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Canada says U.S. ties could be undermined if Michigan shuts pipeline

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A day before Michigan’s deadline to close down a key crude oil pipeline, Canada on Tuesday issued its strongest remarks so far, saying the move could undermine relations with the United States, its closest ally and trading partner.

Enbridge Inc is preparing for a legal battle with Michigan and courting protests from environmental groups, betting it can ignore the state’s Wednesday deadline to shut down Line 5, which runs under the Straits of Mackinac.

The Canadian government said in a U.S. federal court filing that Michigan had no right to act unilaterally since a 1977 Canada-U.S. pipeline treaty guarantees the free flow of oil between the two nations.

“This case raises concerns regarding the efficacy of the historic framework upon which the U.S.-Canada relationship has been successfully managed for generations,” Ottawa said.

Michigan’s move “threatens to undermine important aspects of that cooperative international relationship”, it added.

The brief said Canada would suffer “massive and

potentially permanent disruption” from a shutdown. Line 5 brings 540,000 barrel-per-day of oil from western Canada to refineries and airports in Ontario, Quebec, Michigan, Ohio and Indiana.

In November, Michigan Governor Gretchen Whitmer gave Enbridge six months to shut down the pipeline that runs four miles (6.4 km) along the bottom of Lake Michigan-Huron, citing fears it could rupture.

The order needs a confirmatory order from a judge to enforce it, and Enbridge and Michigan are disputing whether the issue should be heard in state or U.S. federal court.

The sides are in court-ordered mediation, with the next session scheduled for May 18.

“We will not stop operating the pipeline unless we are ordered by a court or our regulator, which we view as highly unlikely,” Enbridge spokeswoman Tracie Kenyon said in a statement this week.

Joe Comartin, Canada‘s consul general in Detroit who is arguing on behalf of Ottawa, said litigation could drag on until at least 2024.

“I don’t see a court jumping the gun and ordering it closed … until the litigation and constitutional issues are resolved,” he said by phone.

Canada has been lobbying https://www.reuters.com/business/energy/frustrated-canada-presses-white-house-keep-great-lakes-oil-pipeline-open-2021-04-26 Washington officials to keep the pipeline open in what is likely to be an election year in Canada, but the White House has so far not weighed in.

Ontario estimates the city of Sarnia, across the border from Michigan, could lose 5,000 refinery and chemical plant jobs. Industry lobbyists say thousands of U.S. jobs are in danger.

Environmentalists and indigenous groups opposed to Line 5 say the potential job losses are exaggerated. They plan “Evict Enbridge” rallies in Mackinaw City, Michigan, on Wednesday and Thursday.

“We are very hopeful to hear from the governor that there will be accountability measures for operating that pipeline,” said Beth Wallace of the National Wildlife Federation.

Michigan is reviewing what it could do if Enbridge keeps operating past the deadline, said a spokeswoman for the Michigan Attorney General.

Canadian crude market forward prices suggest most traders do not expect Line 5 to shut in coming months, but the lack of certainty is concerning, said one Calgary-based market source.

(Reporting by David Ljunggren and Nia Williams; Editing by David Gregorio and Marguerita Choy)

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Pre-owned business jet shortage drives sellers’ market, demand for new luxury planes

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A shortage of newer-model business jets is driving up prices of second-hand aircraft, a trend that is expected to deliver a windfall for luxury planemakers as new affluent buyers enter the market.

After a turbulent 2020 due to COVID-19, the rush toward private transport is so marked that some buyers are snapping up second-hand planes before fully inspecting the wares as the market shifts toward sellers, lawyers and brokers said.

That is expected to push up demand for new jets from planemakers like General Dynamics Corp‘s Gulfstream, Textron Inc and Bombardier Inc since buyers have fewer pre-owned options, and the price gap between old and new narrows.

“There are virtually no young pre-owned aircraft available – good news for would-be sellers and for (planemakers),” said aviation analyst Rolland Vincent.

He recalled one trucking company’s recent search for a pre-owned Gulfstream jet: “There was one aircraft in the world that fit their requirements.”

Traffic from business jets, which carry roughly a handful to 19 travelers, has rebounded to pre-pandemic levels in the United States, the world’s largest market for private aviation, according to FlightAware data.

“On the pre-owned side, inventory appears to be fairly low, and that’s always a benefit to new aircraft sales,” said Scott Neal, senior vice president worldwide sales, Gulfstream.

“We are seeing strong interest across the board from first-time buyers and high net worth individuals as well as corporate customers with a desire to grow their fleets.”

Textron in April raised its full-year profit forecast, propelled by a rebound in business jet demand.

The trend could encourage some planemakers to increase production rates, although any ramp-up would hinge on supply chain capabilities, Vincent said.

Planemakers do not disclose total number of orders.

Preowned aircraft for sale in May accounted for 6.6% of the worldwide fleet, the lowest level recorded in 25 years by JETNET data, Vincent said. He said 864 pre-owned business jets sold during the first four months of 2021, up 36% from the same period last year.

“There are multiple offers on planes,” said Florida-based aviation attorney Stewart Lapayowker, founder of Lapayowker Jet Counsel PA.

Amanda Applegate, a partner at Aerlex Law Group, said she handled more deals for new jets than usual in May, as buyers fail to secure popular pre-owned planes like the G650, raising prices.

Applegate said it’s a case of pent-up demand as some wealthy travelers previously avoided private jets due to concerns like “flight shaming” over the environment. Corporate planes burn more fuel per passenger than commercial.

But since COVID-19, buyers have been shifting to private aviation to avoid airport crowds and coronavirus variants.

Applegate said some deals are so competitive she’s seen buyers give up pre-purchase inspections to win them.

Don Dwyer, managing partner at Guardian Jet, which does aircraft brokerage, appraisals, and consulting, recalled one case where a client didn’t undertake a pre-purchase inspection, which can take more than a month to complete.

It was a particular case since the plane was highly coveted, in good shape based on a visual inspection, and the seller was reputable, Dwyer said.

“I don’t recommend it, but in certain situations it can work.”

 

(Reporting by Allison Lampert in Montreal; Editing by Denny Thomas and Steve Orlofsky)

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Ford starts shipping Bronco SUVs from Michigan assembly plant

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Ford Motor Co said on Tuesday it had started producing and shipping the new Bronco sport utility vehicles (SUVs) from its Michigan assembly plant, following a delay in the launch of the SUVs due to COVID-19-related issues with the automaker’s suppliers.

Customers have booked more than 125,000 sixth-generation Bronco SUVs since the beginning of the year, the company said. The SUVs are targeted at the Jeep Wrangler market segment.

Ford said it had made more than 190,000 reservations for the Bronco in the United States and Canada.

The company built the first generation of Broncos from 1966 to 1977, and withdrew the line in 1996 amid falling demand.

Ford said it had invested $750 million into and added about 2,700 jobs at the Michigan assembly plant to build the new Broncos.

 

(Reporting by Ankit Ajmera in Bengaluru; Editing by Vinay Dwivedi)

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Lufthansa sets 2024 goal, eyes capital increase

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Germany’s flagship carrier Deutsche Lufthansa said it aims to boost its return on capital employed (ROCE) and laid out plans for a capital increase as it prepares for a business recovery amid an easing coronavirus pandemic.

The largest German airline aims to have an adjusted EBIT margin of at least 8% and an adjusted ROCE of at least 10% in 2024, it said late on Monday.

Adjusted ROCE was –16.7% in 2020 and 6.6% in 2019.

The group added it had mandated banks to prepare a possible capital increase, though size and timing have not yet been determined and the German state, which has bailed out the airline during the pandemic, has not yet given its approval.

 

(Reporting by Ludwig Burger; editing by Jonathan Oatis)

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