Dallas, Apr 13 (AP/UNB) — Southwest Airlines customers relaxing on Thursday evening got an email that may mean their summer vacation could be more stressful and expensive than they planned.
Southwest, the biggest operator of Boeing jets, is removing the grounded 737 Max from its schedule until at least Aug. 5, well past the peak of the summer high season.
Company President Tom Nealon wrote in his email that the airline is taking the Max out of its schedule two months longer than previously planned to reduce the need for last-minute changes during the summer travel season. The decision, he wrote, would make the schedule more reliable.
Other airlines are likely to follow Southwest's example, putting pressure on Boeing to finish fixing software on an anti-stall system implicated in two deadly crashes.
Last month, Boeing and federal officials said privately that the company would finish its work before the end of March. Instead, it was delayed by an unexpected problem that Boeing hasn't fully described, and the company is now aiming to complete its work by late April.
Boeing CEO Dennis Muilenburg said the company's pilots have flown 96 test flights totaling 160 hours with the new software and will operate more in the coming weeks to prove that the fix works.
The changes must be submitted to the Federal Aviation Administration for approval. Foreign regulators including those in Europe and China will then do their own reviews — significant because foreign airlines account for about 85% of Max orders, according to analysts for financial services firm Cowen.
It remains uncertain how willing passengers will be to board the Max after crashes in Indonesia and Ethiopia killed all 346 people on board.
"The general flying public seems to be asking more questions about the airplane than they have with prior fleet groundings," said Goldman Sachs analyst Noah Poponak, referring to the 2013 grounding of Boeing 787s because of overheating lithium-ion battery packs. The 787 survived and became a hit with airlines and passengers.
FAA officials including acting chief Daniel Elwell met in Washington with representatives from Southwest, American and United and their pilot unions. An FAA spokesman said they went over the early findings from the two crash investigations, upcoming changes in the Max software, and pilot training for those changes. Elwell promised that the agency would be transparent about decisions to clear the plane to fly.
American Airlines 737 pilot Dennis Tajer, who was in the meeting, said unions pushed for a stronger pilot-training program including troubleshooting items only indirectly related to the anti-stall software. He said FAA seemed receptive.
"This will not be a minimum-training event to just get by," he said.
The longer the Max planes sit on the ground, the more money airlines lose. Southwest already figures that just the first three weeks the Max had been grounded, along with other setbacks, cut the airline's first-quarter revenue by $150 million.
Southwest has been canceling about 90 flights a day because its 34 Max jets have been grounded since mid-March. Spokesman Chris Mainz said the new schedule eliminates about 160 daily flights to assure customers that it will operate the flights they booked.
That is 4% of Southwest's 4,000 daily flights during summer. Still, unless the airline finds replacement planes quickly — and that can be a complicated process — Southwest will scrap about 10,000 flights that could have carried nearly 1.8 million people between now and early August.
American Airlines doesn't expect its 24 Max jets to be flying before June 5, and it too is canceling about 90 flights a day.
United Airlines, with 14 Max planes, says it is shuffling its fleet and mostly covering flights that were scheduled with the Max in mind.
Without those planes, travelers will have fewer flights to choose from, and fewer planes to carry passengers whose flights are canceled for other reasons such as bad weather. There could also be fewer fare sales.
"Travelers who have not already booked their summer reservations may end up paying a slightly higher airfare," said Henry Harteveldt, a travel-industry analyst with Atmosphere Research Group, "but it's not going to be the summer from hell."
Harteveldt said he expects airlines that don't have Max jets — a list that includes Delta, JetBlue, Alaska and Spirit — will court travelers with price-cutting.
The cost of the Max crisis to Boeing also rises the longer the plane is grounded and jets coming off the assembly line pile up around Seattle.
With aircraft orders booming, Boeing shares have soared for more than two years, although they dropped about 14% from March 1 through Friday's close. Most of Wall Street has expressed confidence that Boeing can fix the Max quickly and regain momentum.
Poponak, the Goldman Sachs analyst, said however there is a risk that Boeing orders could suffer for the next few years. He said some airlines seemed to view the Airbus competitor, the A320neo series, as superior, and some aircraft-leasing companies faced a challenge to place the Max with airline customers.
Since its launch in 2017, the Max had emerged as Boeing's best-selling jet. Fewer than 400 have been delivered, but about 4,600 are on order.
However, the company took no new orders for the Max in March — not even before the March 10 crash in Ethiopia — and only 10 in the first three months of the year, down from 112 in the same period last year. It could be that airlines interested in the plane had already placed orders.
Boeing stopped deliveries and announced last week that it was cutting production of 737s from 52 to 42 a month.
Airlines in China and Norway have said they want compensation for their grounded planes. While other airlines have kept silent, analysts expect Boeing will make concessions that could total hundreds of millions of dollars.
The Chicago-based company also faces a growing number of lawsuits by families of the crash victims.
Boeing hasn't provided numbers on the financial impact from the Max crisis.
San Francisco, Apr 12 (AP/UNB) — Uber is providing a look under the hood of its business in the lead-up to its hotly anticipated debut on the stock market, revealing strong growth but an ongoing struggle to overcome huge losses and repair its reputation.
Documents released Thursday offered the most detailed view of the world's largest ride-hailing service since its inception a decade ago.
The massive filing shows Uber has been generating the robust revenue growth that entices investors, but also racked up nearly $8 billion in losses over its 10 years in existence, which mirrors the same trend challenging Lyft, Uber's main rival in the U.S.
Uber's revenue totaled $11.3 billion in 2018, a 42% increase from $7.9 billion in 2017, and a giant leap from $495 million in 2014.
The company posted a profit of $997 million last year, but that doesn't mean its ride-hailing service suddenly started to make money — far from it. The positive result stemmed from a windfall that Uber generated from the sale of its operations in Russia and Southeast Asia. The company said it sustained an operating loss of $3 billion.
The San Francisco company also disclosed a legal cloud hanging over its head as government authorities and regulators investigate whether the company broke any laws.
Among other things, Uber revealed the U.S. Justice Department is conducting a criminal investigation into a yearlong cover-up of a massive computer break-in during 2016 that heisted personal information belonging to millions of passengers and drivers.
The probes are among the many risks that investors must weigh as they mull whether to jump into one of the biggest IPOs in years.
Uber CEO Dara Khosrowshahi acknowledged the self-inflicted wounds that damaged the ride-hailing service's reputation while trying to make the case that the company has rehabilitated itself since he took over 18 months ago.
He struck his note of contrition and optimism in a letter included in the federal documents.
"Some of the attributes that made Uber a wildly successful startup — a fierce sense of entrepreneurialism, our willingness to take risks that others might not, and that famous Uber hustle — led to missteps along the way," Khosrowshahi wrote, closing his letter by assuring he will run Uber with integrity.
Reaching profitability has proven to be a challenge for both Uber and Lyft. Paying drivers is a huge expense, and Uber's fierce competition with Lyft for customers has led both companies to offer rides below cost. Drivers for both companies complain about declining earnings, and they can easily switch between platforms, making it difficult for either company to further reduce driver costs and keep fares cheap for passengers.
Uber said it plans to give bonuses to qualified drivers and is setting aside an undisclosed portion of its stock for drivers to buy.
Its unprofitable history may force Uber to eventually raise its ride-hailing prices unless it can reduce its costs by shifting to driverless cars or expand into other markets and lines of business.
But Uber's operating losses declined from $4 billion in 2017 to $3 billion in 2018, indicating it could be heading in the right direction.
"They're showing that they're capable of controlling their costs, which has been a concern of ride sharing companies in general," said SharesPost analyst Alejandro Ortiz. "That's a sign that will be looked on favorably in the next few weeks."
Lyft beat Uber to the stock market last month with an IPO that raised $2.3 billion, but its shares have been backsliding after an early run-up. Lyft's stock currently is hovering around $61, down from its IPO price of $72.
The rocky start may have prompted Uber to tamp down its IPO ambitions. The company is expected to try to raise roughly $10 billion and seeks a market value of $90 billion to $100 billion, according to the Wall Street Journal. That's below earlier estimates of $120 billion.
The investment bankers handling Uber's IPO are expected to reveal a pricing range for Uber's shares later this month. That will come before executives head out on a so-called road show designed to drum up interest in the IPO among institutional investors who will be given the first opportunity to buy the stock before it begins trading on the New York Stock Exchange next month.
In the end, Uber is widely expected to be the biggest technology IPO since Chinese e-commerce giant Alibaba Group went public in 2014. And it's likely to be the largest among U.S. tech companies since Facebook took its bow on Wall Street seven years ago at a time when most people hadn't ever considered using an app on their smartphone to summon a ride from strangers driving their own cars.
Uber launched in 2009 as UberCab, a black car service where customers could hail professional drivers with a few taps on a smartphone. It shortened its name to Uber in 2010, distancing itself from the taxicab industry, which has criticized the company for operating under less regulation than the traditional taxi industry.
The company operates in 65 countries and has completed 10 billion trips worldwide.
Uber is also expanding in other markets such as freight while offering other ways to get around with shared scooters and bikes. Its fast-growing food delivery business, which spans 500 cities globally, doubled its revenue to $757 million in 2018 from $367 million in 2017.
But Uber faces challenges that Lyft doesn't because of a series of damaging revelations that sullied its reputation among consumers. The setbacks have included rampant internal sexual harassment and allegations it stole self-driving car technology.
The blowback from the problems helped Lyft pick up ground in the U.S. — something Uber acknowledged in its filing — and led to the ouster of Uber co-founder Travis Kalanick as CEO in 2017. Now it will be up to Kalanick's successor, Khosrowshahi, to persuade investors that Uber has cleaned up its act and merits a market value higher than Ford Motor and General Motors combined.
Kalanick is one of Uber's largest shareholders, owning nearly 9% of the company's stock.
Uber has been investing substantially in self-driving vehicles, which could be critical to reducing driver costs and achieving profitability. It launched its first self-driving test vehicle in 2016 and its self-driving car division has more than 1,000 employees, and it has built more than 250 self-driving cars so far.
But it suspended testing when one of its self-driving vehicles struck and killed a pedestrian in Arizona last year. The company resumed testing self-driving vehicles in Pittsburgh in December.
In its federal filing, Uber warned of the fierce competition it faces on that front from rivals such as Tesla and Google's Waymo, who it said could introduce autonomous vehicles earlier than Uber. The company also warned that potential future regulations or increases in insurance costs could impact the autonomous vehicle business.
Alphabet, the parent company of Google, owns 5% of Uber, even as it competes with Uber on self-driving technology. Alphabet also owns roughly 5% of Lyft's stock.
Dhaka, Apr 10 (UNB) - Investcorp, a global manager of alternative investment products for private and institutional clients, wants to invest in Bangladesh’s several sectors, particularly technology, consumer products and infrastructure.
Its Executive Chairman Mohammed Alardhi expressed the interest at a press conference at a city hotel on Wednesday.
Alardhi came to Dhaka as part their annual Asia Roadshow which allows them to visit countries and economies that support their expansion into Asian markets.
He said the annual Asia Roadshow is focused on strengthening existing connections and fostering new ones. “We work particularly with private equity, real estate, absolute returns investment, credit management and infrastructure.”
“Bangladesh has experienced impressive economic growth over the past five years and offers an array of opportunities across multiple sectors….we’re looking forward to exploring and evaluating opportunities in this country, which has hosted us so warmly,” he Alardhi said.
Mentioning that they work in Bahrain, New York, London, Abu Dhabi, Riyadh, Doha, Mumbai and Singapore, Investcorp executive chairman said they are reinforcing their commitment to their Asian friends and will continue to offer more global opportunities to diversify investments and grow businesses.
Since its inception in 1982, Investcorp has made over 185 Private Equity deals in the US, Europe, the Middle East and North Africa region and Asia, across a range of sectors including retail and consumer products, technology, business services and industrials, and more than 600 commercial and residential real estate investments in the US and Europe, for in excess of US $59 billion in transaction value.
Tokyo, Apr 10 (AP/UNB) — Asian shares fell Wednesday following a slide on Wall Street amid growing tensions between the U.S. and the European Union and a dim forecast on global economic growth.
Japan's benchmark Nikkei 225 dropped nearly 0.8% in morning trading to 21,635.16. Australia's S&P/ASX 200 slipped nearly 0.1% to 6,217.30. South Korea's Kospi lost 0.2 % at 2,209.21. Hong Kong's Hang Seng shed 0.8% to 29,925.15, while the Shanghai Composite was down nearly 0.9 percent at 3,211.36.
On Wall Street, the S&P 500 index fell 17.57 points, or 0.6%, to 2,878.20. The Dow Jones Industrial Average dropped 190.44 points, or 0.7%, to 26,150.58. The Nasdaq composite slid 44.61 points, or 0.6%, to 7,909.28. The Russell 2000 index of small-cap stocks gave up 19.32 points, or 1.2%, or 1,559.68.
European indexes also finished broadly lower, giving up early gains, after the U.S. threatened to impose $11.2 billion in tariffs on European products, including cheese, wine and helicopters.
The threat from President Donald Trump could make investors even more concerned about trade disputes hurting an already slowing global economy at a time when the U.S. is trying to resolve a trade conflict with China.
That spat has already made a list of goods more expensive for consumers and is weighing on an already slowing Chinese economy. Negotiators met again last week and both sides have said they are making progress.
Traders also were disappointed to see that the International Monetary Fund lowered its forecast for global growth this year. The IMF now projects 3.3% global growth in 2019, matching the weakest year since 2009. The U.S. fared particularly poorly in the report, with growth now expected at 2.3%, down from 2.9% in 2018.
Investors will get more clues about the Fed's intentions Wednesday, when the central bank releases minutes from its latest policy meeting. The European Central Bank will also meet Wednesday.
"Amid the sporing of growth and trade tension concerns once again, sentiments in Asia markets have once again been undermined," said Jingyi Pan, market strategist at IG in Singapore.
Benchmark U.S. crude rose 11 cents to $64.09. It fell 0.7% to settle at $63.98 a barrel Tuesday. Brent crude added 4 cents to $70.65 a barrel.
CURRENCIES: The dollar fell to 111.14 yen from 111.28 yen Tuesday. The euro inched down to $1.1257 from $1.1277.
Jakarta, Apr 8 (AP/UNB) — More families of victims of the Lion Air crash in Indonesia are suing Boeing Co. after its chief executive apologized and said a software update for the MAX 8 jet would prevent further disasters.
Family members and lawyers said Monday that CEO Dennis Muilenburg's comment related to an automated flight system in a video statement last week was an admission that helps their cases.
The anti-stall system is suspected as a cause of the Lion Air crash in October and an Ethiopian Airlines crash in March that also involved a MAX 8 jet. The two crashes killed a total of 346 people.
Preliminary reports into both crashes found that faulty sensor readings erroneously triggered the anti-stall system that pushed the plane's nose down. Pilots of each plane struggled in vain to regain control.
Families of 11 Lion Air victims said at a news conference organized by Jakarta law firm Kailimang & Ponto that they are joining dozens of other Indonesian families in filing lawsuits against Boeing.
"Boeing's CEO explicitly apologized to 346 passenger families," said Merdian Agustin, whose husband died in the crash. "We hope this is good momentum to have compensation rights."
Agustin, the mother of three children, said that she and dozens of other families have not received 1.2 billion rupiah ($85,000) compensation they are entitled to in Indonesia because they refused to sign a "release and discharge" document that extinguishes their right to sue Lion Air, Boeing or their subsidiaries.
"We refused to sign such a document containing statements that are treating our loved ones like lost baggage," Agustin said. "It's ridiculous and hurts us."
Lawyer Michael Indrajana said that since the crash, families in Indonesia have faced a complicated and painful process against Boeing and Lion Air in their battle to get compensation.
He said the Boeing CEO's statement shows the airline is now acknowledging responsibility.
"No amount of money can bring their loved ones back," he said. "We want to fight for the orphans, so they have the opportunity to get a better future."