WestJet is cutting jobs and slashing its flight capacity by a third because of what the airline calls “instability in the face of continuing federal government travel advisories and restrictions.”
The Calgary-based airline said in a release Friday that up to 1,000 of its employees will be impacted by “furloughs, temporary layoffs, unpaid leaves and reduced hours.”
Ottawa recently changed the rules to require anyone coming into Canada to have a negative COVID-19 test in order to be allowed into the country. As soon as that happened, WestJet CEO Ed Sims said the airline saw “significant reductions in new bookings and unprecedented cancellations.”
The airline lobbied the government to alter or delay implementation of the new rules, but Ottawa ultimately went ahead with them as planned.
“The entire travel industry and its customers are again on the receiving end of incoherent and inconsistent government policy,” Sims said.
“We have advocated over the past 10 months for a co-ordinated testing regime on Canadian soil, but this hasty new measure is causing Canadian travellers unnecessary stress and confusion and may make travel unaffordable, unfeasible and inaccessible for Canadians for years to come.”
In addition to the job cuts, the airline is also slashing about 30 per cent of its flights for February and March. That includes cutting its number of international flights from 100 this time last year to just five now.
About 230 weekly departures have been cut, including about 160 domestic routes. About a dozen normally permanent flights to sunny destinations out of Edmonton, Calgary and Vancouver have been cut, and seasonal service to the following locations has also been cut:
- The Caribbean island of Bonaire.
- Huatulco, Mazatlán and Ixtapa, Mexico.
- London Gatwick.
- Nassau, Bahamas.
- Port of Spain, Trinidad and Tobago.
- San Jose, Costa Rica.
- Tampa, Fla.
- Turks and Caicos.
The flight reductions mean the airline will only have about 150 flights per day. That’s about what WestJet had in June of 2001.
The cuts come on the heels of the airline’s decision announced in October to shut down almost all of its operations in Atlantic Canada.
Couche-Tard CEO would love second shot at Carrefour deal – theglobeandmail.com
Alimentation Couche-Tard (ATD-B-T) (ATD-A-T) would revive its $20 billion bid for France’s Carrefour (CRRFY) if the Canadian convenience store operator saw a change in the French government’s stance on the proposed deal, its chief executive said on Monday.
Couche-Tard dropped its surprise bid for the European retailer over the weekend after the plan ran into opposition from the French government. Some French politicians said the issue was a matter of national food safety.
“We’d love to do the transaction …. if we got signals that the environment could change or would change from the French government or other key stakeholders,” Brian Hannasch told an analyst call.
News of the approach from Couche-Tard, which operates convenience outlets and fuel stations, broke only last week but unravelled swiftly in the face of opposition from French politicians including finance minister Bruno Le Maire.
With a deal effectively blocked, the companies said they had decided instead to examine opportunities for sharing practices on fuel purchases, partnering on private labels and distribution in overlapping networks.
Shares in Carrefour slumped more than 6% in Paris to 15.55 euros on Monday afternoon as the prospect of the 20 euro per share offer evaporated, for now at least. Couche-Tard shares rose 3.4%.
“In terms of politics, I think we went into this with eyes wide open knowing that this was a risk, and I certainly do believe that the pandemic has heightened the food security issue, particularly in France,” Hannasch said.
“And so whether that changes over time, it’s hard to say.”
In a note to clients on Monday, Bryan, Garnier & Co retail analyst Clément Genelot blamed France’s 2022 presidential elections as the “true barrier to the deal,” amid fears that the sale of the country’s leading private employer could strengthen far-right opposition to incumbent Emmanuel Macron.
Carrefour employs 105,000 people in France and runs around 8,000 convenience stores as well as its traditional hypermarkets and supermarkets.
One top ten Couche-Tard shareholder, already skeptical about the merits of a tie-up with a grocer, said the company would face questions for moving away from its core business.
“I think in the interim there will continue to be some form of overhang or discount I think applied to the equity just because there will be that concern that the management team has started to get outside what’s considered their area of competence,” he said on condition of anonymity.
Analysts at investment bank Citi said there was still a chance Carrefour and Couche-Tard could revive talks at a later date, while the possibility remained for Carrefour and domestic rival Casino to examine a merger deal.
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Ontario reports 2,578 new coronavirus cases; testing falls to lowest point since early January – CP24 Toronto's Breaking News
Ontario reported a considerable drop in new COVID-19 cases and deaths on Monday, which could be partially explained by a corresponding fall in testing rates to the lowest point seen in two weeks.
The province reported 2,578 new cases and 24 new deaths on Monday, on the strength of 40,000 test specimens, or 20,000 fewer than what was processed the day before.
Ontario reported 3,422 new cases on Sunday and 3,056 on Saturday.
The seven-day average now stands at 3,074, which is down 10 per cent from this time last week (3,394).
“Locally, there are 815 new cases in Toronto, 507 in Peel, 151 in York Region, 151 in Niagara and 121 in Hamilton,” Health Minister Christine Elliott wrote on Twitter.
Approximately 421 people have died of novel coronavirus infection in the past seven days. Fourteen of the 24 deaths reported on Monday involved residents of the long-term care system.
Monday’s case total is the lowest Ontario has seen since Jan. 1.
There are now 28,621 active cases of infection across the province, down from a peak of 30,141 six days ago.
Provincial labs processed 40,301 test specimens, generating a positivity rate of at least 6.6 per cent. A further 18,481 specimens remained under investigation on Monday.
The number of tests processed is the lowest Ontario labs have completed in a 24-hour period since Jan. 5.
More than 400 patients are receiving care in intensive care for COVID-19 symptoms across the province, with the number of intubated patients climbing by 10 to 303 on Monday.
Toronto’s Chief Medical Officer of Health Dr. Eileen de Villa told the city’s Board of Health Monday that existing intensive care units in the city will reach capacity by the end of January.
There were a total of 1,571 patients admitted to hospitals across Ontario for novel coronavirus infection on Monday, up one from Sunday.
Meanwhile the number of long-term care homes facing an outbreak of COVID-19 grew by 2 to 248 of Ontario’s 626 facilities.
Elsewhere in the GTA, Hamilton reported 121 new cases, Halton Region reported 79 new cases and Durham Region reported 76 new cases.
How Couche-Tard’s ambitious bid for France’s Carrefour was cut down – Financial Times
Every January at the glittering Palace of Versailles, President Emmanuel Macron hosts a conference called “Choose France” to convince the heads of big multinationals that there is no better country to invest in.
Yet when one of Canada’s biggest companies, Alimentation Couche-Tard, made such a choice last week with a €16.2bn bid for French supermarket chain Carrefour, the government moved decisively to extinguish the chance of a deal.
Just 24 hours after the companies revealed they were in talks, French finance minister Bruno Le Maire declared his opposition, calling Carrefour “a key link in the chain that ensures the food security of the French people”. With its grip on a deal slipping, Couche-Tard, a $33bn group which operates convenience stores and petrol stations in North America and Europe, scrambled.
Alain Bouchard, its billionaire founder and chairman, flew into Paris for a meeting to persuade Mr Le Maire that the company would be a good owner for Carrefour, while Canadian politicians, including Quebec’s economy minister, worked the phones.
It was to no avail. The 72-year-old entrepreneur was sent packing back to Laval, Québec where he founded Couche-Tard, best known for its Circle K chain, in 1980. Late on Saturday, the companies admitted the talks were off, but insisted they would examine operational partnerships.
The shortlived drama riveted the French business elite, while briefly holding out the promise of a payday for some of the top investment banks and law firms in Paris. Couche-Tard was advised by Rothschild, where Mr Macron worked from 2008 to 2010. Rival Lazard advised Carrefour.
The saga has also reignited a debate over whether France is as open for business as Mr Macron once promised. By branding a Couche-Tard takeover as a risk to France’s “food sovereignty”, some executives and bankers are worried the government has done lasting damage to its ability to attract foreign investors.
“How can you tell me France is investor friendly and go and do something like this?” said one person involved in the deal. “Protectionism may be politically popular but it is bad for the country in the long run.”
A far-fetched plan
Despite a reputation for protectionism, it is relatively rare for France to block a foreign takeover. In recent years, steelmaker Arcelor, telecom gear specialist Alcatel-Lucent, cement giant Lafarge, and energy group Technip were all snapped up by buyers from outside France. The country was Europe’s top destination for foreign direct investment in 2019, according to a study by EY.
One longtime ally of Mr Macron and adviser to many French companies said the failure of Couche-Tard’s gambit owed more to bad timing than any fundamental change of approach in the Elysée. France was still attractive for investors, the person argued, pointing to labour reforms and tax cuts passed by Mr Macron’s government.
“The idea that the government would stand by while the biggest private employer in France was sold to a foreign buyer in the middle of a pandemic and one year before a presidential election is simply far-fetched,” the person said.
“Carrefour is a very visible asset in France — everyone from the labour unions to the farmers who supply their milk, cheese, and meats would have been up in arms,” they added.
Anticipating such concerns, Couche-Tard had planned to allay them by pitching the deal as a way to forge a French-speaking global retailing powerhouse better armed to compete with Amazon. It pledged to invest €3bn over five years, not cut jobs for two years, and to maintain dual listings in Toronto and Paris, according to people close to the group.
Given how foreign takeovers can quickly turn political in France, companies sometimes quietly run deals by officials to gauge their reaction. In 2005, PepsiCo was rumoured to be weighing up a bid for yoghurt maker Danone, prompting the then Prime Minister Dominique de Villepin to vow to protect the company in the name of “economic patriotism”. A bid never materialised.
Months later, France passed a decree giving the government the ability potentially to block takeovers by foreign buyers in sectors deemed strategic, such as defence and security. It is a definition that has steadily broadened to include energy, water and telecoms. In 2019, “food security” was added, creating the legal tool that would eventually thwart Couche-Tard.
Pascal Bine, an M&A specialist at law firm Skadden, Arps, Slate, Meagher & Flom, said the Covid-19 crisis had made the government more willing to block takeovers that could threaten the country’s supply chains. In December, it rejected US group Teledyne’s bid to buy Photonis, a maker of night vision goggles for military use.
“With the health crisis, there is a new doctrine emerging on foreign investment in France. More attention is being paid to ensure that France has supplies of key goods like medical equipment and food, and the proposed Carrefour deal does raise questions about sovereignty,” Mr Bine said.
“Legally nothing has changed but culturally something has . . . do not forget that the 1789 revolution started in part over bread shortages,” he added.
With the pandemic’s disruption hitting share prices, other countries have also been uneasy about potential foreign takeovers. The UK in November expanded its ability to review takeovers of any size in 17 key sectors, while the EU has sought similar new powers and voiced concerns over state-backed Chinese buyers.
Carrefour’s unwanted discount
If the French government could not stomach the Couche-Tard deal, Carrefour’s board and management were open to considering it.
Instead, Carrefour’s chief executive Alexandre Bompard will have to keep cutting costs to improve profits, while trying to stem a multiyear decline in sales at its large-format stores, known in France as hypermarkets. The company’s shares were down 6 per cent on Monday.
Three years into a five-year turnround plan, Mr Bompard has earned credit for selling assets in China and expanding the group’s ecommerce business. But with most cost savings going to pay for restructuring, margins have barely budged.
Carrefour stock has long traded at a discount to those of other big food retailers like Tesco or Walmart, reflecting the intense competition in France, where it still earns half its sales. With a 20 per cent market share, it is the second-largest player in France behind privately owned E Leclerc.
Fabienne Caron, analyst at Kepler Cheuvreux, said that closing the valuation gap will be that much harder now that a foreign takeover is off the table and regulators have previously frowned on domestic consolidation. “The key lessons of this week is that no foreign company can buy a French food retailer, and that Carrefour is up for sale,” she said.
The lessons have not been lost on Carrefour’s three largest shareholders, who together control about 23 per cent of the stock. The group includes France’s richest man, LVMH founder Bernard Arnault, and the Moulin family behind department store group Galeries Lafayette.
They were open to selling their stakes to help the Couche-Tard deal, according to people familiar with the matter.
They were displeased with the government’s intervention, said one person familiar with their thinking, especially because they have long supported Mr Macron. Spokespeople for Mr Arnault and the Moulin family declined to comment.
Although painful, Couche-Tard’s French snub is unlikely to dent its ambitions. Under Mr Bouchard, the group has completed almost 40 takeovers over the past decade in the fragmented convenience store sector. The relentless dealmaking had, by 2019, made it Canada’s largest publicly traded company by revenue.
Couche-Tard’s move for Carrefour was aimed at cutting its heavy reliance on petrol sales, which are expected to decline in the coming decades as electric vehicles become widespread.
A solid balance sheet certainly gives the company the license to go shopping. According to Barclays analysts, the group’s net debt-to-ebitda ratio for 2020 was 0.9 times and is projected to be 0.5 times this year.
Stephen Groff, a portfolio manager at Cambridge Global Asset Management which owns Couche-Tard shares, said the group’s record has earned it the right to hunt for a major deal — even if the approach for Carrefour came as a big surprise.
“They’re a very effective operator with a decentralised mindset that’s enabled them to adapt to very different market conditions around the world,” he said.
But “shareholders are likely to want to get further clarity on what their long-term ambitions are given this is a different path than what many may have expected.”
Additional reporting by Kaye Wiggins in London
Couche-Tard CEO would love second shot at Carrefour deal – theglobeandmail.com
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