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[DIV class=storyheadline][STRONG][FONT size=3]Focus on Costs As Air Canada Aims to Weather Slump[/FONT][/STRONG][/DIV][BR]
[DIV class=timedate][/DIV]MONTREAL (Reuters) - [FONT face=arial size=-1]Air Canada is focusing on cost-cutting as it aims to weather the uncertain outlook for the travel market, its chief executive said on Thursday. [/FONT][BR][BR]We are absolutely operating as a company on the basis that the only place to go is to get your costs down and hope for the best on revenues, Air Canada's president and chief executive, Robert Milton,told a transportation conference in Florida. [BR][BR]Air Canada, Canada's dominant carrier and world No. 12, bucked the money-losing trend at major U.S. airlines with a C$125 million ($80 million) third-quarter profit, but analysts expect it to lose roughly C$130 million for the full year. [BR][BR]Air Canada is the seventh-largest airline in North America and like the other big carriers its profit margins have been squeezed since early last year by the decline in business travel. Passenger traffic in certain transborder and short-haul markets also eroded after the Sept. 11, 2001, attacks by hijacked airliners against the United States. [BR][BR]The Montreal-based carrier has about C$12 billion of debt and aircraft lease obligations, C$426 million of which comes due within the next 12 months. [BR][BR]But during Milton's presentation to analysts, which was webcast, he noted that Air Canada has C$700 million of cash, C$200 million of committed financing and C$2.5 billion of unencumbered assets. [BR][BR]That means Air Canada had room to maneuver and good prospects, he said. [BR][BR]MULTIBRAND STRATEGY [BR][BR]He also touted the airline's strategy of flying under five brand names: the main Air Canada domestic and international operation, its Tango low-fare operations, Zip no-frills carrier, regional airline group Jazz and sports team charter service Jetz. [BR][BR]The Tango low fare leisure travel brand is modeled after profitable no-frills carriers such as Southwest Airlines Inc. and JetBlue, Milton said. [BR][BR]Passengers can book Tango flights on the Internet for domestic and transborder routes to the United States. But costs are kept under control because there are no interconnections between Tango and Air Canada's mainline fleet and only 14 managers operate the brand. [BR][BR]Ticket bookings procedures are geared to reducing the volatility in Tango's revenue stream. [BR][BR]You book, you pay. You don't show up, we keep the money. What a concept, Milton said. [BR][BR]Everything is extra. All you buy is a seat. You want water, you pay for it. You want a seat assignment, you pay for it, Milton added. [BR][BR]Zip, the stand-alone no-frills carrier launched this year by Air Canada and headed by Steve Smith, former president of profitable low-fare rival WestJet Airlines Ltd., does interconnect and codeshare with the parent carrier. But costs at Zip are kept under control by labor contracts that favor productivity, Milton said. [BR][BR]Air Canada has been slashing costs through layoffs this year. In August, the carrier said it would eliminate 1,300 jobs or 3 percent of its workforce. Jazz is planning to cut 391 jobs or 9 percent of its staff, on top of the 131 layoffs made earlier this year. [BR][BR]SUPPORT FOR UNITED AIRLINES [BR][BR]Milton reiterated Air Canada's hope to help money-losing United Airlines and its parent UAL Corp., which said on Thursday it was in talks with lenders on up to $2 billion of loans to maintain operations if it files for bankruptcy. [BR][BR]We would like to help United any way we can, Milton said, but declined to offer specifics. [BR][BR]United and Air Canada are allied through the Star Alliance, the world's biggest commercial aviation grouping. [BR][BR]In 1999, UAL provided about C$238 million of funding to Air Canada to help the airline fend off a hostile takeover attempt that was led by Toronto conglomerate Onex Corp. and Canadian Airlines, and [STRONG]backed financially by American Airlines parent AMR. Corp[/STRONG]. . [BR][BR]A Quebec court blocked the takeover attempt, Canadian Airlines subsequently collapsed and was taken over by Air Canada. [/FONT]
[DIV class=timedate][/DIV]MONTREAL (Reuters) - [FONT face=arial size=-1]Air Canada is focusing on cost-cutting as it aims to weather the uncertain outlook for the travel market, its chief executive said on Thursday. [/FONT][BR][BR]We are absolutely operating as a company on the basis that the only place to go is to get your costs down and hope for the best on revenues, Air Canada's president and chief executive, Robert Milton,told a transportation conference in Florida. [BR][BR]Air Canada, Canada's dominant carrier and world No. 12, bucked the money-losing trend at major U.S. airlines with a C$125 million ($80 million) third-quarter profit, but analysts expect it to lose roughly C$130 million for the full year. [BR][BR]Air Canada is the seventh-largest airline in North America and like the other big carriers its profit margins have been squeezed since early last year by the decline in business travel. Passenger traffic in certain transborder and short-haul markets also eroded after the Sept. 11, 2001, attacks by hijacked airliners against the United States. [BR][BR]The Montreal-based carrier has about C$12 billion of debt and aircraft lease obligations, C$426 million of which comes due within the next 12 months. [BR][BR]But during Milton's presentation to analysts, which was webcast, he noted that Air Canada has C$700 million of cash, C$200 million of committed financing and C$2.5 billion of unencumbered assets. [BR][BR]That means Air Canada had room to maneuver and good prospects, he said. [BR][BR]MULTIBRAND STRATEGY [BR][BR]He also touted the airline's strategy of flying under five brand names: the main Air Canada domestic and international operation, its Tango low-fare operations, Zip no-frills carrier, regional airline group Jazz and sports team charter service Jetz. [BR][BR]The Tango low fare leisure travel brand is modeled after profitable no-frills carriers such as Southwest Airlines Inc. and JetBlue, Milton said. [BR][BR]Passengers can book Tango flights on the Internet for domestic and transborder routes to the United States. But costs are kept under control because there are no interconnections between Tango and Air Canada's mainline fleet and only 14 managers operate the brand. [BR][BR]Ticket bookings procedures are geared to reducing the volatility in Tango's revenue stream. [BR][BR]You book, you pay. You don't show up, we keep the money. What a concept, Milton said. [BR][BR]Everything is extra. All you buy is a seat. You want water, you pay for it. You want a seat assignment, you pay for it, Milton added. [BR][BR]Zip, the stand-alone no-frills carrier launched this year by Air Canada and headed by Steve Smith, former president of profitable low-fare rival WestJet Airlines Ltd., does interconnect and codeshare with the parent carrier. But costs at Zip are kept under control by labor contracts that favor productivity, Milton said. [BR][BR]Air Canada has been slashing costs through layoffs this year. In August, the carrier said it would eliminate 1,300 jobs or 3 percent of its workforce. Jazz is planning to cut 391 jobs or 9 percent of its staff, on top of the 131 layoffs made earlier this year. [BR][BR]SUPPORT FOR UNITED AIRLINES [BR][BR]Milton reiterated Air Canada's hope to help money-losing United Airlines and its parent UAL Corp., which said on Thursday it was in talks with lenders on up to $2 billion of loans to maintain operations if it files for bankruptcy. [BR][BR]We would like to help United any way we can, Milton said, but declined to offer specifics. [BR][BR]United and Air Canada are allied through the Star Alliance, the world's biggest commercial aviation grouping. [BR][BR]In 1999, UAL provided about C$238 million of funding to Air Canada to help the airline fend off a hostile takeover attempt that was led by Toronto conglomerate Onex Corp. and Canadian Airlines, and [STRONG]backed financially by American Airlines parent AMR. Corp[/STRONG]. . [BR][BR]A Quebec court blocked the takeover attempt, Canadian Airlines subsequently collapsed and was taken over by Air Canada. [/FONT]