JetBlue latest airline to retreat from blocking seats due to pandemic

JetBlue ends seat blocking

The days of airlines blocking seats to make passengers feel safer about flying during the pandemic are coming closer to an end.

JetBlue is the latest to indicate it is rethinking the issue. A spokesman for the carrier said Thursday that JetBlue will reduce the number of seats it blocks after Dec. 1 to accommodate families travelling together over the holidays.

Southwest Airlines said last week that it will stop limiting the number of seats it fills after Dec. 1. Delta Air Lines and Alaska Airlines say they will lift caps on seating early next year.

The pandemic and resulting border restrictions caused U.S. air travel to plunge 95% in April. Some airlines promised to block middle seats to create more distance between passengers. Others, notably United Airlines and American Airlines, did not, arguing that ventilation systems and air filters made planes safe without social distancing.

Since then, all the airlines have reported a slow rise in the number of passengers, although U.S. travel is still down 65% from a year ago.

“When no one is flying, and airlines aren’t hitting the sales cap anyway, they can promote blocked middle seats easily,” said Gary Leff, who runs the View from the Wing travel site. “But as travel slowly recovers, there are more and more flights on which it costs airlines real money in lost sales.”

JetBlue spokesman Derek Dombrowski said the airline will keep flights under 70% full through Dec. 1, and will keep some limits through the holidays, “but what that capacity cap will be has yet to be determined.”

Dombrowski said there will be more families and groups travelling over the holidays, so the New York-based airline will offer “a small number of rows” where people travelling together can occupy all the seats.

Earlier this week, JetBlue President Joanna Geraghty said blocking seats “is not something that’s sustainable,” and that as passenger numbers rise and studies show airplane cabins are safe, the airline will raise capacity on flights.

Southwest CEO Gary Kelly made a similar reference to “scientific evidence” that cabins are safe, but he also cited a strong financial incentive to stop blocking middle seats. Kelly said Southwest lost $20 million in revenue during September because of the policy, with the loss seen rising to between $40 million and $60 million in November.

A recent study by the Defence Department's transport command said the risk of spreading the virus that causes COVID-19 on planes is very low if everyone wears face masks. However, the study was not peer-reviewed and did not account for things like people moving around the cabin.

A number of reports suggest that transmission on airlines is rare, although the lack of testing and contact tracing make it impossible to quantify the risk of flying.

B.C. auction giant Ritchie Bros. to pay US$275m for American data firm

Ritchie Bros. buys data firm

Ritchie Bros. Auctioneers Inc. (TSX:RBA) is drumming up a sizeable sale for itself.

The Burnaby-based company, best known for facilitating sales of heavy equipment and trucks through live auctions and online bidding, is set to acquire U.S. data intelligence firm Rouse Services LLC for US$275 million ($366 million).

The California company specializes in construction equipment market intelligence, including rental analytics, support for equipment sales and fleet appraisals.

Ritchie Bros. CEO Ann Fandozzi said in an October 29 statement that the combined companies would be able to help customers better understand trends in used equipment and then use that information to better optimize fleet-management decisions.

The sale is still subject to closing conditions.

But if it goes through, Rouse Services would remain based in L.A. for “foreseeable future,” according to Ritchie Bros.

The U.S. firm has 60 employees while its potential Canadian parent company has about 2,250 workers worldwide, including about 550 based in B.C.

Much of the Ritchie Bros. C-suite has shifted to the U.S. since Fandozzi assumed the top job and a seat on the board in January.

She was preceded by another American, Ravi Saligram, who departed the company last year and returned to work in the U.S. as CEO for Newell Brands.

Fandozzi is based in Pennsylvania, according to her LinkedIn profile.

The acquisition deal would see Ritchie Bros. acquire Rouse Services for US$250 million in cash and US$25 million in common stock.

Net income during Ritchie Bros.’ second fiscal quarter decreased 2% to US$53.1 million compared with a year earlier, according to financial results released in August. 

Revenue during that same period decreased 1% to US$389.1 million.

Shares were trading $80.65, up 0.61%, at the close of markets.

Nokia profit up, new CEO pledges to boost 5G investments

Nokia profit climbs

Finnish telecommunications company Nokia on Thursday reported improved third-quarter earnings largely in line with expectations, but acknowledged it faced challenges in the race for 5G cellular networks.

Nokia said it would invest more in the new generation of broadband technology and revamp business strategy under its new CEO, who said the company would do “whatever it takes” to achieve 5G leadership.

The company based in Espoo, Finland reported that net profit for the July-September period was up 14% to 305 million euros ($358 million). Sales were down 7% to 5.3 billion euros.

The quarterly report was the first one issued since CEO Pekka Lundmark took over the company’s top spot on Aug. 1.

He said Thursday that “more change is needed” within Nokia, which has played catch-up with China’s Huawei and Sweden’s Ericsson in the 5G market. Last week, Ericsson reported upbeat third-quarter earnings that were helped by the rollout of 5G networks in China and a strong U.S. market.

“Our financial performance in 2021 is expected to be challenging,” Lundmark said. “We have lost share at one large North American customer, see some margin pressure in that market, and believe we need to further increase R&D investments to ensure leadership in 5G. In fact, we have decided that we will invest whatever it takes to win in 5G.”

Nokia said Thursday it has secured 101 commercial 5G deals with 36 live networks, while Ericsson, respectively, said last week it had 112 commercial 5G agreements with 65 live networks. The Nordic duo is still trailing 5G global market leader Huawei.

In a call with reporters, Lundmark said Nokia was “well placed” to take advantage of bans imposed on some network equipment vendors, clearly pointing to Huawei and some other Chinese companies without naming them.

“Some of the geopolitical trends are opening up new opportunities,” Lundmark said in the call. “We understand that the safety and security of the network and the trustworthiness of the vendor is extremely important. It’s going to be increasingly important in the future.”

Huawei has been banned by several governments from 5G networks over allegations it can allow the Chinese government to snoop on data. Huawei has denied the allegations. Sweden became latest European country last week to ban Huawei and ZTE, another Chinese network equipment provider, from its 5G networks.

Nokia also announced a new strategy, effective Jan. 1, where it will have four business groups consisting of mobile networks, fixed networks, cloud and network services, and the Nokia Technologies unit. Lundmark said Nokia would share details of the new strategy in December.


Airbus reports new pandemic losses, but stops bleeding cash

Airbus losses, stops bleeding

Struggling plane maker Airbus says new European virus lockdown measures are making its life “a bit more difficult,” as it announced 1 billion euros ($1.16 billion) in pandemic-related losses for the third quarter Thursday amid a slower-than-expected recovery in air travel.

But CEO Guillaume Faury said Airbus has already repeatedly adapted its operations to cope with the virus and is not predicting major disruptions from the new restrictions, notably those announced in France and Germany on Wednesday.

“We will have to live with the circulation of the virus for long period of time,” he said. “Yes, it’s making our life a bit more difficult, but these kind of measures — which by the way, are necessary — are part of what we have to deal with.”

The Toulouse, France-based company said it managed to stop losing cash in the third quarter after a devastating first half of the year, as airlines collapsed or grounded most of their planes. It maintained its forecast that air traffic won’t return to 2019 levels until 2023-2025.

Faury said the company — one of Europe's leading manufacturers — isn’t currently planning further job losses on top of 15,000 already announced as a result of the pandemic, but said, “there is so much uncertainty we have to remain very humble.”

And he expressed concern about struggling Airbus suppliers. “We are very vigilant to make sure we navigate the situation all together, so that we all stay alive to be able to get to the other side of the pandemic,” he told reporters.

Airbus delayed the ramp-up of production of its single-aisle jets, saying airlines “are not recovering as fast as everyone was expecting a quarter ago.” But it noted a diversity between strong recovery in China and difficulties elsewhere.

Airbus announced 1 billion euros in “COVID-related charges” and posted a loss of 767 million euros for the third quarter, compared with a profit of 989 million euros a year earlier.

Canadian, US stock markets regain footing after big drop

Markets steady themselves

U.S. stocks are pushing upward Thursday after better-than-expected reports on the economy helped stabilize Wall Street following its worst drop in more than four months.

Economists warn big challenges still lie ahead, though, and the S&P 500 is coming off a 3.5% tumble Wednesday on worries the worsening pandemic will drag down the economy and corporate profits again.

Within the S&P 500, a strong rebound for tech stocks more than made up for losses among health care companies.

Gains in the financial sector helped lead Canada's main stock index higher in late-morning trading after sinking to a more than three-month low on Wednesday, while U.S. stock markets also climbed.

The S&P/TSX composite index was up 138.31 points at 15,724.88.

In New York, the Dow Jones industrial average was up 113.35 points at 26,633.30. The S&P 500 index was up 31.88 points at 3,302.91, while the Nasdaq composite was up 153.27 points at 11,158.14.

The Canadian dollar traded for 74.96 cents US compared with 75.18 cents US on Wednesday.

The December crude contract was down US$1.34 at US$36.05 per barrel and the December natural gas contract was down three cents at US$3.26 per mmBTU.

The December gold contract was down US$6.30 at US$1,872.90 an ounce and the December copper contract was up a penny at US$3.07 a pound.

Across the Atlantic, European stocks rose after the head of the European Central Bank said there's “little doubt” it will deliver more stimulus in December. They were also recovering from a sharp slide on Wednesday, when France and Germany announced new restrictions on businesses in hopes of slowing the accelerating spread of the virus.

Despite the relatively calm moves, caution continues to hang over the market. A measure of investors’ fear in the U.S. stock market touched its highest level since June before receding Thursday, and oil prices continued their sharp descent on worries about demand from a virus-weakened economy.

Canadian small business confidence drops in October as COVID cases rise

Business confidence drops

A new report says small business confidence dropped in October as the COVID-19 curve tracked upward.

The Canadian Federation of Independent Business says its latest business barometer, which measures the outlook of Canadian entrepreneurs, fell six points in October to land at a five-month low of 53.3.

The organization says business confidence is the lowest in Quebec at 42.2, while entrepreneurs in Nova Scotia were the most upbeat with a reading of 63.1.

The results suggest that after a rebound in economic activity and optimism over the summer months, the new wave of the pandemic has weakened business confidence.

CFIB chief economist Ted Mallett says the decline in business sentiment is broad based as the jump in COVID-19 cases threatens the small business sector.

But he says businesses in the hospitality and personal services sectors appear to be most concerned with the impact of renewed restrictions.

In preparing its monthly business barometer, the CFIB asks small businesses across Canada how they expect to be performing a year from now. The results are used to create an index, with the highest possible result of 100 indicating all businesses expects their business to be in better shape in 12 months, while zero means all businesses think they'll be in worse shape.

The index of 53.3 reported this month means businesses expect to be in about the same shape in a year, a result Mallett says is negative for entrepreneurs hoping to grow their businesses.

Shopify revenue up 96% amid massive shift to e-commerce

Shopify revenue soars

The flood of businesses scrambling to build or enhance their digital efforts during the COVID-19 pandemic nearly doubled Shopify Inc.'s third-quarter revenue compared with a year ago.

The Ottawa-based e-commerce company, which keeps its books in U.S. dollars, said Thursday that its revenue reached US$767.4 million in the quarter, up from US$390.5 million during the same period last year.

Shopify also said it earned US$191.1 million or US$1.54 per diluted share in the quarter, compared with a loss of US$72.8 million or 64 cents per share in the prior year.

Harley Finkelstein, who was promoted to president at the end of September, said the quarter was boosted by more brands than ever before opening their first e-commerce stores or shifting existing ones from other platforms to Shopify as COVID-19 brought retail foot traffic to a halt and spurred temporary closures and more people staying at home.

"We believe these changes in the landscape will endure as consumers' new shopping behaviours stick and become the new normal," he told a conference call with financial analysts.

Those conditions helped Shopify add a record number of merchants for the second quarter in a row and a record number of them became paid subscribers.

Shopify lured many of them in with extended free trials lasting 90 days, up from the 14 days it previously offered, and some made their first sales faster than the platform has ever seen before.

The quarter, Finkelstein said, saw well-known brands like Dior, Beyond Meat, Clif Bar, Jenny Craig and Mat and Nat join the platform and the goal is to keep growing.

"We want to capture anyone thinking of starting a business. Whether or not they become the next Gymshark or the next Allbirds remains to be seen, but the idea is that we want to capture anyone who has any ambition to start a business on Shopify," he said.

Finkelstein's remarks came as the company's adjusted earnings hit US$140.8 million or US$1.13 per diluted share, up from last year when it lost US$33.6 million or 29 cents per share.

Analysts on average had expected a profit of 53 cents per share for the quarter and US$663.4 million in revenue, according to financial data firm Refinitiv.

Looking ahead, the company was optimistic about the upcoming Black Friday, Cyber Monday and holiday shopping seasons.

A recent survey of merchants Shopify conducted found companies are anticipating more online than in-store purchasing for Black and Cyber Monday, pushing more than half of those in the retail space to make improvements to their online stores ahead of the expected flurry.

Shopify executives said the company is doing its best to increase staff in its fulfilment centres and predict and mitigate supply chain issues ahead of the rush.

Molson Coors third-quarter sales slide 3.1 per cent amid COVID-19 restrictions

Molson Coors sales slide

Molson Coors Beverage Co. reported its third-quarter sales slid 3.1 per cent amid ongoing COVID-19 restrictions and packaging material constraints in North America.

The Montreal-based company, which reports in U.S. dollars, recorded net sales of US$2.75 billion, compared with US$2.84 billion for the same quarter last year.

Molson Coors says it earned net income of US$342.8 million or US$1.58 per diluted share for the quarter compared with a net loss of US$402.8 million or US$1.86 per diluted share a year ago when it took a large goodwill impairment charge.

The brewer says its underlying net income for the third quarter was US$350.8 million, or $1.62 cents per diluted share, compared with an underlying profit of US$321.2 million, or $1.48 per share, in the third quarter of 2019.

The company says Coors Light and Miller Lite grew six per cent and 9.5 per cent, respectively, in off-premise sales in the U.S. so far this year.

Molson Coors chief executive Gavin Hattersley says the challenges throughout the year presented obstacles, but the company expects to see growth in the coming months as it builds on the strength of its core brands.

Husky Energy hit by non-cash impairment charges, reports $7-billion loss in Q3

Husky reports $7B loss

Husky Energy Inc. reported a nearly $7.1-billion loss in its latest quarter as it was hit by $6.7 billion in non-cash impairment charges after taxes related to lower long-term commodity price assumptions and reduced capital investment.

The company says the loss amounted to $7.05 per share for the quarter ended Sept. 30 compared with a profit of $273 million or 26 cents per share in the same quarter last year.

Revenue totalled $3.33 billion, down from $5.29 billion a year ago.

Husky says funds from operations for the quarter amounted to $148 million or 15 cents per share, down from $1.02 billion or $1.02 per share in the same quarter last year.

Total upstream production averaged 258,400 barrels of oil equivalent per day for the quarter with 294,800 in the third quarter of 2019 and 246,500 in the second quarter of 2020.

Husky announced a deal on the weekend to be bought by Cenovus Energy Inc. for $3.8 billion in shares.

“We are confident that the combination with Cenovus will deliver significant long-term value by creating a larger, stronger and more resilient Canadian integrated energy producer," Husky chief executive Rob Peabody said in a statement.

"Over the next few months while the transaction is pending, we will maintain our focus on safe and reliable operations, while planning for a seamless integration to facilitate the accelerated return of capital to shareholders.”

Cenovus Energy takes $450M charge on Texas refinery, reports $194M Q3 loss

$194M loss at Cenovus

Cenovus Energy Inc. reported a loss in its third quarter as its results were hit by a $450-million impairment charge related to a refinery it co-owns with Phillips 66 in Texas and lower oil prices due to the pandemic.

The Calgary-based company says it lost $194 million or 16 cents per diluted share in the quarter ended Sept. 30 compared with a profit of $187 million or 15 cents per diluted share a year ago.

Cenovus says its adjusted funds flow amounted to $414 million or 34 cents per share compared with $928 million or 76 cents per share a year ago.

Total production in the quarter was 471,799 barrels of oil equivalent per day, up from 448,496 in the same quarter last year.

Cenovus announced on the weekend a friendly deal to buy Husky Energy for $3.8 billion in shares.

It has said it will look to cut between 20 and 25 per cent of the 8,600 employees and contractors currently working at the two companies if it is successful in its takeover.

Suncor Energy reports $302M loss on lower production, prices

Suncor misses expectations

Suncor Energy Inc. is reporting a third-quarter operating loss of $302 million or 20 cents per share as revenue fell 34 per cent to $6.5 billion due to lower production and oil prices compared with the same period of 2019.

The Calgary-based company earned $1.114 billion or 72 cents per share in the third quarter of 2019 on revenue of $9.9 billion.

Suncor says maintenance outages across its oilsands and refining operations resulted in production falling to 616,000 barrels of oil equivalent per day from 762,000 boe/d in the year-earlier period, while refinery output fell to 399,700 barrels per day or 87 per cent utilization from 463,700 bpd or 100 per cent.

Its financial returns missed analyst expectations of an operating loss of $241 million or 11 cents per share on revenue of $7 billion, according to financial data firm Refinitiv.

Suncor, which announced three weeks ago it will cut as many as 1,930 jobs over 18 months to reduce total staff by 10 to 15 per cent, says it is on track to achieve its $1-billion operating cost reduction target by the end of 2020.

It reported a net loss of $12 million in the three months ended Sept. 30 compared to net earnings of $1.035 billion in the year-earlier period, noting that the recent loss includes a $290-million unrealized after-tax foreign exchange gain on U.S. dollar debt and the year-earlier figure included a $127-million debt loss and an after-tax gain of $48 million from asset sales.

"We are disappointed with our recent operational performance so we are strengthening our focus on the company’s commitment to reliability,” said CEO Mark Little in a statement.

Suncor revealed this week it plans to move its Petro-Canada head office and most of the associated 700 employees to Calgary from southern Ontario next year.

Vancouver’s Shahrzad Rafati regains control of BroadbandTV through $172m IPO

Tech firm's $172m IPO

One of Vancouver’s largest tech companies is firmly back in control of its founder and CEO following an initial public offering that has allowed BBTV Holdings Inc. (TSX:BBTV) to buy out the controlling stake in BroadbandTV Corp.

BBTV’s IPO of subordinate voting shares went live Wednesday (October 28), raising $172 million.

The injection of capital allowed the holding company to acquire RTL Group’s 51% stake in BroadbandTV for just under $158.8 million.

“It’s a very proud moment for all of us at BBTV. Few companies get to experience what we’re experiencing now,” Shahrzad Rafati, CEO of both BBTV and BroadbandTV, told BIV.

She now owns 34% of BBTV’s equity shares and has 83% of its voting power, giving her effective control over the direction of BroadbandTV, the company she founded in 2005.

BroadbandTV is best known for developing a platform that helps create, distribute and monetize video content for online consumption.

It has just over 350 employees, with 266 in full-time roles.

Rafati expects the company to ramp up everything from strategic acquisitions to expanded revenue growth following the IPO, with additional hiring expected in B.C.

She added that the shift towards remote working will also allow it to recruit more global talent that may have previously been harder to lock down.

Meanwhile, Rafati estimated revenue will climb 25% in the third quarter of 2020 compared with the same period a year ago.

The CEO characterizes her company has being a “COVID winner” owing to the shift in content viewership from traditional media to digital platforms amid the surge in consumption during the pandemic.

“With this continuous emergence of new platforms and the rapid growth of video supply and demand, content owners of any size [need] help to navigate this complex digital landscape,” Rafati said.

“Digital advertising has really benefitted from this shift from mainstream media to digital. This is why we felt this was the right time for an IPO.”

The company said Wednesday’s offering is among the 10 largest tech IPOs ever on the TSX and the first with a sole woman founder and CEO in the technology sector.

“It’s a special milestone for us and a monumental day,” Rafati said.

“We’re hoping that we’re breaking new ground and paving the way for countless women and girls who envision a future with more potential to be leaders.”

Luxembourg-based RTL Group, a subsidiary of Germany’s Bertelsmann SE & Co. KGaA, delivered a $36 million investment in 2013 in exchange for a 51% stake in BroadbandTV.

The European media company went on to invest a further $30.9 million in the company.

BBTV retained a 49% stake in BroadbandTV, which meant Rafati could previously be overruled by RTL in boardroom decisions.

Most the new board is Canadian, and includes Well Health Technologies Corp. (TSX:WELL) CEO Hamed Shahbazi, Hootsuite Inc. executive chairman Ryan Holmes, Clearbanc’s (Clear Finance Technology Corp.) Michele Romanow and Marcel Reichart of Bertelsmann.

BBTV says it will use the remaining money raised from the IPO to fund business operations, offering expenses, strategic acquisitions and growth initiatives.

“The sale is consistent with RTL Group’s three-priority strategy — core, growth, alliances and partnerships — which includes continuously reviewing the Group’s portfolio and growing its European digital assets in the areas of streaming, advertising technology and digital video,” RTL Group said in a statement.

Jill Tipping, CEO of the B.C. Tech Association, said she’s happy to see a West Coast company seeking an IPO rather than priming itself for a strategic buyer.

“It’s been a bit quiet on the IPO front,” she said.

“I’m expecting it will pick up quite a lot in 2021.”

Last week BBTV priced its shares at $16 ahead of the IPO.

Early trading shows the shares fetching $15, down 6.25% from the opening price.

Its prospectus shows BBTV’s revenue has gone from $33 million annually in 2014 to $372 million as of 2019.

The company calculates annual revenue for 2020 is set at $388 million based on money coming in during the 12 months between the second quarter of 2019 and the second quarter of 2020.

BBTV recorded about 439 billion views over its platform between June 2019 and June 2020, and the company asserts it has the second-most unique monthly viewers of all digital platforms: 596 million vs. Google’s 1.118 billion.

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