Wed, April 24, 2024 at 9:35 AM EDT
Business
Soaring fuel prices dig into Transat earnings despite travel rebound – Yahoo Canada Finance
MONTREAL — Skyrocketing jet fuel prices and the COVID-19 pandemic ate into the profits of Transat A.T. Inc. in its second quarter, despite higher revenues as air travel began to rebound, sparking hopes of a turbocharged summer.
The tour operator saw its net loss attributable to shareholders swell 41 per cent for the quarter ended April 30, even as revenues were more than 47 times higher than a year earlier.
“The cost of fuel rose sharply, without which we would have reported positive adjusted operating results in April,” chief executive Annick Guérard said in a statement Thursday.
She said consumers are ready to accept price hikes while the company has implemented a fuel hedging program to protect against significant increases during the summer.
The arrival of two new fuel-efficient Airbus A321neo jetliners this summer will also cut fuel costs.
North American jet fuel prices rose 124 per cent year over year to US$174 per barrel as of June 3, according to the International Air Transport Association. Spiking in March amid Russia’s invasion of Ukraine, the price has fallen 14 per cent over the past month.
Months earlier, the highly infectious Omicron strain prompted further border restrictions and another drop in travel bookings.
Transat cancelled nearly 30 per cent of its scheduled flights in January and February as a result.
However, the CEO said a recovery is now fully underway, with sales for summer trips now topping 2019 levels after trailing them between mid-December and the beginning of March.
In April, seating capacity hit two-thirds of pre-pandemic levels, with more than 80 per cent of those seats filled, Guérard said on a conference call with analysts.
“Our capacity for the summer is at about 90 per cent of 2019 levels” — only 75 per cent for its key transatlantic program, but nearly 100 per cent for sun destinations. “If this trend holds, we expect to see good volumes in the months ahead.”
There may be more bumps ahead as endless security queues and more flight delays at airports threaten to throw a wrench in plans ahead of peak travel season.
“We’ve had the delays at Pearson among other places — there are challenges in Europe as well. As demand for travel ramps up, Canada’s border policies and resources in airports … need to reflect this new reality,” Guérard told analysts.
She said it is “very difficult” for normal travel volumes to mesh with ongoing restrictions, such as random COVID-19 testing of international arrivals — a policy Ottawa has said will stay in place until at least June 30.
Foreign visitors must also continue to provide proof of at least two vaccine doses — unvaccinated Canadians who don’t can return home but must quarantine for 14 days. All travellers must also keep submitting their health information via the ArriveCAN app before their return.
Public health protocols mean customs agents now take two to four times longer than the typical 30-second processing time for international passengers, according to Canadian Airports Council interim president Monette Pasher.
The Canadian Air Transport Security Authority, which manages airport security screening, aims to boost the number of screening officers, with 400 more personnel in various phases of training to be deployed by the end of the month, Transport Minister Omar Alghabra has said.
Transat’s debt load is another obstacle after finishing the second quarter owing $1.78 billion, 11 per cent more than six months earlier.
“We are still carrying significant debt linked to the restarting of our operation,” Guérard said.
On Thursday, the company reported a net loss attributable to shareholders of $98.3 million or $2.60 per diluted share for the quarter. The result compared with a loss of $69.6 million or $1.84 per diluted share a year earlier.
Revenue totalled $358.2 million compared with $7.6 million in the same quarter last year when Air Transat, the company’s airline, suspended operations after Ottawa requested a suspension of travel to Mexico and the Caribbean as well as the adoption of new quarantine measures and testing requirements.
On an adjusted basis, Transat said it lost $2.95 per diluted share compared with an adjusted loss of $2.74 per diluted share in the same quarter last year.
The first figure fell 22 per cent below analysts’ expectations of $2.42 in losses per diluted share, according to market data firm Refinitiv.
This report by The Canadian Press was first published June 9, 2022.
Companies in this story: (TSX:TRZ)
Christopher Reynolds, The Canadian Press
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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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