ACE Aviation Holdings extends Air Canada loan repayment to mid-2014
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Air New Zealand defends Australia-USA transit market as Qantas plans further USA growth with 787-9s
Air New Zealand is turning up the volume. For years the airline had a tidy, under-the-radar business carrying transit passengers between Australia and the US over its Auckland hub. Air NZ is now directly targeting the Australia-USA market with a sales and marketing push that includes an advertising campaign called "Better Way to Fly". CEO Christopher Luxon said in a statement that "capturing just a little bit more of that market would see hundreds of thousands more Aussies flying with us to North and South America...Many Australian travellers still think of us as a trans-Tasman carrier and that’s a perception we’re determined to change."
The shift that Air NZ envisages is being sought now – and not five or even 10 years earlier – largely because of external factors and competition. Air NZ's marketing may suggest an opportunistic push, but the reality is Air NZ is on the defensive. In the Australia-Americas market competitors have lowered their costs, adding city pairs, product improvements and significant capacity growth. 2017 and 2018 are expected to mean even more growth as a resurgent Qantas adds 787-9 services between Australia and the US, and in particular – to Dallas.
Air Canada Part 2: Financial progress makes investment grade metrics more tangible
A decade ago it would have been unheard of for Air Canada to contemplate reaching an investment grade credit rating. The airline had emerged from bankruptcy protection, but was still struggling financially. It would teeter on the verge of another formal restructuring before setting out on a course to restructure its financial foundation – a process that has allowed the airline to improve its balance sheet and leverage.
Air Canada’s leverage targets for YE2018 will not meet the general proxy for an investment grade rating; however, its lower capital commitments and debt refinancing could create an opportunity for achieving that status beyond 2018.
Attaining an investment grade credit rating likely remains a longer term goal for Air Canada as its major financial goals in the short term remain paying down debt that is creeping up due to a fleet renewal, as well as funding growth to drive long-term shareholder value. More meaningful shareholder returns will likely occur once the company reaches what it deems as acceptable progress in debt management, and reaches a certain maturity level in growing its international network.
This is Part 2 in a two part series on Air Canada. Part 1 dealt with long haul LCC subsidiary, rouge.