Today’s news: Trending business stories for February 6, 2024

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Today’s headlines

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Top story

Airline passengers face the prospect of years of disruption

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Airline passengers face the prospect of delayed and cancelled flights for years to come as staffing challenges continue to plague the industry, according to a survey.

About 55 per cent of the 150 senior airline and airport executives surveyed by the travel software company Amadeus expect disruption to remain elevated in the coming years, while just 37 per cent see a return to pre-COVID levels, the survey said.

Staff turnover was exacerbated by the massive job cuts during the pandemic, which led to a shortage of experienced workers as travel sharply rebounded. Over the summer peak season in 2022 and 2023, airlines were forced to trim back schedules, while airports limited flights to cope with the surge in demand.

“We lost the expertise, the people who knew exactly what to do because they’ve seen that scenario before,” said Guy Kavanagh, head of flight operations at Amadeus. “The demand is back but the capabilities aren’t there so we see disruption increasing and that’s likely to continue.”

The shortages are seen throughout the aviation ecosystem, from ground handling services to flight crews. Post-pandemic staff turnover is much higher and the industry is less attractive to young workers starting their careers, according to Christos Pantazis, ground operations director at Goldair Handling.

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Flights across Germany’s major hubs were disrupted for a day last week, after security staff walked out over pay and working conditions. Ground staff at Deutsche Lufthansa AG are set to strike this Wednesday over similar demands.

Airlines face expensive bills for disrupted services. Passengers whose flights start or end in the European Union are entitled to compensation of between €250 to €600 in the event of delays, cancellation or denied boarding, under the so-called EU261 rules.

Scandinavian carrier SAS AB estimates disruption is responsible for eight to 10 per cent for its costs, according to Michael Lindborg, the carrier’s vice president for airline solutions.

“If we want to minimize customer disruption, we can, but that solution may result in a significant cost increase or poor utilization of the fleet,” he said. “We need to be able to quickly understand the full implication of new plans in terms of delay, cost and compensation.”

— Charlotte Ryan, Bloomberg

7:30 a.m.

Stock markets before the opening bell

Global bond markets steadied after the biggest two-day selloff in months, while stocks looked for direction amid mixed earnings.

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Ten-year Treasuries posted small moves after yields soared about 28 basis points in the previous two sessions. European equities and S&P 500 futures were little changed. BP PLC jumped almost seven per cent as the oil major announced plans to repurchase US$3.5 billion of shares in first half. UBS Group AG retreated after its earnings disappointed analysts.

A raft of United States Federal Reserve officials are due to speak this week, which may add additional insight into the central bank’s thinking. Strong U.S. economic data has forced traders to reduce their bets on interest rate cuts and chair Jerome Powell reiterated his wait-and-see approach in an interview on Sunday.

“Wary sentiment from central bankers, cautious about stubborn inflation, may hold back gains again on Wall Street,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “Policymakers still want to keep a tighter rein on demand, so high borrowing costs are likely to linger for longer.”

While market pricing once made a first quarter-point Fed cut in March look like a near-certainty, those odds have now dwindled to around 10 per cent. The Fed’s Loretta Mester and Patrick Harker are due to speak on Tuesday, with Adriana Kugler and Tom Barkin slated for the following day.

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Some of the biggest market moves were in Asia, where Chinese equities soared on speculation authorities are planning more forceful efforts to end the rout. Regulators plan to brief President Xi Jinping on the market as soon as Tuesday.

“While the bounce today is strong and certainly welcome, investors will probably want more concrete actions to be taken by policy makers,” said Eugene Leow, fixed income strategist at Dbs Bank Ltd. “Sentiment on Chinese assets has been in the doldrums for some time.”

The Hang Seng China Enterprises Index jumped almost five per cent, while a broader gauge of emerging market equities headed for its biggest advance this year.

Meanwhile, Palantir Technologies Inc. surged as much as 20 per cent in U.S. pre-market trading after giving a higher-than-expected profit outlook on demand for artificial intelligence products.

Citigroup Inc. strategists warned that positioning in U.S. technology stocks is now so bullish that any selloff could trigger a wider rout. Wagers on declines in tech-heavy Nasdaq 100 futures have been completely erased, leaving investors overwhelmingly expecting further gains, which could “amplify a turn in the market,” strategists led by Chris Montagu wrote.

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— Bloomberg

What to watch today

Bank of Canada governor Tiff Macklem speaks at the Montreal Council on Foreign Relations starting at 1:00 p.m. Eastern time.

Deputy Prime Minister Chrystia Freeland provides an update on the government’s economic plan in Ottawa starting at 9 a.m. Eastern time.

Peeter Routledge, superintendent of financial institutions, and Celyeste Power, chief executive of the Insurance Bureau of Canada, participate in a fireside chat at CatIQ’s Canadian Catastrophe Conference in Toronto.

On the earnings front, expect reports from Ford Motor Co., BP PLC., Toyota Motor Corp., Spotify Technology SA, Snap Inc., Nintendo Co. Ltd., Precision Drilling Corp., Finning International Inc., Algoma Steel Group Inc.

Need a refresher on Friday’s’s top headlines? Get caught up here.

Additional reporting by The Canadian Press, Associated Press and Bloomberg

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