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GRAFTON: Another flighty Liberal bailout, as Trudeau prepares to spend non-existent COVID-19 bucks on failing airlines

Ken Grafton writes that Trudeau is planning a massive bailout of Air Canada, owned mostly by wealthy foreign trusts.

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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

Opinion

FILDEBRANDT: $131 Sloan donation leak was an inside job – Conservative MPs tell us so

Conservative MPs say O’Toole’s office has been caught clearly trying to set Sloan up. This is amateur House of Cards.

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What I’m about to write here doesn’t take a lot of intelligence to put together. But since nobody has yet – at least publicly – let me connect some very clear dots.

On the evening of January 18, federal Conservative Leader Erin O’Toole announced that he was “asking” his MPs to kick fellow Ontario Tory MP Derek Sloan out of the party’s caucus.

Far-left gotcha-propaganda website Press Progress said that they have proof that Sloan accepted a $131 donation from a man named Paul Fromm.

Who the hell is Paul Fromm? Until a few hours ago, I – and probably 98 per cent of Canada – had never heard of the guy. Turns out that he’s a particularly loathsome white supremacist.

The Press Progress hit piece was complete with lots of colourful pictures of Fromm doing his best impression of a Nürnberg rally. The intention was clearly to link Fromm with Sloan.

Doing their best Pravda knock-off, Press Progress has done this before, libelling mainstream – even moderate – conservative politicians in Alberta as a 21st century sturmabteilung. It’s what they do best.

O’Toole did his best surprised face and tweeted furiously.

“Derek Sloan’s acceptance of a donation from a well-known white supremacist is far worse than a gross error of judgment or failure of due diligence.”

Conservative MPs tell me that they all learned about it in the press.

Now you don’t need to be on Team Sloan to smell a rat here. You just need two eyes and half a brain. Let’s examine the evidence.

One: Almost no candidate is aware of every – or even most – of the donations that they receive. It is processed by the campaign’s Chief Financial Officer (CFO). For small campaigns like Sloan’s, that position is often a volunteer, or at the least, not a professional. I could have accidentally accepted blood diamond money while I was in politics for all I know.

Two: No candidate – and I repeat no candidate – is aware of the details of donations the size of Paul Fromm’s: $131. It’s a rounding error. I only ever ran to be an Alberta MLA in my time in politics, and I did not know who was giving me $131. I knew if someone was giving me $1,000. Maybe even $500. Never, ever, $131.

Three: I have never heard of Paul Fromm before. Unless you’re a full-time Nazi hunter, you probably have never heard of Paul Fromm either. I’m doubtful that Press Progress had heard of him until they had this gently brought to their attention.

Four: Paul Fromm’s big $131 donation was processed not just by the Sloan campaign, but by the Conservative Party of Canada itself. Had the CPC had recognized this name, they would have flagged it. They didn’t. They do apparently expect Derek Sloan’s CFO to however.

Five: If the Conservative Party of Canada – with its legendary resources – could not flag this $131 donation, then it is not reasonable to expect a fourth-place also-ran campaign to have the resources to do it.

Six: Elections Canada only requires the disclosure of donor names for contributions over $200. It is illegal for them to disclose donations under that amount. The only two entities that would have had any awareness of Fromm’s donation are: Derek Sloan, and, the Conservative Party of Canada’s staffers.

Seven: Press Progress could not have legally obtained information about the donation except from: Derek Sloan, or, the Conservative Party of Canada. Take your best guess about which one gave the information to Press Progress.

Sloan is not a centrist Tory in the mould of O’Toole, and has a reputation as a bit of a maverick. Leaders do not like mavericks in their caucus.

And Sloan is the only rival that O’Toole faced for the Conservative leadership that currently has a seat in the House of Commons.

Multiple Alberta and Ontario Conservative MPs the Western Standard has spoken to tell us that they and Sloan found out about this in the media. They also tell us that they believe that this was entirely an inside-hit job by O’Toole via the Leader’s Office or party HQ.

One veteran Conservative with inside knowledge of the matter says that several MPs intend to vote against O’Toole’s demand to expel Sloan…if they get a secret ballot.

The Reform Act legally requires that they do, but I’m sure smart people in Ottawa can find a way around that.

And even if his caucus showed some spine, O’Toole has unilaterally declared that Sloan will not be allowed to seek the CPC nomination in his constituency again, even if his local members want him. Grassroots stuff.

From the MPs we have spoken to at least, the Conservative Caucus is bitterly divided. While Sloan has his share of enemies in the party, they see – without much need for a tinfoil hat – that this is clearly instigated at the behest of their own leader. And they tell us that they are afraid that O’Toole could come for them next on trumped-up charges (no pun intended).

What could O’Toole possibly be thinking? There are other ways for leaders to purge troublesome underlings. They can bring forward better false charges of impropriety. They can do a better job of covering their tracks. They can just go the route of Andrew Scheer via Brad Troast, and rig the nomination against them.

This is amateur hour House of Cards.

Derek Fildebrandt is Publisher of the Western Standard

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Opinion

MORGAN: Alberta needs less talk, and more action from Kenney

“Premier Kenney needs to pick a lane and to stick to it with authority.”

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Support for the United Conservative Party under Premier Kenney’s leadership has collapsed. Exclusive polling for the Western Standard has the UCP languishing at an abysmal 26 percent support while the NDP is at 41 percent while the new and still leaderless Wildrose Independence Party has climbed to 9 percent province-wide. This trend is nothing less than catastrophic for the UCP and they will need to make some major changes if they hope to be re-elected in 2023.

With nearly two years in power now, it is tough to point to any concrete changes or policies from the Kenney government. While Jason Kenney talked a great game at campaign time, we have seen little follow-through. Where is the promised democratic reform through citizen’s initiated referenda and recall legislation? Where is the fiscal conservatism and moves to get the budget under control? When will the government act on even one of the Fair Deal panel recommendations?

While Premier Jason Kenney continues to try to be everything to everybody, he is losing support on all fronts. The NDP-left will never learn to love the UCP, yet Kenney remains reticent to take on the government unions which are opposing all efforts at fiscal reform or efficiencies. Kenney has talked tough with unions, but won’t act. It’s time to take a stand and start cutting spending, not just haircuts. We are running out of money and taxpayers are running out of patience. It won’t become any easier for waiting.

On the democratic reform front, Kenney needs to implement the promised referenda and recall legislation. It has been nearly two years and this doesn’t need to be studied any longer. We know what we need and we know what we voted for. Give it to us already.

On the Western alienation front, Kenney has been at his most disappointing. This again has been clearly indicated in the recent polling commissioned by the Western Standard. Support for independence is exploding to new records in Alberta. While the UCP was not elected with a mandate to pursue independence, they were elected as a party expected to stand up to Ottawa. It is time that they did it.

Ottawa has more control over Alberta today than when Jason Kenney came to office. Tough talk is clearly not working.

No more panels. No more “expert” studies. No more kicking the can down the road. Albertans want some leadership and they want somebody to protect Alberta’s interests from an increasingly hostile federal government.

We have made it clear that we want a provincial pension plan. I doubt that I will see it implemented before I am old enough to collect it, and I am only 49 years old.

Why more study on whether or not we want a provincial police force? We know we want it. Now start working on what it will take to create it. What did we get? The province commissioned yet another study.

Where is the Alberta Chief Firearms Officer we were told we would get? How hard is it to appoint somebody? Instead, we got an Alberta Firearms Advisory Committee. More talk.

We are getting a referendum on equalization at least, but Kenney has made clear that there will be no ‘or else’ consequences if Ottawa and the other provinces fail to make reforms.

We are living in tough times. Citizens want to see leadership and that means seeing leaders making tough, definitive decisions. Wishy washy approaches to issues aren’t acceptable.

Premier Kenney needs to pick a lane and to stick to it with authority. If you oppose lockdowns, don’t impose them. If you support lockdowns, do it unapologetically and do it in full. Trying to appease both sides only alienates both sides.

Talk is cheap and we are tired of hearing it. If the current government can’t discover how and where they want to actually act on things, they will be replaced in the next election, and I fear for what that replacement may be.

Cory Morgan is the Podcast Editor and a columnist for the Western Standard

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Opinion

OUELLETTE & SHAW: Freedom of expression is under attack in Canada

“While Canada is a relatively free country, the pandemic has exacerbated our pre-existing shortcomings in terms of freedom of expression.”

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Our freedom of expression is under attack. In recent years, there’s been a significant trend toward censorship in the media, in academia, and among the general population. The controversy at the University of Ottawa over the use of the N-word is one example among others. Why do we need to worry about this trend? For one thing, an attack on our freedom of expression is also an attack on our standard of living.

The virtues of freedom of expression are widely recognized: It improves the quality of our democratic institutions, facilitates the exchange of ideas, and leads to sounder, more transparent public policies.

But aside from these benefits, there is also a strong link between freedom of expression and economic growth. This is confirmed by the economic literature and by many academic papers from different researchers at Stanford UniversityDartmouth College, and the University of California, Berkeley, who all arrive at the same conclusion: The exchange of ideas stimulates innovation, and innovation is one of the main engines of economic growth and rising living standards.

Encouraging the exchange of ideas and the protection of freedom of expression is therefore intuitively beneficial, and this is confirmed by the scientific literature. But concretely, what would the average Canadian stand to gain if our governments put in place public policies encouraging greater freedom of expression?

According to our calculations and our econometric model, individual Canadians would be an average of $2,522 richer each year. Obviously, this amount wouldn’t be deposited directly into one’s bank account, but rather, a gradual increase in our living standards would result from the effects of more freedom of expression.

In the sample of 132 countries used in our study, Canada is among the top 15 per cent in terms of freedom of expression. But while it is true that we live in a relatively free society, taking this good ranking for granted would be a mistake.

Indeed, governments have a lot of room to grow when it comes to improving freedom of expression, especially if we compare ourselves to Norway, the top country in the ranking. There, it is standard practice for politicians to make constant efforts, encouraged by citizens, to better protect freedom of expression.

In contrast, in Canada, and especially in certain provinces like Quebec, the government can arbitrarily decide to subsidize one media outlet rather than another, which can potentially hinder media independence and lead to biased and less reliable information. Not to mention that it is increasingly difficult to obtain information from our governments through requests for access to information, which hampers proper public debate. This situation should alarm us.

In order to improve the country’s performance in terms of freedom of expression, thereby also improving our standard of living, we have three recommendations:

  1. Favour media independence from government by limiting arbitrary subsidies and, in their place, creating a regulatory and fiscal framework favourable to all media;
  2. Encourage Canadian public universities to protect freedom of expression in order to truly allow their researchers, professors, and students to express themselves freely without risk of reprisals;
  3. Increase the information and data available to the population by reducing the need to make requests for access to information, in order to facilitate public debate.

While Canada is a relatively free country, the pandemic has exacerbated our pre-existing shortcomings in terms of freedom of expression. We must not allow the current situation to become the new normal. For the sake of our standard of living and the wealth of our country, we must do more to promote and protect the freedom of expression of all Canadians.

GUEST COLUMN: By Miguel Ouellette, Director of Operations and Economist, and Maria Lily Shaw, Economist, Montreal Economic Institute

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