MILAN (Reuters) – Delta Air Lines <DAL> could pull out of a consortium looking to rescue Italy’s Alitalia as it is unwilling to enter a possible bidding war with Lufthansa <DLAKY>, newspaper Il Corriere della Sera reported on Sunday, citing two sources.
Delta is expected to say it will not raise its offer to invest about 100 million euros ($112 million) in Alitalia in a letter to be sent in the middle of this week to its consortium partners, Italy’s state railways firm Ferrovie and infrastructure group Atlantia, Il Corriere reported.
It said the rough investment figure could go as high as 120 million euros.
But Germany’s Lufthansa might invest about 150 million euros, Il Corriere said.
Lufthansa is seeking up to 6,000 job cuts, however, versus 2,500 envisaged by a plan drafted by the Delta consortium, the newspaper reported.
A source said last week Lufthansa was ready to invest up to 200 million euros in Alitalia which is running out of cash and scrambling to find new funds.
Italy’s industry ministry has extended to Nov. 21 a deadline for binding bids after an Oct. 15 deadline passed without an agreement among potential rescuers.
Alitalia’s temporary administrators said last month that the company’s liquidity amounted to 310 million euros at the end of September.
But that figure was inflated by advanced payments on pre-paid tickets, Sunday’s Il Sole 24Ore newspaper reported, citing unidentified sources.
The report added that adjusted for future costs, the cash amounted to just 160 million euros, and that it would run out in December.
($1 = 0.8957 euros)
(Reporting by Giulio Piovaccari; editing by Jason Neely)
Nov 4 (Reuters) – Philippines’ Cebu Air Inc has finalised the purchase of 16 long-range Airbus A330 neo jets worth $4.8 billion at list prices, the airline said on Monday.
The budget carrier, which operates 74 aircraft, mostly Airbus A320s, under the brand Cebu Pacific, is turning to larger and fuel-efficient jets for expansion, despite limited slots at the main gateway in the Philippine capital.
Scheduled to be delivered between 2021 and 2024, the 16 A330neo aircraft will be deployed on routes in the Philippines, Asia, Australia and the Middle East, Cebu Air said in a statement.
Reuters first reported that Cebu Air was close to buying A330neo or Boeing 787 aircraft in May.
In June, Cebu Air signed a signed a memorandum of understanding to acquire 16 A330neos, 10 A321XLRs and five A320neos, worth about $6 billion in total at list prices, during the Paris Air Show.
The new Airbus aircraft will cut fuel emissions and costs per seat, said Cebu Air Chief Executive Lance Gokongwei, adding that it would also help maximise seating capacity and the airline’s valuable slots in Manila and other major Asian cities.
(Reporting by Neil Jerome Morales; Editing by Clarence Fernandez)
Oct 31 (Reuters) – VietJet Aviation has ordered 20 Airbus long-range A321XLR aircraft that the budget carrier hopes will support its international expansion as Vietnam’s aviation market heats up.
VietJet expects the first aircraft to be delivered in 2023, it said in a statement on Thursday, adding that it will be the “first carrier in the world” to operate the new long-range version of the single-aisle A320neo family jets.
Industry sources said VietJet would be among the first to put the XLR into service.
Vietnam’s largest conglomerate in August applied to launch an airline next year, intensifying competition in one of the fastest-growing aviation markets.
The sector includes Vietnam Airlines, Jetstar Pacific Airlines and Vietnam Air Services Co.
The airline also signed a separate agreement in Toulouse, France, for two A320/A321 aircraft simulators.
VietJet’s order book for Airbus aircraft now totals 186, the airline said.
In September, Reuters reported that Airbus sold 15 A321XLR jets to VietJet.
Airbus on Thursday confirmed that VietJet had placed a new order for 15 XLR and said another 5 would be converted to the new jet from the A321neo model.
VietJet CEO Nguyen Thi Phuong Thao said Thursday’s order will “modernise VietJet’s fleet as we look to strongly grow our international flight network.”
The airline currently flies to destinations including Japan, Hong Kong, Singapore, China and India.
(Reporting by Nikhil Kurian Nainan in Bengaluru; Additional reporting by Tim Hepher; Editing by Jason Neely and Dan Grebler)
(Reuters) – Fiat Chrysler and Peugeot owner PSA are in talks to combine in a deal that could create a $50 billion (£38.88 billion) automaker, a source familiar with the matter said on Tuesday.
Fiat Chrysler shares rose sharply after news of the talks and ended up more than 7.5% in U.S. trading. The companies and the French government had no comment.
The Wall Street Journal first reported the discussions. PSA’s supervisory board was due to meet on Wednesday to discuss the potential merger, another source close to the matter said.
If a combination of Peugeot and Fiat Chrysler succeeded in overcoming political, financial and governance hurdles, the new enterprise would still face substantial challenges. Global automakers face the prospect of a slowdown in global demand coinciding with the most dramatic technology changes in a century.
Peugeot Chief Executive Carlos Tavares has predicted “ten years of chaos” for global automakers as regulators demand a switch to electric vehicles to reduce emissions linked to climate change.
Investors have speculated for several years that Fiat Chrysler was hunting for a merger partner, encouraged by the rhetoric of the company’s late chief executive, Sergio Marchionne.
In 2015, Marchionne outlined the case for consolidation of the auto industry and tried unsuccessfully to interest General Motors Co in a deal. Fiat Chrysler earlier this year broached a merger with French automaker Renault SA that ultimately collapsed.
Created when Fiat, under Marchionne’s leadership, bought control of Chrysler out of a U.S. government-backed bankruptcy in 2009, Fiat Chrysler has one of the global auto industry’s most profitable franchises in the Jeep sport utility vehicle brand and a money-spinning North American pickup and commercial van operation in Ram. Both would boost Peugeot, which does not sell vehicles in the U.S. market.
Peugeot and Fiat Chrysler could over time share engines and vehicle architectures, reducing capital spending and freeing up cash to invest in electric vehicles and emissions reduction technology required in Europe, China and other global markets.
Fiat Chrysler is under increasing pressure to invest in clean car technology. The company disclosed earlier this month that it faces a $79 million fine for falling short of U.S. fuel efficiency standards. Fiat Chrysler agreed to pay U.S. electric car maker Tesla Inc for credits to help it comply with European emissions standards until 2022.
Evercore analyst Arndt Ellinghorst in a note on Tuesday said a combination of Fiat Chrysler and Peugeot “should ignite more rational industry behavior around allocation of capital and this particular merger makes materially more sense than a potential FCA-Renault merger.”
Peugeot and Fiat Chrysler had discussed a combination earlier this year, before Fiat Chrysler proposed a $35 billion merger with Renault. At that time, Fiat Chrysler said a deal with Renault offered more advantages than a combination with Peugeot.
Fiat Chrysler Chairman John Elkann broke off talks with Renault in June after French government officials intervened and pushed for Renault first to resolve tensions with its Japanese alliance partner, Nissan Motor Co.
Following the collapse of the Renault merger plan, Fiat Chrysler CEO Mike Manley left the door open for talks with would-be partners. But he said the Italian-American automaker could go it alone despite mounting costs to develop electric vehicles and comply with tougher emissions rules in Europe, the United States and China.
Along with Jeep and Ram would come Fiat’s Italian operations, which have struggled in recent years. Fiat’s Mirafiori assembly complex in its home city of Turin has run below 50% capacity, with thousands of workers on temporary layoffs.
Overall, Fiat has 58,000 workers in Italy, where the government has long resisted mass lay-offs by large employers.
Peugeot’s Tavares dismissed the idea of a combination with Fiat Chrysler during a discussion with reporters at the Frankfurt auto show last month. “We don’t need it,” he said when asked whether he was still interested in a deal with Fiat Chrysler.
Tavares has moved aggressively to expand Peugeot, acquiring German auto brand Opel from General Motors Co for $2.6 billion in 2017. Since then, he has overseen a turnaround at Opel.
Fiat Chrysler already has a commercial vehicle partnership with Peugeot.
(Reporting by Dominic Roshan K.L. in Bengaluru; Editing by Maju Samuel, Richard Chang and Dan Grebler)
BRASILIA, Oct 28 (Reuters) – A proposed joint venture between United Airlines, Colombia’s Avianca Holdings and Panama’s Copa Holdings has been delayed due to the potential inclusion of a fourth partner, as well as problems at Avianca, the CEOs of two of the companies said.
United Airlines said last week it wants to include Brazil’s Azul SA, in which it already has a stake, in the planned tie-up with Copa and Avianca, the latest play by a U.S. carrier for a region expected to have significant air-travel growth in coming decades.
The three airlines had said in November 2018 they would file for U.S. antitrust approval “in the near term” in order to coordinate routes between South America and the United States, a bold move to expand their market share in the region. At the time, the carriers said they aimed to implement the agreements in 2020.
But almost a year after United, Copa and Avianca announced the preliminary joint venture plan, they have yet to file any paperwork with the U.S. Department of Transportation, seeking antitrust immunity. Now, the regulatory process may begin as late as next year, they said.
Copa Chief Executive Officer Pedro Heilbron said the group expects to file in early 2020, while Avianca CEO Anko van der Werff, said it would file between late 2019 and early 2020. Both spoke to Reuters in separate interviews on Monday on the sidelines of the ALTA Airline Leaders’ Forum in Brasilia.
Both said there was a delay on the original timeline.
United did not comment on a delay but said it planned to complete the application later this year or early next year. Azul had no comment other than saying it was “always looking for opportunities with its partners.”
The potential inclusion of Azul, which may be in the early stages of negotiations, has been one reason for the timetable slipping.
“Quite frankly, really completely open and honest, we haven’t had many discussions,” van der Werff said. “I personally haven’t had even one real, serious discussion at the CEO level about when to include and what to include.”
Both executives said they want Azul to be part of the joint venture – Brazil is by far the largest aviation market in the region – but its inclusion makes negotiations more difficult.
“It almost doubles the level of complexity,” Heilbron said.
Avianca has also gone through corporate turmoil. In May, United Airlines ousted the chairman and controlling shareholder at Avianca, revamping leadership.
“We should have filed with regulators this year but everything got delayed because of what has happened at Avianca,” Heilbron added.
(Reporting by Marcelo Rochabrun in Brasilia Additional reporting by Tracy Rucinski in Chicago Editing by Matthew Lewis and Sandra Maler)
BRASILIA (Reuters) – Brazil is determined to lure airlines to operate domestic flights in Latin America’s largest aviation market, and is taking meetings with at least three carriers, a senior government official told Reuters.
“We are going to talk with Jet Blue, we are going to talk with Volaris, a Mexican group … we are going to talk with Sky Airline, which is Chilean,” Ronei Glanzmann, Brazil’s civil aviation secretary, told Reuters on the sidelines of the ALTA Airline Leaders Forum, an industry conference.
“These are conversations to introduce Brazil to them, they do not mean that the airlines are saying that they will come here,” he added.
Glanzmann said the meetings with Volaris and JetBlue Airways Corp <JBLU> will take place on Monday.
A representative for Sky said they had canceled their participation in the ALTA conference due to the civil unrest in Chile, but declined to comment on taking a meeting with the Brazilian government. Jet Blue and Volaris did not immediately respond to a request for comment.
Brazil’s government has recently begun a push to open its aviation market, the largest in Latin America. Right-wing president Jair Bolsonaro has allowed foreign carriers to set up domestic carriers in the country.
Currently, Brazil’s domestic air travel market is highly concentrated among three airlines. Until earlier this year, there was a fourth player, Avianca Brasil, but the airline stopped operations in May after filing for bankruptcy operations late last year, highlighting the high risk and volatility of operating in Brazil.
Reaction to Brazil’s liberalization has been slow, but already Spanish airline group Globalia has declared its intention to operate a domestic airline in Brazil. But Glanzmann hopes others will too.
His strategy, he said, involves airlines dipping their toes in the Brazilian market first by operating international flights.
“We are working first with international routes, but we are already working so that those operations will become domestic operations in the Brazilian market,” Glanzmann said.
In the past year, four foreign low cost airlines have begun operating international flights to Brazil: JetSMART, which belongs to Indigo Partners, Sky Airline, Norwegian Air Shuttle <NWARF> and Argentina’s Flybondi.
Still, some industry watchers are skeptical that anyone will attempt to enter Brazil’s domestic market anytime soon.
“We don’t see anything changing in the short term regarding a new low cost airline operating domestically,” said Eduardo Sanovicz, who heads ABEAR, an industry group that represents Brazil’s two largest airlines. “For a company to start flying in Brazil, they will need to know that they will have the same costs as we do.”
Brazil’s carriers have long complained about high costs of operating in Brazil, especially value-added taxes on fuel that can be as high as 25%.
(Reporting by Marcelo Rochabrun; Editing by Nick Zieminski)
WASHINGTON, Oct 25 (Reuters) – Microsoft Corp. has won the Pentagon’s $10 billion cloud computing contract, the Defense Department said on Friday, beating out favorite Amazon.com Inc.
The contracting process had long been mired in conflict of interest allegations, even drawing the attention of President Donald Trump, who has publicly taken swipes at Amazon and its founder Jeff Bezos. Trump in August said his administration was reviewing Amazon’s bid after complaints from other companies.
The Joint Enterprise Defense Infrastructure Cloud (JEDI) contract is part of a broader digital modernization of the Pentagon meant to make it more technologically agile. Specifically, a goal of JEDI is to give the military better access to data and the cloud from battlefields and other remote locations.
Oracle Corp had expressed concerns about the award process for the contract, including the role of a former Amazon employee who worked on the project at the Defense Department but recused himself, then later left the Defense Department and returned to Amazon Web Services.
In a statement, an Amazon Web Services (AWS) spokesman said the company was “surprised about this conclusion.”
The company said that a “detailed assessment purely on the comparative offerings” would “clearly lead to a different conclusion,” according to the statement.
AWS is considering options for protesting the award, a person familiar with the matter told Reuters.
Although the Pentagon boasts the world’s most potent fighting force, its information technology remains woefully inadequate, according to many officials.
Officials have complained of having outdated computer systems and being unable to access files or share information as quickly as they might be able to in the private sector.
“If I am a warfighter, I want as much data as you could possibly give me,” Lieutenant General Jack Shanahan, the director of the Joint Artificial Intelligence Center, told reporters in August describing the importance of the contract.
Some companies were concerned that a single award would give the winner an unfair advantage in follow-on work. The Pentagon has said it planned to award future cloud deals to multiple contractors.
This week, U.S. Defense Secretary Mark Esper removed himself from reviewing the deal due to his adult son’s employment with one of the original contract applicants, IBM Corp. IBM had previously bid for the contract but had already been eliminated from the competition.
Microsoft said it was working on a comment. IBM and Oracle did not immediately return requests for comment.
In a book slated for publication Oct. 29, retired Navy commander Guy Snodgrass, who served as a speech writer to former Defense Secretary Jim Mattis, said Trump called Mattis and directed him to “screw Amazon” by preventing it from bidding on the JEDI contract, according to an excerpt of the book seen by Reuters ahead of its release.
“We’re not going to do that,” Mattis later told other Pentagon officials, according to the excerpt. “This will be done by the book, both legally and ethically.”
Snodgrass declined to comment pending the release of his book.
In a statement announcing Microsoft as the winner, the Pentagon underscored its view that the competition was conducted fairly and legally.
“All (offers) were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria. Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed,” it said.
Microsoft shares were up 3% to $144.98 in after-hours trading after the news. Amazon shares were down 0.92% to $1,745.12.
The Pentagon said it had awarded more than $11 billion across 10 separate cloud contracts over the past two years.
“As we continue to execute the DOD Cloud Strategy, additional contracts are planned for both cloud services and complementary migration and integration solutions necessary to achieve effective cloud adoption,” the Pentagon said.
(Additional reporting by Stephen Nellis and Jeffrey Dastin in San Francisco Reporting by Phil Stewart in Washington; Editing by Cynthia Osterman, Sonya Hepinstall and Lincoln Feast)
CHICAGO (Reuters) – United Airlines is in early discussions with Apple Inc about upgrading the U.S. carrier’s terminal at San Francisco International airport, United’s Chief Digital Officer Linda Jojo told journalists on Friday without providing more details.
“I’m being deliberately vague,” she said.
Apple declined to comment on the development. The company has supplied United with iPad tablet computers in the past, but also has deals with United rivals such as American Airlines to let Apple Music customers listen to streaming music on its planes without purchasing in-flight WiFi.
(Reporting by Tracy Rucinski in Chicago and Stephen Nellis in San Francisco; Editing by Nick Zieminski)
A United Airlines 787 taxis as a 767 lands at San Francisco International Airport, San Francisco
WASHINGTON/HAVANA, Oct 25 (Reuters) – The U.S. government said on Friday it would bar U.S. airlines from flying to all destinations in Cuba besides Havana starting on Dec. 10 as the Trump administration boosts pressure on the Cuban government.
The U.S. Transportation Department said in a notice it was taking the action at the request of Secretary of State Mike Pompeo to “further the administration’s policy of strengthening the economic consequences to the Cuban regime for its ongoing repression of the Cuban people and its support for Nicolas Maduro in Venezuela.”
The move will bar U.S. air carrier flights to any of the nine international airports in Cuba other than Havana and impact about 8 flights a day.
The prohibition does not impact charter flights. There are no foreign air carriers providing direct scheduled flights between the United States and Cuba.
Cuban Foreign Minister Bruno Rodriguez said in a tweet that his country strongly condemned the move and that it “strengthened restrictions on U.S. travel to Cuba and its citizens’ freedoms.”
Rodriguez said sanctions would not force Cuba to make concessions to U.S. demands.
These flights carry almost exclusively Cuban Americans visiting home at a time when the Trump administration has drastically reduced visas for Cubans visiting the United States. Some 500,000 Cuban Americans traveled to Cuba last year.
The new measure takes effect soon before Christmas and New Year’s when Cuban Americans flock to the island for family reunions.
Further restrictions on Americans traveling to Cuba would be aimed at squeezing the island economically and expanding Trump’s steady rollback of the historic opening to Cuba by Trump’s predecessor, Barack Obama. The reversal, along with his pressure on Venezuela, has gone over well among Cuban Americans in South Florida, a key voting bloc in Trump’s 2020 re-election campaign.
Under Obama, the United States reintroduced U.S. airline service to Cuba in 2016. Pompeo said on Twitter on Friday that “this action will prevent the Castro regime from profiting from U.S. air travel and using the revenues to repress the Cuban people.”
According to U.S. officials, JetBlue Airways Corp flies to three destinations in Cuba in addition to Havana from Fort Lauderdale — Camaguey, Holguin and Santa Clara — and American Airlines flies to five Cuban cities beyond Havana from Miami — Camaguey, Holguin, Santa Clara, Santiago de Cuba and Matanzas/Varadero.
American Airlines said it is “reviewing the announcement and “will continue to comply with federal law, work with the administration, and update our policies and procedures regarding travel to Cuba as necessary.”
Jet Blue said it will “operate in full compliance with the new policy concerning scheduled air service between the United States and Cuba. We are beginning to work with our various government and commercial partners to understand the full impact of this change on our customers and operations.”
(Reporting by David Shepardson; additional reporting by Diane Bartz in Washington and Allison Lampert in Montreal; Editing by Chris Reese and Sandra Maler)
MEXICO CITY, Oct 25 (Reuters) – General Motors Co will gradually restart operations at several idled plants in Mexico beginning this weekend, after unionized workers for the U.S. automaker ratified a new labor contract, the company’s Mexican unit said on Friday.
The United Auto Workers (UAW) union announced earlier on Friday that its members had formally approved a new four-year labor contract with General Motors, ending a 40-day strike with the top American automaker.
GM said that by the end of next week all of its Mexican operations should be operating normally with all employees back to work.
In a statement, GM’s Mexican unit said its Ramos Arizpe motors plant will resume operating on Saturday, while its transmissions plant and Chevrolet Blazer assembly line located at the same facility will start back up on Monday. The Ramos Arizpe facility is located in the Mexican border state of Coahuila, just south of Texas.
All of the plants located at GM’s Silao facility, in central Guanajuato state, will restart on Monday.
Thousands of Silao workers had been furloughed as anxiety grew earlier this month among residents who viewed the facility as the city’s economic anchor.
Tensions over the future of manufacturing in North America were at the heart of the striking GM workers. The debate pitted U.S. labor advocates eager to reduce Mexico’s cost advantage against Mexican trade unions fighting to protect local jobs.
The strike began in September with UAW negotiators demanding higher pay for workers, greater job security as well as a bigger share of profits and the protection of healthcare benefits.
(Reporting by Anthony Esposito; Writing by David Alire Garcia; Editing by Sandra Maler and Leslie Adler)
