Tag: Reuters (Page 29 of 49)

Air New Zealand Confirms Order for Eight Boeing 787 Jets

May 28, 2019 / WIL BALDWIN

WELLINGTON (Reuters) – Air New Zealand Ltd said on Monday it has ordered eight Boeing Co 787-10 Dreamliner jets worth $2.7 billion (2.12 billion pounds) at list prices, to be powered by General Electric Co engines, as part of a drive toward increased efficiency.

New Zealand’s flag carrier also trimmed its earnings outlook citing higher fuel prices, and said problems with Rolls-Royce Holdings PLC engines and a moderation in demand growth have impacted its financial and operational performance.

The new plane order confirmed a Reuters report last week that Boeing had beaten out rival Airbus SE, which had proposed the A350 for the hotly contested deal.

The airline, which has Rolls-Royce engines on its existing fleet of 13 787s, announced it had switched to GE engines for the new order.

The 787s will replace eight older 777-200ERs and leave the carrier with an all-Boeing wide-body fleet as well as Airbus A320 family jets for shorter flights.

The order comprises eight long-range 787-10s, with the agreement including an option to increase the number of aircraft to 20.

The deal also gives the airline, which has previously mentioned a goal of flying Auckland-New York non-stop, the option to switch some aircraft to the longer range 787-9s.

“With the 787-10 offering almost 15 percent more space for customers and cargo than the 787-9, this investment creates the platform for our future strategic direction and opens up new opportunities to grow,” Air New Zealand Chief Executive Christopher Luxon said in a statement.

The eight jets will enter the Air New Zealand fleet between 2022 and 2027, the airline said.

“The 787-10 has 95 percent commonality with Air New Zealand’s existing fleet of 787-9s and will provide the airline with added benefits in terms of capacity and overall operations,” Vice President of Boeing Commercial Sales and Marketing for Asia Pacific Christy Reese said.

The 787-10 is the largest member of Boeing’s Dreamliner series, and can serve up to 330 passengers in a standard two-class configuration, about 40 more than the 787-9 airplane.

The airline said the 787 was 25 percent more fuel efficient than the jets it is replacing, and noted that carriers typically receive large discounts on the list price of jets.

HEADWIND

In a separate announcement, Air New Zealand trimmed its 2019 earnings before taxation, saying it now expects to beat NZ$340 million ($223 million). That compared with a forecast range of NZ$340 million to NZ$400 million announced in late March.

The change was due to an additional NZ$25 million headwind from increased jet fuel prices, the company said.

The airline also said Rolls-Royce engine issues – in which components prematurely fail or needed extra checks – impacted 2,500 flights and led to 150 cancellations, affecting its financial performance.

Air New Zealand in March launched a two-year cost reduction programme and said it would defer spending on aircraft by about NZ$750 million ($491 million) as part of a business review.

In February, Air New Zealand slashed domestic fares by as much as 50 percent in a shake-up of its pricing structure in response to the slackening travel market.

(Reporting by Praveen Menon in Wellington, Aditya Soni in Bengaluru and Jamie Freed in Singapore; Editing Richard Pullin and Christopher Cushing)

Tesla Stock Drops For Sixth Straight Session

May 22, 2019 / WIL BALDWIN

SAN FRANCISCO (Reuters) – Tesla shares extended their recent sell-off on Wednesday after Citi cut its price target on the struggling electric car maker, leaving buyers of its recent share offer, including Chief Executive Elon Musk, $175 million in the hole.

Tesla’s stock dropped 5.5% to $193.88, on track to close below $200 for the first time since late 2016. It has lost a fifth of its value since the company sold a $1.84 billion convertible bond and almost $900 million of stock on May 2 to raise fresh capital and give it more time to stop losing money.

Citi analyst Itay Michaeli, who has a “sell” rating on Tesla, cut his price target to $191 from $238. He pointed to a an email Musk sent to employees last week, telling them he would increase cost-cutting, and that the $2.7 billion in recently raised capital would give Tesla just 10 months to break even at the rate it burned cash in the first quarter.

“The recent reported internal memo, which seemingly called into question prior guidance, didn’t help the risk/reward calculus. The implications can be serious, since an automaker’s balance sheet is always subject to the confidence ‘spiral’ risk,” Michaeli wrote in a client note.

Consumer Reports warned on Wednesday that a recent update to Tesla’s Autopilot driver assistance software does not work well and could be unsafe.

“It doesn’t appear to react to brake lights or turn signals, it can’t anticipate what other drivers will do, and as a result, you constantly have to be one step ahead of it,” Jake Fisher, Consumer Reports’ senior director of auto testing, said in a news release.

Tesla did not immediately respond to a request for comment. On April 22, Musk told investors that driverless Tesla “robotaxis” would be available in some U.S. markets next year, a claim met by skepticism by some self-driving experts.

UPPING HIS STAKE

Musk is battling to convince investors that demand remains high for the Model 3, the sedan targeted to propel Tesla to sustainable profit, and that it can be delivered efficiently and swiftly to customers around the world. Tesla lost $702 million in the first quarter and warned that profit would be delayed until the latter half of the year.

On Monday, Musk exercised options to buy 175,000 Tesla shares at $31.17 per share, increasing his indirect stake in the company to 34,102,560 shares, according to a filing. With Tesla’s stock down 41% year to date, Musk’s shares, including 102,880 he bought in this month’s capital raise, were worth $6.6 billion on Wednesday.

Tesla’s debt has stalled at lows hit earlier this week. Its recently issued convertible bond due in 2024 priced at 89.09 cents on the dollar, a record low. Its $1.8 billion junk bond traded at 82.5 cents on the dollar, slightly up from the all-time lows it hit on Monday and Tuesday.

The cost to insure Tesla’s debt, as measured by its credit default swap, edged up to roughly 28% of the face value of Tesla’s 2025 bond, from 27.6 % the day before.

(Reporting by Noel Randewich; additional reporting by Kate Duguid in New York and Vibhuti Sharma in Bengalaru; editing by Nick Zieminski and Jonathan Oatis)

SpaceX Sues U.S. Air Force Over Rocket-Building Contracts

May 22, 2019 / WIL BALDWIN

ORLANDO, Fla. (Reuters) – Billionaire Elon Musk’s SpaceX accused the U.S. Air Force of breaking contracting rules when it awarded money to three rocket makers but passed on Musk’s rival bid, and said the tender should be reopened, according to a court filing unsealed on Wednesday.

In the complaint, Space Exploration Technologies Corp said contracts were awarded for three “unbuilt, unflown” rocket systems that would not be ready to fly under the government’s timeline, “defeating the very objectives” outlined by the Air Force’s program.

SpaceX asked the court to force the Air Force to reopen the $2.3 billion Launch Service Agreements competition and reconsider the Hawthorne, California-based company’s proposal.

The agreement is part of a Department of Defense initiative to assure constant military access to space and curb reliance on Russian-made RD-180 engines.

In the watershed race for dominance in the space industry, new entrants including SpaceX and billionaire Jeff Bezos’ Blue Origin, compete for lucrative contracts for military launch services. The arena has been long dominated by incumbents like Boeing Co-Lockheed Martin Corp’s United Launch Alliance (ULA).

ULA was granted $967 million under the program for developing its heavy-lift Vulcan rocket, Blue Origin won $500 million for its New Glenn rocket, and Northrop Grumman Corp was awarded $791.6 million for its OmegA rocket development.

In separate court filings this week, all three companies argued they should be parties to the lawsuit because of their direct financial interest in its outcome.

A SpaceX spokesperson said the company sued to “ensure a level playing field for competition.”

Representatives for the Air Force and ULA did not immediately respond to requests for comment. Blue Origin declined to comment.

SpaceX’s complaint was filed with the U.S. Court of Federal Claims last Friday under seal, along with a request for the court to keep the proceedings secret under a protective order, citing proprietary information. A redacted complaint was filed Wednesday.

SpaceX alleged the Air Force broke contracting rules on five different counts and asked the court to halt deliveries of the award to the three companies and force a re-evaluation of the proposals.

The Air Force rejected a formal objection from SpaceX in April regarding the terms of the awards.

SpaceX has sued the government over contracts before, most prominently in 2014 to protest a multibillion-dollar, non-compete contract for 36 rocket launches to United Launch Alliance. It dropped the lawsuit after the Air Force agreed to open up the competition.

(Reporting by Joey Roulette in Orlando, Florida; Editing by Eric M. Johnson and Richard Chang)

FILE PHOTO: SpaceX headquarters is shown in Hawthorne, California, U.S. September 19, 2018. REUTERS/Mike Blake/File Photo

United CEO Promises To Rebook 737 MAX Passengers

May 22, 2019 / WIL BALDWIN

FILE PHOTO: United Airlines Chief Executive Officer Oscar Munoz poses for pictures in his office at the company’s headquarters in Chicago, Illinois, U.S., November 14, 2018.
Picture taken November 14, 2018. REUTERS/Tracy Rucinski

CHICAGO (Reuters) – United Airlines Chief Executive Oscar Munoz promised on Wednesday to accommodate any passengers concerned about flying Boeing Co’s 737 MAX jets once regulators deem the aircraft safe to fly again.

United is the only one of the three U.S. MAX operators to make such an announcement so far. Southwest Airlines Co, the world’s largest MAX operator, said on Wednesday discussions were still ongoing.

American Airlines Group Inc said on Wednesday “customers can be assured that our pilots would never operate an unsafe aircraft,” echoing other carriers’ insistence that safety is paramount to putting the globally grounded jets back in the air.

Still, following two fatal crashes of the MAX model within months, an Ethiopian Airlines jet in March after a Lion Air jet in October, Munoz said he wants customers to feel as comfortable as possible.

“If people need any kind of adjustments we will absolutely rebook them,” Munoz told reporters after the airline’s annual shareholders’ meeting.

Munoz said it was too soon to discuss whether Boeing would pick up the tab. None of the shareholders at the meeting questioned the company’s MAX plans. United is in the midst of a growth plan that has fuelled a 17% share rise over the past year.

Global regulators are meeting with the U.S. Federal Aviation Administration on Thursday to discuss Boeing’s proposed software fix and training updates for the MAX, which has been grounded since mid-March.

The timing of regulatory approval is still unclear, and Munoz said that is only the first step, with independent analysis and public and employee confidence critical in the Chicago-based airline’s strategy for eventually flying the jets again.

A Reuters/Ipsos poll released last week showed U.S. fliers still value ticket prices over aircraft models when choosing flights, suggesting the crashes have had little impact on consumer sentiment.

The No. 3 U.S. airline by passenger traffic, which trades under parent company United Continental Holdings Inc, operates 14 MAX jets and has dozens more on order.

United, American and Southwest together have cancelled thousands of flights during the busy U.S. summer travel season and warned of hits to profits from the grounded MAX, which many airlines had rushed to buy thanks to the narrowbody’s higher fuel-efficiency and longer range.

Still, Munoz said he was not concerned about the timetable for a return to service.

“We have to fly this aircraft for a long period of time, so a week, a month, whatever is not that important,” Munoz said.

(Reporting by Tracy Rucinski in Chicago; Editing by Matthew Lewis and Phil Berlowitz)

Airbus Seeks Resolution To German Arms Export Row

May 21, 2019 / WIL BALDWIN

PARIS (Reuters) – Airbus is in discussions to try to find solutions to a row with the German government over a ban on arms exports to Saudi Arabia that threatens a border security contract, Chief Executive Guillaume Faury said on Tuesday.

The planemaker has warned of legal action against Germany after taking financial charges over the long-delayed border contract between Airbus’s defence unit and the Gulf kingdom.

“We are not yet there,” Faury told reporters when asked about possible legal action.

“We are very much impacted by the situation which is now being extended and trying to find different solutions,” Faury said, adding that Airbus had been forced into a corner by the unexpected national export embargo.

Germany acted alone with a ban in October after the murder of Saudi journalist Jamal Khashoggi in Istanbul, irritating other European arms exporters including France, where Airbus is based. The measure was extended in March.

The row comes as France and Germany study a new combat jet, in which Airbus is the industrial partner on the German side.

Faury said Airbus remained committed to the manned and unmanned system, adding it could be eventually opened to other nations including Britain “as a more united Europe”.

The arms row also coincides with a separate spat with Germany over 600 million euros of development loans for the A380 passenger jet, which Airbus has said it will stop producing.

The Berlin government said in March it was in talks with Airbus about the outstanding loans, which also feature in a separate trade dispute about mutual claims of illegal aircraft subsidies between the European Union and the United States.

Faury said Airbus “would not be where it is” without its project to build the world’s largest airliner.

Asked at a media event whether the separate disputes with Germany could be settled in a single negotiation, Faury said “We just want to execute the contracts as they are and I will not say more.”

Airbus continues to have good relations with Germany and other founder Airbus nations, Faury said at the event, taking place as Airbus celebrates its 50th anniversary as a planemaker.

(Reporting by Tim Hepher; Editing by Susan Thomas)

Southwest Ends Mechanics Dispute as American’s Heats Up

May 21, 2019 / WIL BALDWIN

CHICAGO, May 21 (Reuters) – Southwest Airlines Co’s mechanics union said on Tuesday its members had overwhelmingly voted to ratify a tentative contract agreement with the airline, ending seven years of labor negotiations fraught with legal disputes and flight disruptions.

The agreement came a day after rival U.S. carrier American Airlines Group Inc said it was filing a lawsuit against its own mechanics alleging an illegal slowdown aimed at disrupting operations to improve their position in labor talks, which began in 2015.

Analysts have highlighted labor issues as a main concern for airlines this year.

Mechanics at both American and Southwest have complained that the airlines are moving to outsource maintenance work that has traditionally been done in-house.

In a statement on its website, the Aircraft Mechanics Fraternal Association, which represents around 2,500 Southwest mechanics, said about 95 percent of its members had voted to accept the labor agreement.

Separately on Tuesday, American Airlines’ mechanics association said it was “ready and willing” to negotiate a fair contract.

“We would much prefer to be at the negotiating table than in a legal battle brought on by American,” the TWU-IAM Association said in a statement.

(Reporting by Tracy Rucinski Editing by Susan Thomas and Bill Berkrot)

American Airlines Files to Stop Alleged Maintenance Slowdown

May 20, 2019 / WIL BALDWIN

FILE PHOTO: An American Airlines Boeing 767-300ER aircraft takes off from Zurich Airport January 9, 2018. REUTERS/Arnd Wiegmann/File Photo

CHICAGO (Reuters) – American Airlines Group Inc said on Monday it has filed a lawsuit against two unions representing its mechanics, accusing the workers of an illegal slowdown aimed at disrupting operations to improve their position in prolonged labor talks.

In a statement, American said there had been 650 flight cancellations and more than 1,500 maintenance delays as a result of the alleged slowdown.

American has been in contract talks with the Transport Workers Union of America and the International Association of Machinists since 2015.

The unions did not immediately return a request for comment.

(Reporting by Tracy Rucinski; Editing by Marguerita Choy)

Ryanair Posts Weakest Annual Profit in 4 Years

May 20, 2019 / WIL BALDWIN

Reuters • May 19, 2019

Profit could fall further in coming year
Fares likely to fall further this summer
Says 737 Max delay a factor
Sees first Max deliveries in October (Adds quotes; details on Max 737 delays)

DUBLIN, May 20 (Reuters) – Ryanair reported its weakest annual profit in four years on Monday and said earnings could fall further as European airlines wage what Chief Executive Michael O’Leary described as “attritional fare wars.”

After initially falling 6%, the shares made up some ground after O’Leary, who helped to develop the no-frills airline model in Europe, argued that lower fares and profitability for a couple of years were a price worth paying to boost market share and hasten consolidation.

O’Leary said the lower fares and profit were cyclical and that four or five European airlines were likely to emerge as the winners in the sector.

“Our strategy would be to keep adding capacity as quickly as we can in all the markets where we can,” said O’Leary, who has been in charge of Ryanair since 1994.

“Will it be painful for a year or two, yes it will. But will it shake out more of the competition, yes it will.”

Ryanair, Europe’s largest low-cost operator, had already signalled a sharp fall in profitability due largely to overcapacity in two warnings last year.

Its 29% fall in after-tax profits to 1.02 billion euros ($1.14 billion) for its financial year to March 31 was in line with investor forecasts.

But its profit forecast for the current financial year to end-March 2020 of between 750 million and 950 million euros, was “considerably worse than expected,” Goodbody analyst Mark Simpson said in a note.

A company poll of analysts published ahead of the release had forecast a figure of 977 million euros.

O’Leary said the forecast was effectively for profits to remain flat as the 2020 figure includes recently acquired and loss-making Laudamotion unit for the first time and would be a “very good outcome.” The equivalent figure in 2019 would have been 880 million.

737 MAX GROUNDING

Several rival airlines have warned of a worse trading environment – partly due to overcapacity and partly because European travellers are holding off booking their summer holidays for fear of how the Brexit process will pan out.

Alistair Wittet, portfolio manager at Comgest, which has a 0.74% stake in Ryanair according to Refinitiv Eikon, said some investors appeared to have been convinced by O’Leary’s line of argument.

“The long-term opportunity is fantastic for a company like Ryanair because that capacity will come out” even if Ryanair has to go through a lot more pain than expected in the meantime, Wittet said.

Ryanair has also been affected by delays in the delivery of the Boeing 737 MAX after its worldwide grounding in March following a fatal Ethiopian Airlines crash.

The airline, which has ordered 135 737 MAX 200s and has options on 75 more, was expecting to receive its first five planes between April and June but said it now expects them to be flying by November. O’Leary said he was “reasonably confident” it would have around 50 MAX aircraft flying next summer.

The grounding has forced Ryanair to cut around 1 million seats in the year to March 2020. But it still expects to fly 153 million passengers in the period, up from 139 million last year.

The airline plans to have a conversation with Boeing about “modest compensation”, Chief Financial Officer Neil Sorohan said.

Ryanair’s shares were trading down 3 percent at 10.46 euros at 1250 GMT, down over 40% from a peak of 19.39 euros in August 2017, before the airline was hit by a wave of industrial unrest, fare weakness and the grounding of the MAX.

In what O’Leary described as a vote of confidence from the board, Ryanair will begin a 700 million euro share buyback in the coming days. ($1 = 0.8966 euros)

(Additional reporting by Helen Reid; Editing by Subhranshu Sahu and Louise Heavens)

Air New Zealand Picks Boeing for Wide-body Jet Order

May 20, 2019 / WIL BALDWIN

PARIS (Reuters) – Air New Zealand Ltd has decided to buy wide-body planes from Boeing Co, people with direct knowledge of the matter said, ending an 18 month battle between the U.S. aircraft maker and European rival Airbus SE.

The carrier has been considering replacing eight Boeing 777-200ER aircraft in a deal worth over $2 billion at list prices, though carriers typically receive steep discounts. Air New Zealand already uses Boeing wide-bodies exclusively on long-haul flights, and Airbus single-aisle jets on shorter routes.

The final choices under consideration were the Boeing 787 and Airbus A350, Air New Zealand Chief Financial Officer Jeff McDowall said in a video interview with the New Zealand Herald published on Saturday.

“They are both fantastic aircraft,” McDowall said. “Both produce a fantastic customer experience compared to the existing aircraft but also a lower cost and lower carbon emissions… We expect to make a decision soon, in the next month.”

Air New Zealand already operates 13 787-9 jets and has one more on order. The airline did not respond to a Reuters’ request for comment. It will hold an annual investor briefing on May 27.

Boeing and Airbus declined to comment. The people with direct knowledge of the matter declined to be identified ahead of a public announcement.

Air New Zealand’s chief executive, Christopher Luxon, last year told Reuters the larger Boeing 777X was also under consideration, and that the airline planned to use the new jets to begin longer routes such as Auckland to New York and Brazil.

In March, CFO McDowall in an analyst briefing said the airline would need fewer replacement jets in 2023 than initially anticipated due to changes in its flight network.

Air New Zealand began a two-year cost reduction program in March and deferred aircraft capital expenditure of about NZ$750 million ($490.1 million) as part of a business review.

A month earlier, it slashed domestic fares by as much as 50% in a shake-up of its pricing structure in response to a slackening travel market.

(Reporting by Tim Hepher in Paris; Additional reporting by Praveen Menon in WELLINGTON; Editing by Stephen Coates and Christopher Cushing)

FILE PHOTO: An Air New Zealand Airbus A320-200 plane takes off from Kingsford Smith International Airport in Sydney, Australia, February 22, 2018. REUTERS/Daniel Munoz/File Photo

Airbus Lands MBDA Boss Bouvier To Steer Strategy

May 15, 2019 / WIL BALDWIN

PARIS (Reuters) – European missile maker MBDA’s chief executive is returning to Airbus as head of strategy as the planemaker seeks to modernise its factory system and explores future options in defence, two people familiar with the matter said.

Antoine Bouvier, 59, replaces Patrick de Castelbajac who becomes head of Airbus Asia-Pacific, the sources said. Castelbajac’s responsibility for Airbus international operations had already been transferred to sales chief Christian Scherer.

At Airbus, Bouvier will be embarking on a battle of wits with a new strategy head at arch-rival Boeing CO.

Chris Raymond, until recently head of Boeing’s Autonomous Systems business, recently became vice-president for enterprise strategy under finance director Greg Smith, sources said. Raymond’s appointment has not been officially announced.

Airbus and MBDA declined to comment on Bouvier’s appointment, which was first reported by AeroDefenseNews. It is the latest step in a management reshuffle accelerated by the recent official appointment of Guillaume Faury as Airbus CEO.

Bouvier, a former civil servant who narrowly missed out on running France’s DGA defence procurement agency two years ago, brings experience in forging defence partnerships to Airbus, which is embroiled in a row with Germany over arms controls.

He is expected to be replaced at MBDA by former OneWeb chief Eric Beranger.

Although there is fierce day-to-day competition, with Taiwan’s China Airlines opting last week to switch to Airbus, the European planemaker is not expected to exploit the grounding of Boeing’s 737 MAX jetliner for now, industry sources said.

NEXT GENERATION

The future of the Airbus A320neo and Boeing 737 MAX – the industry’s most successful models – is seen as strategically entwined and insiders say Airbus is also worried about the impact of the grounding on global certification..

But the planemakers are crafting crucial strategies for the next generation of single-aisle jets from about 2030 – both likely to define the aircraft industry well beyond mid-century.

Insiders say Faury wants Airbus to focus more on industrial strategy and closing a perceived gap with Boeing in production technology, as well as responding to the threat of increased environmental regulation of air travel, as well as new products.

Airbus must also assess how to respond to rising defence spending after its failure to merge with Britain’s BAE Systems in 2012 left it heavily skewed towards commercial markets that are now approaching the end of an extended upcycle.

It is involved on the German side of a nascent Franco-German fighter project along with French partner Dassault Aviation but faces competition for valuable systems work and a growing spat with the German government over export controls.

At MBDA, Bouvier helped forge an Anglo-French agreement on the use of shared missile technology.

Bouvier followed the classic path of a French mandarin from the prestigious Polytechnique engineering school to France’s ENA civil service academy. He had been linked with a number of top aerospace posts such as Safran and Thales.

“His appointment will be very credible with the French government,” a person familiar with the appointment said. France and Germany own 11 percent each of Airbus.

(Reporting by Tim Hepher; Editing by Luke Baker and Alexander Smith)

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