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Boeing posts quarterly loss on 787, Starliner problems

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October 27, 2021

By Sanjana Shivdas and Eric M. Johnson

(Reuters) – Boeing Co reported a quarterly loss on Wednesday as charges and expenses on its problem-plagued 787 Dreamliner and Starliner spacecraft programs dampened a ramp-up in 737 MAX deliveries amid rebounding air travel.

The 737 MAX and 787 jetliners are integral to Boeing’s ability to recoup billions of dollars in lost sales from the pandemic and move beyond the safety scandal caused by two fatal crashes, while its Starliner has fallen behind dominating space rival Elon Musk’s SpaceX.

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The U.S. planemaker reported a net loss of $132 million, compared with a loss of $466 million a year ago, but eked out a small core operating profit of $59 million, pushing shares up fractionally to $210.52 against a slightly lower Dow Jones Industrial Average.

“It’s important we enter (next year) with a decent trajectory. I feel like we’re on it,” Chief Executive Dave Calhoun said in an interview with CNBC.

Calhoun told employees earlier that Boeing was still muscling through many engineering, production and safety certification problems across its aircraft portfolio. Those issues have been magnified by a severely weakened supply chain, weak international travel demand and the 737 MAX jet’s continued grounding in China.

On the 787, Boeing said it incurred abnormal costs of roughly $1 billion – or $183 million in the quarter – due to inspections and repairs over the last two years from structural defects embedded in the aircraft, confirming for the first time a price tag reported by Reuters in February.

It has twice halted 787 deliveries, with the latest stoppage ongoing since May and resulting in an inventory of more than 100 jets worth $9 billion cash. Calhoun said he could not say when 787 deliveries would resume as Boeing works through forensic inspections and repairs to jets, and supplier problems.

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“Simple maths and the $1bn anticipated cost would suggest that it is going to be another ~3-4 quarters before the rate gets back to 5/month,” Vertical Research Partners analyst Rob Stallard said.

Boeing also booked a charge of $185 million on its long-delayed Starliner astronaut capsule it is developing under NASA’s Commercial Crew Program, due to delays and repairs from faulty fuel valves that sidelined the spacecraft after its last flight attempt in August.

Meanwhile, SpaceX’s Dragon capsule has ferried astronauts and supplies to orbit four times.

Revenue rose 8% to about $15.3 billion, fueled by 737 MAX deliveries and growth in Boeing’s services unit as it sees recovery in the air travel market.

Boeing also said it was building 19 of its 737 MAX jets per month, up from the 16 last quarter, with ongoing plans to push to 31 per month in early 2022.

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On the prospect of ramping to 50 or more jets monthly, Calhoun said, “The wild card in this one isn’t demand. It’s all about the supply chain. Whether it’s two, three or four years, I’m not sure. I do think we get there.”

The company delivered 62 of its 737s in the quarter, the most since the first quarter of 2019 when the second of two fatal crashes grounded the plane worldwide and lurched Boeing into a crisis long overtaken by the global pandemic.

It also said it has been producing about two jets monthly at its South Carolina factory with plans to go back to an already slow rate of five a month at some future point.

An adjusted loss of 60 cents per share compared with analysts’ average estimate of 20 cents per share, according to Refinitiv data.

Quarterly free cash flow of negative $507 million compared with negative $5 billion a year ago, while Boeing’s mountain of debt fell to $62.4 billion from $63.6 billion.

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(Reporting by Sanjana Shivdas and Sweta Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Steve Orlofsky)

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Deutsche Post CEO favourite to become Telekom chairman – sources

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December 5, 2021

BERLIN (Reuters) – Frank Appel, the chief executive of German logistics company Deutsche Post, is the favourite to become the next supervisory board chairman of Deutsche Telekom, two sources close to the matter told Reuters.

The sources said Deutsche Post’s supervisory board is due to meet on Wednesday and Deutsche Telekom’s board will meet a week later to discuss the matter.

Both companies declined to comment.

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The Handelsblatt newspaper reported on Saturday that Appel would potentially be proposed for election at Deutsche Telekom’s annual meeting on April 7.

The term of office of Telekom chairman Ulrich Lehner, who has headed the Telekom supervisory body since 2008, ends at next year’s shareholder meeting. He had already confirmed that an external search for a successor was under way.

Appel’s predecessor at Deutsche Post, Klaus Zumwinkel, also served as supervisory board chairman of Telekom.

The German government holds stakes in both companies.

Appel, a former McKinsey consultant, has been with Deutsche Post since 2000. In 2002, he became a member of the board of management, and in 2008 he moved up to the post of CEO.

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His contract runs until 2022 and a decision on his future at the Post had been expected soon. Some industry insiders have speculated that Appel could be ready to move on given that Deutsche Post has posted record results through the pandemic.

(Reporting by Matthias Inverardi and Nadine Schimroszik; Writing by Emma Thomasson; editing by David Evans)

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Canadian employers, facing labor shortage, accommodate the unvaccinated

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December 5, 2021

By Julie Gordon and Steve Scherer

OTTAWA (Reuters) – Canada’s tight labor market is forcing many companies to offer regular COVID-19 testing over vaccine mandates, while others are reversing previously announced inoculation requirements even as Omicron variant cases rise.

Canadian Prime Minister Justin Trudeau’s government adopted one of the strictest inoculation policies in the world for civil servants and has already put more than 1,000 workers on unpaid leave, with thousands more at risk.

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Airlines, police forces, school boards and even Canada’s Big Five banks https://www.reuters.com/world/americas/canadas-major-banks-require-employees-entering-premises-be-vaccinated-2021-08-20 have also pledged strict mandatory vaccine policies. But following through has proven less straightforward, especially as employers grapple with staffing shortages and workers demand exemptions.

Job vacancies in Canada have doubled so far this year, official data shows, and vaccine mandates can make filling those jobs harder, potentially putting upward pressure on wages. That could fuel inflation https://www.reuters.com/world/americas/canadas-annual-inflation-rate-hits-47-oct-highest-since-feb-2003-2021-11-17, already running at a near two-decade high.

“It’s already difficult to find staff, let alone putting in a vaccine mandate. You’d cut out potentially another 20%” of potential workers, said Dan Kelly, chief executive of the Canadian Federation of Independent Business.

There are pitfalls to employing the unvaccinated. Companies run a higher risk of COVID-19 outbreaks and many vaccinated employees are uncomfortable working with those who have not had the jab, said industry groups and marketing experts.

At Luda Foods, a Montreal-based soup and sauce maker, president Robert Eiser said he has 14 open jobs, no vaccine mandate and no plans to restrict new hires to the vaccinated.

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“I don’t know that I want to reduce the (labor) pool, which is already quite low,” said Eiser. “We need to attract people to meet the demand. If we don’t, our competitors will.”

Data released on Friday underpinned Canada’s tight labor market, with a hefty 153,700 jobs https://www.reuters.com/markets/us/canada-posts-hefty-job-gains-outlook-clouded-by-omicron-variant-2021-12-03 added in November. It also showed a growing mismatch between available workers and unfilled jobs. And job postings are far above pre-pandemic levels. (Graphic: Canada job postings surge above pre-pandemic level Canada job postings surge above pre-pandemic level, https://graphics.reuters.com/HEALTH-CORONAVIRUS/CANADA2/klvyknzklvg/chart.png)

WALKING BACK

The province of Quebec backtracked on a vaccine mandates for healthcare workers last month, saying they could not afford to lose thousands of unvaccinated staff. Ontario, which was also eyeing a mandate, said it would not go ahead.

Toronto-Dominion Bank and Bank of Montreal have both softened their vaccine policy to allow regular testing for workers who missed their Oct. 31 inoculation deadline.

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In Canada, 86% of adults are fully inoculated, though that drops under 80% among 18-40 year olds. At least 15 cases of the new Omicron https://www.reuters.com/markets/rates-bonds/canada-has-reported-total-11-cases-omicron-variant-health-official-2021-12-03 variant in Canada have been reported in the past week.

John Cappelli, vice president of onsite managed services in Canada for global recruitment firm Adecco, said half of his clients are mandating vaccines with the other half allowing regular testing for the unvaccinated.

But he expects the Omicron variant will prompt more workplaces to get strict on vaccination, even as they grapple with the tightest job market he’s seen in his 25-year career.

“We are now starting to see our first workplace (COVID-19) cases in five months,” he said.

The number of Canadian job postings on search website Indeed mentioning vaccine requirements has quadrupled since August. (Graphic: Canada job postings and vaccine mandates, https://graphics.reuters.com/HEALTH-CORONAVIRUS/CANADA3/byvrjqrlmve/chart.png)

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In the hard-hit manufacturing sector, where 77% of firms say their top concern is attracting and retaining workers, vaccine mandates are more rare.

Dennis Darby, CEO of Canadian Manufacturers and Exporters, said most of Canada’s factories have operated safely throughout the pandemic. While CME encourages vaccination, “some companies are still using rapid testing if somebody doesn’t want to get vaccinated,” he added.

But companies risk a hit to their reputation if they are overt in efforts to tap into the unvaccinated as a labor pool, said Wojtek Dabrowski, managing partner at Provident Communications.

“If you go out and say, ‘We are intentionally seeking to hire unvaccinated people,’ many customers are equating that with you being anti-science and anti-safety,” said Dabrowski.

(Reporting by Julie Gordon and Steve Scherer in Ottawa, additional reporting by Rod Nickel in Winnipeg and Nichola Saminather in Toronto; Editing by Alistair Bell)

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Israeli firm to sell HSBC Tower in New York for $855 million

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December 5, 2021

By Steven Scheer

JERUSALEM (Reuters) – Israel’s Property and Building Corp said on Sunday it agreed to sell the HSBC Tower building in midtown Manhattan for $855 million to New York-based real estate firm Innovo Property Group, recording a net loss of $45 million.

The Israeli company, which is 63% owned by Discount Investment Corp, said it had also sold property in Israel for 390 million shekels ($123 million).

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Doron Cohen, chief executive of both Property and Building and Discount, said management was focusing on income-producing properties in Israel and that the amount it was receiving from both transactions would allow it to advance this policy.

“We are continuing the policy and examining the possibility of realising additional properties in the United States and in Israel,” Cohen said, noting the sale of the HSBC building came despite “gloomy” predictions over U.S. commercial real estate market.

He cited Tivoli Village, an upscale apartment complex in Las Vegas that opened this year, which may be put up for sale as part of the company’s efforts to boost liquidity and reduce debt.

Along with conglomerate Koor Industries, Property and Building, bought the 30-storey, 80,000 square metre HSBC Tower in 2009 for $353 million. In 2011, Property acquired Koor’s stake in the tower which has an occupancy of 99%, it said. HSBC had bought the building in the 1990s.

Property and Building said the value of the HSBC Tower in its books was $864 million as of Sept. 30. After costs, it said it would record a net loss of $45 million from the sale.

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Completion of the sale is expected by April 1, 2022 subject to Innovo’s right to advance the date while also receiving options to postpone the completion twice for 30 days each.

Property said after the sale it will have a net cash flow of $343 million.

Its shares were 0.7% lower in afternoon trading in Tel Aviv.

($1 = 3.1605 shekels)

(Reporting by Steven Scheer;Editing by Elaine Hardcastle)

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