Noah Zivitz

Managing Editor, BNN Bloomberg

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It's down to business jets for Bombardier after the rapidly-shrinking company announced a memorandum of understanding yesterday to sell its rail division to Alstom in a US$8.2-billion deal that will see US$4.5 billion in cash and stock flow to the Montreal-based manufacturer. CEO Alain Bellemare, who has presided over the stunning overhaul of the industrial giant, said the transaction will "change the game for Bombardier" by allowing the company to chip away at its more than US$9 billion in debt. Meanwhile, Myriam Balezou – one of our Bloomberg partners who did some great advance reporting on the deal – called it a “life saver” for Bombardier when we spoke with her this morning live from London.

Some basic questions that will help frame our coverage today: What's the outlook for winning regulatory approval? What's the reaction from Bombardier's major rail clients who've been miffed by problems the last couple of years? What about the implications for Bombardier's workforce? Is Bombardier's "brand-new footing" (Bellemare's words) going to be stable footing considering the biz jet business is at the mercy of economic cycles? And how will history remember Bellemare's makeover of Bombardier? We’re looking forward to speaking with Alain Bellemare at 10:30 a.m. ET.  

BLOCKADE WATCH

Prime Minister Justin Trudeau emerged from his meeting with top cabinet officials yesterday saying he wants to “quickly and peacefully” find a solution to end the blockades that continue impeding rail traffic in Canada. But 13 days into the disruption, “quick” might be losing some of its meaning in this incredibly complicated situation. The PM will resume cabinet talks later this morning and presumably this will be the topic in the House of Commons during question period this afternoon. Should point out Via Rail today announced partial service between Ottawa and Quebec City will resume Thursday.

CRTC WIRELESS HEARING BEGINS

The Canadian Radio-television and Telecommunications Commission begins a two-week hearing in Gatineau, Que.  today as part of the regulator’s nearly year-old review of the country’s wireless market. It’s a highly political issue after the federal Liberals campaigned on a pledge to bring down cell phone bills 25 per cent. Paul Bagnell is on location at the hearing and will bring us live updates today and tomorrow, including insight on the hot topic of mobile virtual network operators (MVNOs) that want access to the incumbents’ networks. Today’s presenters include the Competition Bureau and Shaw Communications.

AIR CANADA HELD BACK BY MAX AND VIRUS

No surprise there. The airline this morning warned its first-quarter EBITDA will land approximately $200 million below year-ago levels due to the lingering impact of 737 Max groundings and service suspensions caused by the coronavirus. Despite those major drags, Air Canada’s EBITDA rose seven per cent in the fourth quarter and its passenger revenue hit a record of almost $3.98 billion, notably because fares inched higher amid capacity constraints. We’ll see how investors interpret the results as performance fell short of estimates on a few fronts. Also should point out the company said it expects the Max will start flying again late in the third quarter.

Virus-related warnings are a major theme today, with Apple saying it’ll miss this quarter’s revenue forecast and Walmart’s CFO telling Bloomberg the outbreak could shave a few cents off the retailer’s first-quarter profit. It’s just one more thing for Walmart shareholders to sweat after the company forecast full-year profit that’s below expectations and reported fourth-quarter numbers that were dented by soft holiday sales in the U.S., disruption in Chile, and Brexit.   

OTHER NOTABLE STORIES

-HSBC announced a sweeping overhaul today, with plans to rid itself of US$100 billion in assets and cut ~35,000 positions from its global workforce.

-The Caisse de dépôt et placement du Québec was a top newsmaker yesterday. In addition to positioning itself to become Alstom’s top shareholder by virtue of its stake in Bombardier Transportation, the pension fund said it will raise its stake in Cirque du Soleil Entertainment Group to 20 per cent by picking up the last of founder Guy Laliberté’s shares. And it’s also partially cashing out of CGI by selling a little more than 6 million shares back to the IT firm for cancellation at a price of $99.85 apiece. The Caisse will be left with an 11.9 per cent stake in CGI.

-Hudson’s Bay Company today said proxy advisors ISS, Glass Lewis and Egan-Jones are advising their clients to support the retailer’s proposed privatization. 

-Spin Master announced today its chief operating and chief information officers are leaving the company “by mutual agreement.”

-Park Lawn says chairman and CEO Andrew Clark is stepping down from his roles at the cemetery owner/operator.

-M&A in the U.S. asset management business this morning, with Franklin Templeton striking a deal to buy Legg Mason for US$50 per share.

NOTABLE RELEASES/EVENTS

-Notable earnings: Air Canada, Emera, Nutrien, Stelco Holdings, Walmart

-Notable data: Canadian manufacturing sales

-9:00 a.m. ET: CRTC opens two-week hearing on mobile wireless services (agenda here)

-9:30 a.m. ET: Assembly of First Nations National Chief Perry Bellegarde holds news conference in Ottawa re. blockades

-11:00 a.m. ET: Prime Minister Justin Trudeau makes statement on the blockades

-11:30 a.m. ET: Deputy Prime Minister Chrystia Freeland, NAFTA Chief Negotiator Steve Verheul, and Acting Ambassador to U.S. Kirsten Hillman testify before House Standing Committee on International Trade

-Statistics Canada releases report on RRSP contributions in 2018

Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.