Oil price pain seeps into other sectors of Alberta economy
Oil price pain seeps into other sectors of Alberta economy
From airlines to beer-makers to wireless providers, withering crude prices have been a drag on businesses seemingly far removed from the oilpatch.
"Sometimes — outside of Alberta, particularly — there's some skepticism or even some derision against the petroleum sector," said Todd Hirsch, chief economist at ATB Financial.
"Some people actually feel it's getting its comeuppance... But they need to realize that it has broader implications for the whole economy."
Troubled skies
WestJet Airlines, based in Calgary, is shuffling around its schedules to reflect lower demand for flights to and from energy-focused destinations in Western Canada.
On a recent quarterly conference call, there was also talk of potentially deferring the delivery of new planes and returning leased aircraft that are up for renewal next year.
"It's had a dramatic impact on WestJet," aviation consultant Rick Erickson said of the crude downturn. "Demand is down across the country but nowhere near as much as it is in Western Canada."
Traditionally, a big portion of airline traffic had been oil workers commuting to and from site from elsewhere in the country, said Erickson. With projects on hold, those volumes have tapered off.
Molson, Telus and Manulife
The crude downturn was even cited as cause for concern in the latest earnings for Molson Coors Brewing Co., which said on its quarterly call Thursday that beer drinkers — particularly in Alberta — are choosing economy brews over premium brands.
The oilpatch pain was also evident in the latest financial report from Vancouver based Telus. The company added just 4,400 postpaid wireless customers in Alberta during the second half of last year, a sharp drop from the net 50,000 it added in the same period a year earlier.
Insurer Manulife took a $250-million charge in the fourth quarter and a $876-million charge for 2015 as a result of a decline in its energy investments.
Retail pain
Data compiled by NPD Group, a research firm, paints a picture of how retail traffic has fared in different parts of the country in 2014 versus 2015.
Purchasing visits were down two per cent in Alberta and Atlantic Canada, while in the country as a whole, they were up three per cent.
The U.S. crude benchmark hit a high of around $108 US a barrel in mid-2014 and finished off 2015 below $40 a barrel. It's since depreciated further.
Oil price pain seeps into other sectors of Alberta economy - Calgary - CBC News
