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Canadian airlines feel the pressure of flight-shaming and the 'Greta effect' – CP24 Toronto's Breaking News

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Christopher Reynolds, The Canadian Press


Published Sunday, January 19, 2020 3:45PM EST

MONTREAL – Swedish may not be the lingua franca of the aviation world, but ask any airline executive about the term “flygskam” and they’ll likely know exactly what it means.

Flygskam – Swedish for “flight shame” – is a growing environmental movement that highlights the flight sector’s carbon footprint, putting pressure on Canadian carriers to reduce greenhouse gas emissions while managing the cost of passenger guilt.

“It does seem like a switch has flipped,” says airline expert Seth Kaplan.

“For a while, there was this very incremental recognition of the urgency (of climate change), and then over the past year or so all this has really gotten into the spotlight – aided by Greta Thunberg.”

The Swedish teenage activist, who travelled by racing yacht to a climate summit in New York to avoid flying and its attendant emissions, has focused attention on aviation’s role in global warming, with consequences for travel companies.

The CEO of SAS, one of Scandinavia’s largest carriers, has attributed declining passenger numbers in Sweden to flight shaming. Meanwhile the country’s main train operator, SJ, said it sold 1.5 million more tickets in 2018 than the previous year, thanks to what’s been dubbed the “Greta effect.”

Other European countries are experiencing the same phenomenon. Germany saw a similar decline in domestic flights in 2018, along with a corresponding increase in rail travel.

To combat this trend, airlines are turning to carbon offsets, where they invest in projects such as wind farms and tree planting to compensate for plane-produced carbon dioxide.

Such measures could cost airlines billions, Citigroup Inc. said in a research note last October. The banking conglomerate forecasts that carbon offsetting economy-class flights will cost US$3.8 billion per year within five years.

Carriers could absorb the expense or pass it along to consumers via a higher ticket price, but airlines will struggle in the long run if increased costs deter travellers from flying, Citi said.

If airlines foot the bill themselves, “the cost of carbon offsetting all leisure consumption could be as much as 27 per cent of airlines’ profits by 2025,” wrote analyst Mark Manduca.

Offsetting corporate travel – which Citi defined as business-class seats – will cost another $2.4 billion, reducing airline profits by a further 17 per cent, the report said.

Commercial aviation accounts for about two per cent of global carbon emissions – a far smaller share than that of cars (estimates range between about 15 per cent and 20 per cent) or coal-generated power (30 per cent). “But it emits carbon in a very visible way,” Kaplan said.

“You look up in the sky and you see airplanes flying.”

In Europe, where the European Commission has called for a climate-neutral Europe by 2050, airlines have taken big steps in response.

EasyJet announced in November it would begin to offset emissions immediately, a move that they claim makes them the first major airline to operate net-zero carbon flights.

British Airways followed suit and began offsetting all flights within the United Kingdom as of Jan. 1

New York-based JetBlue unveiled plans to go carbon-neutral on all domestic flights starting in July, the first major U.S. carrier to do so.

Canadian airlines have also made efforts to reduce their carbon footprints, albeit less ambitious ones than their European counterparts.

“Using fuel-efficient aircraft is our best hedge against rising fuel costs and improves our carbon footprint,” WestJet Airlines Ltd. spokeswoman Lauren Stewart said in an email. “We are proud to have one of the youngest and most fuel-efficient fleets in North America.”

Air Canada has committed to carbon-neutral growth starting this year, meaning Canada’s biggest airline plans to cap net emissions, regardless of expansion.

Other efforts by the airline include more fuel-efficient aircraft and biofuel investment, said spokesman Peter Fitzpatrick.

However, the proliferation of budget carriers and a robust tourism sector is resulting in more emissions even as aircraft become increasingly fuel efficient.

A recent study by the International Council on Clean Transportation found that airplane emissions are increasing as much as 50 per cent faster than forecast by the United Nations, whose aviation body predicts aircraft fuel consumption will more than double by 2045.

Europe’s keen awareness and aggressive efforts around climate change may justify a little “tagskryt” – “train-boasting” in Swedish – but travellers on a densely populated continent have a built-in advantage.

“There’s no high-speed rail network here like there is in Europe. The cities are not as closely located as they are in Europe or in Japan. And if I have to go to meetings in Montreal or the West Coast of the United States, flying is my only option due to time and cost concerns,” said Brandon Graver, the Washington D.C.-based airline researcher behind the clean transportation council study.

A lack of investment in high-speed rail by governments in North America is also to blame, experts say, with flights between Montreal and Toronto more appealing in the absence of bullet trains.

Even if Canadian airlines were to proclaim carbon neutrality, its effectiveness remains up in the air.

“There’s been a lot of talk lately that, ‘Look, it’s nice to go and plant trees, but it’s not truly a one-for-one offset – that there’s not enough tree-planting in the world you could do to truly offset the impact of emissions,”’ airline expert Kaplan said.

Nor do carbon offsets address the issue of fossil fuel dependence, according to a recent paper by the David Suzuki Foundation and the Pembina Institute.

“It’s not the silver bullet … to reducing their emissions, but it’s one option of many – while others would call them modern-day indulgences where you’re paying for your sins,” Graver said.

“We’re hopeful that industry and governments together can come together and come up with a climate goal, an actual action that is beyond just lip service.”

This report by The Canadian Press was first published Jan. 19, 2020.

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Japan’s SoftBank returns to profit after gains at Vision Fund and other investments

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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.

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Trump campaign promises unlikely to harm entrepreneurship: Shopify CFO

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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.

Companies in this story: (TSX:SHOP)

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RioCan cuts nearly 10 per cent staff in efficiency push as condo market slows

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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.

Companies in this story: (TSX:REI.UN)

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