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Air Canada posts $1-billion loss as carrier faces ‘darkest period’ in commercial aviation history – The Globe and Mail

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The COVID-19 pandemic drove Air Canada to a $1-billion loss in the first quarter as most air travel came to a halt.

Air Canada burned through $880-million in liquidity in the first three months of 2020, as it reduced its schedule by 90 per cent since March 16.

“Our first quarter results reflect the severity and abruptness of the impact that the COVID-19 pandemic has had on Air Canada, which started to be felt across the global airline industry in late January with the suspension by many carriers, including Air Canada, of services to China,” Air Canada said in a statement accompanying its results on Monday morning. “The impact was exacerbated during the month of March with mandated social distancing, unprecedented government-imposed travel restrictions in Canada and around the world and the shutting down of economies.”

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Air Canada outlined measures it is taking to preserve its operations, but said a recovery to 2019 revenue levels and capacity is three years away.

“The past quarter was the first in 27 consecutive quarters that we did not report year-over-year operating revenue growth. Our solid January and February results gave us every encouragement that this performance would continue until the sudden and catastrophic impact of COVID-19’s onset in Europe and North America in early March. We are now living through the darkest period ever in the history of commercial aviation,” Air Canada said.

Air Canada said revenue fell by $712-million to $3.7-billion in the first three months of 2020, compared with the year-earlier period. The operating loss was $433-million, compared with a profit of $127-million in the first quarter of 2019.

The airline’s $1-billion net loss, or $4 per share, compares with a profit of $345-million ($1.26) in the same period a year earlier.

Passenger revenue miles fell by 17 per cent.

The World Health Organization declared a global pandemic on March 12 and the Canadian government on March 13 told Canadians to avoid non-essential travel. Ottawa closed the border to international visitors, except for Americans on March 18, and on March 20 expanded the restrictions to include U.S. travellers. Air Canada suspended U.S. flights on April 26.

Air Canada said its annualized second-quarter capacity will be reduced by 85 per pent or 90 per cent, and by 75 per cent in the third quarter.

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Air Canada said it is taking steps to ensure it has enough cash to survive, including drawing a $1-billion credit facility, an $820-million loan secured by aircraft and spare engines, and bridge financing worth $780-million.

On top of the cost savings achieved through capacity and workforce reductions, Air Canada said it will save $1-billion through other cost reductions and program deferrals. Air Canada is getting rid of 79 older, less fuel-efficient planes, the Boeing 767, Airbus 319 and Embraer 190 aircraft, a move that reduces costs and simplifies fleet maintenance. Air Canada and its subsidiaries operate 406 planes.

Scotiabank analyst Konark Gupta said Air Canada will consume about $1.4-billion in cash in the second quarter, a figure that increases to $1.5-billion or $17-million a day in a “worst-case scenario” of a total shutdown.

Mr. Gupta said he would be surprised if the Canadian government does not provide financial aid to Air Canada, after the U.S. government announced it would do so.

Air Canada said until June 6 most of its 33,000 employees will receive federal government wage subsidies intended to prevent layoffs. The carrier has operated more than 500 international cargo flights since March 22, after removing seats in some planes to carry freight. Air Canada said it plans to fly as many as 150 cargo flights a week in the second quarter.

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Gold shrugs as ECB throws more stimulus into markets to fight COVID-19 – Kitco NEWS

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(Kitco News) – The gold market is holding steady above $1,700 but is seeing little reaction as the European Central Bank threw more stimulus into financial markets Thursday.

As expected, following its monetary policy meeting, the ECB announced that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively.

However, in an effort to support the European economy, devastated by the COVID-19 pandemic, the ECB said that its pandemic emergency purchase programme (PEPP) will be increased by €600 billion to a total of €1,350 billion.

“In response to the pandemic-related downward revision to inflation over the projection horizon, the PEPP expansion will further ease the general monetary policy stance, supporting funding conditions in the real economy, especially for businesses and households,” the ECB said.

The timeline for the PEPP program will also be extended until at least June 2021.

Andrew Kenningham, chief Europe economist at Capital Economics said that the latest move by the ECB more than meets market expectations.

“It also does enough to justify the view that euro-zone policymakers have got their act together, for now at least, in responding to the coronavirus crisis,” he said.

Along with the emergency spending measures, the central bank said that its regular asset purchase programme (APP) will continue at a monthly pace of €20 billion, together with the purchases under the additional €120 billion temporary envelope until the end of the year.

The ECB also reiterated that its asset purchase programme will run for as long as the committee deems necessary.

The gold market is not seeing much reaction to the new stimulus measures. August gold Futures last traded at $1,711.20 an ounce, up 0.38% on the day.

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U.S. trade gap widens in April masking steep declines in both exports and imports – MarketWatch

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The numbers: The U.S. trade deficit widened to $49.4 billion in April from a revised $42.3 billion in the prior month, the Commerce Department said Thursday. Economists polled by MarketWatch had forecast a $49.5 billion shortfall. The wider trade gap masks a significant decline in trade flows from the COVID-19 pandemic.

What happened: Exports fell 20.5% to $151.3 in April. The decline was led by civilian aricraft, crude oil, and autos.

Imports dropped 13% to $200.7 billion. The decline was led by passenger cars, semiconductors and consumer goods including pharmaceutical preparation and apparel.

Exports are down 9.5% year-to-date, while imports are off 10.2%. The U.S. services surplus narrowed $1.3 billion to $22.4 billion.

The trade gap with China widened $9 billion to $26 billion in April.

Big picture: The COVID-19 pandemic has depressed trade flows into and out of the United States, economists said. The wider deficit should depress second-quarter gross domestic product even further. Economists surveyed by MarketWatch are expecting GDP to decline at a 27.2% annual rate in the April-June quarter.

Market reaction: Stocks futures indicated a lower opening on Thursday. Stocks have been on a tear lately. with the Nasdaq Composite
COMP,
+0.03%

moving to with 2% of its all-time high.

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Premier Defends Travel Ban as Class-Action Lawsuit Filed – VOCM

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Premier Dwight Ball says a response has been prepared to a class-action lawsuit against the province’s travel ban.
He says this is not about shutting people out, but about protecting the people of Newfoundland and Labrador.

Two local law firms have launched a class action on behalf of those unable to visit their Newfoundland properties because of the travel ban imposed by government.

It’s the second such legal challenge of the special order.

The Premier says people have a right to file those claims, but the travel ban is in the name of public health and protection.

He says there are families with loved ones in long-term care who have not been able to visit their family only a kilometre away.

Lawyer Geoff Budden says mobility rights within Canada are protected under the Charter.

He says refusing people access to their property in this province raises all kinds of concerns.

He says you’re asking people to walk away from a property in which they may have invested a significant amount of money. Not only is it unfair, but he says it’s also inconsistent with Charter rights.

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