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Norwegian Air Cancels Boeing Orders, Seeks Compensation

June 30, 2020 / WIL BALDWIN

OSLO (Reuters) – Norwegian Air <NAS.OL> has cancelled orders for 97 Boeing <BA.N> aircraft and will claim compensation from the U.S. plane maker for the grounding of the 737 MAX and for 787 engine troubles that hit its bottom line, the Oslo-based carrier said on Monday.

The airline cancelled 92 of the 737 MAX jets, five 787 Dreamliners and so-called GoldCare service agreements related to both aircraft, just as Boeing on Monday began a crucial set of flight tests of the 737 MAX in an effort to gain regulatory approval for it to return to the skies.

“Norwegian has in addition filed a legal claim seeking the return of pre-delivery payments related to the aircraft and compensation for the company’s losses related to the grounding of the 737 MAX and engine issues on the 787,” the airline said.

Norwegian did not specify the amount it would seek to claim from Boeing, which it had been in talks with about compensation, and was not immediately available for comment.

Boeing said it was working with Norwegian on a path forward in a challenging time as it was with other operators but it would not comment on commercial discussions.

The problematic Trent 1000 engines, used on the Dreamliners, were made by Rolls-Royce <RR.L>, which Norwegian has been in a dialogue with about compensation. Monday’s statement did not say whether Norwegian would file a legal claim against Rolls-Royce.

The European budget carrier, which revolutionised transatlantic travel by offering cheap fares, was struggling before the COVID-19 pandemic brought the airline industry to its knees.

One reason was the grounding of the 737 MAX in March 2019 following the second of two fatal crashes that together killed 346 people. Norwegian had 18 MAX passenger jets in its 163-aircraft fleet at the time.

Originally a small regional airline in Scandinavia, Norwegian made its breakthrough on the global stage with a multi-year order in 2012 for up to 372 aircraft, of which 222 were from Boeing and 150 from Airbus <AIR.PA>.

(Reporting by Gwladys Fouche and Terje Solsvik; Additional reporting by Eric M. Johnson in Seattle; Editing by Leslie Adler and Christopher Cushing)

FILE PHOTO: Norwegian Air Sweden Boeing 737-800 plane SE-RRY lands in Riga International Airport in Riga

Airbus Likely to Acquire Remaining Bombardier A220 Stake

February 7, 2020 / WIL BALDWIN

MONTREAL/PARIS (Reuters) – Europe’s Airbus SE <EADSY> is likely to acquire Canadian plane and train maker Bombardier Inc’s <BBD-B.TO> remaining stake in the A220 passenger jet program, two industry sources said.

A deal for Airbus to buy the 33.58% share in the program was widely expected after Bombardier said in January it was reviewing the stake in the joint venture. Barring surprises, a deal is expected next week ahead of both companies’ earnings reports on Feb. 13, the sources added.

Airbus and Bombardier both declined to comment. The terms of a potential deal that would mark Bombardier’s exit from commercial aviation were unclear.

Bombardier, which is weighing additional asset sales, faced a cash crunch in 2015 due to its high-stakes bet on the technologically advanced narrowbody.

Bombardier shares closed up 2.8%.

Montreal-based Bombardier ceded control of the program to Airbus in 2018 for a token C$1 as part of broader efforts to improve its finances. It retained a minority stake alongside the Canadian province of Quebec.

Bombardier had warned the program would require additional cash to ramp up production, and could be subject to a writedown, as it faces higher-than-expected costs in its rail division and more than $9 billion of debt.

Since Airbus took over the program, the A220 has seen a sharp pickup in sales to 658 orders as of Jan. 31. But it has not seen the cost declines expected from Airbus applying its greater purchasing power with suppliers, one of the sources said.

A deal would leave Airbus to shoulder additional investments required by the plane program.

“Airbus did not particularly want to do this at this time, but is presented with little choice if Bombardier is pulling back,” the second source said.

Airbus, with a 50.6% stake in the program, delivered 48 A220 jets in 2019 and is ramping up production toward its maximum monthly capacity of 10 jets in Mirabel, Quebec, and four planes at a second line in Alabama by mid-decade.

Airbus Chief Commercial Officer Christian Scherer told Reuters in January the company was progressing toward its target of a double-digit percentage reduction in the A220’s production costs.

Quebec, with a 16.36% stake in the A220 program, would not invest further. Rather, it is trying to protect the program’s estimated 2,700 jobs, along with the province’s $1 billion investment in the program, Economy Minister Pierre Fitzgibbon said on Monday.

“We put $1 billion in it and that’s enough.”

(Reporting by Allison Lampert and Tim Hepher in Paris; Editing by Diane Craft, David Gregorio and Richard Chang)

Trump Called Boeing CEO to Inquire About 737 MAX Production Halt

December 19, 2019 / WIL BALDWIN

WASHINGTON (Reuters) – U.S. President Donald Trump called Boeing <BA> Chief Executive Dennis Muilenburg this week to ask about the status of 737 MAX production, two people briefed on the matter confirmed.

The call on Sunday was brief and Muilenburg assured Trump that the planned production halt was temporary and that the company would not be laying off any workers. The production halt, set to begin in January, was announced by Boeing Monday after a board meeting.

Boeing and the White House declined to comment on the call, reported earlier by the New York Times.

Separately, S&P Global Ratings on Thursday downgraded Boeing’s credit rating to “A-” from “A” and lowered the short-term rating to “A-2” from “A-1.”

The change “reflects the uncertainty over when the 737 MAX will return to service, the risk to the supply chain from the planned production halt, and possible long-term impact to Boeing’s competitive position.”

U.S. officials have repeatedly said they are waiting for additional answers from Boeing and have at time faulted the quality of submissions from the planemaker since the plane was grounded in March after two fatal crashes killed 346 people.

“We’ve had conversations about the importance of making sure that we are looking at complete documentation and not piecemeal documentation,” FAA Administrator Steve Dickson told Reuters in September. “It’s really better to be very methodical and very detailed rather than try to rush a partially completed product and then say, ‘We’ll get back to you with the rest of it.’”

Boeing has repeatedly said it is working with regulators to safely return the plane to service and acknowledged last week it would not occur until 2020.

Dickson said last week there are nearly a dozen milestones that must be completed before the MAX returns to service. Approval is not likely until at least February and could be delayed until March, U.S. officials told Reuters last week.

American Airlines Group Inc <AAL> and Southwest Airlines Co <LUV> have canceled flights into April because of the grounding.

(Reporting by David Shepardson; Editing by Nick Zieminski)

Ryanair Tries to Delay Operations Chief’s Flight to easyJet

December 2, 2019 / WIL BALDWIN

FILE PHOTO: Chief Operating Officer Bellew of Ryanair attends a news conference in Frankfurt

DUBLIN (Reuters) – Ryanair <RYAAY> heads to court on Tuesday to try to prevent operations chief Peter Bellew from joining arch-rival easyJet <ESYJY> until 2021.

Europe’s biggest budget airline said in July that the former Malaysia Airlines boss would step down at the end of the year.

But after easyJet announced Bellew’s appointment as its new chief operations officer a week later, Ryanair launched legal proceedings in Ireland’s High Court.

Ryanair argues that all its senior executives commit to non-compete clauses barring them from joining a competitor for 12 months after leaving the Irish airline.

Ryanair boss Michael O’Leary told reporters in September that the only issue was whether Bellew, who is currently working out his notice, can join easyJet on Jan. 1, 2020, or Jan. 1, 2021, a full 18 months after easyJet announced his appointment.

An easyJet spokeswoman declined to comment on the case. Bellew has not commented on the case since Ryanair initiated proceedings.

O’Leary has said the timing of Bellew’s switch is sensitive because of the problems Ryanair is currently having with Boeing’s <BA> grounded 737 MAX jet, which have slowed down its growth plans.

Ryanair is one of Boeing’s biggest customers for the MAX 737, with 210 on order, and the airline said last month it expected a further delay to deliveries that could leave it without the new jets next summer.

Bellew left his role as CEO of Malaysia Airlines two years ago to return to Ryanair where he was director of flight operations before leaving for Kuala Lumpur in 2014.

Tasked with tackling a pilot revolt that resulted in Ryanair’s first ever strikes, Bellew has helped patch up relations with staff and agree deals on pay and conditions with trade unions that have quelled the unrest.

An Irish national, Bellew described his return to Ryanair in 2017 as “a form of national service” to help what he described as Ireland’s greatest company. Some observers had seen Bellew as a possible future Ryanair chief executive.

(Reporting by Padraic Halpin; Editing by Mark Potter)

United Airlines in Talks with Apple on SFO Airport Upgrade

October 26, 2019 / WIL BALDWIN

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

Tesla Scouting Sites for Possible Factory in Germany

August 25, 2019 / WIL BALDWIN

FRANKFURT (Reuters) – Electric carmaker Tesla <TSLA> is scouting out locations for a possible factory in the German state of North Rhine-Westphalia (NRW), Germany’s most populous state, daily Rheinische Post reported on Sunday, citing people familiar with the matter.

First inspections have taken place, the paper said.

Tesla spokespeople in Europe were not immediately available for comment.

Tesla Chief Executive Elon Musk said in a tweet in April that the company was “considering” building a factory in Germany.

Last year, Musk said Germany was a leading choice in Europe to build a Gigafactory, adding “the German-French border makes sense, near the Benelux countries”.

NRW, Germany’s most populous state, shares borders with the Netherlands and Belgium.

Tesla is also looking at the German state of Lower Saxony, which shares a border with the Netherlands, its Economy Minister Bernd Althusmann said earlier this week.

(Reporting by Christoph Steitz; Editing by Frances Kerry)