended a failed quick and poorly planned attempt at becoming a tour operator as well, but CanJet Vacations lasted 2 months at best, again poor execution of a business plan and now it has run out of ideas. The airline has run the gauntlet of airline business models without any long term success or profit, the problem is more to do with execution than the business plans used, a common Canadian aviation problem. Now it will dry lease out its last 4 x B737-800’s and return them to their owners in May, 2016, but with no operations the AOC will be gone, and that is worth something for Canada’s aspiring ULCC start-ups like Canada Jetline or Maple Leaf Travel who have no AOC or money right now. Canada needs a ULCC, the business model is proven and LCC companies like Indigo Partners LCC and Irelandia Aviation surely would love to give it a try in Canada where 85% of domestic travel is in the hands of the duopoly of Westjet Airlines and Air Canada. Why are airlines like Air Transat allowed to lease in 10+ foreign B737-800’s on ACMI leases when Canadian aircraft and crews are available ? foreign ACMI leases should be allowed only when there is no Canadian lift available, time for the government to investigate this matter.

As expected (my Blog May 19, 2015), Canada has lost another airline last week, when CanJet Airlines, shut down the operation of its last operational Boeing B737-800 which was operating on an ACMI lease for Air Transat out of Toronto, and was downgraded to just a dry lease, forcing the company to furlough its last … Continue reading

SUMMARY: Canada’s charter airlines struggle, CanJet Airlines (owned by IMP) future in serious doubt while Air Transat limps along in its recovery, but Air Canada’s Rouge is growing and on its heels. Meanwhile the 3 ultra low cost airline candidates struggle to raise money, with Jet Naked (Enerjet) lost its 3 star ULCC (ultra low cost carrier) executives and now Enerjet is being sued by them for breach of contract. Meanwhile, NewLeaf Travel Co. Inc. ties up with Flair airlines to operate 2 x B737-400’s for it, IF and WHEN it raises sufficient start-up capital. Over in Vancouver, Canada Jetlines orders 5 and options another 16 Boeing B737Max7’s before it even has start-up financing in place ?? Interesting developments in this segment, and worth watching, as Canada needs a ultra low cost airline (ULCC) to offer low cost air travel to Canadians. Canada is the ONLY large country left without a LCC, and is controlled by a duopoly. Troubled CanJet Airlines has the potential to be a ULCC and save itself from doom, but right now it looks like no ULCC will start-up in Canada this year and CanJet will most likely be shut down, leaving NO low cost champion in Canada, and 34 million Canadians are prisoners to only 2 airlines domestically, a country that is only 2% smaller than all of Europe put together !

The first 4 months of 2015, have brought mixed results for some of Canada’s airlines. In big trouble is one of Canada’s leisure and ad hoc charter airlines, Halifax based CanJet Airlines, owned by IMP Group International, a diversified conglomerate owned by the Rowe family, that now employs 4,500 employees in 6 Divisions in Aerospace … Continue reading

ABSTRACT: Bombardier may have its CSeries launch customer in newly re-branded Lufthansa Group owned Swiss Global Air Lines which ‘should’ get the aircraft by 1Q/2016 ? at the earliest, while Bombardier desperately tries to ‘re-position’ the Q400 as a viable ATR-72-600 competitor with a “secret new technique” of slowing it down for better fuel economy and trip costs ?? the Q400 is $10 million more expensive, it uses 104% more power (shp), therefore it burns 40% more block fuel, engine maintenance is more expensive on PW150 than PW127 so how can it be economically close to the ATR which out sells the Q400 by a wide margin even with deep discounting on the Q400, meanwhile experts say the CSeries needs to be discounted by 50% to get the needed BIG airline orders as that is what BIG airlines expect, welcome to the BIG league Bombardier where huge discounts (30% to 50%) by Airbus and Boeing are the norm rather than the exception which can be up to 65%, and you can’t win a price war against Boeing or Airbus, can Bombardier even afford to heavily discount now that break-even has to be 580+ units as the CSeries program cost grows to $5.4 billion from an initial $3.4 billion and production is planned at only 10 per month ? break-even is now 6 years of production, can it afford NOT to discount with sales still stuck at a scant 243 “firm” orders (some highly questionable) after 6 years and NO major US airline order in sight ? meanwhile Lufthansa Group’s Austrian Airlines takes 17 x E195’s over CS100’s just like Air Canada kept its 25 x E190’s instead of buying the CSeries last summer, both after a thorough cost evaluation, so what gives with the economics of the CSeries ? Learjet without the Learjet 85 has little to offer, a sale of that company should be considered, the ‘good’ news is that Bombardier successfully raised $C 868 million in new equity and $C 2.25 billion in high yield debt to bolster its liquidity problem.

The news at Bombardier Inc. keeps getting worst, as this past week China’s locomotive manufacturers China CNR Corp. was acquired by China CSR Corp. in a $US 26 billion merger, creating a large state owned enterprise (SOE) that will surely give the 3 other large train manufacturers Siemens (Germany), Bombardier (Canada) and Alstom (France) lots … Continue reading

ABSTRACT: Chorus Aviation, the biggest Air Canada Express partner with 122 aircraft, is buying DHC-8 / CRJ-200 ACMI operations specialist Voyageur Airways for $C 80 million on the heels of an amended CPA (capacity purchase agreement) with Air Canada (AC) that now extends into 2025, and one that requires Chorus to lower its costs, one way to do that is to set up a separate low cost unit (Voyageur Airways) to operate the older DHC-8-100/300’s at a lower cost base , and another unit will continue to operate the newer and bigger Q400’s, CRJ-705’s and the CRJ-200’s, it is a strategic move to lower labor costs (at $95,442 per employee, 9% higher than at AC) and to stop other regional airlines like Sky Regional and Air Georgian from winning new AC CPA business in the future, Chorus Aviation is paying a rather high 4.7 times EBITDA to have its ‘low cost subsidiary’, the old and out of production DHC-8’s (average 26 years old) have become a burden on Chorus which generates 99.2% of its business from AC, its previous attempts to diversity have all failed, a regional LCC is a fantasy, too little room for extra seats or extra utilization to drive CASM’s down, Chorus Aviation’s 2014 Net Income margin of 3.9% is very low and cash flow was negative $C 45 million, AC needs low cost regional partners more than ever now and it just gave Chorus a 10 year life line to shape up.

Canada’s Chorus Aviation Inc.  (TSX: CHR.B, CHR.A) is to buy all of the issued shares of 519222 Ontario Ltd. A holding company that owns North Bay, Ontario based Voyageur Airways and its affiliated companies for around $C 80.0 million to be its ‘low cost’ DHC-8-100/300 operator, a mini version of Rouge, which is Air Canada’s … Continue reading

ABSTRACT: UPDATE – Bombardier plans first flight of the $72 million, 135 seat CS300 any day now, the future of Commercial Aircraft Division rides on this model, which today has 74% of the CSeries 243 meager orders, the company has just sold 424.4 million newly issued shares (TSX:BBD.B) at $C 2.21 per share (10% discount) and raised $C 938 million in equity with another $C 1.2+ billion in debt financing needed in 1H/2015 to raise liquidity, as cost of the CSeries program is now $5.4 billion (up by $2.0 billion), the Government of Quebec is prepared to “bail out” Bombardier Inc. if it needs it, for now it does not need it, the company is “too big to fail” ? 2015 is a BIG year for the company, get CS100 certification, and new orders will come, which will drive confidence and stock price upwards, miss the planned 2015 certification and the stock will plummet, already confidence among investors, customers, prospects and employees is very low, new President/CEO Alain Bellemare has the potential to turn it all around, but cannot due it alone, needs good people to implement the changes needed, any good executives left ? the problem is not the products but the poor leadership and bad corporate culture that has been allowed to permeate throughout the company under the previous CEO.

As it looks now, the Bombardier CS300 is set for its 1st flight tomorrow, Thursday, February 26th, as it now has the approval from Transport Canada to test fly the aircraft. The Bombardier CS300 is in the 135 to 160 market, so it will compete with the Airbus A319neo and Boeing B737-Max7, a tough duo … Continue reading

ABSTRACT: Canada Jetline and Jet Naked are racing to be Canada’s first ULCC (ultra low cost carrier), both looking to start this summer but funding the initial $50 million start up costs is dragging on, yet Canada Jetline orders 5 x B737-Max7’s and purchase rights on 16 more but delivery is not till 2021 and start up will be with old B737-300’s, can one of them do the same that Westjet Airlines did 19 years ago when it WAS a low fare airline with 3 x B737-200’s ? and when Air Canada failed to crush it early on with its failed LCC ZIP, presently Air Canada is busy with its low cost but not low fare subsidiary Rouge, while Westjet is building up its regional network with Encore and its wide-body fleet with B767-300’s (???) for flights to Europe and Hawaii, current distractions at AC and WJ are good for the ULCC hopefuls, Canada needs a LCC as we live in the ONLY major country in the world without a locally based LCC we can turn to for low fares as the duopoly here (AC and WJ have yields of +/- 19 cents/RPM) and have NO incentive to lower theirs, it is why +4.9 million Canadians drive to US border airports to fly on US carriers every year !

Canada’s new ULLC (ultra low cost carrier), I prefer to use the term low fare airline (LFA), but anyway Canada Jetlines Ltd has signed an agreement with Boeing for 5 new B737-Max7 airliners for delivery in 2021, and has purchase rights for 16 more, while it is in the midst of raising $ C 50 … Continue reading

ABSTRACT: Porter Airlines, now 8 years in operation and Canada’s 3rd largest scheduled airline has been in a state of semi-oblivion since 2011 when it received the last of its current 26 Q400’s, but the latest sale of its Passenger Terminal at Billy Bishop Toronto City Center Airport (CYTZ) for a reported C$ 750 million now gives Porter the money to move forward with its purchase of 12 plus 18 options for the Bombardier CS100’s, just needs to ‘influence’ Toronto’s City Council to allow jets into the airport and lengthen the runway by 400 meters, Bombardier desperately needs this Canadian/North American order for its struggling program, the political obstacles will surely be taken care off, so it is now very likely that Toronto’s City Council will approve of the lifting of the jet ban, agree to the runway extension and the CSeries will be in Porter’s livery one day as money always talks in politics and business, though Toronto will have another major airport right in downtown Toronto that will have to handle +4.5 million passengers ! but is the CS100 strategy the right one for Porter Airlines ? get the strategy wrong and it will bankrupt the airline in no time and can anyone ever change the airline duopoly in Canada ?

Porter Airlines, Canada’s 3rd largest scheduled airline (though it has less than 2.5% of the C$ 13 billion a year Canadian domestic and trans-border market) was heading into its 9th year of operation in a state of oblivion, as its fleet of 26 Bombardier Q400’s (74 passenger seats) and 1,400 employees has remained constant since … Continue reading

ABSTRACT: Bombardier takes another credibility hit, stock drops 25% in one day as investor confidence is shaken and they are selling, another senior executive departs, the Learjet 85 is “paused” with a $US 1.4 billion write down, certifying 4 new jets at once costing $US 6.9 billion was “nuts”, the Q400 and CRJ’s programs are near their end, another 1,000 employees are to be laid off on top of 2,000 last year, corporate credit rating cut, talk of a Q400 and CRJ assembly line in China, only 243 firm orders for the CSeries after 78 months of effort, and probably 100+ will NOT take delivery, Alenia a major CSeries subcontractor sues for $US 121 million, CSeries EIS not till 2016, low fuel prices diminish the fuel efficiency argument for CSeries, while it’s launch customer is a secret ? sell Commercial Aircraft Division to China’s COMAC and create Combardier ? capital markets worried about liquidity and management, Business Aircraft Division now discounting some aircraft, Learjet cannot survive on only 33 Learjet 70/75 sales (+/- $US 335 million) a year, is it doomed ? sell it off ? with a cashflow of only $US 800 million in 2014 will Aerospace have the cash to complete certification and produce the $US 1 billion Global 7000/8000 business jets and the $US 4.5 billion CSeries ? time for an outsider as CEO – again ?

Bombardier, the world’s only plane and train manufacturer continues to disappoint shareholders, employees and customers, and on Wednesday, January 15th, we saw the wall crash down, when Bombardier stock (TSX:BBD.B) crashed downwards by 25.85% in one day ($US 1.8 billion in market capitalization) on volume of 57 million shares, to $CAD 3.07 from $CAD 4.14, ouch … Continue reading

ABSTRACT: Fast growing Exchange Income Corporation (EIC) of Winnipeg buys its 7th aviation company for $246 million, Provincial Aerospace Ltd. (PAL) and is now the 3rd largest fixed wing commercial aircraft operator in Canada with around 117 aircraft and few have heard of the company, yet it has what we need in Canadian aviation, vision, desire to grow, good leadership and ability to source financing, who said you can’t make money in this industry ? it takes financial experts working closely with experienced aviation executives and letting them do their jobs ! finally a quick look at the Maritime Patrol Market that PAL is in.

Back on January 31, 2013, I wrote a blog entitled “Consolidation through mergers and acquisitions in the Canadian regional airline industry and how to Value them ?”. I introduced the Exchange Income Corporation (EIC) (TSX: EIF) run by Mr. Mike Pyle out of Winnipeg, which today owns 6 aviation companies, 4 are regional airlines in … Continue reading

Once again the Makivik Corporation and NorTerra Inc. could NOT agree on a merger between their respective First Air and Canadian North airline operations, the merger is dead even though they acknowledge “that the Northern airline industry was not economically viable”, so will the owners subsidize their airlines forever ? or make changes to their business model ?

Back in mid-April, 2014, The owner of Canadian North, NorTerra Inc. and the owner of First Air, Makivik Corporation, announced that talks were under way to merge the two northern Canadian airlines, which together operate 39 aircraft (DHC-8-100’s to Boeing 737’s and a B767), to “improve the sustainability of the critical Inuit birth right enterprises” … Continue reading

The US regional airline industry is changing, only 3 BIG Majors left who use regional airlines, and now at least 584 small 50 seat RJ’s are on their way out to be replaced by up to 346 larger 76 seat RJ’s coming in (1.7 : 1.0 ratio) and that means the total US regional airline fleet is heading for a 14% decline of around 238 RJ’s, and can all of the 8 US regional “airlines” survive the changes ? and what is going to happen to all those 50 seat RJ’s ?

It is time to take a good and serious look at the US regional airlines and the “small” 37 to 50 seat regional jet market (Bombardier’s CRJ line and Embraer’s ERJ line), globally numbers 1,445 active aircraft, of which 1,054 (73% of global fleet) are operated by 8 US regional airlines for 4 mainline US … Continue reading

Canada’s cozy airline duopoly is about to face new challengers in the form of newly emerging ULCC’s (ultra low cost carriers) Jet Naked (Enerjet) and Canada Jetlines that want a piece of the Low Price Segment in the $11.2 billion a year domestic and transborder market, and free Canadians from high fares !

Well, it is official, we now know of 2 ULCC (ultra low cost carriers) that plan to enter the Canadian market in the near future, as Calgary based Enerjet, owned by WestJet co-founder Tim Morgan and now operating 3 B737-700’s on charters has announced its intent to enter the Canadian ULCC market with Jet Naked, … Continue reading