There is some tempering necessary on the numbers. (enter, albeit briefly, into AC shareholder mode.) AC acquired CP and although they bought CP for less than $79M, they assumed considerably more than that in debt and other liabilities. Much of these liabilities were settled for pennies on the dollar. They also acquired "income tax recoveries". I'm not an accountant, but I understand they are similar to carrying over a tax deductions. Still some of these liabilities (like labour costs) from CP exist. Year over year #s, per ACs own disclaimer are poor comparisons. The key # is 'operating loss', in this respect they lost $731M. This of course, is Canadian dollars, or about $456M USD. United's full year operating loss was 1.8B USD I recall. This makes AC's loss look very large, and it is. AC shackled themselves with a labour guarantees that the government would let them out of. (Canada 3000 had a similar situation, and couldn't hold on.) Canadian's restrictive labour laws can be held accountable for a sizable chunk of their loss. BUT. AC's management can take the blame for the rest. - AC had reasonable trans-con competition for much of the year, but they still hold the lions share of the market due to their feeder networks out of Calgary/Vancouver and Toronto/Montreal. - AC has strong regional competition (i.e. Westjet), but they still hold the lions share of the market for the same reason as above. - AC has government controlled competition on international routes. CP's asian routes were there most profitable, and AC always did well on European routes. - AC has virtually no competition on the US market since the open-skies policy between Canada and the US is still mostly one way. AC's feeder network also guarantee's them a certain portion of the traffic anyways. The rest is clear mismanagement. Morale among many AC folk is pitiful, leading to poor productivity. There's a tremendous cost in poor inter-employee relations brought about by the CP/AC merger that was not helped from an executive level. Even ACs staffers admit management tells them they are in the "Transportation Business not the Customer Service Business"! That attitude is felt by the customer and the customer is responding. Compare AC to Westjet. Westjet has a higher market capitalization that AC! How AC can have: - one of the youngest and most efficient aircraft fleets of any major airline - pay their employees 60-65% of their US counterparts (after $ conversion) - have domination over the industry in a country that relies on air travel - have domination over the transborder business to the richest country in the world ... And still loose a boat load of cash? I guess the question still stands. > Original Message: > ----------------- > From: Alex Nieves alexnieves1@juno.com > Date: Thu, 7 Feb 2002 14:59:20 -0500 > To: AIRLINE@LISTSERV.CUNY.EDU > Subject: Re: Air Canada posts record $1.25 billion loss for 2001 > > > Air Canada's managers must be terrible at running an airline! > If you have almost a monopoly in a market (AC's market is > full-service, coast-to-coast airline just in case y'all were > thinking Westjet and Air Transat, etc), how can you possibly > lose so much money? Did they do that bad on international > routes? Or was traffic to and from the US the major problem > for AC? If anyone can shed some light into this so I don't > stay in the dark, i'd appreciate it. That amount of loss > just leaves me wondering! > > Alex Nieves > > On Thu, 7 Feb 2002 12:32:57 -0600 Roger James > <ejames@escape.ca> writes: > > Air Canada posts record $1.25 billion loss for 2001 > > Last Updated Thu, 07 Feb 2002 13:07:34 > > > > MONTREAL - Air Canada said Thursday it lost a record $1.25 billion > > last year, its worst financial performance since 1992. > > Canada's national carrier reported it lost $10.43 a share for 2001. > > Air > > Canada's fourth quarter and full year performance reflect the > > extraordinarily difficult environment in which we and other > > comparable > > North American carriers were operating," chief executive Robert > > Milton said > > in a news release. Financial analysts say while the airline has > > benefited > > from cost-cutting measures, they aren't enough to offset a lack of > > passengers. "Like the rest of the international airline industry, > > we > > experienced an unprecedented decline in business travel due to the > > economic > > downturn along with high fuel prices. Then came the devastating > > impact of > > Sept. 11," read Milton's release. Air Canada's yearly revenues fell > > 11 > > percent, from $10.8 billion to $9.6 billion. > >