Friday, October 31st9.3°C

Space tourism: Virgin Galactic has big backers, ambitious dreams, celebrity passengers

The explosion of a Virgin Galactic rocket ship during a test flight over California has almost certainly dashed founder Richard Branson's goal of starting passenger flights next spring. Information about Virgin Galactic, its backers, and its goals:


Virgin Galactic is a joint venture between Branson's Virgin Group Ltd. and Aabar Investments PJS, a state-backed investment firm in the oil-rich United Arab Emirates. Aabar said it paid about $280 million for a 32 per cent stake in Virgin Galactic's holding company in exchange for the chance to launch tourism and research flights from the Emirates.


Branson and Virgin Galactic have repeatedly stated ambitious goals for the beginning of suborbital passenger flights, followed by delays in developing and testing the rocket ship. In 2008, Branson predicted that the maiden flight would come within 18 months. In interviews last month, Branson said the first space flight could happen before Christmas and that he and his son hoped to fly on the first passenger flight, perhaps in March. That goal, too, seems unlikely after Friday's accident, which happened minutes after SpaceShipTwo separated from the plane that carried it high into the atmosphere. Galactic said late Friday the cause was unknown.


The spacecraft was built by Scaled Composites, a firm founded by famous aerospace designer Burt Rutan. Virgin Galactic said Friday's test flight marked the 55th time that SpaceShipTwo had flown on its own and that WhiteKnightTwo had flown 173 times. Company officials said the long development and testing period was all for safety. "Customers are eager to fly, but they know we'll fly them when we feel ready," the CEO, George Whitesides, said in September.


Seats on Virgin Galactic cost $250,000 each. The company said this month that it has signed up about 700 passengers who have put down more than $80 million in deposits. Galactic hopes to eventually sell point-to-point flights similar to airlines — New York to Australia in 40 minutes, for example, Branson suggested.


As Galactic's chief salesman, the 64-year-old, shaggy-haired Branson is among the world's most recognizable and flamboyant entrepreneurs. He owns a private island in the Caribbean, and his Virgin Group has holdings around the globe in airlines, entertainment, telecommunications and other industries. Galactic's passenger list is dotted with celebrities, including actor Ashton Kutcher and singer Justin Bieber.

The Canadian Press

TransForce yet to close Contrans acquisition, but looking to shed truck business

MONTREAL - TransForce has yet to close the acquisition of Ontario-based Contrans, but Canada's largest trucking and logistics companies is already considering spinning off its truckload operations as early as next year, likely followed by its waste division.

"I'm working on both things at the same time," CEO Alain Bedard said Friday.

TransForce (TSX:TFI) said it has received sufficient shareholder support for a $495-million cash takeover offer for the Contrans trucking group but continues to await a response from Canadian competition authorities.

The Montreal-based company said it has been in discussions with the Competition Bureau and expects the 30-day waiting period will expire on Wednesday. As a result, TransForce has extended the offer deadline to Nov. 11.

TransForce said it has received shares or offers of support representing 70 per cent of the Contrans class A shares and all of the multiple-vote class B shares, providing more than the two-thirds majority required under the offer.

After closing, TransForce plans to focus on reducing debt but not issue more shares.

Shareholders of Woodstock-based Contrans Group (TSX:CSS) would receive $15 a share, including $14.60 cash from TransForce and a special dividend of 40 cents per share from Contrans.

TransForce wants to focus its efforts on developing its package and courier, small truckload and logistics business, which manages the flow of parcels from warehouse and other sources.

To do that it wants to shed the truckload and waste operations, which together account for more than one-third of its overall revenues and about half of its pre-tax operating profits. Truckload refers to transport services involving large trucks and trailers.

Bedard said the company is looking at various options including spinning them off, selling them or doing a"vend-in" — similar to a reverse takeover where it gets lots of stock in the other company. The tax implications are very different for each option, he told analysts.

He said trucking is a good business, but it needs to increase its size and reach, something that will be helped by Contrans and recent acquisitions in the United States.

David Tyerman of Canaccord Genuity said the strategy of buying Contrans only to sell the larger trucking business seems odd, but makes sense.

"They needed to have more size to really be able to do this better," he said in an interview.

Bedard said the priority is to address the truckload business, possibly in 2015, followed perhaps a couple years later by the waste division, which includes landfills.

"Waste is a diamond in the rough...(but) it's not valued properly."

He foresees TransForce becoming in three years "a huge cash flow machine" with that focuses on three core areas of operation.

In the meantime, TransForce is growing its e-commerce business by partnering with Google and an unnamed U.S. national retailer to provide same-day deliveries in some major U.S. markets.

"We're going to do great things in 2015 here in the U.S. and that's the area that we're focusing," Bedard said from Dallas, Tex.

Walter Spracklin of RBC Capital Markets said he expects 2015 to be a "watershed" year for the company. "After completing about $1 billion in acquisitions this year, 2015 will be a year of integration and debt repayment," he wrote in a report.

TransForce reported Thursday that its third-quarter net income fell to $41.5 million or 41 cents a share from $44 million or 45 cents in the year-earlier period. Its revenue for the three months ended Sept. 30 soared to $981.1 million from $775.1 million a year earlier, mainly because of acquisitions.

Contrans shares closed Friday at $14.93 while shares of Montreal-based TransForce closed up 17 cents at $27.56.

The Canadian Press

Former Calgary Stampeders offensive lineman John Forzani dies at 67

CALGARY - Calgary lost a prominent businessman while the Stampeders lost a former offensive lineman. But John Hufnagel lost a friend.

John Forzani, who spent six seasons with the CFL club and later built a chain of successful sporting goods stores, died Friday. He was 67.

The Stampeders confirmed Forzani's passing in a statement Friday morning. The Calgary native had been on life support in a California hospital after suffering a heart attack.

"John was a teammate, a friend, one of the funniest guys I ever knew," said Hufnagel, the Stampeders' head coach and general manager. "John was instrumental, along with Ted Hellard, Doug Mitchell and Bob Vickers, in my hiring in 2008, which I'm very appreciative of.

"Even though John is not with us, his legacy and his mark that he made in the sports world and in the business world in the community of Calgary will survive."

The Stampeders have become a model franchise under Hufnagel, finishing atop the West Division four times since his return. Calgary has reached the Grey Cup twice in that time, winning in '08.

Hufnagel has amassed a superb 87-36-1 record as Calgary's head coach heading into Saturday's home game against Winnipeg. The Stampeders have the CFL's best record this season at 14-2.

"He was pivotal in getting coach Hufnagel up here and for that reason alone, he's directly contributed to our success on the field," Stampeders running back Jon Cornish — the CFL's outstanding player last year — said of Forzani. "He's definitely a guy who took some of his football habit and kept on living with them throughout his life.

"He's always worked hard and played hard."

After attending Utah State, Forzani won a Grey Cup in 1971 in his first season with Calgary. He played alongside his brothers Tom and Joe.

Forzani's nephew, Johnny, was also with the club from 2010 to '12.

"John's passion for community and football were singularly essential in the revival of the Stamps' important role in the community," Stampeders chairman Ken King said in a statement. "It is one, among many, of his great legacies. I will miss him dearly."

Commissioner Mark Cohon said the CFL family was saddened by the news of Forzani's passing.

"As a league, we are immensely proud to say he was one of ours," he said in a statement. "As individuals, we are so grateful to have known him. On the field, John was a Grey Cup champion. In business, he epitomized the entrepreneurial spirit. In the community, he supported causes he believed in. And as a member of our board of governors, and an owner of the Calgary Stampeders, he did much to move the CFL forward.

"Gregarious and outgoing, John was a joy to be around. He not only demonstrated to us all how to reach lofty goals; he showed us how to enjoy the journey as well. Our thoughts are with his family. Like all of his other friends across the country, we will miss him, and remember him."

After retiring from football, Forzani built his sporting goods business, which had over 500 outlets. That company, Forzani Group Ltd, was sold in 2011 to Canadian Tire, which renamed it FGL Sports.

Forzani also established Calgary's annual Mother's Day Run and Walk in 1977, a fundraising event which continues to this day. In 2000, the Forzani Foundation was established to assist charities including Canadian amateur athletics.

Forzani was also part of a local group that purchased the Stampeders in '05. The Calgary Flames became majority owners of the football franchise in '12 but Forzani retained a minority stake and was the team's co-chair in 2013.

Upon the arrival of the ownership group that included Forzani, the Stampeders went from a 4-14 team in 2004 to 11-7 the following season. The club has posted a winning record in nine of 10 seasons since.

"I called him uncle John," veteran Stampeders receiver Nik Lewis said. "He was part of the group that came in here and turned things around.

"Being here in '04 and seeing how bad we were as a team and the ownership group was always up in the air and you didn't know what was going on, to move into 2005 when Ted Hellard and John Forzani and the rest of the owners came in, you could just see the difference.

"There's not a lot of loyalty in professional football, but when you've got a guy like John, you really look at him and he's going to tell you what it is and how it is and you can respect it and you just love him for it."

Club president Gordon Norrie said Forzani will forever be a key figure in the CFL franchise's history.

"He was certainly instrumental in turning this football club around to the point you see how successful it is today," Norrie said. "He was a great contributor to the community of Calgary too with the Forzani foundation, a significant businessman behind the Forzani group. It's going to be a tough day for all of us.

"He was the funniest man I met in my life and he had time for everybody all the time. A very uplifting individual."

Forzani is survived by his wife Linda and grown children Mike and Jodi. Funeral arrangements were not immediately known.

The Canadian Press

Most actively traded companies on the TSX

TORONTO - Some of the most active companies traded Friday on the Toronto Stock Exchange:

Toronto Stock Exchange (14,613.32, up 154.63 points):

Coro Mining Corp. (TSX:COP). Miner. Unchanged at three cents on 13.5 million shares.

U3O8 Corp. (TSX:UWE). Miner. Up one cent, or 28.57 per cent, to 4.5 cents on 11.5 million shares.

Bombardier Inc. (TSX:BBD.B). Aerospace. Down 10 cents, or 2.62 per cent, to $3.71 on 10.3 million shares.

Kinross Gold Corp. (TSX:K). Miner. Down 35 cents, or 12.68 per cent, to $2.41 on 9.6 million shares.

Yamana Gold Inc. (TSX:YRI). Miner. Down 50 cents, or 10.02 per cent, to $4.49 on 8.9 million shares.

Semafo Inc. (TSX:SMF). Miner. Down 21 cents, or 7.09 per cent, to $2.75 on 6.9 million shares.

Companies reporting major news:

Imperial Oil (TSX:IMO). Oil and gas. Up $2.42, or 4.67 per cent, to $54.23 on 923,541 shares. The company reported a 45 per cent jump in quarterly profit to $936 million or $1.10 a share, up from $647 million, or 76 cents per share, a year earlier. Revenue rose 12.4 per cent to $9.66 billion.

The Canadian Press

Report: Seniors increasingly struggling with debt, bankruptcy

OTTAWA - The country's growing cohort of senior citizens is carrying more debt into retirement and increasingly declaring bankruptcy, says a report prepared for the federal government.

The need to support dependent adult children who are taking longer to find work is contributing to the trend, says the study conducted for the Financial Consumer Agency of Canada.

The report, prepared by market research firm The Strategic Council, also said declining numbers of seniors are in registered pension plans. There's also evidence of growing income inequality among those 65 and older.

"Demographic, economic and even behavioural trends suggest that the current landscape for Canadians as they head into their retirement years is challenging," the study found.

Seniors are also struggling with so-called financial literacy, experiencing difficulties staying on top of their financial affairs with advancing age, the report says. They are also far more vulnerable to financial scams.

The report recommended that financial literacy strategies should take into account ageism, the stigmatization of older people, health status and elder abuse.

Many seniors are unfamiliar with the online world, which contributes to their struggles to manage finances, the study also found.

"The issue of digital literacy was raised a number of times by several experts as being the single largest obstacle or barrier for many seniors in terms of improving their financial literacy and their financial management skills," it read.

Susan Eng, vice-president for advocacy at CARP, said the study reflects what her organization is tackling.

"Not only do seniors not have enough money saved for their own retirements, but as they try to invest for their retirement, they are often vulnerable to shark activity by financial advisers," she said.

"They are losing their life savings, and that concerns us the most."

The number of Canadians working past the age of 65 has almost doubled over the last seven years. There are now close to 600,000 seniors still in the workforce.

Eng says governments of all levels must do more to encourage registered pension plans, and to crack down on financial predators who target seniors.

Follow Lee-Anne Goodman on Twitter @leeanne25

The Canadian Press

Stock markets advance as Bank of Japan seeks to fire up world's No. 3 economy

TORONTO - The Toronto stock market ran ahead sharply Friday on relief that another major central bank is stepping up to help keep the global economic recovery on track.

The S&P/TSX composite index jumped 154.63 points to 14,613.32 after the Bank of Japan unexpectedly expanded a key stimulus program.

It will increase its purchases of government bonds and other assets in the world's third-largest economy by between 10 trillion yen and 20 trillion yen (US$91 billion to $181 billion) to about 80 trillion yen (US$725 billion) in total annually.

Bank governor Haruhiko Kuroda said the increase was required to prevent a reversal into a "deflationary mindset" that the country's leaders contend has held back growth for many years. The bank judged the move necessary in the wake of weakening consumer demand following a consumption tax hike and the recent substantial decline in oil prices, which have been exerting downward pressure on inflation.

"At the very least it says central bankers are going to do everything they can to try to get growth going," said Philip Petursson, director of institutional equities at Manulife Asset Management.

"And that’s what it seems like in Japan — this is everything and the kitchen sink."

The Canadian dollar fell 0.6 of a cent to 88.72 cents US as Statistics Canada reported that gross domestic product dipped 0.1 per cent in August against the flat showing that economists had expected.

In New York, the Dow Jones industrials shot up 194.9 points to 17,390.32, and the S&P 500 index gained 23.4 points to 2,018.05 — both indexes ending the session at new highs — while the Nasdaq climbed 64.6 points to 4,630.74.

The move by the Japanese central bank comes at a point when the U.S. Federal Reserve is winding up its marquee stimulus program. It announced Wednesday that quantitative easing would end at the end of October.

Meanwhile, the TSX found support from the financial, tech and industrials sectors.

The energy sector was also positive, up 2.1 per cent even as December crude fell 58 cents to US$80.54 a barrel.

Imperial Oil (TSX:IMO) reported a 45 per cent jump in quarterly profit to $936 million or $1.10 a share, up from $647 million, or 76 cents per share, a year earlier. Revenue rose 12.4 per cent to $9.66 billion and its shares gained $2.42 to $54.23.

The base metals sector also gained 2.1 per cent as December copper dipped two cents to US$3.05 a pound.

Gold prices have been a major casualty of the Fed move to end QE. That is because the program of massive bond purchases had elevated inflation concerns. Traders had bought into gold as an inflation hedge but the program is now wrapping up and inflation is tame in most parts of the world.

"When you are absent inflation in any meaningful way, it's a real challenge to hold onto what has long been known as the best inflation hedge," added Petursson. "So the outlook for gold and gold companies continues to be negative."

Also working against gold and other commodity prices has been a higher U.S. dollar. A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals, which are dollar-denominated.

The Toronto gold sector is down about 15 per cent this week alone, with December bullion falling $27 on Friday to US$1,171.60 an ounce.

The TSX ended last week ahead 69 points or 0.5 per cent as stocks continue to claw back some of the losses racked up during a sell-off that peaked mid-October.

The Dow industrials fared much better, gaining 585 points or 3.5 per cent.

The Canadian Press

Canadian dollar lower amid subpar economic performance during August

TORONTO - The Canadian dollar dropped almost two-thirds of a U.S. cent Friday as economic growth for August missed already modest expectations. The loonie was also under pressure amid a move by the Bank of Japan to stimulate the world's third-largest economy.

The loonie was down 0.6 of a cent to 88.72 cents US as Statistics Canada reported that gross domestic product dipped 0.1 per cent in August against a flat showing that economists had expected.

TD Economics said that the report was "consistent with real GDP growth tracking around two per cent annualized for the third quarter."

That represents a marked slowdown from the 3.1 per cent increase recorded in the second quarter "but it's still respectable," TD said.

Meanwhile, markets were surprised overnight as the Bank of Japan expanded a key stimulus program.

The bank will increase its purchases of government bonds and other assets by between 10 trillion yen and 20 trillion yen (US$91 billion to $181 billion) to about 80 trillion yen (US$725 billion) in total annually.

Bank governor Haruhiko Kuroda said the increase was required to prevent a reversal into a "deflationary mindset" that the country's leaders contend has stymied growth for many years. The bank judged the move necessary in the wake of weakening consumer demand following a consumption tax hike and the recent substantial decline in oil prices, which have been exerting downward pressure on inflation.

The move by the Japanese central bank comes at a point when the U.S. Federal Reserve is winding up its marquee stimulus program. The Fed's quantitative easing program has been a fixture since the 2008 financial crisis.

It announced Wednesday that the third such QE exercise would end at the end of October.

Gold prices have been a major casualty of the Fed move. That is because the QE program of massive bond purchases had elevated inflation concerns. Traders had bought into gold as an inflation hedge but the program is now wrapping up and inflation is tame in most parts of the world.

On Friday, the December bullion contract dropped $27 to US$1,171.60 an ounce on top of a $26 slide Thursday.

Also working against gold and other commodity prices has been a U.S. dollar that strengthened following the Fed's decision and moved higher against other currencies Friday following the Bank of Japan announcement. A stronger greenback makes it more expensive for holders of other currencies to buy oil and metals, which are dollar-denominated.

December crude oil fell 58 cents to US$80.54 a barrel and December copper added to Thursday's four-cent decline, down two cents at US$3.05 a pound.

At the same time, currency analysts are pointing out that the Bank of Japan move has the potential to spark a currency war.

The yen fell sharply following the Bank of Japan announcement and "a weaker yen is clearly part of the (bank's) strategy," said Camilla Sutton, chief FX Strategist, managing director, Scotiabank Global Banking and Markets.

"A weaker yen has significant implications for the other Asian currencies in the region (and) a weaker yen, combined with a weaker euro, have negative growth implications for the U.S."

The Canadian Press

From swoon to surge: US stocks reach record levels after Japan's surprise economic stimulus

NEW YORK, N.Y. - For stock investors, there was no shortage of drama in October.

Stocks started the month modestly below a record high, only to cascade to their worst slump in two years. But after flirting with a correction, or a 10 per cent drop, the U.S. market rebounded and closed at all-time highs on the last day of the month.

All told, U.S. stocks ended October solidly higher, up 2.3 per cent. The Dow Jones industrial average capped the rally by rising 195.10 points, or 1.1 per cent, to end at 17,390.52 on Friday. The Standard & Poor's 500 rose 23.40 points, or 1.2 per cent, to 2,018.05 and the Nasdaq composite added 64.60 points, or 1.4 per cent, to 4,630.74.

Both the Dow and the S&P 500 closed at record highs.

It's a remarkable turn given the month's volatility, which at times approached levels from the 2008 financial crisis. Then again, the month has an unfortunate history for unsettling moves, with the stock market crashes of 1929 and 1987 both happening in October.

This October, the market's seesaw path was driven by fears that Europe's economy was slipping back into a recession, worries about plunging oil prices and concerns of possible weakness in the U.S. economy. Oh, and don't forget Ebola. Those anxieties sent the market, for the most part, straight down for two weeks.

The nadir came on Oct. 15, when the S&P 500 came with a hair's breadth of going into a correction. Investors had suspected such a drop. The last one occurred in late 2011, and historically corrections happen every 18 months or so.

But just after the market came close to going into a correction, it bounced right back. Strong U.S. corporate earnings were the primary driver of the rebound as well as signs that central banks in Japan and Europe were going to do all they could to stop their economies from dragging everyone else down with them.

"I don't think it's a surprise that we came close to a correction. We've been expecting one for a while. I think the bigger surprise has been how we rip-roared all the way back up," said Bob Doll, chief equity strategist at Nuveen Asset Management. "When you hit someone over their head with a hammer, you don't expect them to get up immediately."

U.S. companies have been, for the most part, reporting strong quarterly results the last two weeks. Corporate profits are up 7.3 per cent from a year ago, according to FactSet, compared with the 4.5 per cent investors had expected at the beginning of the month. And any worries about the U.S. economy earlier in the month evaporated as the data rolled in, mostly recently Thursday's data showing the U.S. economy grew at a 3.5 per cent pace last quarter.

Friday's gains were driven by the Bank of Japan, which surprised investors by announcing it would increase its bond and asset purchases by 10 trillion yen to 20 trillion yen ($90.7 billion to $181.3 billion) to about 80 trillion yen ($725 billion) annually. The announcement came after data showed that the world's third-largest economy remains in the doldrums, with household spending dropping and unemployment ticking up.

Japan's move comes only two days after the U.S. Federal Reserve brought an end to its own bond-buying program. Investors have been hopeful that the European Central Bank might also start buying bonds to stimulate that region's economy by keeping interest rates low and injecting cash into the financial system. That form of stimulus is called quantitative easing, also known among investors as "QE."

"The Japanese central bank has taken the QE baton from the Fed, and equity traders couldn't be happier," said David Madden, market analyst at IG.

Japan's stock market rose 4.8 per cent to the highest level since 2007.

The Japanese currency weakened dramatically following the Bank of Japan's announcement. The yen slumped 2.6 per cent against the dollar to 112 yen. The yen is trading at the lowest level in more than five years. Japanese companies typically like a weak Japanese yen because it makes their exported goods cheaper abroad.

European stock markets rose broadly following the Bank of Japan's announcement on hopes that the ECB could be tempted to follow Japan's lead in stepping up stimulus measures. However, few think anything will be announced at the ECB's next policy meeting next Thursday.

"The willingness of the Bank of Japan to ease further in the fight against deflation will encourage those who think the ECB should be doing the same," said Julian Jessop, chief global economist at Capital Economics.

Britain's FTSE 100 rose 1.3 per cent. France's CAC 40 jumped 2.2 per cent and Germany's DAX climbed 2.3 per cent.

In other markets, the price of U.S. benchmark crude oil fell 58 cents to $80.54 a barrel in New York as increasing production from OPEC members added to already high global supplies of oil.

Brent crude, used to price oil in international markets, dipped 38 cents to $85.86 in London. In other energy futures trading on the NYMEX, wholesale gasoline fell 2.6 cents to close at $2.169 a gallon, heating oil fell was flat at $2.515 a gallon and natural gas rose 4.6 cents to close at $3.873 per 1,000 cubic feet.

Bond prices fell. The yield on the U.S. 10-year Treasury note rose to 2.34 per cent from 2.31 per cent Thursday.

In metals trading, the price of gold fell $27 to $1,171.60 an ounce. Silver fell 31 cents to $16.11 an ounce and copper fell 2 cents to $3.05 a pound.

The Canadian Press

Lower credit card fees for retailers won't help consumers, critics say

OTTAWA - An agreement to cut the fees charged to merchants for accepting credit card payments likely won't save consumers money, say Canada's banks and opposition critics.

The non-binding deal, now expected to be unveiled by the Harper government next week, would see so-called interchange fees cut, and then effectively capped, for an extended period.

The Conservatives pledged in their budget of last February to reduce credit card processing fees as part of their consumer-first agenda.

But the Canadian Bankers Association, which was not directly involved in discussions, points to a study from last year that found savings were not passed on to consumers after Australia imposed a cap on interchange fees in 2003.

And NDP consumer critic Glenn Thibeault says the reduction in processing fees is so slight that consumers probably won't feel the impact.

"We still have the highest (interchange) fees in the world," and likely will even after the cuts are announced, Thibeault said, renewing his call for mandatory regulations.

"The only way the businesses can recoup the costs from these high fees is by increasing the price on goods," he said.

"If we're only seeing a 10 per cent reduction, that 10 per cent reduction might not be passed down onto the consumers because small business owners are still being gouged."

The Retail Council of Canada, on the other hand, said a study last year showed a majority of the savings from recent debit card fee reductions in the U.S. were passed on by merchants to their customers.

There are roughly 76 million credit cards issued in Canada, more than five per household, which are used to pay for about half of the overall purchases made by Canadians.

Sources familiar with the negotiations say the agreement reached this week is voluntary.

Not that the key players — Visa and Mastercard — had much choice but to make cuts, given the backlash from consumers and retailers over recent increases in swipe fees, says Karl Littler of the Retail Council of Canada.

"This is voluntary in the way that a shotgun wedding is voluntary," said Littler, the council's vice-president of provincial government relations and strategic issues.

"Banks and networks don't offer up fee cuts out of a wellspring of the goodness of their hearts. This is something that has been reluctantly agreed to by the (interchange) networks."

The agreement also upholds credit card company rules forbidding retailers from imposing surcharges on customers who use premium cards.

But it's expected those rules will be "simplified," said one source speaking on condition of anonymity because they weren't yet authorized to discuss the matter publicly.

Critics have said allowing retailers to recoup premium card fees by surcharging has failed elsewhere, particularly in Australia where strict regulations were adopted over a decade ago, leading to a variety of surcharges that served to confuse consumers who then accused retailers of gouging them.

The fee reductions, expected to be detailed by the credit card companies following a government announcement, represent a shave off the fees charged to an estimated 700,000 retailers and other businesses across the country, said one source close to the negotiations.

Merchants currently pay fees of 1.5 to 3 per cent on each credit card transaction with the higher fees charged when customers use so-called premium cards.

And they add up. The Competition Bureau estimated in 2010 that swipe fees collected in Canada totalled $5 billion annually, although more recently analysts have estimated that figure is closer to $7 billion.

In Australia, the benchmark interchange fee is capped at 0.5 per cent while it sits below 1.0 per cent in the U.K. and Switzerland.

Cuts to fees in Canada, along with a capping of interchange rates, is a move that merchants will likely be willing to accept, if for nothing else but the cost stability a cap would create, said Littler.

"It's a significant move," he acknowledged.

"There's no question that the government has wrestled with what is a complex issue, and they've used their best efforts to bring the parties to the table and meet that commitment in Budget 2014, so we are very appreciative of that."

The agreement follows months of intricate talks balancing the government's stated desire for a rate cut with legal and competitive issues among the major credit issuing firms.

The Canadian Federation of Independent Businesses said it's pleased that at least some relief is on the horizon.

"CFIB is encouraged that it appears we have an industry-led solution to this critical issue," federation president Dan Kelly said in a statement.

"We hope these changes will bring about an end to the ‘arms race’ of ever-higher tiers of premium cards."

Some merchants encourage customers to use cash or debit cards in order the cut the cost of doing business.

But many of those firms are reluctant to offer discounts to customers who avoid using credit cards and consumer advocates say cash-only buyers end up subsidizing the reward points collected by those who favour charging their purchases to plastic.

Follow @tpedwell on Twitter

The Canadian Press

Air Canada pilots ratify 10-year deal with 20% wage increase, signing bonus

MONTREAL - Air Canada's pilots have ratified a 10-year contract that includes a large signing bonus, wage increases of more than 20 per cent over the life of the pact and an improved profit-sharing formula that Canada's largest airline says provides stability to support growth.

Some of the promised benefits are contingent on the carrier achieving its profit and growth targets, but union president Capt. Craig Blandford said those goals should be achievable.

"It's an investment in the airline's future," Blandford said Friday after the deal was announced.

"If they follow through on their vision and their plan for growth, which is not outrageous, then we've given 10 years of labour peace."

The agreement includes a $10,000 signing bonus, two per cent annual wage increases, higher starting pay, improved pension benefits and improved profit sharing, Blandford said in an interview.

The collective agreement, which expires in September 2024, includes provisions to resolve disputes that may arise every three years during negotiations on specific items. If the airline meets its growth targets, pilots give up the right to strike by agreeing to send disagreements to mediation or arbitration.

If the targets aren't met, pilots regain their full rights under the Canada Labour Code, including the right to strike.

Blandford said he's hoping that a new relationship developed between the airline and its highest-paid employee group will ensure that disruptions are a "non-starter."

"We've just come up with this deal without any outside pressure or help so we're hoping we can carry that through in the next 10 years — that kind of relationship of mutual respect for each other when we sit down and talk."

The deal is the first with pilots since 1996 to be achieved without strike or arbitration.

Air Canada's last round of labour talks were among the most acrimonious in its history. They included a 12-hour illegal walkout by baggage handlers and ground staff that disrupted flights, the tabling of a back-to-work bill in Parliament and a final-offer selection in which an arbitrator sided with the airline.

That coloured the talks this time and was a catalyst to reaching an early agreement, Blandford said.

The pilots' union said its 3,000 members voted 84 per cent in favour of the deal, with 92 per cent of members voting.

Air Canada (TSX.AC.B) called it a landmark deal that is tangible evidence of a culture shift.

"The new agreement provides greater stability and long-term cost certainty as well as a framework for a strong partnership with our pilots," CEO Calin Rovinescu said in a statement.

He said it also provides increased flexibility for service provided by its regional network partners and the renewal of the fleet at low-cost subsidiary Rouge.

In addition to a signing bonus and general annual wage increases, pilots will receive two per cent cash bonuses in both 2016 and 2017.

Starting wages will increase about three per cent to $50,000 and reach $62,000 by the fourth year. These wages will apply to pilots at both Air Canada and Rouge. More senior Rouge pilots will earn less than mainline pilots, but have higher overtime rates, fly more hours and have the ability to move more quickly to captain. An Air Canada Boeing 777 captain with 12 years experience can earn up to nearly $300,000 a year.

The agreement also introduces a maternity benefit that tops up employment insurance benefits. Air Canada has 174 women pilots.

And it includes a new profit sharing plan that mirrors the one that applies to upper management. The pilots as a group are eligible for between four and eight per cent of the pilots total payroll if the airline reaches its target of achieving 15 per cent EBITDAR (earnings before interest, taxes, depreciation, amortization and airplane rent).

The union has developed an internal mechanism to divide among pilots up to $38 million that can be earned annually based on the current payroll of $475 million.

Rouge continues to be limited to 50 aircraft, but it can alter the mix of narrowbody and widebody planes and use other types of aircraft.

Talks began in June after the airline approached the union to renew a five-year retroactive contract imposed by an arbitrator in 2012. The contract was set to expire in April 2016.

The airline will now turn its efforts on reaching collective agreements next year with other unions representing flight attendants, mechanics, call centre and airport workers.

Blandford said the pilots hope other unions will also strive to reach deals that give the airline room to grow and be profitable. "If that's suitable for their members then I don't see any reason why they wouldn't follow that path," he said.

Chris Murray of AltaCorp Capital called the agreement "historic" that will make Air Canada more cost competitive.

"In the near-term, we believe (it)...should offer some comfort that new contracts with other groups are achievable during what should be a much more conventional bargaining process than what occurred during the last set of negotiations," he wrote in a report.

On the Toronto Stock Exchange, Air Canada's shares were up 30 cents or 3.28 per cent at $9.46 Friday afternoon.

Follow @RossMarowits on Twitter

The Canadian Press

US consumer spending retreats in September, first setback in 8 months

WASHINGTON - U.S. consumer cut spending in September for the first time in eight months, as incomes grew at the slowest pace this year. The figures underscore nagging economic soft spots that are expected to ease in the coming months.

Consumer spending slipped 0.2 per cent in September, the Commerce Department reported Friday, the weakest performance since an identical decline in January. Income edged up 0.2 per cent in September in the smallest monthly gain since a flat reading last December.

Shoppers appeared to take a breather after a big spending spree in August, which lifted consumer spending 0.5 per cent. Economists say September's downturn shouldn't last, especially amid a strengthening job market and a growing economy.

Spending, which accounts for 70 per cent of economic activity, has fallen only three times since the recession ended in 2009.

Economists blamed the weak September spending figure on falling energy prices and slower auto sales after a surge the previous month.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said he expects consumer spending to accelerate to a 2.5 per cent rate in the current October-December quarter, faster than the 1.8 per cent spending gain in the third quarter.

"The next couple of months will see spending pick up strongly as people start to spend their windfall from falling gas prices," Shepherdson said.

In September, spending on durable goods such as autos dropped a sizable 2 per cent after a 2.1 per cent jump in August. Spending on nondurable goods such as clothing, food and gasoline, was down 0.3 per cent, while spending on services such as doctor's visits and utilities posted a modest 0.2 per cent rise.

Lower prices at the pump mean consumers will have more to spend on other items.

Another reason for optimism is continued strong job growth, which pushed the unemployment rate down to a six-year low of 5.9 per cent in September. More people working means higher incomes and more fuel to drive consumer spending.

The small rise in income and the decline in spending in September resulted in a slight increase in the saving rate.

Savings as a percentage of after-tax income rose to 5.6 per cent in September, up from 5.4 per cent in August. The saving rate averaged 4.9 per cent in 2013, down from 7.2 per cent in 2012. That had been the highest level in nearly two decades as Americans worked to boost savings following the 2007-2009 recession.

Inflation as measured by a gauge tied to consumer spending edged up a slight 0.1 per cent in September, with prices up just 1.4 per cent over the last 12 months. That is well below the 2 per cent target for annual price increases which the Federal Reserve considers an optimal level for inflation.

The government reported Thursday that the overall economy, as measured by the gross domestic product, grew at an annual rate of 3.5 per cent in the July-September quarter. Analysts believe after five years of sub-par economic growth, the economy has finally accelerated, helped by solid employment growth.

Economists project growth of 3 per cent in the current quarter, helped by solid consumer spending. They are also forecasting 3-per cent growth in 2015, which would be the strongest level since 2005, two years before the start of the Great Recession.

The improving economy prompted the Federal Reserve this week to end its third round of bond purchases, which have pushed the central bank's balance sheet up by more than $3 trillion over the past six years. The Fed bought the bonds as a way to put downward pressure on long-term interest rates and provide an extra boost to the economy after it had slashed its key short-term rate to a record low near zero.

The Canadian Press

Claude Resources ordered to pay $172K for fuel spill in northern Saskatchewan

LA RONGE, Sask. - Claude Resources has been ordered to pay a penalty of $172,000 for a fuel spill almost two years ago at its Seabee gold mine in northern Saskatchewan.

The mining company recently pleaded guilty to one charge under the federal Fisheries Act and one charge under Saskatchewan's environmental legislation.

The charges were laid after 24,000 litres of diesel fuel leaked from a storage tank at the mine, which is 125 kilometres northeast of La Ronge.

An investigation found that the tank, which was 35 metres from the north shore of Laonil (LYE'-oh-nihl) Lake, had not been serviced by a certified installer.

The fuel spilled when a connection point failed.

Enforcement officials concluded that the spill was preventable and Claude Resources was charged.

The spill affected an area along the bank and shoreline, and had to be contained within a boom on the lake.

"It is very important that owners and operators of fuel storage tanks in our province abide by the regulations under the Environmental Management and Protection Act," Ken Aube of Saskatchewan's Environment Ministry said in a release Friday.

The Canadian Press

Imperial profits rise during third quarter on strong refinery performance

CALGARY - Imperial Oil Ltd. (TSX:IMO) posted a 45 per cent increase in third-quarter profits thanks to strong performance in its refining and chemical business.

The major oil producer and refiner, majority owned by ExxonMobil Corp., said net income for the third quarter was $936 million, or $1.10 per share, beating the average analyst estimate of 98 cents, according to Thomson Reuters.

During the same quarter a year earlier, profits were $647 million, or 76 cents per share.

The downstream part of Imperial's business, which includes refineries in Alberta and Ontario, had profits of $343 million versus just $46 million a year earlier. The refineries ran more reliably and benefited from cheaper crude.

Imperial's chemical business had a record quarter with profits of $66 million, up from $39 million a year earlier.

The upstream side of the business, which includes vast oilsands operations around Fort McMurray and Cold Lake, Alta., had weaker performance for some of the same reasons the downstream thrived.

The impact of lower prices for both synthetic crude oil, and the bitumen from which it's derived, was about $200 million. Higher royalties and operating costs were also a drag. Overall, upstream net income was $532 million, 12 per cent lower than a year earlier.

Bitumen production from the Kearl oilsands mine averaged 78,000 barrels per day during the quarter. Without two weeks of planned maintenance work factored in, production would have averaged 92,000 barrels per day. The mine's planned capacity is for 110,000 barrels per day.

CIBC World Markets analyst Arthur Grayfer said Kearl performed better than expected.

"This is encouraging and suggests the company is on track to consistently achieve capacity around year end," he wrote in a note to clients.

An $8.9-billion expansion project that would add another 110,000 barrels per day to Kearl is 97 per cent complete. It's currently tracking ahead of its schedule of starting up in late 2015.

In August, Imperial and its partner Kinder Morgan announced they're doubling the capacity of their planned Edmonton rail terminal to 210,000 barrels per day. The terminal would enable Alberta crude to get to market on trains as major pipeline proposals remain mired by delays. It's on track to start up early next year.

Imperial shares rose more than three per cent to $53.42 in late morning trading on the Toronto Stock Exchange.

Follow @LaurenKrugel on Twitter

The Canadian Press

Feds closer to black ink as deficit slips to $300 million in August

OTTAWA - The federal government inched closer to a budget surplus in August as the deficit slipped to about $300 million for the month, down from $2 billion in August 2013.

In its monthly Fiscal Monitor, the department said the deficit for the April to August period shrank to $1.1 billion, compared with $6.6 billion in the same period last year.

For August alone, revenues were down $7 million, as increases in personal income tax and GST were offset by a decrease in corporate income tax revenues.

Program expenses decreased by $1.6 billion, or 8.4 per cent, largely reflecting a decrease in direct program expenses.

Personal income tax revenues were up by $700 million for the month, but corporate tax revenues were down by $1.2 billion.

Excise taxes and duties were up $500 million, or 14.3 per cent, mostly due to a $400 million jump in GST revenues. Revenues from EI premiums rose by $100 million, reflecting higher earnings.

Transfers to people, including elderly, EI and children's benefits increased by $100 million, or 2.4 per cent.

Transfers to other levels of government rose by $200 million.

Direct program expenses were down $2 billion.

Public debt charges fell by $0.1 billion, or 4.9 per cent.

For the April-August period, total revenues rose by $4.4 billion or 4.2 per cent, to $108.2 billion.

Personal income taxes for the period totalled $53.2 billion, up from $50.9 billion in 2013. Corporate income tax brought in $12.3 billion, compared with $11.4 billion in 2013.

The Canadian Press

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