Suncor to Abandon Gaddafi's Libya, and Air Canada Strike to Forcibly End.

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Suncor (TSE: SU) has announced that it will be pulling out of Libya indefinitely until the departure of Omar Gaddafi from power. To be sure, it will have to take a write-down on its assets in the country should it take longer than the NATO Allies expect to gain power for the rebels. However, it is probably only a matter of time, whether it be from old-age or unnatural causes, until Suncor can get its pumps in Libya going again and returning cash to shareholders. It is, of course, probably no coincidence that Canada has a number of aircraft bombing Gaddafi's compound and that Canada also has a significant monetary interest in getting the country into Allied-friendly hands.


Air-Canada's (TSE: AC.B) striking workers will soon probably be forced back to work by federal government legislation. Clearly, this would be a huge blow to the union and its activists as the right to strike is the biggest bargaining tool that a union and its workers possess. Our current pro-business Conservative government is making a strong indication to the labour community that it is on the side of big business and the country's shareholders. National business and employee profits first, employee rights, secondary. For investors, this is a huge win as labour costs for airlines, as in most businesses, eat into profits. If you can force labour to work, regardless of their decision to strike, then you have, for all intents and purposes, destroyed the labour movement in the country. Air Canada is a PRIVATE business, and thus its labour situation should be the company's concern, not an issue involving government legislation. 


More information on these two stories from the CBC:
http://www.cbc.ca/video/#/News/Business/1239849460/ID=2002094493


Happy Investing : )

Suncor Generates Huge Profits From the Oilsands, but Might Have to Take a Loss on Libya.

When Suncor (TSE:SU) bought Petro-Canada, it is doubtful that they anticipated the amount of trouble their Libyan assets would cause the company and its shareholders. Having announced huge profits today of 1.02 billion dollars for the last three months, the company is increasing its dividend by a penny per share. And with cash-flow coming in at 2.4 billion dollars for the quarter, the company has plenty of money to still invest in the expansion of its oil-sands operations. So why is the stock down almost five percent on the news? 

Trouble at its operations in Libya due to the uprising have forced them to reduce production in the country and perhaps even "write-off" or record a loss on the value of its assets there. On it's balance sheet, the Libyan operations are currently valued at about 900 million dollars, but if turmoil in the country continues or gets worse, Suncor will be forced to re-evaluate the value of those holdings.

Essentially, Suncor, operationally, is doing great, and money is pouring into the company, but assets that it holds in both Libya, and now Syria, could be in serious trouble. For investors, this means that on a cash basis, there is nothing to worry about, but there might be an accounting loss in the near future if Libya does not turn around soon.