In the words of Virgin Air founder Richard Branson, “If you want to be a millionaire, start with a billion dollars and launch a new airline.”
Now it seems, after months of being non-committal on the issue of airline bailouts, Prime Minister Justin Trudeau is about to charge up the Canadian Taxpayer Mastercard again – not a paltry Branson $1 billion though, but a whopping Liberal $7 billion, if carriers and unions have anything to say about it.
Branson was warning that airlines are expensive and often lose money – and Branson should know. Virgin Atlantic applied for bankruptcy protection in New York on August 4th. They are attempting to negotiate a $1.6 billion rescue plan. Virgin Australia also filed for bankruptcy earlier in the year.
These are not the best of times. COVID-19 grounded most commercial flights globally in March, resulting in plummeting airline stock prices. Airlines have been losing millions of dollars every week, and billionaire “canary-in-the-mine” investor guru Warren Buffett has sold out his entire $4 billion airline portfolio. Buffett said, “Investors have poured their money into airlines … for 100 years with terrible results. … It’s been a death trap for investors.”
Airline failures however, predate COVID-19. Airline bankruptcies since 1980 include TWA, US Airways, United, Air Canada (in 2003), Delta, American and many others.
The airline business model is problematic in a number of respects. First and foremost, it lacks scalability. This means that cost growth increases linearly with revenue growth, thereby making it very expensive for an airline to grow. A new A380 will set you back approximately $437 million USD. It costs about $83,000 for a fill-up at the pump, and a new set of 22 tires is a jaw-dropping $121,000.
As Buffett explained to Berkshire shareholders in 2007, “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”
But, as history records, Orville made a safe landing that day in 1903.
Another problem with airlines is a sensitive dependence upon price competition. The reality is that if one airline decides to cut fares, for whatever reason(s), competitors have little choice but to follow. This can have disastrous impact financially.
Air Canada is Canada’s largest carrier. Privatized in 1989, its’ history includes layoffs, restructuring, mergers, previous bankruptcy and government bailouts. In May, Air Canada threatened to lay off 50-60 per cent of it’s 38,000 employees, saying that it is losing $20 million per day as a result of COVID-19. It is projecting a 75 per cent reduction in flight capacity during Q4 compared to 2019, and reported Q3 revenue of C$757 million, down 86 per cent from a year earlier, with an operating loss of $785 million CAD.
It has since been taking advantage of the Canadian Emergency Wage Subsidy (CEWS) program.
Now, as a result of COVID-19, Air Canada wants another bailout from the taxpayer.
Transportation Minister Marc Garneau said, “To protect Canadians, the Government of Canada is developing a package of assistance to Canadian airlines, airports and the aerospace sector. As part of this package, we are ready to establish a process with major airlines regarding financial assistance which could include loans and potentially other support to secure important results for Canadians.”
But who exactly are taxpayers going to be bailing out?
The top 10 Air Canada shareholders are all investment management funds. Letko, Brosseau & Associates Inc., Fidelity (Canada) Asset Management ULC, Fidelity Management & Research Co. LLC, EdgePoint Investment Group Inc., US Global Investors Inc., RBC Global Asset Management Inc., Causeway Capital Management LLC, Mackenzie Financial Corp., APG Asset Management NV, and CI Investments, Inc..
The irony of Canadian taxpayers ponying up $7 billion to bailout wealthy global investment funds would be amusing if it weren’t true.
Perhaps Trudeau will broker a loan from Air Canada’s shareholders. They can afford it.
The likelihood of you getting an operating line of credit from your local bank because you had lost 90 per cent of your income and were billions in the red? Zero to none.
According to Intergovernmental Affairs Minister Dominic Leblanc the government is “very much discussing” the possibility of nationalizing the airlines, as Germany has done.
If the argument for deregulation and privatization is increased efficiency and cost benefit, then it follows that private sector enterprise must be prepared to bear the cost of failure. Trudeau is burdening Canadians with crippling debt as a result of COVID-19. The wealthy investment funds that own Air Canada should be prepared to do the same.
Ken Grafton is freelance columnist for the Western Standard from Aylmer, Quebec
SLOBODIAN: Singh’s big, comfy rocker shows his true stripes
“Pure democratic socialism doesn’t exist. Never has. Never will. It’s a myth like unicorns, government transparency, keeping campaign promises, and equality for everyone.”
The federal NDP says it is committed to democratic socialism that will deliver Utopia for me and thee.
NDP Leader Jagmeet Singh breathlessly preaches equality for all when it comes to wealth, income, and the distribution of limitless goodies.
So, going by this equal distribution doctrine Singh embraces, we can all expect to get a free $1,895 rocking chair. Right?
One just like the Grand Jackson Rocker Singh’s wife Gurkiran got from Monte Design, a Canadian furniture company that rewarded her for promoting the chair on her Instagram account in December.
Hold on. Isn’t that a violation of the Conflict of Interest Code for Members of the House of Commons? It states MPs or “any member of a member’s family” may not accept gifts that “might reasonably be seen to have been given to influence the member in the exercise of a duty or function of his or her office.”
Gifts valued under $200 are permitted with conditions. Anything of greater value must be reported to the office of Ethics Commissioner Mario Dion within 60 days with an explanation of the source of the gifts and why they’re given. If an MP is deemed to have violated the code, a sanction can be recommended to be levelled at the discretion of the House of Commons.
Don’t hold your breath.
But Gurkiran got the rocker. It’s not like hubby Singh planned to sit in it, promote it, or anything so brazen as that.
MPs surely attend Ethics Class 101 and are expected to be astute enough to know advertising a gift from a company would be a big dumb no-no.
Uh-oh. Singh published a photo Sunday on his Instagram page of him holding his infant daughter while parked in the comfy freebie chair. The name of the furniture company was tagged in the image.
Maybe Singh was so busy plotting how to dole out buckets of free stuff on the taxpayer dime, he skipped ethics class.
Anyway, it’s all good now — after Singh got outed.
“The NDP says it is working with the ethics commissioner and intends to file a formal disclosure report on a $1,895 rocking chair given to NDP Leader Jagmeet Singh’s wife in exchange for posting about the item on her Instagram account,” NDP spokesperson Mélanie Richer said in a statement to CBC.
“The chair was given to Gurkiran with an expectation that she would promote it on social media. There was no expectation that Jagmeet would post about it.”
That the code clearly mentions family members escaped the attention of the noble NDP. Details.
The Singhs have “realized their error and will be paying for the gift,” said Richer.
Saskatoon West Tory MP Brad Redekopp didn’t feel like overlooking the error.
“The average Canadian is worrying about how they are going to pay their bills, while Jagmeet Singh and the NDP worry about making online influencer deals to get expensive gifts,” he tweeted.
He also tweeted a picture of a laughing Singh and a chair asking: “Are you a NDP Champagne Socialist that can afford $1,900 rocking chairs?”
“Socialists make the best capitalists,” tweeted the Western Standard’s Cory Morgan, assistant opinion and broadcast editor and host of Triggered.
They do. With his expensive Rolex watches, custom made suits, and BMW, flashy Singh’s no exception.
Wealth isn’t a bad thing. The Bible’s full of scripture endorsing prosperity. Hypocrisy? Heavily frowned upon.
Socialists are masters of manipulating fear and greed of voters by making big promises that never materialize.
Some argue that in Singh’s case, it’s only a chair. Perhaps.
But socialism is a slippery slope. Where does it end? A rocking chair one day, a dacha the next?
Socialism is communism with lipstick that leads to a two-tiered society — the elite and the wanting, duped poor.
In Russia, the elite peddle communism whilst munching on black caviar in well-furnished seasonal dachas.
Meanwhile, the masses head to the markets hoping the potatoes in the bins won’t be too blackened from blight or mold.
How’s socialism working out for the suffering people in Argentina — once prosperous and plentiful like us?
Socialism attracts two kinds of supporters. Those too stupid to know it’s a curse. And those in power who bank on their stupidity by preaching its merits while cashing in on the fruits of capitalism.
Singh peddles hardcore socialism while wringing his hands over the increasing plight of the poor brought by Prime Minister Justin Trudeau’s destructive and crushing policies he unfailingly supports.
“Increasingly, we’re seeing two worlds in Canada,” he once said.
“The world for most Canadians is increasingly unaffordable, involves more precarious work, and is a harder place in which to get by. The second world is an exclusive club for the wealthy and well-connected who get special access and are exempt from rules the rest of us play by.”
About that rocker. Don’t start rearranging the furniture to make room for it.
Pure democratic socialism doesn’t exist. Never has. Never will. It’s a myth like unicorns, government transparency, keeping campaign promises, and equality for everyone.
Slobodian is the Senior Manitoba Columnist for the Western Standard
THOMAS: How Western Canada fared in the 2021 housing market
“That didn’t happen. By early summer, sales picked up, prices steadied and the industry hasn’t looked back since, with some markets setting sales records in 2021.”
When COVID-19 hit in March 2020, like many industries, the lockdowns and restrictions shut down housing industry operations.
Home sales and prices plummeted, adding to the fear of the virus that homeowners would lose their homes’ equity.
That didn’t happen. By early summer, sales picked up, prices steadied and the industry hasn’t looked back since, with some markets setting sales records in 2021.
Here’s how major markets in Western Canada fared last year.
It was the third year in a row with record-breaking sales and dollar volumes.
“Both 2020 and 2021 were remarkable years in delivering sales gains from the previous year,” said Kourosh Doustshenas, outgoing president of the Winnipeg Regional Real Estate Board. “Last year saw an increase of more than 2,500 sales compared to 2020 and 33% sales growth over the previous five-year average.”
Sales of existing homes in 2021 reached 18,575 units with the dollar sales volume reaching $6.25 billion, up 28% from 2020.
Single-family homes and condominiums were the most popular, with market shares of 68% and 14% respectively.
The Saskatchewan Realtors Association’s (SRA) report covers all sales in the province.
A record 17,387 sales were recorded in 2021, surpassing the previous record in 2007 by 17%.
While the pandemic triggered disruptions in some sectors of the economy, housing boomed, said SRA CEO, Chris Guérette.
“Improved savings from those not financially impacted by COVID-19, combined with low lending rates have supported the strong sales environment we saw throughout 2021,” said Guérette, adding inventory levels in the province were 16% below long-term trends.
“This resulted in the MLS Home Price Index (HPI) composite benchmark price* gaining more than seven percent.”
Sales of existing homes in Calgary soared in 2021, reaching a record 27,686, nearly 72% higher than 2020 and more than 44% higher than the 10-year average, says the Calgary Real Estate Board (CREB).
“Concerns over inflation and rising lending rates likely created more urgency with buyers over the past few months, said CREB’s chief economist Ann-Marie Lurie. “However, the supply has not kept pace with the demand, causing strong price growth.”
The year-end benchmark price was $451,567, up 8% from 2020.
“We enter 2022 with some of the tightest conditions in over a decade,” said Lurie. “In December, inventory was nearly 25% lower than long-term averages, which will impact our housing market in 2022.”
“2021 was an incredible year for the Greater Edmonton Area (GEA),” says Realtors Association of Edmonton chair Tom Shearer. “The year-over-year stats for sales and listings in the GEA were significantly higher than December 2020.”
Last December, single-family home sales rose 16.5% from December 2020. Condo sales increased 25.6% from December 2020. Duplex/rowhouse sales increased 16.8% year-over-year.
The HPI benchmark price in the GEA came in at $410,900, a 5.2% increase from December 2020.
Home sales reached an all-time high in 2021, with the Real Estate Board of Greater Vancouver (REBGV) reporting a total of 43,999, a 4% increase over the previous record of 42,326 in 2015.
The HPI composite benchmark price at the end of 2021 was $1,230,200, a 17.3% increase from December 2020.
“While steady, home listing activity didn’t keep pace with the record demand we saw throughout 2021. This imbalance caused residential home prices to rise over the past 12 months,” said Keith Stewart, REBGV economist.
“Detached home and townhome benchmark prices increased 22% last year, while apartments increased 12.8%.”
There were 10,052 properties sold in 2021, close to the record of 10,622 sales in 2016.
“The theme of this year has been very consistent,” says Victoria Real Estate Board president David Langlois. “Each month a high demand for homes paired with record low inventory has put strong pressure on pricing and attainability.”
The single-family HPI benchmark price in the Victoria Core in December 2021 was $1,144,900, up 25.1% from $1,122,600 in November. The HPI benchmark price for a condominium in the area in December 2020 was $570,600 up from $487,100 a year earlier.
Housing supply across the country is a concern, said Langlois
“We have spoken throughout the year about the need for new housing supply at all levels to help moderate prices and improve attainability,” he said. “Some of our municipalities have begun to look at ways to make it easier for new homes to be brought to market and we applaud and encourage any movement in this area.”
*The MLS® Home Price Index (HPI) is a measure of real estate prices that provides a clearer picture of market trends over traditional tools such as mean or median average prices. It is designed to be a reliable, consistent, and timely way of measuring changes in home prices over time.
Myke Thomas is a Western Standard contributor. He started in radio as a child voice actor, also working in television and as the real estate columnist, reporter and editor at the Calgary Sun for 22 years.
MAKICHUK: Flaming question: Should we let them go, or not?
“Maybe Gondek can take a holiday in Mexico? Pretty please?”
So, do we care if the Flames leave, or not?
That, my friends, is the question.
While it appears Mayor Jyoti Gondek was instrumental in letting the arena deal die, it’s never quite as simple as that.
I wouldn’t exactly put halos over the heads of the Flames owners either.
Someone suggested the right people to negotiate this thing are not in place — that actually sounds like it might have some merit.
It reminds me of when the Flames decided to trade Doug Gilmour, the player who helped them win the Stanley Cup.
At that time, sources told me the team and Gilmour were not that far apart in the money department. In fact, it was pocket change compared to what they pay players now.
I won’t go over the Gilmour-Leeman trade, it’s too painful for Flames fans to have to endure, and, well, I’m not that cruel of a person.
But really, are we that far apart now? We all know construction costs are soaring, but slamming the door shut on this deal, is not the way to go, IMO.
Even though I can’t stand the Flames. Why?
Well, for starters, I’m a Red Wings fan, all the way.
Secondly, when I worked at the Calgary Sun, whenever the Flames went into the playoffs we would end up working 12-hour days until the ordeal was over.
We did well against the competition, having a good stable of writers who worked their tails off. Not to mention the best sports photogs in the city.
As we got no extra overtime pay for all this extra effort and hardly saw our families during these times — which were exciting, of course, no argument there — it just got to be too much.
We would kill forests of trees to pound out pages on the Flames and their playoff adventures.
In the end, whenever the Flames were eliminated, we would hold the “Thank You Flames Open” — a golf tournament, complete with prizes, and, a Green Jacket, which we purchased at Goodwill for $8.
The winner would get to wear the green jacket in the office, for an entire year — a tremendous honour!
But I’m not here to beat up on the Flames. I know how important this team is to the city.
While personally I don’t care if they stay or go, I know a lot of people want them to stay because they have become such an important symbol of our city.
Some of the best hockey ever played was between the Flames and, those guys up north … what’s their name again? Oil something?
Anyway, you get the picture. We happen to have a big rivalry with the folks in Edmonton who seem to get things done better and faster than our city council.
Case in point, Rogers Place. How come they could get it done and we couldn’t?
That project also went over-budget, and led to a similar standoff. Clearly, cooler heads prevailed and Edmonton’s council approved the funding for the House of McDavid … and the rest, as they say, is history.
By the way, they also have better winter snow removal according to what I’ve been told.
So do we care or not? Should we try to resurrect this deal or not?
Should Gondek — she of the climate emergency no one cares about — swallow her pride and step aside from the negotiation process?
Or, well … should we let them go and build a brand new stadium for the Calgary Stampeders instead? Believe it or not, they actually do need a new stadium.
As much as I love McMahon stadium, it is seriously out of date. I mean, even Regina has a much better football stadium, for crissakes. Regina!
If you ask me, I’d rather axe the Green Line, and other such Nero-like mega-projects of the previous mayor and use that money elsewhere.
But let’s get back to the Flames. Remember Winnipeg, who went through a dark period after their NHL team left town?
Glen Murray was city councillor for Winnipeg’s Fort Rouge ward at the time and was elected as the city’s mayor in 1998. He watched as Winnipeg’s team slipped away, eventually moving to Phoenix, where hockey never really caught on.
“It was heartbreaking because the provincial and the municipal governments who were subsidizing [the team] couldn’t sustain it,” Murray told the CBC.
“Every proposal for a new arena involved hundreds of millions of dollars, which no one in the community could raise at the time,” he said. “It was a real dark period for the city because people love their hockey team.”
When the much-despised NHL commissioner Gary Bettman announced the return of the then still-to-be-named team in May 2011, the excitement in the city was palpable.
“In all my years as a reporter, I have never seen a city stop before,” said Marjorie Dowhos, a CBC Manitoba reporter.
“Cheers immediately broke out, some people had tears in their eyes and I had shivers up my spine as I watched all of this,” she said.
Season tickets went on sale to the general public on June 4 and sold out in 17 minutes.
What more do I have to say? Do we really want to go the way of the Winnipeg Jets?
Let me finish, with a little story.
Back in 1967, my Dad took me to my first NHL hockey game at the Olympia in Detroit. They were sold out, so we bought $3 standing room tickets.
The first thing I saw was Gordie Howe score effortlessly on Toronto Maple Leafs goalie Terry Sawchuk, on a breakaway. The place went nuts, it literally shook.
That, and many other experiences that evening, would change my life. I saw walls of Red Wings paraphernalia, none of which we could afford. I think all we came home with was a cheap program.
To this day, I will never forget that first experience of watching the Wings play and seeing them walk off the ice on a carpet, right in front of me.
Hockey gods they were — not like today’s overpaid prima donnas.
One can’t really put a dollar value on that. I don’t know how much the Flames bring to the city, financially, but I would imagine it’s significant. But then, there’s that emotional attachment, too.
Remember the big run in 2004? We all do. Hell, even I was popping shooters on 17 Avenue!
So yeah, hell, let’s try to keep the Flames. Let’s give it another go and hope that as good citizens the Flames owners group will cut us some slack in this time of financial disarray. And let’s get the right people in there, to get this done.
Maybe Gondek can take a holiday in Mexico? Pretty please?
And really, let’s leave this “line in the sand” crap to Vladimir Putin and his maniacal ambitions.
We’re better than that, I’m sure of it. Let’s get ‘er done.
Dave Makichuk is a Western Standard contributor.
He has worked in the media for decades, including as an editor for the Calgary Herald. He is also the Calgary correspondent for ChinaFactor.news
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