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Aviation: Boeing parks its 737 aspirations – Financial Times

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It has been getting harder for staff to find parking spaces at Boeing’s Renton plant outside Seattle. For much of this year, the world’s largest aircraft manufacturer has been using the employee car park to store planes which it cannot deliver.

Renton is home to the 737 Max, the latest model of the best selling commercial jet in history. Since two fatal crashes prompted global regulators to ground the entire Max fleet in March, the plant’s 12,000 people have been confronted each day they arrive for work with hulking reminders of the biggest crisis in Boeing’s 103-year history.

The company has been producing 42 Max jets a month, even while it could not send them on to customers, leaving it with 400 “white tails” — finished planes awaiting airline liveries — in need of novel storage solutions.

They will soon have more room, after Boeing announced this week that it is halting production at Renton for an indefinite period. Employees will be parking at other nearby Boeing facilities where the $188bn company has promised to find them work.

Dennis Muilenburg, Boeing’s chief executive, and family members of those killed in the Ethiopian Airlines Flight 302 and Lion Air Flight 610 crashes, at a Senate hearing © Andrew Harnik/AP

Dennis Muilenburg, Boeing’s engineer-chief executive, had hoped the Max would be flying again by this summer, yet analysts now think it will not return until March 2020 at the earliest — almost 18 months after the first of two crashes, in Indonesia and Ethiopia, that killed 346 people. But even that might be optimistic — United Airlines said on Friday that the Max would not return to its fleet until June.

The crisis has not only cost America’s largest exporter billions of dollars: it has challenged many of the global aviation industry’s core assumptions about the political, regulatory and competitive context in which it operates.

Boeing’s announcement left employees who had feared lay-offs relieved, but it rattled suppliers who will find it harder to replace work lost during any prolonged interruption to orders.

With its shares down almost a quarter since March, and economists estimating that the disruption could shave half a percentage point off US gross domestic product in the first quarter of 2020, its troubles have also caught the attention of the passenger of its best known plane, Air Force One. Donald Trump reportedly called Mr Muilenburg on Sunday to ask about the company’s health highlighting that in election year the president will be weighing Boeing’s economic impact against his voters’ safety fears.

Boeing’s failure to put the Max crisis behind it has baffled even experts who have studied corporate crises, from Johnson & Johnson’s 1982 Tylenol pain relief recall, to BP’s Deepwater Horizon environmental disaster in 2010.

The drawn-out saga has few parallels, says Eric McNulty, associate director of the National Preparedness Leadership Initiative, but he believes it stems from “tone-deaf” management and an inability to understand that Boeing’s world was changing even before the pride of its fleet proved fatally flawed.

When questions first arose about the role its MCAS anti-stall system played in the Max crashes, Mr McNulty argues, the company’s first reaction was to think “we’re Boeing; this can’t be happening to us”; it failed to question potential failings in its culture, its close relationship with its domestic regulator or its fast-changing market.

“When you have a worldview that makes sense it’s almost impossible to break out of it,” he adds: “The system made perfect sense until it didn’t.”

Grounded Boeing Co. 737 Max airplanes are seen in a parking lot near Boeing Field in Seattle, Washington, U.S., on Tuesday, Dec. 17, 2019. Boeing plans to halt production of its grounded 737 Max in January, a move that will deepen the crisis engulfing the planemaker, complicate its eventual recovery and ripple through the U.S. economy. Photographer: David Ryder/Bloomberg
Grounded Boeing 737 Max planes in a car park near Boeing Field airport in Seattle © David Ryder/Bloomberg

Boeing is accused of producing a flawed design for the MCAS system, which pushed the nose of the plane down when sensors detected it was about to stall. But Boeing opted to use one instead of two sensors to deliver that crucial data to the flight control system, leaving it exposed if the remaining sensor was defective. Compounding the problem, Boeing lobbied to keep information on the system out of the manual to avoid costly pilot training, arguing that crew should be able to handle the system from existing checklists.

One analyst, a former aerospace engineer, says: “I don’t think they think they did anything wrong. They think they designed an aeroplane that was fine and this never would have happened if they had pilots who knew what they were doing . . . Deep down inside they think they are being picked on.”

If Boeing has been blindsided by the hostile response to its predicament, that is partly because its status as one of America’s most politically significant companies has offered it surprisingly little protection. With plants dotted around the country, the company donated $4.2m to politicians of all stripes from 2016 to 2018. It also gave $1m toward Mr Trump’s inauguration.

But if it hoped such patronage would shelter it, it was mistaken. Boeing does not face insurmountable technical problems, says Richard Aboulafia, vice-president of aviation consultancy Teal Group. Instead, “it’s a hideous mix of political pressure, messaging incompetence and regulatory misalignment” that is confronting the company.

In the view of one former supplier who asked not to be named, its problems with the Max began when the Federal Aviation Administration let it “ram through” alterations to a 737 design which was first certified in 1967, rather than face the more arduous approval process for an entirely new aircraft.

As House of Representatives and Senate committee members have learnt how keen Boeing was to avoid having the Max classified as a new jet, rather than an update of an old one, they have taken a tougher tone in questioning Mr Muilenburg and other executives.

The House transportation committee wants to find out who was pushing regulators to minimise how much training pilots would need on the Max. With 500,000 documents to review, its investigation has months to run.

“There is clearly a cultural issue at Boeing,” says one congressional official. “It is going to take a lot of things to turn this company around — a new leadership, and possibly a fresh perspective.”

FILE PHOTO: Airplane fuselages bound for Boeing's 737 Max production facility await shipment on rail sidings at their top supplier, Spirit AeroSystems Holdings Inc, in Wichita, Kansas, U.S. December 17, 2019. REUTERS/Nick Oxford/File Photo
737 Max fuselages await shipment at their supplier in Wichita, Kansas © Nick Oxford/Reuters

Much of the scrutiny Boeing has faced on Capitol Hill has focused on a relationship with its domestic regulator that many now paint as excessively cosy. An official report from representatives of the FAA, Nasa and seven regulators, concluded that the FAA’s practice of delegating many of the steps required to certify an aircraft to Boeing’s own staff had created “conflicting priorities”.

Under fire, the FAA has appeared determined to demonstrate its distance.

Where once the regulator might have accepted Boeing’s reassurance that its aircraft were airworthy, now it is “reasserting itself”, Mr Aboulafia says.

The manufacturer’s timetable for getting approval for the Max to fly again was “not realistic”, the FAA said last week, reprimanding Boeing for appearing to try to “force” it into moving faster.

The FAA is not Boeing’s only concern. Despite a tradition of domestic regulators taking the lead in such decisions, China was the first country to ground the Max and the FAA’s international peers have all demanded a say in the process for getting it airborne again.

Authorities ranging from the European Aviation Safety Agency to Canada’s civil aviation body have peppered Boeing with questions. The FAA’s hopes of avoiding a piecemeal return to service have required unprecedented co-ordination with peers, which some in the US industry see as eager to challenge its standing as the leading regulator.

(FILES) In this file photo taken on March 27, 2019 Employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington. - Boeing could on Monday announce whether to further cut or suspend production of its grounded 737 MAX plane, The Wall Street Journal reported December 15, 2019. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)
Boeing’s Renton plant, where production will be suspended indefinitely © Jason Redmond/AFP/Getty

Their suspicions have been fed by other tensions between Washington and its trading partners. Mr Trump’s tariffs have sharpened competition with China, while the US recently won World Trade Organization backing for its case that the EU has provided unfair subsidies to Airbus, Boeing’s European rival.

Despite this win, one senior industry executive warns that “time is against Boeing” because the Max crisis may have set back the planned launch of its “new midsized aeroplane”, by three years. The popularity of Airbus’s recently launched A321XLR and re-engineered A330neo could leave little of the mid-market for it to go after, he says.

For now airlines faced with an effective duopoly between Boeing and Airbus cannot afford for either to fail. “The market needs [Boeing] to recover,” the executive says.

Despite the discomfort Mr Muilenburg showed while being grilled in October’s congressional hearings, many still expect Washington to temper its urge to punish the national champion.

“Boeing will receive all the support it needs to recover from airlines, the government, the agencies,” the executive says. “Boeing was too optimistic and arrogant in the way it predicted the aircraft would fly again but the FAA and EASA will authorise the 737 to fly again.”

If Boeing has had to rethink its assumptions about Washington and the wider regulatory environment, it has had to do the same with its planes.

The company faced angry reactions when it suggested earlier in the year that its errors with MCAS had been just one link in a “chain of events” but the pilot error at which it hinted remains a concern for manufacturers and regulators.

As the industry’s growth forecasts depend on emerging markets, Boeing faces the need to reassess its different pilot training programmes. That will mean building more technological safety nets into cockpits, and a level of automation which it had resisted.

The Boeing board, for now, is trusting Mr Muilenburg to execute these longer-term shifts, even while leading the urgent work to return the Max to the skies and responding to challenges like the malfunction which prevented its Starliner astronaut capsule from reaching the International Space Station on Friday.

But the chief executive will have one eye on the planes sitting in the Renton car park. A 737 does not take well to being grounded: its tyres go flat, its electronics need retesting, and its engine must be turned over. Much like one of the cars at Renton, one employee says, “you’ve got to take it out for a spin”.

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​Rogers, Shaw formalize planned Freedom sale to Quebecor – BNN Bloomberg

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Rogers Communications Inc., Shaw Communications Inc. and Quebecor Inc. announced Friday they reached a definitive agreement for the previously-announced proposed sale of Shaw’s Freedom Mobile wireless business.
 
The three companies said that the terms of the definitive pact are “substantially consistent” with their original announcement on June 17, when they said Montreal-based Quebecor agreed to pay $2.85 billion to purchase Freedom. Originally, July 15 was the target to reach the definitive agreement.  

“We are very pleased with this agreement, and we are determined to continue building on Freedom’s assets,” said Quebecor president and chief executive officer Pierre Karl Péladeau in a release Friday. “Quebecor has shown that it is the best player to create real competition and disrupt the market.”
 
The transaction is conditional on Rogers receiving final regulatory approvals for its planned $20-billion takeover of Shaw, which was announced in March 2021.
 
The road to regulatory approval has become more treacherous for Rogers after Competition Commissioner Matthew Boswell stated his objections to the plan, warning it would diminish competition in the telecom market, notwithstanding Rogers’ long-stated intent to divest Freedom Mobile.
 
Rogers’ legal counsel has argued vociferously against Boswell’s claims, saying in a June 3 filing with the Competition Tribunal that Boswell’s stance “is unreasonable, contrary to both the economic and fact evidence presented to the Bureau, and not supportable at law.”
 
The Competition Tribunal is currently scheduled to begin a hearing on the matter Nov. 7.
 
Rogers also has to clear another regulatory hurdle: its planned acquisition of Shaw requires approval from Innovation, Science and Industry Minister François-Philippe Champagne, who has previously said he won’t allow the wholesale transfer of Shaw’s wireless assets to Rogers.
 
The process became more complicated for Rogers after a national network outage knocked out service to its customers in early July.

Champagne subsequently said the outage would “certainly be in [his] mind” when weighing the merit of the Shaw sale.
 
For its part, the Canadian Radio-television and Telecommunications Communications announced its conditional approval of the transaction in March.
 
Shaw investors have consistently demonstrated skepticism that the deal will go ahead as planned, as evidenced by its shares never once attaining the $40.50-per-share takeover offer from Rogers since the takeover was announced last year.

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Power has been restored after downtown Toronto outage, Hydro One says – The Globe and Mail

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The site of a collision between a barge carrying a crane and power lines in Toronto on Aug. 11.Christopher Katsarov/The Canadian Press

Hydro One said power has been restored in Toronto after an outage in the city’s downtown core on Thursday that lasted nearly eight hours and affected about 10,000 customers.

Toronto Hydro said the outage, which began at approximately 12:30 p.m., affected an area stretching from just south of Bloor Street to the edge of the waterfront, and as far west as University Avenue to the Don Valley Parkway in the east.

“Safety is always our top priority. We know this power outage has made today exceptionally difficult for many of you, and we appreciate your patience,” said David Lebeter, chief operating officer of Hydro One in a Thursday evening statement.

“We had all available resources helping to restore power as quickly and safely as possible. I want to thank all of those affected by this outage for their patience and Toronto Fire and Toronto Hydro for their collaboration.”

The cause of the outage was confirmed to be a barge carrying a crane that had struck a critical high-voltage power line in city’s Port Lands district, Hydro One confirmed in a statement Thursday evening.

Hydro One spokesperson Tiziana Baccega Rosa initially said the company was investigating a crane accident as a possible cause, after videos of the barge hitting the power lines was posted to social media.

Toronto Fire District Chief Stephan Powell also confirmed the incident and said that fire services were attending to the scene and had cordoned off a significant portion of the area, noting that the power lines fell into the water and the area remained dangerous.

No injuries have been reported, but Mr. Powell said that fire services responded to a high number of people trapped in elevators related to the power outage. Federal Minister of Immigration Sean Fraser tweeted a picture of himself trapped in an elevator with three others, calling it “terrible timing.”

Jennifer Stranges, spokesperson for Unity Health Toronto, said St. Michael’s Hospital is operating as normal but was affected by the outage and was relying on backup power systems to maintain patient care.

“Patients with scheduled appointments or who need to visit our emergency department should continue to come to the hospital for care. Our teams have worked quickly to respond to this issue and we thank them for their continued efforts,” Ms. Stranges said in an e-mail.

Gillian Howard, vice-president of communications for University Health Network, said the outage also affected Toronto General Hospital, which is on the corner of University Avenue and Elizabeth Street. Ms. Howard said the hospital was operating on normal power, but required emergency backup power for around a half hour. She also noted that none of UHN’s facilities on the west side of University Avenue were affected, such as Mount Sinai Hospital or the Princess Margaret Cancer Centre.

The outage caused general frustration for residents around the downtown core as entire blocks remained without power, halting business and creating traffic jams as intersections became four-way stops. In a reminder of the nationwide Rogers outage in July, stores put up signs turning customers away due to a lack of functioning payment systems and an inability to use any appliances. Some people also complained of being unable to access high-speed cellular services like data and 5G networks.

The billboard-laden Yonge-Dundas Square and the Eaton Centre were also affected, the latter of which had its power restored and reopened to shoppers in the midafternoon. Other high-traffic locations, such as St. Lawrence Market, remained closed for the duration of the outage.

The city confirmed city hall and other government buildings in the affected area were also without power or operating on emergency systems.

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Telus asks CRTC permission to add 1.5% credit card surcharge to customer bills – CBC News

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Canadians who pay their cellphone bill with a credit card could soon see an extra fee every month, if Canada’s telecom regulator approves a proposal currently before them.

Telecom company Telus is asking the Canadian Radio-television and Telecommunications Commission (CRTC) for permission to add a 1.5 per cent surcharge to the bills of customers who pay their bill using a credit card. If approved, it would be in place starting as soon as October.

For a theoretical customer in Alberta whose cellphone bill is $100, the charge would bring their bill to $106.66 — $100 for their basic bill, plus $5 for GST, a $1.58 surcharge for the new fee on top of that, plus another 8 cents in GST on the surcharge.

“The company plans to provide advance notices of the fee to its existing customers starting in mid-August,” Telus said in its letter to the regulator.

Fee could be in place by October

The company is asking the regulator to decide on the proposal by Sept. 7 and would like to start levying the new charge as of Oct. 17, and while the CRTC must rule on the matter, in a statement to CBC News the telecom company made the plan sound like a done deal.

“Starting in October, Telus mobility and home services customers choosing to make a bill payment with a credit card will be charged a 1.5 per cent credit card processing fee,” Telus told CBC News in a statement. 

“This fee helps us recover a portion of the processing costs we incur to accept credit card payments, and the average cost will be around $2 for most customers,” the company said, adding that it can easily be avoided by paying through a bank, via a debit transaction, or other means.

WATCH | Why Canadians pay more for telecom services than many other countries do: 

Do Canadians pay too much for internet and cellphone service?

28 days ago

Duration 7:34

Consumer advocate and wireless bill expert Mohammed Halabi helps explain why Canadian internet and cellphone bills are so high — and what consumers can do to negotiate lower prices.

Telus’ rationale for the move stems from a development this summer, when credit card firms including Visa and MasterCard agreed to a settlement that will see them refund millions of dollars worth of credit card processing fees that merchants have paid them over the years. Crucially, that settlement also gives businesses permission to start charging customers those fees directly starting in October, which is what Telus is trying to do.

Previously, many merchants weren’t allowed to charge customers directly for the fees that credit companies charge them for processing sales. Such fees can range from less than one per cent of the sale, to more than three per cent for some premium cards.

Because just about every part of its business is regulated by the CRTC, Telus needs the regulator to start charging fees that consumers can expect to start seeing from a variety of merchants soon.

CBC News reached out to Rogers and Bell to see if they have any similar plans in the works, but representatives of both companies did not reply to that request within one business day.

Some customers aren’t happy

Some wireless customers aren’t enthused by the idea. Kenneth Hart of Windsor, Ont., a Telus customer for 15 years, calls the plan “a money grab.”

Kenneth Hart has been a Telus customer for 15 years and he says the company is making a mistake with this new policy. (Kenneth Hart)

“It’s a bad business move,” he told CBC News in an interview. “They have some accountants telling them this is good. But then you talk about the PR costs, the reputational cost, and it could create … dissatisfaction for those customers who are already … not satisfied.”

“This could be the straw that broke the camel’s back.”

Telus only filed the application on Monday, and the CRTC has already heard from more than 200 Canadians via its website, many of which are opposed to the plan.

Steve Struthers is one of them. The resident of London, Ont., is not a Telus customer but he took the time to give his two cents to the regulator because of how opposed he is to the plan.

“Consumers are already extremely stressed with unaffordable housing, increased food prices, expensive gasoline prices and wages that are not keeping up with any of this,” he told CBC News in an interview.

“I’m quite certain they could afford to absorb a 1.5 per cent credit card fee … It bothers me knowing the cellphone companies aren’t happy with the money they’re making and they still want more in an environment where people are reaching their limit as to what they can pay.”

‘The last thing anyone needs is an additional fee’

Rosa Addario, a spokesperson for telecom watchdog OpenMedia, says the plan is just the latest way for the industry to extract more revenue from cash-strapped Canadian consumers.

“All three of our telecom providers … have reported increased profits, increased revenue and increased customers for 2021,” she told CBC News in an interview. “They are doing better than ever. This is just another way to raise our bills through shady practices and extra fees and adding things on top so that we are paying even more than we already are.”

Suze Morrison, a former Ontario MPP, is urging the CRTC to reject the proposal, noting that it will disproportionately impact people who are already financially vulnerable.

“Working class people, low income people are really struggling to make ends meet right now,” she told CBC News in an interview. “The last thing anyone needs is an additional fee just because of how they pay their telephone bill to keep their phone lines connected.”

WATCH | Canada has 3 major telecom providers. Could that change?

Could Canada grow beyond the Big 3 telecoms?

1 month ago

Duration 4:18

After a nationwide Rogers outage, John Lawford of the Public Interest Advocacy Centre talks to The National’s Andrew Chang about how Canada ended up with only three major telecoms and if that can ever change.

While credit card surcharges are creeping into many businesses, she says it’s different for a telecom utility to charge them because it is a necessity. “A consumer has a choice to go to a mom and pop restaurant or to cook dinner at home or to go to a restaurant that’s not charging fees for credit card swipes,” she said.

“But we’ve allowed so much consolidation in our telecom industry and there’s such a monopoly in the sector that it’s not like folks can say, ‘OK, well, if you’re going to charge a fee, I’m going to take my business somewhere else.’ I have nowhere else to go.”

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