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After Air Canada lifeline, small carriers seek aid as virus looms ahead of summer travel

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By Allison Lampert and Steve Scherer

MONTREAL (Reuters) –Canada is facing industry calls to extend financial aid to smaller airlines, after offering a C$5.9 billion ($4.71 billion)life-line to Air Canada, as new COVID-19 variants loom ahead of the vital summer travel season.

The timing of Monday’s deal, which saw the Canadian government take a 6% equity stake in Air Canada, was partly designed to secure “access to air travel when it returns,” as the country’s vaccine rollout ramps up this summer, a source familiar with the discussions said.

But with the spread of new variants threatening to overtake the pace of vaccination, early hopes for a relaxation of Canada‘s strict travel requirements ahead of summer are fading.

Fears of a delayed recovery, along with the Air Canada deal, has upset the “level playing field” for air service, with smaller carriers asking for financial support.

“We want everyone to have access to the same programs,” said John McKenna, chief executive of the Air Transport Association of Canada (ATAC), which represents smaller carriers.

On Wednesday, Air Canada joined rival WestJet Airlines in extending a three-month suspension of sun-destination flights to the Caribbean and Mexico originally slated to end on April 30, reflecting the government’s current warnings against international travel. [L1N2M71SG]

The planned April reopening of a bubble in Atlantic Canada, which would allow travel among the region’s four provinces without the need to self-isolate, was postponed this week until at least May 3 over COVID-19 concerns.

WestJet said its previously-planned schedule for Atlantic Canada remains unchanged.

Canada‘s vaccine roll out has been slow, but it is ramping up now. By the end of June, some 44 million doses are expected, and everyone who wants to be fully inoculated will be by the end of September, Prime Minister Justin Trudeau has promised.

Trudeau said in a radio interview this week that he supports Canadian provinces which choose to close their borders to help curb the spread of COVID-19.

Canada‘s Liberal government, which will deliver its first budget in two years next week, has said talks with carriers like Onex Corp-owned WestJet are ongoing.

“We hope that the other agreements come as soon as possible,” the source familiar with the talks said, adding that “different airlines have different needs”.

WestJet spokeswoman Morgan Bell said the airline is optimistic that a successful vaccine roll-out will support summer travel and expects “government policy will transition” with mounting jabs.

Canada, with some of the world’s toughest travel rules, has a mandate that its citizens and residents arriving from abroad self-isolate for 14 days.

Health Canada advised Canadians in a statement to avoid traveling outside the country “for the foreseeable future.”

Calgary-based WestJet has asked the government to end an order requiring international arrivals to quarantine for up to three days in a hotel in favor of COVID-19 testing.

The government must decide whether to renew the controversial hotel order, which expires on April 21.

McKenna also urged the government to relax restrictions on travel with neighboring United States.

“The government can come up with all the financial help they want,” ATAC’s McKenna said. “But until those things are relaxed we can’t do anything.”

($1 = 1.2515 Canadian dollars)

(Reporting By Allison Lampert in Montreal and Steve Scherer in Ottawa. Additional reporting by David Ljunggren in Ottawa; editing by Diane Craft)

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How the COVID-19 microchip shortage has brought Canada's car industry to a halt — again – CBC.ca

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Even before the pandemic, 2020 was always going to be an uncertain year for Canada’s automotive industry.

The Big 3 automakers — General Motors, Ford and Chrysler (now known as Stellantis) — were set to negotiate multi-year work agreements with their main unions, after the previous agreements with their workers had expired.

Then COVID-19 hit, and everything changed. Buyers weren’t coming to showrooms for fear of getting sick, so sales slowed to a crawl. Factories shut down to keep workers safe.

By the time consumers felt safe enough to take their first tentative steps back into dealerships this year, they were confronted by a new problem: There were no cars to buy.

That’s because when things slowed down in 2020, car companies slashed their orders from their suppliers for the components that go into them. When demand came roaring back, those same suppliers could not ramp up fast enough, especially the makers of the cheap little semiconductor microchips that are in just about everything these days.

“Automakers in Canada initially thought that demand would be very slow recovery over the course of the pandemic, so they cut their chip orders,” said Rebekah Young, an economist with Scotiabank.

WATCH | How microchips worth $1 each can halt production of a $40,000 car: 

The microchip crisis explained

20 hours ago

Economist Rebekah Young with Scotiabank explains how the global shortage of microchips has led to major delays in the supply chain for the car industry 0:57

It’s not just the car companies, either. Makers of everything from iPhones, to gaming consoles and even refrigerators can’t find microchips right now, which is a global supply crunch for just about everything.

A typical car rolling off the line today likely contains dozens of semiconductor microchips that control everything from the headlights to the entertainment system to GPS navigation. 

They’re relatively inexpensive, adding a few dollars apiece to the cost of a typical car. But they’re also highly customized, which means it’s next to impossible to find alternatives on short notice. But without that custom-made $1 microchip, a car company can’t finish a car that might sell for $40,000 — and the industry is scrambling to get its hands on what’s available.

“Do you remember the toilet paper shortage in March and April of 2020?” automotive journalist Stephanie Wallcraft said in an interview. “That’s pretty much what we’re going through right now in terms of semiconductors.”

“Everybody’s trying to get semiconductors all at once and there’s just not the supply to get that inventory out,” she said.

Car companies aren’t necessarily at the front of the line, so they’re waiting their turn same as everyone else. That’s causing them to idle factories in Canada until they can get the components to start building again.

GM’s facility in Ingersoll has been down for most of the year, and Ford’s main Oakville plant has been idled at times, too. The Stellantis facility in Windsor was offline for two months up until May before it reopened at limited capacity.

As recently as last year Stellantis was floating the idea of expanding production there but this week the company waylaid staff with news that it would be closing one line entirely and laying off 1,800 workers.

WATCH | Stellantis workers in Windsor react to job loss news: 

Stellantis workers react to news of a shift cut

2 days ago

Frustration, fear for Stellantis workers thinking about their futures. 1:23 

In the labour deals they hammered out late last year, Canada’s big car makers made it clear that the future of the automotive industry in Canada will be in making electric vehicles, but most of those won’t be rolling off the lines until some time in 2024 at the earliest.

Until then, Canadian car plants don’t have a lot to do, and a big part of the problem is that the vehicles Canadian plants are set up to make aren’t the ones that are selling.

“What they’re doing is they’re allocating the minimum chips to their most profitable vehicles,” Unifor president Jerry Dias said in an interview with CBC News.

“If you’re looking at the industry in North America that would be predominantly pickup trucks and SUVs.”

Young, the economist, says Canada is on track to produce about 1.2 million vehicles this year. That would be the lowest annual total since 1982 — below the 1.4 million the country made in pandemic-stricken 2020, and well off the 2.2 million annual pace that the country had been cranking out for the decade leading up to 2019.

Chip makers, mostly in Asia had been ramping up production through the first part of 2021, before the delta variant put a chill on everything again. Malaysia makes about one seventh of the world’s semiconductors, and factories there have been idled for September and October. Vietnam is another major supplier, and they too are about three months behind because of COVID lockdowns.

For both car buyers and the people who make them, the good news is that the experts think things will get back to normal at some point.  But the bad news is it could take a while.

“Demand for vehicles is very strong this year, and that could have easily closed pre-pandemic gaps this year if there were enough vehicles to buy,” Young said.

But without enough chips to go around “we see that being pushed out not only to 2022, but in fact 2023.”

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At least 34 dead after floods in north India

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At least 34 people have died following days of heavy rains in the north Indian state of Uttarakhand, the state’s chief minister said, as rescuers continued work to free those stranded on Wednesday.

Aerial footage of the affected areas showed engorged rivers and villages partially submerged by floodwaters.

“There is huge loss due to the floods … the crops have been destroyed,” Pushkar Singh Dhami told Reuters partner ANI after surveying the damage late on Tuesday.

“The locals are facing a lot of problems, the roads are waterlogged, bridges have been washed away. So far 34 people have died and we are trying to normalise the situation as soon as possible.”

Prime Minister Narendra Modi said in a tweet he was “anguished” by the loss of life.

The Himalayan state of Uttarakhand is especially prone to flooding. More than 200 were feared killed in February after flash floods swept away a hydroelectric dam.

Unseasonally heavy rains across India have led to deadly floods in several areas of the country in recent days. Authorities in the southern state of Kerala said on Monday more than 20 people had died there following landslides. (This story corrects typographic error in the last paragraph)

 

(Reporting by Alasdair Pal; Editing by Jane Wardell)

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Japanese volcano spews plumes of ash, people warned away

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A  volcano erupted in Japan on Wednesday, blasting ash several miles into the sky and prompting officials to warn against the threat of lava flows and falling rocks, but there were no immediate reports of casualties or damage.

Mount Aso, a tourist destination on the main southern island of Kyushu, sent plumes of ash 3.5 km (2.2 miles) high when it erupted at about 11:43 a.m. (0243 GMT), the Japan Meteorological Agency said.

It raised the alert level for the volcano to 3 on a scale of 5, telling people not to approach, and warned of a risk of large falling rocks and pyroclastic flows within a radius of about 1 km (0.6 mile) around the mountain’s Nakadake crater.

The government is checking to determine the status of a number of climbers on the mountain at the time, Chief Cabinet Secretary Hirokazu Matsuno told reporters, but added that there were no reports of casualties.

Television networks broadcast images of a dark cloud of ash looming over the volcano that swiftly obscured large swathes of the mountain.

Ash falls from the 1,592-metre (5,222-foot) mountain in the prefecture of Kumamoto are expected to shower nearby towns until late afternoon, the weather agency added.

Mount Aso had a small eruption in 2019, while Japan’s worst volcanic disaster in nearly 90 years killed 63 people on Mount Ontake in September 2014.

(Reporting by Ju-min Park; Editing by Clarence Fernandez)

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