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Lufthansa continues talks with the pilots' union despite a possible strike
Both parties announced on Friday that Lufthansa would continue to negotiate with the German Pilots' Union VC regarding a pension dispute. This will prevent a strike for now at its main airline. The union members had voted for a walkout in order to press Lufthansa to agree on a more generous deal with pensions. Both parties have said that they will explore the possibility of new dates and further negotiations after Thursday's constructive discussions. A spokesperson for VC or Vereinigung Cockpit said that while Lufthansa had not made a new proposal, it was possible to find a solution. Lufthansa's spokesperson said, "We remain committed to finding a strike-free solution." The union wants higher contributions from the employer to the company pension plans of the 4,800 employees in the cockpits at the Lufthansa brand and its cargo subsidiary Lufthansa. Lufthansa has no financial room to maneuver, since its core brand is overspending and hasn't made any money in the last year. It has threatened to shift more jobs to its less expensive subsidiaries, Discover and City Airlines. (Reporting and writing by Ilona wissenbach, Miranda Murray editing by Ludwig Burger).
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China retaliates against US ships by charging additional port fees
China's Transport Ministry announced that vessels owned or operated or built in the United States, or those flying the U.S. Flag will be charged an additional port fee per voyage as of October 14. The ministry stated on Friday that the fees were a countermeasure to upcoming U.S. Port fees. Starting on October 14, all ships that are built in China, or that are operated or owned in China will be required to pay a fee when they arrive at their first US port. Analyst estimates suggest that fees could reach $1 million for ships carrying more than 10,000 containers. Vessels operated or owned by Chinese entities will be charged a flat rate of $80 for each net tonnage on each voyage to the U.S. Following a U.S. trade representative (USTR) investigation, the U.S. charges on China-linked ships are part of a broader U.S. initiative to revitalize domestic shipbuilding while reducing China's naval power and commercial shipping. China's biggest shipyards are handling both military and commercial projects. The Chinese fees levied on U.S. ships could harm the U.S. less that the U.S. charges levied on a legion of Chinese vessels. According to analysts in the military and industrial sector, Chinese shipyards produced more than 1,000 commercial ships last year while the U.S. built fewer than 10. The Chinese Transport Ministry announced that the tariff for U.S. vessels docking in Chinese ports after October 14 will be 400 yuan (56.13 dollars) per net ton. This will rise to 640 Yuan ($89.81), and 880 Yuan, from April 17th 2027. From April 17, 2028 the fee for vessels visiting Chinese ports will be 1,120 Yuan ($157.16). Since September, tensions between China and America have been rising. The two superpowers are struggling to break their 90-day trade tariff truce that began on August 11 and ends around November 9 The U.S. president Donald Trump and Chinese President Xi Jinping will meet at the Asia-Pacific Economic Cooperation Conference ( End of October, he will be in South Korea.
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Trump bans Chinese airlines from flying over Russia in US flights
Trump's administration proposed on Thursday to ban Chinese airlines from flying above Russia during flights into and out of the United States. They said the practice places American carriers at an unfair disadvantage. U.S. Airlines have criticized for years the decision of allowing Chinese carriers to fly above Russia on certain flights, because they gain the benefit of reduced flying time and less fuel. In its proposal order, the U.S. Transportation Department stated on Thursday that "this imbalance has now become a significant factor in competitiveness." USDOT announced that it would ban Chinese overflights to "level this competitive disparity between U.S. air carriers and Chinese airlines." The Chinese Embassy in Washington has not yet responded to the report. In retaliation to Washington's ban on Russian flights over the U.S. after its invasion of Ukraine in March 2022, Russia has banned U.S. and other foreign airlines from flying over their airspace. This decision may affect some U.S. flights operated on Air China, China Eastern Airlines, Xiamen Airlines, and China Southern. The move comes amid increasing tensions between China and the United States on a number of economic issues. USDOT has given Chinese carriers until November to respond. A final order may be issued as early as then. Reports indicate that the United States granted additional flights to Chinese carriers in May 2023 after they agreed to not fly over Russia. USDOT announced last year that Chinese airlines would be able to increase weekly round-trip flights from the U.S. to 50. Before restrictions were placed in early 2020, each side allowed more than 150 round-trip weekly passenger flights. Some U.S. airlines have informed the Trump administration that direct flights from the East Coast to China are not feasible due to the additional cost of not flying over Russia.
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Trump Administration airs video in airports accusing Democrats of shutdown
The Trump administration began playing a video in airports around the country on Thursday, blaming Democrats for a nine day-old shutdown of the government that has caused significant flight delays. They are still required to show up at work, but not paid. Next week, they will receive a partial pay for the work done before the shutdown. A spokesperson for the Department of Homeland Security confirmed that the video was being shown at U.S. Airports. Fox News reported that Homeland Security Secretary KristiNoem is heard in the video saying, "Democrats refuse to fund federal government and as a result, many of operations are affected and most TSA employees work without pay." Since Monday, there have been over 19,000 delays in U.S. flights - including 3300 on Thursday. Many of these are due to the FAA delaying flight because air traffic controllers were absent. Both Republican and Democratic leaders blame each other for the shutdown that began on October 1, after Congress failed approve new spending legislation. Chuck Schumer, Senate Democratic Leader, said: "Everyday that Republicans refuse negotiations to end this shut down the worse it gets to Americans and it becomes clearer who is fighting for them." The TSA reported that wait times at airport security are still low. On Wednesday, it screened approximately 2.4 million passengers with an average waiting time of 6.28 mins for standard screening. Many government agencies posted banners on their websites accusing Democrats of the shutdown. In 2019, the number of controllers and TSA agents absent increased during a 35 day shutdown as workers missed their paychecks. This led to longer waits at checkpoints in some airports. The authorities were then forced to slow down air traffic in New York. This put pressure on legislators to end the standoff quickly. (Reporting and editing by Deepa Babyington, with David Shepardson)
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Urals crude diffs remains steady in thin trading
Market sources say that the price of Urals crude remained stable on Thursday, despite a thin trade. However, a rise in freight rates from Russian ports to Asia may affect its differentials with Brent dated, they said. The EU's sanctions chief said that while sanctions are hurting Russia's economy, President Donald Trump keeps his allies guessing as to whether he'll sign off on additional measures. This is despite Washington's participation in the G7 deal to coordinate actions against the Kremlin. PLATTS WINDOW There were no bids or offerings reported on Thursday in the Platts Window for Urals, Azeri BTC Blend or CPC blend crude. A drone attack caused fires to break out in fuel and energy plants in Russia's Volgograd Region, said Governor Andrei Bocharov on Thursday. * On Thursday, the United States imposed sanctions against Serbia's Russian owned oil company NIS. This prompted Croatia to reduce crude supplies. There are also concerns that Serbia's only refinery could cease operations in a few weeks. (Reporting and Editing by Joe Bavier).
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Turkish Airlines could switch Boeing 737 orders to Airbus if talks about engines fail, says chair
Ahmet Bolat, Turkish Airlines' chairperson, said that the airline could change its order of Boeing 737 MAX planes to Airbus if negotiations with engine supplier CFM do not progress. The sudden warning came after Turkish Airlines announced a tentative agreement with Boeing to purchase 150 MAX aircraft, which coincided with the meeting between Turkish President Tayyip Erdoan and his U.S. counterpart Donald Trump on September 25, subject to an engine deal. CFM International is a joint venture between GE Aerospace, Safran and CFM International. It is the exclusive engine supplier of the Boeing 737 MAX. Pratt & Whitney, RTX's unit, competes for Airbus A320neo airline contracts. Costs - DISAGREEANCE Bolat said in Stockholm, late Wednesday night: "If CFM can come up with reasonable economic terms, we will sign with Boeing." Bolat said that negotiations had progressed, but there were still disagreements over costs. If CFM persists in its position, we will switch to Airbus. Bolat stated that he had two options when it comes to Airbus' two engine suppliers. CFM, which is the largest engine manufacturer in the world by number of engines sold, stated: "As an issue of policy, CFM doesn't disclose the details of contract negotiations with our clients." Boeing declined to make a comment. The deal, which is being closely watched, is part of an ambitious fleet replacement program and expansion that will see around 800 Airbus aircraft in service by 2033. This follows Turkish Airlines' (THY) order for more than 200 Airbus airplanes in 2023. Sources in the industry said that they expected the deal with CFM to be completed, given recent attention from politicians on the Airbus order and the limited supply of the competing jets. Shared Risks The industry has been impacted by a series of engine shortages, maintenance delays and rising prices for engine parts. THY is one of the airlines that has expressed frustration with this disruption. It faces delays related to Pratt & Whitney engine on its Airbus fleet. Engine makers claim they should be compensated for taking on such huge financial risks. Industry sources claim that the core of the dispute over THY is who should take the biggest risk in terms of long-term repair costs. Jet engines are usually sold at a profit, but the manufacturers make money by servicing them over a 20-year period. Instead of charging for repairs on an as-needed basis, they will often make long-term agreements priced per flight hour. This is riskier because of the increased wear and tear that modern engines experience. Sources claim that THY is waiting for a deal of this kind. CFM appears to have been less inclined to offer such deals over the past few years. They prefer to delegate more work to independent stores. Two industry sources say that CFM has recently shown more flexibility in hourly deals, but at a higher price. CFM officials said recently that the company had not stopped offering hourly contracts for long periods of time and its strategy to shift more work outsourced had not changed. Open to placing orders on delayed Boeing 777X Bolat, in a positive development for Boeing, said that THY, despite reports of recent delays, was still considering Boeing's troubled 777X Mini-Jumbo and closely monitoring its progress. The twin-engined world's biggest jetliner, which was originally scheduled to be completed in 2027 is now projected to arrive seven years later. Bolat stated that THY was in regular contact, including discussing the 777X. He also said THY was assessing the best routes for the aircraft. Bolat added that THY would not rush to buy the 777X. (Reporting from Marie Mannes in Stockholm and Tim Hepher, with additional reporting by Joanna Plucinska and Ceyda Kaglayan, Editing by Adam Jourdan; Emelia Sithole Matarise, Rod Nickel).
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Delta's earnings outlook is optimistic due to the demand for premium fares and higher prices.
Delta Air Lines announced on Thursday that a robust demand for luxury travel, coupled with a sharp decline in seat capacity expansion across the industry, has positioned them well to grow revenue and margins over the next year. The Atlanta-based airline also expects record earnings in the current quarter, after posting stronger-than-expected third-quarter profit on improved consumer demand and pricing power. In midday trading, its shares rose by about 5%. Delta, by far the largest airline in the United States, has reported that its sales across all regions have increased over the last six weeks. It reported an increase in corporate bookings from all sectors. Tickets prices increase due to fewer seats The sharp decrease in seat capacity on the domestic market is driving up ticket prices. Delta's unit revenue - a key indicator of pricing power - increased in the third quarter after a decline the first quarter. Delta expects that its unit revenue will remain positive during the December quarter, despite Spirit Airlines' bankruptcy and other carriers' plans to reduce capacity in order to avoid discounting pressure. Delta CEO Ed Bastian said on an earnings call that "structural change" had taken place across the industry. He was referring to a reduction in the unprofitable flights by U.S. airlines. The airline anticipates a profit adjusted between $1.60 and $1.90 per share for the fourth quarter, which ends in December. Bastian stated that the company will perform at or above their all-time earnings for the fourth quarter. LSEG data shows that the midpoint of the forecast is $1.75 compared to analysts' average estimates of $1.66. Delta's revenue for the quarter is expected to increase by 2%-4% compared to last year. Delta reported an adjusted profit per share of $1.71 in the third quarter of 2018, compared to analysts' estimates of $1.53. The company's optimistic tone contrasts with the rocky first half year, when economic uncertainty clouded the forecast for travel spending and prompted Delta and other U.S. airlines to withdraw their financial projections. High-End Travel Demand Since the pandemic began, travelers are willing to pay more for better seats and a more luxurious experience. Delta and United rivals have benefited the most. Delta's premium revenues were up 9% from the previous year in its third quarter and accounted about 43% for passenger revenue. The airline is encouraged by the high returns and plans to expand the premium seat offering while reducing the main cabin capacity. Delta President Glen Hauenstein said, "Exposure of higher household income cohorts has improved our relative position against carriers who cater to a more stressful lower-to-mid-income environment." The outlook does not take into account any negative effects of the U.S. Government shutdown. This week, more than 13,000 flights were delayed due to staffing shortages in air traffic control facilities. The staffing shortage could worsen as federal employees work without pay. Travelers have begun canceling their trips and avoiding the airports until U.S. legislators reopen government. A prolonged shutdown could also have a negative impact on the economy and consumer spending. Delta was hit with a financial loss of $25 million in 2019 during the 35-day shutdown. Hauenstein said, however, that the airline had not felt any material impact as a result of the shutdown. (Reporting and editing by Sherry Jacobi-Phillips, Rod Nickel and Rajesh Kumar Singh)
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Citi rejects Grupo Mexico's bid for Banamex
Citigroup rejected Grupo Mexico’s bid to acquire its retail division in Mexico, Banamex. Instead, Citigroup opted to move forward with an agreement previously reached. Grupo Mexico Surprised last week When it made an uninvited $9.3 billion bid for Banamex more than two years after it had abandoned negotiations. Local markets were rocked by the news. Wiping out billions In the firm's capitalization. Citi announced Thursday that they had rejected the offer. This led to a 4.5% increase in shares of Grupo Mexico. Citi announced last month that it will be launching a new website. Sell a 25% stake Banamex sold its shares to Mexican billionaire Fernando Chico Pardo who is the chairman of airport operator ASUR for $2.3 billion. It was announced at the time that the lender planned to conduct a public offer for the remainder of the unit while also testing the interest of local magnates. Citi said on Thursday that they believed the deal would maximize shareholder value and divest responsibly from Banamex. Reporting by Raul and Kylie Madry, editing by Cassandra Garrison
US can fire air traffic controllers if they fail to perform as delays continue
Sean Duffy, the U.S. Transportation secretary, warned that the government may dismiss air traffic controllers if they repeatedly fail to report to work during the shutdown. Flight delays are continuing to increase.
Duffy stated on Fox Business Varney & Co. that if there is a small group of controllers who don't come to work and are the "problem children", we will let them go. "I can't have people not showing up for work," Duffy said on Fox Business' Varney & Co.
FlightAware reports that there have been almost 21,000 delays in flights since Monday, including 6,300 on Friday. The FAA has slowed down flights due to air traffic controllers' absences, which is responsible for thousands of these delays.
United Airlines and Delta Airlines each had 500 flights delayed on Thursday. This is about 15%. American Airlines, however, had 850 flights delayed or about 25% of its flights. Southwest Airlines, meanwhile, had 1,300 flights delayed or about 30%.
Duffy praised 90% to 95% controllers who show up every day despite not being paid.
Duffy continued, "It is only a small number of people that don't show up to work who can cause such a massive disruption. You're witnessing it rippling across our skies today."
PROCEDURES IN PLACE
In response to Duffy's complaint, a spokesperson for the National Air Traffic Controllers Association said: "There are procedures and processes in place to deal inappropriately with sick leave."
The union has repeatedly asked controllers to continue working during the nine day government shutdown. NATCA warned workers that participating in a "job action" could lead to removal from federal employment and was illegal.
Air traffic controllers have been in short supply in the U.S. for over a decade. Many of them were working six-day work weeks and mandatory overtime before the shutdown. About 3,500 air traffic control staff are not enough to meet the FAA's target.
In the past, staffing problems in our towers have been responsible for about 5% delays. Duffy stated on Wednesday that the last two days, it was 53%.
Ed Markey, a Democratic Senator from Massachusetts, urged major airline companies to refund customers if necessary "without making them jump through unnecessary and complicated hoops." The FAA does not require airlines to pay for hotel costs, meals or other expenses incurred due to delays.
The air traffic control staffing problems during this shutdown are more severe than during the last major stoppage of government funding in 2019. That was during President Donald Trump's initial term. This has led to unexpected shortages across the country.
The number of controllers and TSA agents who missed their paychecks increased during the 35-day shutdown. This resulted in longer waits at checkpoints. The authorities were forced to reduce air traffic in New York. This put pressure on legislators to end the standoff quickly.
The government shutdown has forced 13,000 air traffic control officers and around 50,000 Transportation Security Administration (TSA) officers to continue working, but without pay.
(source: Reuters)