Struggling tour operatorAir Transatis in talks with the federal government on aid but may not reach a deal by an April debt deadline, a source close to the situation said, putting pressure on Quebec to ride to the rescue of another troubled aerospace brand in the province.
Air Canada dropped its merger plans with Transat on Friday, saying European regulators had signaled it was unlikely to pass antitrust concerns.
Canada’s largest carrier first bid for Transat in 2019 and discounted its offer last year as the pandemic decimated the travel and tourism sector.
Airlines have been in talks with Ottawa since last year about a possible aid package. Transat’s aborted deal adds fresh urgency to the talks, given the jobs at risk if the carrier fails and the political importance of Quebec ahead of an expected federal election this year.
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Transat, which last month suspended flights until June due to pandemic guidelines, has said it needs at least C$500 million in financing this year.
It has obligations due on April 29 for a $50 million revolving facility and a C$250 million short-term loan that matures on June 30. If it does not meet the April 29 requirements, or obtain another extension, creditors could accelerate the repayment obligation.
“There are ongoing negotiations and there is a budget coming up and there is no guarantee at this point that they will get there before the budget,” said a source close to the situation, referring to the federal budget slated for April 19.
“I think politically it would be a problem in Quebec. The federal government therefore absolutely has to come up with a solution,” the source added, noting that “Transat has more of a cachet in Quebec (than Air Canada).”
2:10 Media mogul confirms offer for Air Transat still valid
Media mogul confirms offer for Air Transat still valid
Both airlines are Montreal-based but Air Canada originated in Winnipeg before moving its headquarters to Quebec in the 1940s. Transat was founded by a group of Quebec businessmen, including the province’s current premier, in 1986 and grew to become the country’s third-biggest airline.
The airline was “confident we will be able to secure the necessary financing in the coming weeks,” spokesman Christophe Hennebelle said on Sunday, reiterating it was at an “advanced stage” of discussions with Ottawa on sector aid and accessing specific pandemic-aid to businesses.
Asked about the status of government talks with Transat, a spokeswoman for Canada’s finance minister said: “I can’t speak to which creditors or lines of financing Air Transat is pursuing. As a private company, they’d be best placed to answer that.”
Ottawa said on Friday that protecting jobs and securing the long-term viability of Transat were a priority for the government. The carrier employs 5,000 people, mostly in Quebec, home to much of Canada’s aerospace sector.
‘COLLECTIVE INTEREST’
The survival of Transat, its Montreal headquarters and employees puts significant pressure on the Quebec government to secure its future.
Quebec has come to the aid of struggling aerospace companies before. In 2015, the previous provincial government sunk US$1 billion into planemaker Bombardier’s then-struggling CSeries program. Two years later, Airbus paid Bombardier one dollar for control of the commercial jet program.
“The Quebec government is caught between a rock and a hard place on this one,” said John Gradek, a former airline executive and program coordinator at McGill University’s aviation management program.
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“There will be a lot of pressure on (Premier Francois) Legault to come to (Quebec businessman) Pierre Karl Péladeau’s aid in terms of funding.”
Péladeau, who proposed buying Transat for $5 a share, said on Friday his offer is still available. Transat had previously said the bid lacked the required level of financing.
Péladeau, chief executive of Quebecor Inc, said in a statement that his offer includes “a rigorous business plan focusing on areas of the company with high growth potential, on expertise and job creation in Quebec” and a continued Montreal head office.
A second source familiar with the matter said Péladeau’s offer did not call for funding from the Quebec government, which said in February it was looking at scenarios for Transat “with or without Air Canada.”
A spokesman for Quebec’s economy minister declined comment on Sunday.
1:57 Toronto-bound passengers stuck on plane for several hours
Toronto-bound passengers stuck on plane for several hours – Jul 31, 2019
The separatist Bloc Quebecois said it wanted to ensure Quebec ownership would be favored for the carrier and blamed Ottawa, which approved the merger in February, for delaying an airline aid package.
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“Air Transat is a flagship that has made Quebecers proud while offering Francophones a career in aviation,” BQ transport critic Xavier Barsalou-Duval said in a statement.
“It is in our collective interest that its decision-making center as well as its control remain in Quebec.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
