Wed, April 24, 2024 at 9:35 AM EDT
Business
Satisfaction, disappointment greet Bombardier decision to sell A220 shares
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A union representative called Bombardier’s sale of its remaining shares in the A220 commercial jet program — formerly known as the C Series — “the best-case scenario,” while an aerospace expert said it’s a “sad” day for Quebec.
The company announced the move late Wednesday night, and politicians and stakeholders weighed in on Thursday.
Quebec Economy Minister Pierre Fitzgibbon says the sale will mean more production and more jobs for the province.
“Our business is to make sure we create good jobs,” Fitzgibbon said, saying that he still sees potential in Bombardier’s contribution to Quebec’s economy.
“I’m convinced the engineering of Bombardier … will contribute to economic growth in Quebec.”
David Chartrand, the representative for Quebec’s division of the International Association of Machinists and Aerospace Workers, says he’s satisfied Airbus and its subsidiary Stelia intend to keep jobs in Quebec.
The deal calls for the jobs of 360 people who construct the plane’s cockpits at the plant in the Montreal borough of Ville St-Laurent to be guaranteed for three years. After that, they will be transferred to Mirabel.
“Priority number one, absolutely, was to keep those jobs here in Quebec and make sure … our members continue to benefit from those jobs,” Chartrand said.
He said he’s confident the jobs are safe as long as Airbus continues to sell airplanes, and that Airbus and Stelia assured him the union’s collective agreement will remain in place.
Deal secures 3,300 Quebec jobs, Airbus says
Bombardier has been reorganizing its business to try and pay off a multibillion-dollar deficit.
The union is in discussions to ensure the same work conditions for the more than 360 workers at the plant in Ville St-Laurent, Chartrand says.
Airbus says the deal secures 3,300 jobs in Quebec.
Under the deal, Airbus will hold a 75 per cent stake in the commercial jet program. The Quebec government will have 25 per cent.
Quebec Premier François Legault said he’s satisfied they were able to reach this agreement.
Bombardier released its latest financial statement Thursday. The company incurred losses of $1.6 billion US, or close to $2.3 billion Cdn, in the last quarter.
‘We’re not putting in any more money’: Quebec premier
Legault criticized the former Liberal government’s $1.3 billion investment in the C Series in 2016. Sales of the planes were initially slow, leading Bombardier to sell a controlling stake of the program to Airbus in 2018 for $1.
While A220 orders have since started rolling in, Bombardier would need to inject more money into the program to ramp up production.
“It’s the old government that made a bad financial transaction to put $1.3 billion of our money not into the Bombardier group, but only in one division of it,” Legault said at the National Assembly Thursday.
“We’re not putting in any more money.”
Pierre Arcand, interim leader of the Quebec Liberal Party, said his government invested in the C Series to protect tens of thousands of jobs in the Montreal area.
“We see the sales of those planes are increasing. We’ll see in the future what is the value of that 25 per cent,” Arcand said, adding that Legault’s challenge will be to ensure the jobs remain in the province.
Isabelle Dostaler, dean of the faculty of business administration at Memorial University of Newfoundland whose research focuses on aerospace and aviation management, said it’s a sad day for Quebec.
“To think that our country developed the most advanced civil aircraft and that we’re not able to sell it ourselves, it’s really really, really sad,” Dostaler told CBC Daybreak‘s Mike Finnerty.
She said if she were the premier, she wouldn’t diminish the province’s participation in the A220 program.
“I think whoever owns that aircraft, and that’s now going to be Airbus, they’re going to make a lot of money.”
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Business
Oil Firms Doubtful Trans Mountain Pipeline Will Start Full Service by May 1st
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Oil companies planning to ship crude on the expanded Trans Mountain pipeline in Canada are concerned that the project may not begin full service on May 1 but they would be nevertheless obligated to pay tolls from that date.
In a letter to the Canada Energy Regulator (CER), Suncor Energy and other shippers including BP and Marathon Petroleum have expressed doubts that Trans Mountain will start full service on May 1, as previously communicated, Reuters reports.
Trans Mountain Corporation, the government-owned entity that completed the pipeline construction, told Reuters in an email that line fill on the expanded pipeline would be completed in early May.
After a series of delays, cost overruns, and legal challenges, the expanded Trans Mountain oil pipeline will open for business on May 1, the company said early this month.
“The Commencement Date for commercial operation of the expanded system will be May 1, 2024. Trans Mountain anticipates providing service for all contracted volumes in the month of May,” Trans Mountain Corporation said in early April.
The expanded pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.
The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.3 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion).
The expansion project has faced continuous delays over the years. In one of the latest roadblocks in December, the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions.
The company asked the regulator to reconsider its decision, and received on January 12 a conditional approval, avoiding what could have been another two-year delay to start-up.
Business
Tesla profits cut in half as demand falls
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Tesla profits slump by more than a half
Tesla has announced its profits fell sharply in the first three months of the year to $1.13bn (£910m), compared with $2.51bn in 2023.
It caps a difficult period for the electric vehicle (EV) maker, which – faced with falling sales – has announced thousands of job cuts.
Boss Elon Musk remains bullish about its prospects, telling investors the launch of new models would be brought forward.
Its share price has risen but analysts say it continues to face significant challenges, including from lower-cost rivals.
The company has suffered from falling demand and competition from cheaper Chinese imports which has led its stock price to collapse by 43% over 2024.
Figures for the first quarter of 2024 revealed revenues of $21.3bn, down on analysts’ predictions of just over $22bn.
But the decision by Tesla to bring forward the launch of new models from the second half of 2025 boosted its shares by nearly 12.5% in after-hours trading.
It did not reveal pricing details for the new vehicles.
However Mr Musk made clear he also grander ambitions, touting Tesla’s AI credentials and plans for self-driving vehicles – even going as far as to say considering it to be just a car company was the “wrong framework.”
“If somebody doesn’t believe Tesla is going to solve autonomy I think they should not be an investor,” he said.
Such sentiments have been questioned by analysts though, with Deutsche Bank saying driverless cars face “technological, regulatory and operational challenges.”
Some investors have called for the company to instead focus on releasing a lower price, mass-market EV.
However, Tesla has already been on a charm offensive, trying to win over new customers by dropping its prices in a series of markets in the face of falling sales.
It also said its situation was not unique.
“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs,” it said.
Despite plans to bring forward new models originally planned for next year the firm is cutting its workforce.
Tesla said it would lose 3,332 jobs in California and 2,688 positions in Texas, starting mid-June.
The cuts in Texas represent 12% of Tesla’s total workforce of almost 23,000 in the area where its gigafactory and headquarters are located.
However, Mr Musk sought to downplay the move.
“Tesla has now created over 30,000 manufacturing jobs in California!” he said in a post on his social media platform X, formerly Twitter, on Tuesday.
Another 285 jobs will be lost in New York.
Tesla’s total workforce stood at more than 140,000 late last year, up from around 100,000 at the end of 2021, according to the company’s filings with US regulators.
Musk’s salary
The car firm is also facing other issues, with a struggle over Mr Musk’s compensation still raging on.
On Wednesday, Tesla asked shareholders to vote for a proposal to accept Mr Musk’s compensation package – once valued at $56bn – which had been rejected by a Delaware judge.
The judge found Tesla’s directors had breached their fiduciary duty to the firm by awarding Mr Musk the pay-out.
Due to the fall in Tesla’s stock value, the compensation package is now estimated to be around $10bn less – but still greater than the GDP of many countries.
In addition, Tesla wants its shareholders to agree to the firm being moved from Delaware to Texas – which Mr Musk called for after the judge rejected his payday.
Business
Stock market today: Nasdaq futures pop, Tesla surges after earnings with more heavyweights on deck
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Tech stocks rose on Wednesday, outstripping the broader market as investors welcomed Tesla’s (TSLA) cheaper car pledge and waited for the next rush of corporate earnings.
The Nasdaq Composite (^IXIC) rose roughly 0.6%, coming off a sharp closing gain. The S&P 500 (^GSPC) was up 0.2%, continuing a rebound from its longest losing streak of 2024, while the Dow Jones Industrial Average (^DJI) fell 0.1%.
Tesla shares jumped nearly 12% after the EV maker’s vow to speed up the launch of more affordable models eclipsed its quarterly earnings and revenue miss. That cheered up investors worried about growth amid a strategy shift to robotaxis and the planned cancellation of a cheaper model.
The results from the first “Magnificent Seven” to report have intensified the already high hopes for Big Tech earnings, that the megacaps can revive the rally in stocks they powered. The spotlight is now on Meta’s (META) report due after the market close, as the Facebook owner’s shares rose after the Senate voted for a potential ban on rival TikTok. Microsoft (MSFT) and Alphabet (GOOG) next up on Thursday.
Meanwhile, Boeing (BA) reported better than expected first quarter results before the opening bell with a loss per share of $1.13, narrower than the $1.72 estimated by Wall Street. Shares rose about 2% in morning trade.
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