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WestJet soars in Q4

Also: Looking for something to worry about? We've got two good options for you.

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Feb 4, 2014

by Max Fawcett

WestJet has made a name for itself in the airline business by going against trend, and that extends to its financial performance. The company booked yet another profitable quarter – its 35th in a row – and hiked its dividend by 20 per cent for good measure. That’s the fourth such hike since the company initiated the dividend back in 2011, a record that its shareholders surely appreciate. It generated $67.8 million of net income in the fourth quarter of 2013 on $926.4 million of revenue, compared with $60.9 million in net income and $860.6 million in revenue in the same quarter of 2012.

Meanwhile, global markets continue to shudder as emerging markets come to terms with the reality of what the Federal Reserve’s tapering program means for them. And while many have raised interest rates in recent days to stem the flow of capital leaving their economies (and heading back to the U.S., where the prospect of rising bond yields makes the risk-reward proposition there more appealing), the Telegraph’s Jeremy Warner thinks that might only make things worse. “We now have a situation where the world’s two biggest economies – the U.S. and China – are both winding down stimulus in lockstep. Europe is tightening passively as its balance sheets shrinks, and M3 money fizzles out. This amounts to something of a shock to large parts of the emerging market nexus. Is it therefore proper for these EM states to further compound the shock with pro-cyclical monetary (or fiscal) tightening, and to do so on a scale that could ultimately push the global economy closer to a deflation trap?”

On the other hand, Warner’s colleague, Ambrose Evans-Pritchard, thinks we should be much, much more worried about Europe itself – hardly a surprise given his longstanding position on the continent’s disastrous experiment with austerity. “Against the self-harm of the eurozone, Turkey and Argentina look like mere fireflies before the storm,” he writes. “In the scale of things, they don’t matter, and in themselves are unlikely to alter the wider picture of what’s happening in the world. The greater menace still lies in Europe, which, as the U.S. Treasury has observed, now adds a seemingly permanent deflationary bias to the global economy. The structural reform Europe fondly imagines its disciplines impose is just skin-deep. It will, in any case, have only limited impact in economies where the stuffing has been knocked out of demand. Since subjecting itself to the diktats of the EU troika, Ireland has slipped ever further down international “ease of doing business” league tables, while in Italy they cannot even manage to deregulate the taxi service without the country grinding to a halt in a wave of protests.”

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