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Calgary Herald
15 hours ago
- Business
- Calgary Herald
Air Canada shares plunge as decline in travel to U.S. hits bottom line
The trans-border market's weaker performance partly reflected the impact of increased foreign exchange volatility leading to a softer Canadian dollar versus the U.S. dollar. It was also affected by geopolitical and macroeconomic concerns as a result of actions, statements and uncertainty surrounding U.S. tariffs and related countermeasures, both of which negatively affected travel demand, it said. In response, Air Canada reduced its capacity in the trans-border market in the second quarter and first six months of 2025, it said. 'We are closely monitoring the state of the Canada-U.S. sector, where we see a decrease in overall market capacity,' said Galardo. He said passenger revenues from trans-border travel declined 11 per cent to $961 million in the second quarter and are down eight per cent at $1.95 billion for the year so far compared to 2024. Domestic travel, on the other hand, is experiencing capacity growth as assets are redeployed from the U.S. routes, said Galardo. 'We kept a strong and steady presence and offered more options for travellers to explore the country, increasing capacity on key leisure destinations,' he said. Domestic passenger revenues grew three per cent year over year to $1.38 billion in the second quarter. The airline attributed the growth to the year-over-year increase in operated capacity and traffic, partially offset by lower yields. Galardo said they continue to witness strong demand for their international network through the end of the year and into early Q1 of 2026. 'Booking trends continue to evolve,' he said as fall and early winter periods see greater relative strength as opposed to historical norms. BMO Capital Markets transportation analyst Fadi Chamoun said revenue per available seat mile (RASM) was better than expected and booking trends appear positive judging by advanced ticket sales that are two per cent above forecast. Royal Bank of Canada analyst James McGarragle said the broader narrative of demand recovery and operational realignment remains intact despite the modest cost-related headwinds in the quarter. Air Canada maintained the 2025 full year guidance it provided in May. National Bank analyst Cameron Doerksen said he remains positive on Air Canada shares over the longer term, but does note some near-term risks that warrant caution, notably negotiations with the flight attendants and related strike risk potentially later in August. 'Although the macroeconomic backdrop remains uncertain and a risk for the stock, demand for air travel remains stable,' Doerksen said in a note. Bookmark our website and support our journalism: Don't miss the business news you need to know — add to your bookmarks and sign up for our newsletters here.
Global News
21 hours ago
- Business
- Global News
How Canada-U.S. trade talks could shape the potential recession risk
As the deadline looms for a new trade deal between Canada and the U.S., economists say what the deal contains could determine a key possibility — how bad a potential recession could be. On Monday, Prime Minister Mark Carney said he would only sign a deal that was 'a good deal for Canada' and that 'negotiations are at an intense phase' towards a new trade deal with the U.S. If one isn't reached by Aug. 1, U.S. President Donald Trump has threatened to hit Canada with more tariffs of 35 per cent. At the same time, economists are watching closely for the risk of a recession. 'We are so far sticking to a view that we see a very shallow technical recession in Canada for the second quarter, third quarter. Very mild contraction,' said Sal Guatieri, director and senior economist at BMO Capital Markets. Story continues below advertisement However, that depends on one key caveat. 1:57 'Trump ate von der Leyen for breakfast': EU leaders react to 'unbalanced' trade deal with US 'That assumes we do work out a trade deal with the U.S. and it keeps that average effective tariff rate close to six per cent (and) does not pile on too many new sectoral duties in the months ahead,' he added. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy With a six per cent effective tariff rate, Canada's economy could potentially start recovering by the end of the year, Guatieri said. 'It does hurt, but it's manageable and something that Canadian businesses ultimately could adjust to and live with.' The reason the effective tariff rate on Canada is relatively low, at six per cent, is that goods that comply with the Canada-U.S.-Mexico Agreement (CUSMA) were exempt from Trump's broad-based tariffs back in April. Story continues below advertisement Not everyone agrees that a recession is likely, either. 'We don't have a recessionary outlook again for later this year. If CUSMA exemptions do hold, which is what we're expecting right now, we don't expect there will be significant changes to the outlook either,' said Claire Fan, senior economist at RBC. 3:32 'It may seem like it's a long way (off)': Carney says Canada needs 'right' trade deal with U.S. While Canada is expecting a trade deal with some tariffs, Fan said CUSMA exemptions might help Canada avoid a worst-case scenario economic downturn since it puts it ahead of the U.S.'s other major trade partners. 'It reflects a comparative advantage as a key exporter to the United States. It's not so much about the exemptions themselves, but more so what it means for Canadian exporters relative to, let's say, exporters from Europe or from one of the other major U.S. trade partners,' she said. Story continues below advertisement If the status quo holds, Fan expects that the 'bulk of the damage is already done' to Canada's labour market. However, if Trump's tariffs on Canadian steel, aluminum and automobiles continue after Friday, those sectors could see further losses. 'It's a blow for the auto industry (and to) steel and aluminum. There will be some pain there, maybe further layoffs. But for the overall economy and other industries, it is a manageable tariff to absorb, Guatieri said. 4:59 Canada – U.S. trade negotiations ahead of deadline 'We are seeing very pronounced damage in sectors where you would expect damage to be showing up. These are largely very trade-exposed sectors. Manufacturing is one, and a lot of the related sectors, for example, warehousing and transportation,' Fan said. So far, the damage from tariffs has been most heavily localized in southern Ontario and Quebec, Fan said. Story continues below advertisement 'If you were to look at the unemployment rate in southern Ontario, it's approaching 10 to 11 per cent in Windsor and is really elevated in other parts like Peterborough as well. In Toronto, too, which is above where the national average is,' she said. If CUSMA exemptions hold, Guatieri expects much of the country to escape the worst effects of Trump's trade war. 'We think most of the rest of the country is somewhat insulated from this trade war. Unfortunately, Ontario and Quebec are not,' he said.
Yahoo
a day ago
- Business
- Yahoo
MongoDB Poised For AI?Fueled Growth
MongoDB (NASDAQ:MDB) just grabbed an Outperform from BMO Capital Markets with a $280 price target as it rides the wave of generative AI workloads. BMO's lead analyst Keith Bachman says MongoDB is poised to be a GenAI database winner as customers shift AI projects into production. Warning! GuruFocus has detected 6 Warning Signs with ARM. The database market tops $100 billion in annual spend per Gartner, and Bachman forecasts MDB can sustain low? to mid?20% revenue growth through fiscal 2026 and mid? to high?teens growth in fiscal 2027. That outlook taps into surging demand for vector search and real?time analytics, areas where MongoDB is beefing up capabilities and exploring M&A. Shares are up with a year?to?date gain of 4.5% versus 12.5% for the IGV software ETF. Analysts note MongoDB has beaten consensus revenue and EPS estimates every quarter since Q2 2021, setting a track record ahead of its Q2 fiscal 2026 report on August 28. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 days ago
- Business
- Yahoo
Bank of Canada expected to hold interest rates steady for the third time
By Promit Mukherjee OTTAWA (Reuters) -The Bank of Canada on Wednesday is likely to keep interest rates unchanged at 2.75% for the third time, economists and market analysts predict, as firm core inflation and robust job growth lessen the urgency to ease rates. The central bank, economists and businesses are increasingly hoping that the worst-case scenario from the impact of President Donald Trump's tariffs is over. "Core inflation is still a little bit hot for the Bank of Canada's comfort," said Doug Porter, chief economist at BMO Capital Markets. "And on top of that, most of the economic data we have seen in recent weeks and even months has been a little less bad than expected," he added, saying that the chances of a continued pause in rates are much more likely. The spillover effects from high tariffs on steel, aluminum and automobiles have largely been confined within those markets while other sectors posted job growth in June. The economy added 83,100 new jobs in June, the first net increase since January. The unemployment rate fell to 6.9% in June with surprise job growth in sectors including wholesale and retail trade, as well as manufacturing, healthcare and social assistance. At the same time, the core measures of inflation that the BoC closely tracks have been persistently at or above 3%, the upper end of the bank's 1%-3% inflation target range. "The Bank of Canada, being a single mandate central bank, cares about inflation the most," said David Doyle, head of economics at Macquarie. Money markets are pricing in a 7%-8% probability of a rate cut this week. A Reuters poll of 28 economists showed that the lack of clarity around tariffs, combined with recent data on inflation and jobs, will keep the BoC on the sidelines this week. The poll was conducted from July 21 to July 25. Nearly two-thirds of the economists surveyed, 18 of 28, forecast that the BoC would cut its policy rate by 25 basis points in September to 2.50%. More than 60% of the economists predicted a second 25-bps cut before yearend. The BoC was the first central bank among the G7 countries to start cutting rates in June last year and has been the most aggressive since then in its easing cycle. It has reduced rates by 225 basis points between June last year and March. BoC Governor Tiff Macklem will announce the governing council's decision at 9:45 a.m. ET (1345 GMT) on Wednesday. The bank will also release its quarterly monetary policy report, which usually contains its predictions on the economy and inflation. However, the BoC changed tack in April for the first time since the pandemic and offered two different scenarios for the economy as uncertainty on the magnitude and the timing of tariffs have complicated forecasting, the bank said. "Things are still tremendously uncertain, but it feels like the uncertainty has come down a little bit since then. I would be surprised if they didn't present formal forecasts," Doyle from Macquarie said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
2 days ago
- Business
- Reuters
Bank of Canada expected to hold interest rates steady for the third time
OTTAWA, July 28 (Reuters) - The Bank of Canada on Wednesday is likely to keep interest rates unchanged at 2.75% for the third time, economists and market analysts predict, as firm core inflation and robust job growth lessen the urgency to ease rates. The central bank, economists and businesses are increasingly hoping that the worst-case scenario from the impact of President Donald Trump's tariffs is over. "Core inflation is still a little bit hot for the Bank of Canada's comfort," said Doug Porter, chief economist at BMO Capital Markets. "And on top of that, most of the economic data we have seen in recent weeks and even months has been a little less bad than expected," he added, saying that the chances of a continued pause in rates are much more likely. The spillover effects from high tariffs on steel, aluminum and automobiles have largely been confined within those markets while other sectors posted job growth in June. The economy added 83,100 new jobs in June, the first net increase since January. The unemployment rate fell to 6.9% in June with surprise job growth in sectors including wholesale and retail trade, as well as manufacturing, healthcare and social assistance. At the same time, the core measures of inflation that the BoC closely tracks have been persistently at or above 3%, the upper end of the bank's 1%-3% inflation target range. "The Bank of Canada, being a single mandate central bank, cares about inflation the most," said David Doyle, head of economics at Macquarie. Money markets are pricing in a 7%-8% probability of a rate cut this week. A Reuters poll of 28 economists showed that the lack of clarity around tariffs, combined with recent data on inflation and jobs, will keep the BoC on the sidelines this week. The poll was conducted from July 21 to July 25. Nearly two-thirds of the economists surveyed, 18 of 28, forecast that the BoC would cut its policy rate by 25 basis points in September to 2.50%. More than 60% of the economists predicted a second 25-bps cut before yearend. The BoC was the first central bank among the G7 countries to start cutting rates in June last year and has been the most aggressive since then in its easing cycle. It has reduced rates by 225 basis points between June last year and March. BoC Governor Tiff Macklem will announce the governing council's decision at 9:45 a.m. ET (1345 GMT) on Wednesday. The bank will also release its quarterly monetary policy report, which usually contains its predictions on the economy and inflation. However, the BoC changed tack in April for the first time since the pandemic and offered two different scenarios for the economy as uncertainty on the magnitude and the timing of tariffs have complicated forecasting, the bank said. "Things are still tremendously uncertain, but it feels like the uncertainty has come down a little bit since then. I would be surprised if they didn't present formal forecasts," Doyle from Macquarie said.
