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Boeing Prepares Deeper Cuts From Executive Ranks to Real Estate – BNN

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(Bloomberg) — Boeing Co. is thinning its corps of vice presidents and winnowing real estate holdings, including a splashy outpost near the Massachusetts Institute of Technology, as the planemaker works furiously to counter plunging aircraft sales and mounting costs for the grounded 737 Max.

About 170 midlevel executives, 70 of them based at Boeing’s commercial airplane division, are taking a buyout offer that includes a year’s salary, according to people familiar with the matter. The first of the vice presidents and senior managers to accept the terms will leave the company Oct. 2, followed by a second wave later in the year.

The cuts go deeper and wider than the 19,000 jobs pared earlier this year when the coronavirus pandemic sent air travel into an unprecedented collapse. Stemming the cash outflow has become a paramount concern for Boeing, and the company is also wringing savings from investments in futuristic technology as well as its businesses and organizational structure.

Boeing is shedding assets “like King Midas in reverse,” said Richard Aboulafia, an aerospace analyst with Teal Group.

The biggest and most controversial of the cost-saving measures mulled by Boeing would be to build the 787 Dreamliner at a single site, most likely its South Carolina factory, and close a second final-assembly line in Everett, Washington.

The decision on production amid a steep plunge in wide-body jet deliveries is expected to be announced as soon next month, according to two of the people, who asked not to be named because they weren’t authorized to speak publicly.

Au Revoir Chateau

Boeing also is jettisoning holdovers from the days when it was flush with cash. One example: a lavish executive retreat, modeled after a French chateau, in the countryside near St. Louis. The Boeing Leadership Center is closing indefinitely, with 81 workers from chefs to waiters losing their jobs, according to a WARN report.

Chief Executive Officer Dave Calhoun and Chief Financial Officer Greg Smith warned in July that the company faced a shrinking market that’s likely to remain depressed for years. The Chicago-based company could see a staggering $23.3 billion cash outflow this year, according to an estimate by Melius Research analyst Carter Copeland, before the resumption of Max deliveries starts to fill the company’s coffers in 2021.

Smith, who’s orchestrating the shakeup, said in August that Boeing needs to be “clear-eyed about the market” and how to mitigate its risks.

Boeing signaled last month that a new voluntary exit offer would take workforce reductions well beyond the 10% it initially targeted. The package was aimed at the commercial aircraft and services businesses, the most damaged by the pandemic, as well as the corporate operation, which employed 37,862 people at the start of the year. Fewer employees in the company’s defense, space and government business were eligible for the buyouts.

NeXt Out

Boeing is trimming research and development spending in part by phasing out Boeing NeXt, a two-year-old unit focused on futuristic concepts from flying cars to a supersonic business jet.

Aurora Flight Sciences, among the highest profile of the ventures, remains a wholly-owned subsidiary with work proceeding “full steam ahead,” a Boeing representative said.

But the company has tapped the brakes on the Autonomous Flight Research Center it had planned to open this year in MIT’s Kendall Square Initiative in Cambridge, Massachusetts, near the university’s campus.

Boeing is trying to sublease about half of the 100,000 square-feet space it had secured, said Peter Conway, director of research for Boston-based Lincoln Property Co., which doesn’t represent Boeing or the landlord. Aurora no longer plans to move its Cambridge-based team to the building, Boeing said.

The company plans to decide by year-end whether to maintain or monetize its stakes in three ventures:

  • Aerion, which is developing a supersonic business jet
  • SkyGrid, which is making an air-traffic management system for drones
  • Wisk, a joint venture with Kitty Hawk Corp., an autonomous flight venture backed by Google founder Larry Page.

“It’s a different world now,” said Stephen Perry, an investment banker who specializes in aerospace and defense deals at Janes Capital Partners. “They’re all cash-draining businesses in the short run, with an uncertain future.”

Boeing, Perry said, needs to focus on its core businesses because it’s “in a fight for survival.”

©2020 Bloomberg L.P.

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Homelessness: Tiny home village to open next week in Halifax suburb

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HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.

Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.

Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.

The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.

Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.

They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.

The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.

This report by The Canadian Press was first published Oct. 24, 2024.

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Here are some facts about British Columbia’s housing market

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Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.

Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.

Average residential home price in B.C.: $938,500

Average price in greater Vancouver (2024 year to date): $1,304,438

Average price in greater Victoria (2024 year to date): $979,103

Average price in the Okanagan (2024 year to date): $748,015

Average two-bedroom purpose-built rental in Vancouver: $2,181

Average two-bedroom purpose-built rental in Victoria: $1,839

Average two-bedroom purpose-built rental in Canada: $1,359

Rental vacancy rate in Vancouver: 0.9 per cent

How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent

This report by The Canadian Press was first published Oct. 17, 2024.

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