Tag: regulators (Page 2 of 3)

Brazil Association Takes Fight Against Embraer-Boeing Deal to Europe

December 5, 2019 / WIL BALDWIN

BRUSSELS, Dec 5 (Reuters) – An association representing minority investors in Brazil is lobbying European antitrust regulators to spike a deal between planemakers Embraer SA and Boeing Co, calling it a killer acquisition.

Aurelio Valporto, the head of minority investor association Abradin, said the European Commission should block Boeing’s proposed $4.2 billion purchase of 80% Embraer’s commercial passenger jet division or demand hefty concessions.

“What will be left from Embraer won’t survive, and even if it was possible to survive, Embraer wouldn’t be able to produce any aircraft with 50 passengers or more,” Valporto said in an interview late on Wednesday, arguing that Embraer and Boeing planes compete in the marketplace.

Embraer’s commercial jet division focuses on the 70 to 150-seat segment, competing directly with the CSeries jets designed by Bombardier Inc, a division that was bought by Europe’s Airbus SE.

Boeing aims to take control of Embraer’s commercial jet business, its most profitable, to compete directly with Airbus in the market for planes with fewer than 150 seats.

Embraer said in a statement on Thursday that the deal will “serve the interests of shareholders by enabling Embraer to expand markets and increase sales.” The deal was backed by around 97% of Embraer’s shareholders earlier this year.

Valporto complained about the deal to the European Commission two months ago, saying it hurt competition in the Brazilian aerospace industry, and on Wednesday took his grievance to antitrust officials in Brasilia.

The deal has already been approved by regulators in the United States, China and Japan. If it closes, Embraer will receive dividends from its remaining 20% stake in the commercial jet business, but will have to rely more heavily on its business jets and defense divisions to turn a profit. Those two divisions have posted losses in recent quarters.

The European Commission, which launched a full-scale investigation into the deal in October, declined to comment.

Boeing said it and Embraer had been engaged with the European Commission and other global regulatory authorities since late last year.

“We continue to co-operate with the European Commission and CADE as they assess our transaction and look forward to a positive resolution,” a spokesman for the company said.

The EU has voiced concerns the deal would remove Embraer, the world’s third-largest commercial aircraft maker, from the industry, an indication that it may demand significant concessions from Boeing.

The EU regulator halted its investigation last month while waiting for Boeing to submit data on the deal.

(Reporting by Foo Yun Chee in Brussels Additional reporting by Marcelo Rochabrun in Sao Paulo Editing by Kirsten Donovan and Matthew Lewis)

Boeing to Give Southwest Board 737 MAX Update This Week

November 18, 2019 / WIL BALDWIN

FILE PHOTO: A number of grounded Southwest Airlines Boeing 737 MAX 8 aircraft are shown parked at Victorville Airport in Victorville, California

CHICAGO (Reuters) – Boeing Co <BA> this week will present to the board of its largest 737 MAX customer, Southwest Airlines Co <LUV>, an overview of its plans to return the grounded jet to service, a spokesman for the airline said on Monday.

The meeting on Wednesday and Thursday comes after Southwest Chief Executive Gary Kelly said last month that the airline could look next year at diversifying its fleet beyond Boeing 737 aircraft. Budget-friendly Southwest has structured its business model around flying only 737 aircraft for the past 50 years and bet its entire growth strategy on the 737 MAX, the latest iteration of Boeing’s narrowbody workhorse.

With the MAX parked since mid-March following crashes on Lion Air and Ethiopian Airlines that together killed 346 people, Southwest has had to scale back its growth plans and cancel north of 100 daily flights, wiping $435 million from its earnings between January and September.

Kelly, who is also Southwest’s chairman of the board, invited Boeing to address the timing and logistics of dozens of 737 MAX deliveries that it was supposed to receive this year. The meeting will also give Boeing a chance to defend its product and the steps it is taking to restore public confidence after the two fatal crashes, sources said.

“It’s an overview of the Return to Service Plan, timing, and plans moving forward,” Southwest spokesman Chris Mainz said. “Just a good chance for our Board to hear directly from Boeing, but nothing more to it than that.”

It is not the first time that Boeing has presented to a regularly scheduled board meeting, he said.

Southwest had 34 MAX jets in its fleet when global regulators grounded the aircraft in March. The airline was supposed to receive 41 more 737 MAX planes before the end of the year, but most of those deliveries are now scheduled for 2020.

Hundreds of undelivered 737 MAX jets are parked at Boeing facilities in Washington state, where the planemaker is facing a delivery logjam once the U.S. Federal Aviation Administration gives approval for them to fly commercially.

While Boeing is targeting approval in December, the FAA has pushed back on any fixed timeline.

Southwest has removed the 737 MAX from its flying schedule until early March. The airline has said it will need one to two months to train its pilots and prepare the jets for flight once regulators approve new software and pilot training.

(Reporting by Tracy Rucinski in Chicago; Additional reporting by Tim Hepher in Dubai; Editing by Matthew Lewis)

European Pilot Group Demands Action over Ryanair Sick Leave Policy

November 14, 2019 / WIL BALDWIN

DUBLIN (Reuters) – The European Cockpit Association (ECA) pilot group has urged regulators to take action over what it described as a “safety hazard” caused by Ryanair’s <RYAAY> approach to flight crews’ sick leave, according to a letter seen by Reuters.

Europe’s largest budget carrier has spent the last two years negotiating improved pay and conditions with its pilots and cabin crew after a revolt by some staff forced it to recognize trade unions for the first time.

The ECA, which represents pilots’ associations in 33 European countries, said Ryanair adopts a practice of systematically questioning absences due to certified sickness, leading to investigative and disciplinary meetings where staff are threatened with potential dismissal.

Asked about the ECA’s concerns, a Ryanair spokeswoman said the airline operates “a standard sick pay scheme, and like all employers, manages absenteeisms”.

The airline, which has never had a fatal crash and has one of the youngest fleets in Europe, regularly cites safety as its top priority.

The ECA said it raised the issue with the European Union Aviation Safety Agency (EASA) a year ago but that Ryanair’s “problematic approach” to flight crew’s sickness has not substantially changed.

“In fact, we are concerned that the safety hazard created by this approach remains fully in place, must be considered endemic, and quite evidently is not adequately addressed by the competent national authority: the Irish Aviation Authority (IAA),” the letter dated Nov. 5 said.

A spokeswoman for the ECA confirmed it had sent such a letter to the regulator, the second in a year, and that it was concerned that the safety hazard related to Ryanair’s policy remains unaddressed.

In the letter, the ECA said it was aware that the EASA raised the matter with the IAA following the initial complaint but that the Irish regulator told one of the ECA’s member groups that it was satisfied there was not a systematic issue of crews flying while unfit due to fear of sanction at Ryanair.

The IAA did not immediately respond to a request for comment.

Citing letters sent to staff, the ECA said Ryanair or broker agencies overseeing agency workers used by the airline have gone as far as threatening to halt pilots’ career progression, due to their sickness rate.

The pilot group called on the European regulator to ensure the IAA adequately fulfils its safety oversight role by summoning Ryanair to stop the practice of intimidating letters and investigative proceedings and also carry out an independent confidential survey among Ryanair crew.

(Story by Conor Humphries and Padraic Halpin, editing by Giles Elgood)

FILE PHOTO: A Ryanair commercial passenger jet takes off in Blagnac near Toulouse

IAG Ups Bet on Latin America with Air Europa Takeover

November 4, 2019 / WIL BALDWIN

* Buys Air Europa for 1 bln euros

* To be funded by external debt

* Shares rise more than 2%

* To be run by Iberia CEO

* Regulators may set requirements -analysts

Nov 4 (Reuters) – IAG, the parent of British Airways and Spain’s Iberia, announced a 1 billion euro ($1.12 billion) takeover of Spain’s Air Europa to boost its presence on routes to Latin America and the Caribbean.

The deal follows a setback in Latin America for IAG after Chile’s Supreme Court ruled against a plan that would have allowed it to bolster cooperation with partners in the oneworld airlines alliance.

**BA parent IAG ups bet on Latin America with Air Europa takeover**
Ryanair Chief Executive Michael O’Leary attends a Reuters Newsmaker event in London

Chile’s LATAM Airlines in September then announced it planned to leave the alliance, opting instead for a tie-up with SkyTeam member Delta Air Lines.

IAG shares initially rose more than 2% following the Air Europa takeover announcement but some analysts said IAG may have to shed routes in order to win regulatory approval.

IAG shares were up 1.2% at 1315 GMT.

Ryanair CEO Michael O’Leary said his company will ask the UK’s market watchdog to force IAG to make divestments as part of its Air Europa takeover, a deal he said would be bad for competition.

“Potential remedies, perhaps in the form of slot release or behavioural restrictions, may be required and these could impact the potential synergies,” an analyst at Liberum wrote in a note.

IAG also owns carriers Iberia Express, Level, Ireland’s Aer Lingus and Vueling.

“We are not convinced that having just another brand platform is the optimal move, and could see it potentially combining with Level, Vueling or potentially Iberia Express after some time,” analysts at Bernstein said.

FILE PHOTO: An Air Europa-branded Boeing 737 MAX aircraft is seen grounded at a storage area in an aerial photo at Boeing Field in Seattle

Air Europa serves 69 destinations, including long-haul routes to the Americas and the Caribbean. It had a fleet of 66 aircraft at the end of 2018.

Air Europa’s Spanish parent company Globalia earlier this year received authorisation from the Brazilian government to explore the possibility of flying domestic routes within Latin America’s largest economy.

It is unclear if that authorisation will remain with Globalia or be transferred to IAG.

Air Europa will initially keep its brand and as it gets integrated into the existing hub at Madrid it will be a standalone operation run by Iberia boss Luis Gallego, IAG said.

It will also withdraw Air Europa from the SkyTeam alliance once the deal is completed. Air Europa has a joint venture with Air France-KLM.

“This is of strategic importance for the Madrid hub, which in recent years has lagged behind other European hubs,” said Gallego, adding that Madrid had the potential to serve as a gateway between Asia and Latin America.

IAG said it expected the Air Europa deal, which will be funded through external debt, to close in the second half of next year and for it to add to its earnings in the first full year after the closure.

($1 = 0.8951 euros) (Reporting by Yadarisa Shabong in Bengaluru; additional reporting by Andres Gonzalez in Madrid and Marcelo Rochabrun in Sao Paulo, editing by Patrick Graham and Jason Neely)

An Air Europa Boeing 737 airplane takes off at the airport in Palma de Mallorca

‘System is not Broken’ After 737 MAX Crashes

September 28, 2019 / WIL BALDWIN

FILE PHOTO: A Boeing 737 MAX aircraft is seen grounded at a storage area in an aerial photo at Boeing Field in Seattle

NEW YORK (Reuters) – The U.S. Federal Aviation Administration process for certifying new airplanes is not broken but needs to be improved, the chair of an international panel of air-safety regulators, tasked to review Boeing Co’s <BA> 737 Max, said on Friday.

Speaking on the sidelines of an event at a New York City college, Christopher Hart, chair of the multi-agency panel, said there was no need to question the agency’s overall way of certifying airplanes.

“The U.S. aviation system each day transports millions of people safely, so it’s not like we have to completely overhaul the entire system, it’s not broken. But these incidents have shown us that there are ways to improve the existing system,” Hart said, referring to fatal crashes of a Lion Air 737 MAX in Indonesia and an Ethiopian Airlines 737 MAX five months apart that killed a total of 346 people.

The MAX remains grounded and Boeing has not set when it will conduct a key certification test flight. Some in Congress and in aviation have criticized the FAA’s longstanding practice of delegating certification tasks to manufacturers.

Michael Perrone, who heads the Professional Aviation Safety Specialists union, said at a House hearing in July that external entities designated by the FAA “are now performing more than 90 percent of FAA’s certification activities despite serious concerns that oversight is lacking.”

Hart, former chairman of the National Transportation Safety Board (NTSB) and a licensed pilot, heads the Joint Authorities Technical Review, a panel including air-safety regulators from the United States, Canada, China, Indonesia, European Union and Brazil.

Reuters reported on Sept. 17 the review’s recommendations will include citing regulations that need to be harmonized internationally and where communications can be improved at the FAA and among international regulators, citing a person briefed on the matter.

Hart on Friday said the panel would release its recommendations to the FAA “shortly,” but declined to provide more details on the timeline. He said the panel’s goal was not for all of its members to agree, but to provide a wide range of opinions and recommendations to the FAA.

Hart spoke to students the Vaughn College of Aeronautics and Technology in Queens. Asked by a student whether passengers can be expected to fly again on a 737 MAX, Hart said he predicted people would “sooner or later forget” about the crashes and investigations.

“This will be the safest airplane out there by the time it has to go through all the hoops and hurdles,” he said.

He also was optimistic when asked whether the deadly crashes would spell the end for Boeing’s 737 MAX programme.

“It will be a cold day in hell before Southwest starts moving away from 737s because that’s all they got,” Hart said, referring to Southwest Airlines Co <LUV.N>, which has cancelled flights into January because of the MAX grounding.

A Southwest Airlines spokesman declined to comment directly on Hart’s comments but said the airline has “no plans to veer away from our all-737 fleet.”

(Reporting by Tina Bellon in New York; Additional reporting by David Shepardson; Editing by Daniel Wallis)

China Out in Force at Frankfurt Car Show

September 11, 2019 / WIL BALDWIN

FILE PHOTO: Supercar Hongqi S9 is unveiled next to FAW Group Chairman Xu Liuping at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany. September 10, 2019. REUTERS/Wolfgang Rattay/File Photo

FRANKFURT (Reuters) – Chinese suppliers and manufacturers have stepped up their presence at the Frankfurt auto show, capitalizing on a strong position in electric technologies forced on European carmakers by regulators seeking to curb pollution.

Though the number of exhibitors has fallen to 800 in 2019 from 994 in 2017, Chinese automakers and suppliers now make up the biggest foreign contingent, with 79 companies, up from 73.

Several European and Japanese carmakers including Fiat , Alfa Romeo, Nissan and Toyota have skipped the show as the industry cuts costs.

Europe’s automakers face multibillion-euro investments to develop electric and autonomous cars, forcing them to rely on Chinese companies for key technologies such as lithium ion battery cell production, an area where Asian suppliers dominate.

German firms are striking major deals with Chinese suppliers to help them meet stringent EU anti-pollution rules, which were introduced in the wake of Volkswagen’s 2015 emissions cheating scandal.

“All carmakers face the challenge that they will have to fulfill fleet consumption targets,” Matthias Zentgraf, regional president for Europe at China’s Contemporary Amperex Technology, told Reuters.

Zentgraf said he expected further supply deals to be struck in Europe this year following agreements with BMW and Volkswagen.

Daimler on Wednesday said it had chosen China-backed Farasis Energy to supply battery cells for its Mercedes-Benz electrification push.

Farasis is building a 600 million euro ($663 million) factory in east Germany, close to where Chinese rival CATL is erecting a 1.8 billion euro battery plant.

SVOLT Energy Technology, which was carved out of China’s Great Wall Motor Co, told Reuters it would start building battery cells in Europe at a new 2 billion euro plant in 2023.

TIPPING POINT

Chinese companies are also giving Europe more attention since the United States and China embarked on a global trade war, which has resulted in tariffs.

“We put Europe up in priority,” said Daniel Kirchert, chief executive of Chinese electric car maker Byton.

“We are at a tipping point” for acceptance of electric vehicles in Europe, Kirchert, a former BMW executive, added.

Byton has taken its prototype vehicles on road shows in Europe, and received expressions of interest from 20,000 customers, he said. In electric vehicle hot spots, such as Norway and the Netherlands, “we see a very positive response.”

Byton plans to export vehicles from its factory in Nanjing, to Europe in 2021, Kirchert said, adding that exporting to the United States would be a challenge if Washington and Beijing did not resolve their trade war.

He said Byton still hoped to launch in the United States in 2021, but tariffs would threaten the company’s goal of selling vehicles at a starting price of about $45,000.

“We decided no matter what” Byton will launch in the United States, even at a higher price, he said.

China’s Great Wall Motor may consider building car manufacturing facilities in the European Union once its sales there hit 50,000 units a year, its chairman told Reuters at the show.

German carmakers have been forced to accelerate electrification plans after the EU imposed a 37.5% cut in carbon dioxide emissions between 2021 and 2030 in addition to a 40% cut in emissions between 2007 and 2021.

PSA Group Chief Executive Carlos Tavares used the show to step up criticism of Europe’s aggressive approach toward emissions limits.

“The word dialogue has become meaningless in Europe,” he said, referring to the requirements placed on the auto industry.

“Politicians can decide rules without any discussion with industry,” he told journalists on the sidelines of the show.

Electric cars made up only 1.5% of global sales last year, or 1.26 million of the 86 million passenger vehicles sold, JATO Dynamics said.

If carmakers fail to meet the 2021 targets they could face a combined 33 billion euros in fines, analysts at Evercore ISI have estimated.

They also estimate it will cost the auto industry an aggregate 15.3 billion euros to comply, assuming a 60 euro cost per gram to reduce CO2 emissions for premium carmakers and 40 euros per gram of CO2 reduction for volume manufacturers.

(Writing by Edward Taylor; Editing by Mark Potter)

A woman cleans the prototype of a Chinese car at the IAA Auto Show in Frankfurt, Germany, Monday, Sept. 9, 2019. The IAA officially starts with media days on Tuesday and Wednesday. (AP Photo/Michael Probst)

FAA to Invite Global Boeing 737 MAX Pilots for Simulator Tests

August 23, 2019 / WIL BALDWIN

CHICAGO/WASHINGTON, Aug 22 (Reuters) – The U.S. Federal Aviation Administration said on Thursday it would invite Boeing 737 MAX pilots from across the world to participate in simulator tests as part of the process to recertify the aircraft for flight following two fatal crashes.

Earlier, Reuters reported that the agency had asked the three U.S. airlines that operate the MAX to provide the names of some pilots who had only flown the 737 for around a year, including at least one MAX flight.

In a statement, the FAA said it had not specified the number of required hours of flight experience, but said the candidates would be a cross-section of line pilots and must have experience at the controls of the MAX.

Boeing Co’s latest 737 narrow-body model, the MAX, was grounded worldwide in March after two crashes within five months in Indonesia and Ethiopia that killed 346 people.

Boeing has been reprogramming software for a stall-prevention system at the center of both crashes, which the FAA must approve before the plane flies again commercially.

The FAA said it had not yet specified a firm schedule for the tests.

Boeing has said it is working toward getting the 737 MAX flying again commercially in the early fourth quarter. Reuters reported on Thursday that it had told suppliers it planned to ramp 737 production back up in February, sending its shares 4% higher.

The world’s largest planemaker slowed its 737 production rate in April because deliveries of the MAX, which makes up the bulk of its single-aisle production, were frozen under the grounding, hitting its supply chain and airline customers.

In the United States, MAX operators Southwest Airlines Co , American Airlines and United Airlines have had to cancel hundreds of daily flights as they wrestle with slimmer fleets at a time of strong domestic air travel demand.

The MAX is Boeing’s fastest-selling aircraft, with about 5,000 pending orders.

As part of its own testing process, Boeing has invited senior airline pilots to experiment with the software fix and use simulators to run scenarios similar to the ones that led to the two crashes.

But sources told Reuters that the FAA also wanted to observe newer 737 pilots. One source said the simulator tests were supposed to be conducted during the first week of September but had been pushed back to the middle of the month.

The FAA, which is working alongside global regulators, has said repeatedly it does not have a fixed time line to approve the grounded jets to fly commercially again.

(Reporting by Tracy Rucinski in Chicago and David Shepardson in Washington; Additional reporting by Eric M. Johnson in Seattle; Editing by Matthew Lewis and Peter Cooney)

Daimler Cuts 2019 Profit Outlook on Diesel Issues

June 23, 2019 / WIL BALDWIN

FRANKFURT (Reuters) – Daimler has cut its earnings outlook for this year after lifting provisions for issues related to its diesel vehicles by “a high three-digit million euro amount”, the carmaker said on Sunday.

Group earnings before interest and tax for 2019 are now expected to be at last year’s level. Previously, the carmaker had expected the figure to be “slightly higher”.

The revision is related to an increase in expected expenses linked to “various ongoing governmental proceedings and measures with regard to Mercedes-Benz diesel vehicles,” the company said.

A spokesman declined to elaborate on the nature of those issues.

However, Sunday’s profit warning follows news over the weekend that Daimler must recall 60,000 Mercedes diesel cars in Germany after regulators found that they were fitted with software aimed at distorting emissions tests.

The transportation ministry said it was expanding its investigation into further models.

The company also said it was reducing its forecast for the return on sales for Mercedes-Benz vans.

It now sees a return between minus 2% and minus 4%, below its previous forecast of a return on sales of 0% to 2%.

(Reporting by Tom Sims; Editing by Jan Harvey)

Lufthansa Loses Challenge To Aid For Frankfurt Hahn Airport

April 12, 2019 / WIL BALDWIN

BRUSSELS (Reuters) – Lufthansa on Friday lost its court challenge against millions of euros in state aid being granted to Frankfurt-Hahn airport to the benefit of rival Ryanair, after failing to prove the payments dented its revenue or market share.

The German carrier took its case to the Luxembourg-based General Court after EU antitrust regulators in 2014 gave the green light to a series of support measures for the airport, which is 82.5-percent owned by China’s HNA Group with the rest held by the German state of Hesse.

The support given to the airport, which is only used by Ryanair and Wizz Air, included capital increases totalling 49 million euros (42.40 million pounds), direct grants and a charging scheme.

The German airline argued that many of the benefits of the aid were passed on to Ryanair, which was not paying high enough airport charges.

But Europe’s second-highest court said that Lufthansa had failed to show it took a financial hit or lost market share as result of the measures.

The airline can appeal at the Court of Justice of the European Union but only on points of law. The case is T-492/15 Deutsche Lufthansa v Commission.

(Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Kirsten Donovan)

JetBlue Wants Regulators To Review Joint Ventures

November 16, 2018 / WIL BALDWIN

(Reuters) – The chief executive of JetBlue Airways Corp, which has made no secret of its desire to expand into transatlantic service, said on Thursday that U.S. and European regulators should review joint ventures that have allowed big airlines to dominate the market.

JetBlue CEO Robin Hayes, speaking at an airline industry event in New York, said consumers were at risk of decades of high fares because of legacy transatlantic partnerships.

JetBlue (JBLU.O), the sixth largest U.S. airline, wants to service Europe from its main hubs in New York, Boston and Fort Lauderdale, Florida, but is concerned about challenges posed by the big three U.S. legacy airlines’ control of important foreign markets through their global alliances.

American Airlines Group Inc (AAL.O), Delta Air Lines Inc (DAL.N) and United Airlines (UAL.O) are each part of a global airline alliance that together control nearly 80 percent of the transatlantic market. The three carriers also have joint ventures with member airlines in Europe that allow them to coordinate prices and schedules and share revenues.

“We believe that regulators should be doing everything they can to make it possible for new players and new models to have a fair shot at competing,” Hayes said.

Hayes believes competition authorities in the United States, the UK and the European Union should force slot divestitures to create a level playing field for new entrants, particularly in the wake of major consolidation among U.S. carriers over the past decade.

For example, since American Airlines forged a commercial tie-up with fellow oneworld alliance member British Airways (ICAG.L) in 2010, it has merged with US Airways to become the world’s largest airline.

Such mergers have made it more difficult for younger, low-fare carriers like JetBlue to access gates and slots – as airport take-off and landing rights are known – at congested airports where the larger airlines dominate.

A handful of Europe-based budget carriers, including Norwegian Air (NWC.OL) and WOW Air, have broken into the transatlantic market, but two – Primera Air and Monarch Airlines – were forced into bankruptcy over the past year.

JetBlue argues that Mint, the carrier’s version of business class, has driven a 50 percent decline in premium fares on some competing U.S. routes. It believes it can drive a similar reduction for premium travel between the United States and Europe.

Separately on Thursday, JetBlue announced a biometric self-boarding gate for international flights at New York’s John F. Kennedy International Airport (JFK), becoming the first domestic airline to launch the use of facial recognition technology to verify passengers with a quick photo capture for international travel.

JetBlue has 14 million annual JFK customers.

(Reporting by Tracy Rucinski; Editing by Leslie Adler)

Image from www.jetblue.com

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