Post by
Tempo1 on Sep 15, 2024 10:18am
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
Comment by
Rouge10 on Sep 15, 2024 11:15am
Correct. Manageable. Also keep in mind that there will be few performance improvements negotiated in return. It is never one way street. So net impact will be lower than these numbers.
Comment by
1condor on Sep 15, 2024 1:58pm
Not convinced we will see a big move up on Monday as some expect...but nonetheless this is good news and should provide a boost to the SP.
Comment by
wideopenthrottl on Sep 15, 2024 2:17pm
do you think enough shorts will hut it hard to shake out some shares then cover later under more stealth? and there wo t be enough buyers just sellers on the news,...who knows really....but glta
Comment by
Tempo1 on Sep 15, 2024 2:51pm
Not sure of the amplitude of the rise but it's been a year now that the SP was driven with a parking brake on with the pilots problem. It simply the starting signal for a more normal situation. From now the SP will be driven by the perspective ahead instead of a september strike risk.