What the agreement means?ALPA said that they obtain an additional 1,9 B$ for theirs members. What that means for the EBITDA ?:
The rule of thumb: That means an average of 425M$ less EBITDA per year than in 2024…..but it is not so simple.
The agreement is for 4 years with in all likelihood, an upfront increase of 20-22% in the first year. The 30% last week disclosure and the US airlines agreement had a first year adjustment followed by normal inflationary increase for the years 2 to 4. All the costs had some inflationary increases (like the 2% annual in the last agreement) as the revenues have, that doesn’t count in a profitability analysis. So, only the first year 20-22% wage adjustment have to be count as an additional cost for Air Canada.
Like others agreements or the last week disclosure, that is 66% of the additional cost of the agreement. We will have a 1,25 B$ for the first year adjustment, or a 313 M$ additional charge (or less EBITDA) per year.
The pilots salaries are charged according to flights hours, so, it’s a variable cost. The bulk of the additional cost will be paired with the revenues and the most profitable quarters (quarters with the easiest yield management).
The additionnal charge is 8% to 10% of the forecasted EBITDA for 2024 (313\ 3,100-3,500).
The new agreement will be effective sept 23, 2023. The salary adjustment for the last 12 months means a charge of 300M$ for the Q3 2024.
Conclusion, it a significative cost, 6% to 8% more than at Westjet but a few points less than at US counterparts. It is manageable