Air Canada CEO's pay cut by over half to $5.8M due to pandemic

Air Canada CEO's pay halved

Air Canada CEO Calin Rovinescu was on track to receive around $12.9 million in total compensation last year, but the value fell by more than half as the airline's shares stalled due to the COVID-19 pandemic.

As of May 4, when the company's share price closed at $17.63 on the Toronto Stock Exchange, the total compensation of its president and chief executive officer was estimated at $5.8 million. Air Canada's shares closed at $16.76 on Monday.

Remuneration of top executives and board members were included in a proxy circular sent to Air Canada shareholders prior to its virtual meeting scheduled for June 25.

Rovinescu, 64, was entitled last year to a base salary of $1.4 million. The value of his share-based awards fell to $1.89 million from $3.55 million, and $3.5 million in options were worthless due to a big drop in the share price. His bonus was also cut by more than half, to $1.6 million from $3.5 million while his pension value was $875,000.

The CEO gave up his base salary until June 30. His total compensation was $11.6 million 2018.

In 2019, Air Canada earned $1.4 billion in profits on $19.1 billion in revenues. COVID-19 turned everything upside down with the airline losing $1.05 billion in the first quarter ended March 31, in addition to forecasts that it would take more than three years to recover from the current crisis.

Gucci, Saint Laurent seek radical redo of fashion calendars

Fashion industry slows

Gucci and Saint Laurent are two of the highest profile luxury fashion houses to announce they will leave the fashion calendar behind, with its relentless four-times-a-year rhythm, shuttling cadres of fashionistas between global capitals where they squeeze shoulder-to-shoulder around runways for 15 breathless minutes.

The coronavirus lockdown, which has hit luxury fashion houses on their bottom lines, has also given pause to rethink the pace of fashion, offering the possibility to return to less hectic, more considered periods of creativity and production — and perhaps consumption.

Gucci creative director Alessandro Michele imagines a twice yearly appointments — one in the fall and one in the spring — to present co-ed collections, getting away from the hyped-up calendar which has come to require pre-season collections before the major women’s and men’s runway shows and a one-off cruise collection, increasingly in exotic locations.

“Two appointments a year are more than enough to give time to form a creative thought, and to give more time to this system,” Michele said in a video conference Monday, expanding on an idea he launched over the weekend in a series of Instagram posts from his own lockdown diaries.

The virus-imposed shutdown — while stopping production and consumption that feed the fashion cycle — also recharged creativity among those who found new time for reflection. "It is a great gift that our planet gave us, a great gift that cannot be discarded,’’ Michele said.

Michele said he hopes that a new calendar and new rhythms would be decided within the fashion system and in co-operation with other designers.

It has been clear for the last few years that the fashion world has been suffering under the current pace: More luxury houses have been combining men’s and women’s shows as genderless and even seasonless dressing becomes a global theme; it hasn't been unheard-of for major brands to skip a season or to venture away from their fashion cities to expand their audience.

Saint Laurent hasn’t articulated its intentions, but said in a statement last month that it would “take control” of the fashion schedule “conscious of the current circumstances and its waves of radical change.”

Luxury fashion was one of the first industries to show suffer from coronavirus, first with the China shutdown that closed boutiques and blocked travellers already in January from a region responsible for a third of global luxury. And the pandemic appeared in Europe just as Fall-Winter 2020-21 shows were underway in Milan and then Paris.

Illustrating just how vulnerable the show system is in the face of a fast-spreading global virus, Giorgio Armani showed his collection in a closed theatre on Feb. 23 — just two days after Italy became the first Western country with a coronavirus outbreak.

Armani also has called for a major rethink of changes in luxury fashion during his 45 years as a stalwart of Milan fashion.

In a letter to Women’s Wear Daily last month, Armani said he found it “immoral” for luxury fashion to adopt the pace of fast fashion — the drive to deliver more in pursuit of profits “yet forgetting that luxury takes time, to be achieved and to be appreciated.” That has included moves toward see-now, buy-now capsule collections by some brands, running in direct opposition to his notions of “timeless elegance.”

“It makes no sense for one of my jackets or suits to live in the shop for three weeks before becoming obsolete, replaced by new goods that are not too different,” Armani said.

Armani, who opened his Milan boutiques last week as the Italian economy slowly reopens, said he would keep summer collections in stores until September — running counter to recent practice that put linen dresses in stores in winter and Alpaca coats in the summer.

The British Fashion Council and the Council of Fashion Designers of America also have endorsed resetting “the way in which we work and show our collections.” They encouraged brands “to slow down,” and reconsider how much merchandise they produce.

The Italian Fashion Chamber is promoting three days of online presentation of men’s and women’s collections in July to substitute the regular June calendar. Gucci will participate with a collection called “Epilogue,” to represent the end of an era.

When the fashion communication rebirth that Michele envisions will happen remains to be seen. He said September is too soon, while Saint Laurent only said it wouldn't participate in any previously scheduled events this year.

Fashion chamber president Carlo Capasa can’t say when live shows might return to the agenda — but he says they are irreplaceable.

“I believe that the digital experience is important, but it should be tied with a physical experience,” Capasa told AP. “Whoever has been to a fashion show knows the importance of the setting and the emotions.”

As malls reopen, worries grow that consumers won't come back

Will malls be the same?

Malls across the country are beginning to open their doors after weeks of government-mandated shutdowns, but both operators and retail tenants are stepping into uncharted territory amid the COVID-19 pandemic.

In the near-term, operators are focused on reopening their properties safely, but there's a larger concern that shoppers — who have embraced e-commerce and curbside pickup since the pandemic's outset — will be unimpressed upon returning to malls as many stores remain closed and new safety measures change the experience.

Tim Sanderson, head of Canadian retail at Jones Lang LaSalle, said he's worried about a repeat of U.S. retail giant Target's ill-fated attempt to penetrate the Canadian market, where supply chain issues resulted in empty shelves, and annoyed customers who left and never came back.

"This is the experience that I fear, that we fear, could happen in the malls," he said. "Someone goes to a shopping centre, goes through all of the protocols involved, walks into the shopping centre, and the store she came for is not even open, but also, the experience is going to be underwhelming."

Sanderson emphasized that the safety measures malls have rolled out, such as one-direction travel, reduced or eliminated seating, physical distancing requirements and increased security to enforce policies, may be detrimental to the shopping experience but are crucial as a resurgence of the pandemic is the worst-case scenario.

"If we reopen business, and then the government has to lock it down again, I think that's just bad for everybody in a whole lot of ways, not just shopping and retail, but people's psyche and everything," he said.

Mall owners have a strong incentive to get their properties open safely, as rents have plummeted following the provincial orders to close.

Owners were only paid about 20 to 25 per cent of their expected April rent, and around 15 per cent in May.

"There's lots of talk among the retail and landlord community about what rents look like going forward, people have had a major, major impact to their sales."

But he said there hasn't been much progress as nobody's in a position to say what sales will look like, or what rent levels will be affordable.

Mall owners, like many other landlords, have engaged tenants in rent deferrals to help struggling tenants.

Ivanhoe Cambridge has given deferrals to the "vast majority" of tenants "in solidarity with the difficult circumstances," said spokeswoman Katherine Roux Groleau.

Some landlords are stepping in to help in other ways. Brookfield Asset Management, which has extensive mall holdings especially in the U.S., has said it's ready to invest US$5 billion in large retailers to keep them afloat.

The situation could also lead to a return of pure percentage deals, where rent is tied to sales, especially for restaurant tenants, said CBRE Ltd. vice chair Paul Morassutti.

The crisis, however, will likely also accelerate the trend already underway of mall properties moving away from strictly retail, especially as numerous retailers like Reitmans, Aldo, Pier 1 and others go into creditor protection.

"This pandemic has accelerated the timing for some of those stores," said Ray Wong, vice president at Altus Group.

"It's not just the pandemic, they were having challenges before, and this just pushed them along."

He said that while some premier shopping centres like Yorkdale Mall in Toronto will continue to see high demand, others in secondary markets could see an accelerated switch to more mixed used condos and rentals and office, while some in smaller markets might not survive as retail spaces at all.

"Certain malls or certain shopping centres, it may not be viable to have retail there and it may be redeveloped to other types of uses."

The coronavirus outbreak, and the resulting shift to working from home, could also make people more reluctant to take long commutes and will instead gravitate to suburban hubs, like a massive development Oxford has planned for central Mississauga to further the trend of diversifying mall properties.

"It will be really interesting to see the discussion on the office front, with more people working from home, not wanting to do the two-hour commute on the subway, that they prefer locations that are closer to where they live, especially in the suburbs," said Wong.

"It's a constant juggling act to figure out what will work."

European regulators to take closer look at Air Canada-Transat deal

AC-Transat deal scrutinized

European regulators are launching an in-depth investigation into Air Canada's deal to buy travel company Transat AT amid European Commission concerns the deal may reduce competition and result in higher prices.

A preliminary investigation said Air Canada and Transat have been competing head-to-head for passengers.

The commission is worried the proposed deal could significantly reduce competition on 33 origin and destination city pairs between Europe and Canada.

These include 29 where both companies offer direct services and four where one company flies direct and the other one indirect via one of its hubs.

The commission said even if WestJet expanded its transatlantic operations to Europe, it is unlikely that it would be enough.

Air Canada's deal to buy Transat for $720 million has been agreed to by shareholders, but still requires regulatory approval in Canada and the European Union.

Central Mountain Air to resume commercial flights July 6

Central set to resume flights

Central Mountain Air will resume commercial flights starting July 6.

The airline says its initial return to schedule service will run through Aug. 8, with flights from Fort St. John to Kamloops, Kelowna, and Prince George. Flights will be based on demand, public health guidelines, and government travel regulations, the airline said.

“Over the coming months, our schedule will responsibly and gradually return, as we continue to navigate our way through these unprecedented times” the company said in an update posted to its website. 

“We look forward to providing travel and cargo operations that are essential and will enable re-opening of our economy, as well as connect you to friends and loved ones.”

The airline suspended commercial flights April 11.

Cargo to Fort St. John, Prince George, Kamloops, and Terrace continues, as do charter flights.

Pipeline route clearing in Peace Country nears completion

Route cleared for GasLink

Clearing for the first two spreads of Coastal GasLink pipeline construction through the Peace region is nearly complete.

The Surerus Murphy Joint Venture is building the first two sections of the pipeline. The right-of-way for the first 92 kilometres to the Brule Mines area is 86% cleared, while the right-of-way for the next 48 kilometres to the McLeod Lake area is 76% cleared.

There have been 73 kilometres of pipe stockpiled to date for the two spreads, and pipe hauling will continue as crews ready for installation this summer, the company reported May 21.

Ongoing road maintenance and bridge upgrades, and environmental monitoring continues.

“A key focus for the near-term is managing erosion and sediment control to protect local waterways from potential run-off, and planning for additional site preparation activities,” the company said.

The Sukunka Lodge is temporarily closed for spring break-up, while development of the Chetwynd work camp site will resume in June.

The company says it is working with Northern Healh and its contractors to implement enhanced health screening measures for its workers due to the COVID-19 pandemic.

“As spring thaw comes to an end, we are preparing for a slow and steady increase in activities leading up to our summer construction program,” the company said.

“Towards the end of May, we anticipate workforce numbers to gradually increase to approximately 650 workers – including those from local areas – with work focused on environmental monitoring and field work, grading, grubbing and site preparation to position the project for pipe assembly and installation later in the summer.”

TSX starts week higher, U.S. stock markets closed for holiday

TSX starts week higher

Canada's main stock index started the trading week by moving higher, fuelled by gains in the financial and industrial sectors.

The S&P/TSX composite index was up 94.85 points at 15,008.49.

U.S. stock markets were closed for the Memorial Day holiday.

The Canadian dollar traded for 71.47 cents US compared with 71.35 cents US on Friday.

The July crude contract was up 18 cents at US$33.43 per barrel and the July natural gas contract was down three cents at US$1.85 per mmBTU.

The June gold contract was down US$8.60 at US$1,726.90 an ounce and the July copper contract was up nearly three cents at US$2.41 a pound.

Vermilion Energy president and CEO Anthony Marino steps down

Vermilion CEO departs

Vermilion Energy Inc. says Anthony Marino has stepped down as president and chief executive and as a director of the company, effective immediately.

The Calgary company says instead of replacing Marino it has created an executive committee to run the firm that includes chairman and former chief executive Lorenzo Donadeo, who has been named executive chairman.

Curtis Hicks, who served as Vermilion's chief financial officer from 2003 to 2018, has also rejoined the company as president.

Vermilion says it has used the executive committee structure in the past and that it has been re-established formally.

The executive committee will include a minimum of five senior executives including the executive chairman, president, chief financial officer, chief operating officer, executive vice-president people and culture and vice-president of business development.

Vermilion is an international energy producer with properties in North America, Europe and Australia.

Five things to watch for in the Canadian business world

This week in business

Five things to watch for in the Canadian business world in the coming week:

Poloz speech

Bank of Canada governor Stephen Poloz will give the University of Alberta Eric J. Hanson Memorial Lecture by video conference on Monday. Canada's top central banker, who will retire next month, said recently that adding an income-support measure like the Canada Emergency Response Benefit to the government's tool kit could help the country more quickly respond to sudden shifts in the economy.

Big bad bank earnings

Scotiabank and National Bank will kick off the results from the big Canadian banks on Tuesday, followed by Royal Bank and Bank of Montreal on Wednesday and TD Bank and CIBC on Thursday. Analysts are expecting an "ugly" quarter as mortgage and loan deferral programs rolled out amid COVID-19 are bound to contribute to drops in revenue and spikes in provisions for credit losses.

Aritzia earnings

Aritzia Inc. will hold a conference call with analysts to discuss its fourth-quarter financial results on Thursday. Statistics Canada reported Friday that Canadian retail sales posted their biggest monthly decline on record in March and warned an even bigger drop is expected for April as closures due to pandemic ran the entire month.

GDP numbers

Statistics Canada will release gross domestic product figures for March and the first quarter of 2020 on Friday. A preliminary estimate by Statistics Canada last month pointed to a nine per cent drop in GDP for March.

Canopy update

Canopy Growth Corp. is set to hold a conference call on Friday to discuss its fourth-quarter and full-year financial results. The cannabis company recently parted ways with chief operating officer Andre Fernandez and chief commercial officer Dave Bigioni, following layoffs of roughly 800 staff as a result of the COVID-19 pandemic.

TSX higher to cap good week despite concerns about U.S.-Chinese relations

TSX climbs to cap week

Canada's main stock index capped a good week by moving slightly higher amid ongoing concerns about U.S.-Chinese relations.

The S&P/TSX composite index closed up 28.79 points at 14,913.64.

In New York, the Dow Jones industrial average was down 8.96 points at 24,465.16. The S&P 500 index was up 6.94 points at 2,955.45, while the Nasdaq composite was up 39.71 points at 9,324.59.

The Canadian dollar traded for 71.35 cents US compared with 71.76 cents US on Thursday.

The July crude contract was down 67 cents at US$33.25 per barrel and the July natural gas contract was up 2.9 cents at US$1.88 per mmBTU.

The June gold contract was up US$13.60 at US$1,735.50 an ounce and the July copper contract was down 4.55 cents at nearly US$2.39 a pound.

Air Canada revises refund policy amid growing anger over cancelled flights

Air Canada revises refunds

Air Canada is revising its cancellation policy amid mounting customer frustration, offering travellers the option of a voucher with no expiry date or discount Aeroplan points if the airline cancels their flight due to the COVID-19 pandemic.

The airline says the new policy — the previous one capped travel vouchers at 24 months — applies to non-refundable tickets issued up to the end of June, with an original travel date between March 1 and June 30.

Air Canada's new tack comes as advocates and thousands of passengers continue to demand their money back for services they paid for but have not received.

Three petitions with more than 77,000 signatures are calling for full refunds to be implemented before financial aid is handed out to airlines, two of which were presented to the House of Commons over the past 11 days.

None of Canada's major airlines are offering to return cash to passengers for the hundreds of thousands of flight cancellations since mid-March, opting instead for vouchers — typically with a timeline of two years.

Pressed on the issue Thursday at his daily media conference, Prime Minister Justin Trudeau said the government will look at the issue further.

B.C. business survey shows majority doubt return to profitability

Uncertainty amid reopening

A survey of British Columbia businesses finds barely one quarter believe they can open and operate profitably as the province gradually eases COVID-19 restrictions.

More than 1,300 member businesses of the Greater Vancouver Board of Trade, the BC Chamber of Commerce and the Business Council of British Columbia were asked about the second phase of B.C.'s restart plan.

A statement from the board of trade says 26 per cent expect to open and operate at a profit while 75 per cent worry about attracting customers.

Other concerns include a lack of cash to meet expenses or new safety standards and the board says 55 per cent also believe restarting their business will take at least two months.

But owners now report an average of just 12 layoffs, down from 43 in mid-March, and the board says that likely shows the effect of wage subsidy programs.

About 43 per cent of businesses say they think they will need government incentives to continue operating.

Val Litwin, president and CEO of the BC Chamber of Commerce says despite the easing of COVID-19 restrictions, the crisis is not over for businesses across the province.

"Policy-makers must appreciate that business models will be very fragile during this early stage of the recovery cycle and that ongoing supports will be essential," he says in the statement.

Nearly 400,000 B.C. workers have lost their jobs since the pandemic hit, says Greg D'Avignon, president and CEO of the Business Council of British Columbia.

He is calling on the federal and provincial governments to address tax, regulatory and process costs.

The survey is the third in a series conducted by the Mustel Group on behalf of B.C.'s major business organizations since COVID-19 forced closure of many sectors of the provincial economy two months ago.

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