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United, American Airlines both back Azul restructuring, eyeing Brazil market
United Airlines and American Airlines are fierce competitors in the U.S., but have decided to support Azul after the Brazilian airline filed for bankruptcy earlier this week. This move is being made as major U.S. carriers look to improve connections in Latin America’s largest country. American's support of Azul is noteworthy given its own ties with its local competitor Gol, which has just emerged from its own Chapter 11 proceedings. According to a filing by Azul, U.S. firms are planning to invest up $300 million in a equity offering for Azul to repay its debtor-in possession financing after it emerges from bankruptcy. John Rodgerson, Azul's Chief executive officer, said that the company believes in its long-term viability and our network strategy. "Brazil will be very important for United and American." Both airlines will have codeshare agreements and serve on the board of directors for Azul when it emerges out of Chapter 11. Azul filed for bankruptcy in the United States Wednesday. This followed similar moves made by Gol, and LATAM Airlines, who had spent months trying to restructure debts mainly from pandemic years. Rodgerson pointed out that, although United and American both have "great franchises" throughout Latin America their routes connect Brazil with different U.S. city. American Airlines flies to Dallas, Miami, and New York JFK Airport while United flies to Chicago, Houston and Washington. United is an Azul shareholder. It bought a stake as part of a strategy in 2015 to catch up with U.S. competitors who had a stronger foothold on South America's largest air travel market. Andrew Nocella said that the new deal was an opportunity for United to expand their business with Azul. American has been a partner of Brazilian carrier Gol for many years. Gol holds roughly the same market share as Azul in Brazil, at around 30%. Azul offers a much wider range of destinations than Gol, which focuses on the big cities like Sao Paulo and Rio de Janeiro. Stephen Johnson, American Airlines' Chief Strategy Officer, said in a press release that Gol was still a major partner and praised Azul for its plans. He called them "extremely beneficial" to the Brazilian aviation industry. Gabriel Araujo, Mexico City. Editing by Aurora Ellis.
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Fuel shortages in the US add to supply risk during an above-average hurricane season
Analysts said that low fuel stock levels in the United States had fueled supply anxiety ahead of an expected hurricane season above average. The U.S. gasoline and diesel stock levels have been at or below their five-year average, partly because of a series of refinery shutdowns and unplanned maintenance over the past few weeks. Forecasters predict that this year's Atlantic Hurricane Season will produce over 17 named storms. This could threaten the majority of U.S. refineries and a large part of the oil production along the U.S. Gulf Coast. The latest Energy Information Administration data showed that U.S. stocks of distillate fuel oil fell to the lowest level since April 2005. The week's gasoline stocks dropped by 2.4m barrels, while analysts expected a 527k-barrel drop. A major disruption in Gulf Coast refinery would be quickly felt by Eastern demand centers, and could cause prices to spike there as the region scrambles to import additional products to meet demand. Chowdhury said that the Gulf Coast is the main source of inbound transfer for the East Coast. Colonial Pipeline is the main conduit for fuel moving from the U.S. Gulf Coast up to the East Coast. A new S&P Global Commodity Analysis shows that if a major hurricane hit the Gulf Coast in this season, gasoline stocks and diesel inventories could fall below their seasonal range of five years. Fuel demand could be a factor that limits the volatility of refined products prices. Joe DeLaura is a senior energy strategist with Rabobank. He said: "I think that if we have a strong storm season this year - and it is supposed to be one of the biggest ones ever - it will negatively impact prices and logistics." "Some refineries are out of service for a few days or even a week, but the product demand is also lower during this time."
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Williams works with federal and state regulators in Pennsylvania to revive natgas pipelines between New York and Pennsylvania
Williams Cos, a U.S.-based energy company, said Thursday that it is working with state and federal regulators to revive the two natural gas pipelines previously canceled from Pennsylvania to New York. The Northeast Supply Enhancement Pipeline (NESE), which runs from Pennsylvania through New Jersey to New York, and the Constitution Pipeline, which runs from Pennsylvania to New York. Williams canceled Constitution after years of fighting to get permits from New York regulators, and canceled NESE after years of fighting to get permits from New York and New Jersey regulators. After gaining a lot of money, the company wanted to revive its projects. Support from the Trump Administration On May 19, the administration lifted an order that had been in place for a month to stop work on the $5 billion Empire Wind offshore project of Norwegian energy company Equinor off New York. U.S. Interior Secretary Doug Burgum who had issued the Empire Wind stop-work order in April said that he was pleased to see New York Governor Kathy Hochul allowing new gas pipeline capacities to be built. Hochul, who asked the Trump administration for the lifting of the stop-work orders on the offshore wind farm did not endorse the gas pipelines but stated in a press release that New York will work with private entities and the U.S. Administration on projects that comply with state law. In an email, a Williams spokesperson said that the company had "submitted a petition to Federal Energy Regulatory Commission for reinstatement of certificate of public necessity and convenience for the Northeast Supply Enhancement Project (NESE)." The company said that it had begun to work with state environmental regulators of New Jersey, Pennsylvania, and New York on permitting issues and would be filing applications as soon as possible with these agencies in order to obtain the permits necessary for the NESE Pipeline and Constitution Pipeline Projects. Williams said that the projects were "essential" to address the persistent shortages of natural gas in the Northeast. These shortages have resulted in higher energy prices for consumers, and a greater reliance on fuels with higher emissions like fuel oil. (Reporting and editing by Chris Reese, Mark Porter and Scott DiSavino)
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US FAA extends Boeing's ability to perform agency tasks such as inspections
The U.S. Federal Aviation Administration on Thursday said it would extend by three years a program that allows Boeing to perform some tasks on the agency's behalf like inspections, saying the planemaker had made improvements. In May 2022, the agency agreed to renew Boeing's Organization Designation Authorization -- known as ODA -- program for three years rather than the five Boeing had asked for to ensure the planemaker implemented "required improvements." Before making the decision to again extend the ODA program, FAA said it had "closely monitored specific criteria and saw improvements in most areas," adding that it "will continue to closely monitor Boeing's performance throughout its renewal period." The program allows an independent unit within Boeing to perform FAA-delegated tasks like inspections and approving repairs. A report last year said there were more than 1,000 workers who performed tasks on behalf of the FAA in engineering, manufacturing and administrative functions. Boeing did not immediately respond to a request for comment. Last month, Democratic U.S. Senator Maria Cantwell of Washington told the FAA should address critical concerns before deciding whether to extend the program. Boeing's quality and safety efforts have faced harsh criticism since a January 2024 mid-air emergency involving a new Alaska Airlines 737 MAX 9 that was missing four key bolts. Then-FAA Administrator Mike Whitaker in February 2024 ordered Boeing to implement a safety and quality improvement plan and acknowledged that prior oversight "was too hands off." Transportation Secretary Sean Duffy said in March that Boeing needs strict oversight. After the 2024 incident, the FAA took the unprecedented step of imposing a production cap of 38 planes per month on the 737 MAX, which remains in place. The FAA in 2022 set one requirement before allowing a new program extension, that ODA employees can "act without interference by company officials." Congress passed sweeping reforms in December 2020 on how the FAA certifies new airplanes after two fatal 737 MAX crashes killed 346 people and led to the plane's 20-month grounding. The FAA continues to inspect all Boeing 737 MAXs and 787 Dreamliners before issuing airworthiness certificates for individual planes, rather than delegating those tasks to Boeing. The Office of Inspector General said FAA officials in 2023 sought to allow Boeing's ODA to resume issuing final airworthiness certificates for 737 and 787s. Before FAA senior officials could approve the request, the Alaska mid-air emergency occurred. (Reporting by David Shepardson Editing by Bill Berkrot)
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Poste Italiane does not promote changes at Telecom Italia's helm
Poste Italiane does not plan to ask for changes in the near future at Telecom Italia after becoming the largest investor. Consob, the market regulator, announced on Thursday that Poste completed its purchase of 15% more of TIM by France's Vivendi on May 23. Vivendi’s stake in TIM fell to 2.5%, from 19.3%, according to the filing. Poste, a state-controlled financial conglomerate whose business includes energy, phone, and payment services as well as postal and parcels, became TIM's first investor in February, with a 9.8% initial stake. It replaced the state lender CDP. Poste said that it does not intend to change the board of directors or auditors at TIM, but it reserved the right to reassess later. Vivendi dropped its legal action against TIM as part of the 684-million euro deal which gave Poste an additional stake. Two sources who are directly familiar with the matter confirmed this. Vivendi challenged in court TIM’s decision to sell the prized landline network to a consortium headed by U.S. Investment Fund KKR, which included Italy’s Treasury.
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Boeing CEO wants to increase 737 MAX production throughout the rest of the year
Boeing aims at increasing production of its most popular 737 MAX aircraft to 42 aircraft a month within the next few weeks and then to 47 a monthly in early 2026. This was announced by Chief Executive Kelly Ortberg on Thursday. After Ortberg stated at the Bernstein Strategic Decisions Conference that he wanted to reach 47 aircraft per month production by 2025, the share price of the U.S. airplanemaker jumped 5%. He corrected himself a few minutes later by saying that the company should be preparing to reach this level of production before the end the year. Boeing aims to maintain production at 38/month. This was the level set by the U.S. Federal Aviation Administration (FAA) in 2024, after a mid-air accident brought the safety and quality of the planemaker's production program into question. He said that production defects in the 737 program have decreased by 30%. "Virtually all of our customers are reporting an improved quality of aircraft at delivery." Boeing must increase production to become cash-positive again, something Ortberg said previously he expected to happen in the second half. It spent $2.3 billion on cash in the first quarter. Ortberg stated, "I believe the financial performance of the company will follow its production performance. I think that we should think about it in this way." He said that the company was making progress in certifying both the smallest MAX and the largest MAX with the U.S. Federal Aviation Administration. Partly due to concerns about the engine deicing system, MAX 7 and MAX 10 were delayed. He said that the company would finish testing its fix in July and be able to certify aircraft before the end of the calendar year. Boeing's backlog of orders includes almost 1,200 orders for 737 MAX 10 and nearly 332 orders MAX 7. Ortberg said that Chinese Airlines will resume Boeing deliveries in June. China halted deliveries to Boeing in April as a retaliation for tariffs imposed on President Donald Trump. Boeing estimates that the tariffs will have an impact of less than $500,000,000, according to him.
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Ryanair CEO O'Leary could earn 100 million Euros if he hits his share price target
Michael O'Leary, Ryanair's Chief Executive Officer, hit on Thursday a target share price that could bring him more than 100 million euros. He had told investors earlier in the month that this payout would be a good deal compared with football players' salaries. The stock price of Europe's biggest low-cost airline closed Thursday above 21 euros for the 28th consecutive day. This met a condition set by a share-option plan, which was originally established in 2019 at the time of the COVID-19 Pandemic. According to the annual report of the company, if O'Leary stays with Ryanair through July 2028, he can buy 10 million shares for 11.12 euros each. The closing price on Thursday was 23.74 euro, which would be a discount worth 126 million Euros. O'Leary responded to a question about the option during an analyst call in early October: "I believe we're providing exceptional value for Ryanair's shareholders, especially at a time when Premiership footballers are earning 20-25 million dollars yearly." "I believe Ryanair shareholders get a special value from our share options, both mine and those of the rest of the Management Team," he said in the call after the airline announced an annual profit after tax of 1.6 billion euro. A Ryanair spokesperson said earlier this week that the airline would not comment on the Thursday milestone, as the options will not vest for three more years. O'Leary, in his three decades of being chief executive at Ryanair, has transformed the airline from a regional Irish carrier into Europe's biggest airline by number of passengers. With 44.1 million shares, he is the eighth largest shareholder of the airline. This represents 4.15%. In the early 1990s, he was given a large stake during his first years as CEO. Ryanair's stock price dropped to 8 euros just months after its 21 euro target. (Written by Conor Humphries, edited by Kirby Donovan).
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US Supreme Court limits environmental review in Utah Railway ruling
The U.S. Supreme Court gave a blow to environmentalists by allowing federal agencies the ability to limit their review of the environmental impact on projects that they regulate. However, the justices supported a Utah railroad project designed to transport crude oil. The 8-0 decision overturned an earlier court ruling that had stopped the project. It had also faulted a Surface Transportation Board environmental impact report issued by the federal agency in its approval of the railway for being too limited in scope. Environmentalists and the Colorado County challenged the project. Four other conservative justices joined the ruling, written by conservative Justice Brett Kavanaugh. Three liberal justices of the court filed an opinion in which they concurred with the ruling. A coalition of seven Utah Counties and an Infrastructure Investment Group are seeking to build an 88-mile-long (142-km-long) railway line to connect the sparsely-populated Uinta basin region to an existing rail freight network, which would primarily be used to transport waxy crude oils. The case examined the scope of the environmental impact studies required by federal agencies under the National Environmental Policy Act, a 1970 U.S. legislation enacted to prevent potential environmental harms from large projects. The law requires that agencies evaluate the "reasonably predictable" effects of any project. Kavanaugh wrote in his opinion that agencies should only take into account the environmental impacts of the project under consideration and not "the effects from future potential projects or geographically separated projects" and that courts need to give agencies "substantial discretion" when it comes to the scope of their assessments. "NEPA is not a substantive roadblock, but a cross-check of procedural requirements." Kavanaugh wrote that the goal of NEPA is to inform agency decisions, not paralyze them. On Dec. 10, the Supreme Court heard arguments in this case. Companies and environmental groups have been watching closely to see how the ruling could affect other infrastructure and energy projects. The Center for Biological Diversity (one of the groups who challenged the rail) said that "this disastrous decision will undermine our nation's environmental law, which is the bedrock of our country. This will lead to more pollution in our air and our water, and the climate and extinction crisis will worsen. People will also be less healthy." Park stated that the policy "guarantees bureaucrats will be able to bury their heads in sand, and ignore the harm that federal projects can cause ecosystems and wildlife as well as the climate." Jay Johnson, an attorney representing the Seven County Infrastructure Coalition welcomed Thursday's ruling. Johnson stated that the court had done everything they asked. The court agreed with us that NEPA requires that courts defer to the expertise of agencies and that agencies shouldn't be required to study projects they aren't currently involved in. Companies and business groups say that environmental reviews with a broad scope can delay the regulatory process by years, putting at risk the viability of a project and future infrastructure developments. Surface Transportation Board (which has regulatory authority for new railroad lines) issued an environmental impact report and approved the rail proposal in 2021. The Center for Biological Diversity, along with other environmental groups, sued the state of Colorado over the approval. Eagle County also filed a lawsuit, citing that the project would double the traffic on a rail line already in place along the Colorado River and increase the train traffic within its region. In 2023, the U.S. Court of Appeals District of Columbia Circuit ruled that the environmental review did not adequately analyze the effects of increased production of oil in the basin and downstream, where it would be refined. The railway coalition was supported by the former Democratic President Joe Biden’s administration, as well as the state of Utah. The challengers were supported by 15 other states. Colorado claimed that its economy is based on outdoor recreation and the project would increase the risk of spills, rail accidents, or leaks near the Colorado River headwaters. Conservative Justice Neil Gorsuch resigned from the case. Democrats had called for his resignation because former client Philip Anschutz has a financial stake in the outcome. Circuit Court in Washington, D.C. Circuit. Park stated that the Supreme Court decision did not guarantee construction of the railway. Park stated, "The last thing that we need is a climate bomb on wheels which the communities along its proposed path say they do not want." "We have been fighting against this project for many years and will continue to fight until this rail is never built."
German Gas Pipeline Lobby proposes reforms for cost-saving storage
The German pipeline lobby group proposed on Wednesday a new strategy for gas storage that included a permanent reserve. This was done to lower the cost of constructing an energy buffer in advance of the European Winter.
In order to avoid a supply disruption, European Union nations have increased their storage capacity in response to the energy crisis that is linked to Russia's invasion into Ukraine in 2022.
The way in which Germany manages this practice has a resounding effect on the rest of the EU, as Germany is the largest energy market and storage facility on the continent and is heavily reliant upon imports.
A month ago, the new Berlin federal government changed the required levels of filling for the upcoming winter to align with changes anticipated in European Union regulations. The EU now allows 80% filling before November 1, instead of 90%.
Fernleitungsnetzbetreiber Gas' Managing Director Barbara Fischer said the regulatory change helped for the short term, but more was need for the longer term.
She said that the model she proposed would combine gas supply security and a greater responsibility and inclusion for market participants, referring to gas merchants on FNB's transport pipe networks.
The proposal of the lobby group involves creating a permanent underground gas reserve, where Germany can store for example a quarter its annual needs.
This would reduce the pressure on utilities to meet seasonal filling targets, which has in many cases led to them paying higher prices because they knew that market participants needed to purchase.
The group also proposes that shippers be required to hold or store enough volume to serve their retail customers.
This would help spread out the backlog of orders more evenly throughout the year, and discourage any market speculative surges. Vera Eckert reported, Barbara Lewis edited.
(source: Reuters)