United Airlines orders 50 Airbus aircraft to replace Boeing 757s

NEW YORK -- United Airlines said Tuesday it had ordered 50 Airbus A321XLR aircraft, worth an estimated $6.5 billion, to replace an existing fleet of aging Boeings.

The new Airbus planes, which will be delivered in 2024, will allow United to retire its Boeing 757-200s, the company said.

The Airbus order is the latest blow to the American manufacturer, already deeply mired in the crisis surrounding its 737 MAX.

Boeing, whose 737 MAX has been grounded worldwide after two crashes that resulted in 346 deaths, currently has no new aircraft to compete with the Airbus A321XLR in the mid-market range.

Airbus launched the A321XLR only this year, at the Paris Air Show in June.

The single-aisle aircraft's range is 15 percent above that of its predecessor model, the A321LR, making it a cost-effective alternative to long-haul wide-body planes.

United said it would use the new aircraft to serve additional European destinations from US East Coast hubs in Newark/New York and Washington.

United turned to Airbus for the purchase due to Boeing's lack of aircraft in the mid-market range, a source close to the matter told AFP on condition of anonymity.

"There are no aircraft currently offered by Boeing that can replace the 757," the source said, adding that negotiations between Airbus and United began several months ago.

Boeing, which is currently focused on returning its MAX aircraft to the sky, has already postponed possible announcement of a new model aircraft (NMA) until next year.

The manufacturer recently presented the design to various airlines, industrial sources told AFP.

Airbus decided to no longer publish the catalog prices for its aircraft beginning in 2019. However, the A321XLR is a long-range version of the A321, whose unit value was $129.5 million in 2018.

United has meanwhile postponed receipt of its first 45 Airbus A350 long-haul aircraft by 5 years.

The company, which ordered the planes in 2017, said it now plans to have them delivered in 2027 instead of 2022.

Agence France-Presse

Airbus fires 16 over suspected German army spying: report

BERLIN — European aviation giant Airbus has fired 16 employees over a case that had prompted Germany to open a probe into suspected industrial espionage, German media reported Sunday. 

National news agency DPA said Airbus confirmed the sacking but did not provide further details.

Sources at the company had said in September that German prosecutors were investigating suspected internal spying by Airbus employees over two arms projects with the German armed forces.

"Some of our employees had documents that they shouldn't have had," a source had said. 

The employees work in the Munich-based Program Line Communications, Intelligence and Security (CIS), which handles cybersecurity and related activities.

Airbus said it was conducting an "ongoing internal review with the support of an external law firm" in the case.

"The company is fully cooperating with relevant authorities to resolve the matter," it said then in a statement.

German media had reported that the Airbus employees had obtained secret files of the German army involving the acquisition of a communication system, among other subjects.

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Emirates announces $16 billion deal to buy 50 Airbus 350s

DUBAI - Emirates Airline said Monday it would buy 50 Airbus 350-900 widebody aircraft in a deal worth $16 billion, with delivery to begin in May 2023.

"I am happy to announce we are purchasing 50 Airbus 350 for $16 billion," the carrier's chairman and CEO Sheikh Ahmed bin Saeed Al-Maktoum told reporters at the Dubai Airshow.

Emirates serves a global network spanning over 158 destinations in 84 countries. Its fleet stands at 267 large aircraft, including more than 100 Airbus 380 superjumbos.

Its move earlier this year to reduce its total A380 orders triggered Airbus to pull the plug on the costly plane, which airlines have struggled to fill to its capacity of 500-850 people.

At the time, Airbus said it would buy smaller A330 and A350 models instead.

"It is very good news for Airbus," the European aerospace giant's CEO Guillaume Faure said of the announcement in Dubai, adding he was "very proud that Airbus 350 has been selected by Emirates".

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How Boeing vs. Airbus became Trump vs. Europe

Just weeks after his inauguration, President Donald Trump toured Boeing’s factory in North Charleston, South Carolina, holding a rally with workers, admiring a new 787 Dreamliner and calling on the company to bring down the cost of new Air Force One planes.

But Boeing wanted something from Trump, too.

During a private conversation at the event, Boeing’s chief executive, Dennis A. Muilenburg, talked to Trump about a long-running trade dispute between the United States and the European Union that had its roots in the pitched rivalry between Boeing and Airbus, according to 3 people familiar with the meeting, who spoke on the condition of anonymity to discuss a delicate matter.

The case, which centered on subsidies that Europe provides Airbus, had been working its way through the World Trade Organization for years, but an end was finally in sight. In the event that it was settled on Trump’s watch, Muilenburg urged the president to enforce the ruling, which would mean levying tariffs on European goods.

On Wednesday, Boeing got its wish. After an announcement by the World Trade Organization, the Trump administration said it would tax as much as $7.5 billion of European exports annually.

It was the largest-ever authorized retaliation in the organization’s history, adding another layer of complexity to a global economy already rattled by brewing trade wars and further straining relations between the United States and the EU. And it was the government’s boldest-ever step to protect Boeing, the United States’ largest manufacturing exporter.

“All of those countries were ripping off the United States for many years,” Trump said Wednesday at a news conference with the president of Finland, an EU member. “They know I’m wise to it. We’ve had a lot of wins. This was a $7 billion win. Not bad.”

It was also a win for Boeing, one decades in the making. Boeing has pursued its case against Airbus since the waning days of the Clinton administration, compiling evidence and finally persuading the United States to file a complaint with the WTO in 2004.

Yet this is hardly a clean victory for Boeing. The company is in the midst of the biggest crisis of its 103-year history after the 737 Max was grounded because of two deadly crashes, and has infuriated many of its most important customers with its faltering response. Some of the customers affected by the Max grounding also buy Airbus planes and now face the prospect of higher costs as a result of the tariffs, adding to their frustrations with Boeing.

What’s more, in a case that the WTO is expected to decide next year, Europe accuses the United States of providing illegal subsidies to Boeing. A ruling against the United States could lead to tariffs against Boeing planes sold to European customers. Europe could also find ways to retaliate against the tariffs announced after last week’s ruling.

“It’s a Boeing victory,” said Richard Aboulafia, an aviation analyst at the Teal Group. “But one that may have unintended consequences that are not in Boeing’s interest.”

At issue was the substantial financial support that European countries have given to Airbus in the form of below-market-rate loans that are often forgiven. Without that support, the United States and Boeing argued, Airbus would never have been able to become a true rival to Boeing. With help from those loans, Airbus went from having less than 25 percent of the market share for large commercial airplanes in 1990 to overtaking Boeing in 2003. Today, Airbus and Boeing roughly split the market for commercial jets.

Boeing hopes the new tariffs will reverse some of those gains. Airlines in the United States will now have to pay at least 10 percent more for Airbus jets coming from Europe, potentially steering more orders toward Boeing. And the EU may be forced to reconsider its support for Airbus, with the tariffs in place until the two sides negotiate a settlement or the WTO decides that Europe is in compliance with its rules.

“Europe is facing tariffs today because Airbus has refused for years to comply with WTO rulings,” Boeing said in a statement. “Unfortunately, Airbus’ noncompliance will negatively impact European member states, industries and businesses completely unrelated to Airbus’ actions, as well as Airbus’ airline customers.”

Airbus accepted the ruling, while calling for a settlement. Its chief executive, Guillaume Faury, said tariffs “would be a barrier against free trade and would have a negative impact on not only the US airlines but also US jobs, suppliers and air travelers.”

Airlines expressed their displeasure with the ruling last week, and the stocks of American Airlines, United Airlines and Southwest Airlines, the three domestic carriers that fly Boeing’s Max, all fell as a result of the pending tariffs.

Delta called them “an unfair tax on US consumers and companies.” JetBlue, which flies only Airbus planes, said it was “concerned about the detrimental impact aircraft tariffs will have” and argued they would “harm customers who rely on us to offer competitive, low fares.”

Other major airlines in the United States did not comment on the tariffs, preferring to avoid publicly criticizing Trump, yet were quietly fuming.

The tariff package could have been worse for Europe and its customers. The Office of the US Trade Representative said it planned to start by levying a 10 percent tariff on European aircraft and a 25 percent tariff on agricultural goods, including French wine and Spanish olive oil. Those taxes may be manageable for a time, but leave the United States room to increase pressure in the future.

But no party got everything it wanted. Boeing had hoped the tariffs would tax airplane parts from Europe, a move that would have hurt Airbus, which opened a factory in Mobile, Alabama, in 2015. In the end, the Trump administration declined to do so, believing that such a move might damage manufacturing in a pro-Trump state.

Airlines, meanwhile, had been lobbying for the tariffs to be structured in a way that minimized their pain. Last week, a bipartisan group of 34 lawmakers sent a letter urging Robert Lighthizer, the US trade representative, to avoid levying tariffs and, if he did, to exempt existing aircraft orders. But the tariffs will hit existing orders.

With more rulings from the WTO and the threat of European tariffs targeting US products looming, Boeing may not have long to savor its success. Yet in the midst of a trying year for the company, the decision was a welcome bit of good news.

“The extent to which European member states went to create and sustain Airbus for the purpose of competing with Boeing, an iconic American company, is unprecedented,” said Robert Novick, a partner at the law firm WilmerHale who represented Boeing in the case. “Indeed, the WTO established that, and the level of harm it found to Boeing is unprecedented.”


2019 The New York Times Company

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Airbus pulls out of Canada fighter jet race, boosts Lockheed Martin's chances

OTTAWA - Airbus SE on Friday pulled out of a multibillion-dollar competition to supply Canada with 88 new fighter jets, a decision that boosts the chances of rival Lockheed Martin Corp.

The defense arm of Airbus, which indicated last month it might withdraw, cited onerous security requirements and a late decision by Ottawa to loosen the rules for how much bidders would have to invest in Canada.

Airbus and other contenders had already complained the government appeared to be tilting the race in favor of Lockheed Martin's F-35 plane, which the Royal Canadian Air Force wants. Canada is part of the consortium that developed the plane.

Canada launched the long-delayed competition last month and said it was confident no favoritism had been shown. Ottawa says the contract is worth between C$15 billion ($11.30 billion) and C$19 billion.

Canada's official opposition Conservative Party, which is seeking to defeat Liberal Prime Minister Justin Trudeau in an October election, accused the government of gross mismanagement.

Reuters revealed in July that Airbus and Boeing Co had written to Ottawa to say they might pull out.

The firms are unhappy that in late May, the government dropped a demand that bidders must guarantee to give Canadian businesses 100 percent of the value of the deal in economic benefits.

Such legally watertight commitments, which Boeing, Airbus and Sweden's Saab AB had already agreed to, contradict rules of the F-35 consortium. Ottawa's move allowed Lockheed Martin to stay in the competition.

"One of the strongest points of our bid was the fact we were willing to make binding commitments," said an Airbus source, who requested anonymity given the sensitivity of the situation.

"Once this was loosened up to a point where these commitments were no longer valued in the same way," the firm decided "that's just too much," added the source, who also cited security challenges.

European jets must show they can meet stringent standards required by the United States, which with Canada operates the North American Aerospace Defense Command.

"NORAD security requirements continue to place too significant of a cost on platforms whose manufacture and repair chains sit outside the United States (and) Canada," Airbus said in a statement.

Canadian Procurement Minister Carla Qualtrough said she respected the Airbus decision, adding Ottawa was determined there should be a level playing field.

"This included adapting the economic benefits approach to ensure the highest level of participation among suppliers," she said in emailed comments.

Canada has been trying unsuccessfully for almost a decade to purchase replacements for its aging F-18 fighters. The former Conservative administration said in 2010 it would buy 65 F-35 jets but later scrapped the decision, triggering years of delays and reviews.

Trudeau's Liberals took power in 2015 vowing not to buy the F-35 on the grounds that it was too costly, but have since softened their line.

"Justin Trudeau has spent the past four years delaying and dithering on new fighter jets for Canada only to completely mismanage the competition process," said Conservative defense spokesperson James Bezan.

Lockheed Martin declined to comment while Boeing and Saab did not respond to requests for comment.

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Global share rally cools as Trump turns trade heat on Europe

NEW YORK -- The dollar fell and the rally in global equities lost steam on Tuesday as a US threat to slap tariffs on hundreds of European goods and a downgrade by the International Monetary Fund in its global economic growth forecasts dimmed the appetite for risk.

The IMF warned that growth could slow further due to trade tensions and a potentially disorderly British exit from the European Union. China, Germany and other major economies might need to take short-term actions to support growth, the IMF said.

US Treasury Secretary Steven Mnuchin told lawmakers the Trump administration is preparing for the possibility of a "hard Brexit."

Asian shares rose to an eight-month high overnight but US and European markets fell after President Donald Trump welcomed the World Trade Organization's finding that Europe's subsidies to planemaker Airbus had hurt the United States.

The US Trade Representative on Monday proposed a range of EU products, from large commercial aircraft and parts to dairy products and wine, to target as retaliation for subsidies given to Airbus.

Equities fell in Europe and on Wall Street, snapping an eight-day rally for the S&P 500, after an EU official said the European trade bloc was beginning preparations to retaliate over Boeing subsidies.

Uncertainty over tariffs and trade between the United States and China have dented business confidence and led corporate investment to dry up, said Hank Smith, co-chief investment officer at The Haverford Trust Co in Radnor, Pennsylvania.

"Business investment is now being put on hold because of the uncertainty around tariffs," he said.

A weak US-China trade deal probably is priced into the market, but a very good trade deal is not, Smith said.

"Even if it's not so good, it is going to have a positive effect on the economy because it is going to remove an uncertainty," he said.

MSCI's all-country world index, a gauge of stock performance in 47 countries, fell 0.35 percent. The pan-European STOXX 600 index closed down 0.47 percent and the FTSEurofirst 300 index of leading regional shares fell 0.41 percent.

Airbus said it saw no legal basis for the US move toward imposing tariffs on its aircraft and warned of deepening trade tensions.

Airbus shares fell 1.86 percent and many of its key suppliers lost between 0.7 percent and 1.2 percent. Boeing shares fell 1.46 percent ahead of its aircraft delivery and order numbers for March.

On Wall Street, the Dow Jones Industrial Average fell 190.44 points, or 0.72 percent, to 26,150.58. The S&P 500 lost 17.57 points, or 0.61 percent, to 2,878.20 and the Nasdaq Composite dropped 44.61 points, or 0.56 percent, to 7,909.278.

The yen rose as traders favored the safe-haven currency in the wake of the US proposal for tariffs on European goods.

The dollar index fell 0.04 percent, with the euro up 0.04 percent to $1.1263. The Japanese yen strengthened 0.32 percent versus the greenback at 111.14 per dollar.

US Treasury yields slid, pressured by concerns about the IMF's global economic outlook for 2019 as well as a round of headlines on Britain's messy departure from the EU.

In Europe, government borrowing costs in southern countries hit fresh lows, pushed down by hopes that this week's European Central Bank meeting will reinforce expectations for supportive policy measures in the months ahead.

Portugal's 10-year government bond yield fell to 1.195 percent, a 25-year low.

Benchmark U.S. 10-year Treasury notes rose 5/32 in price to push yields down to 2.4989 percent.

Oil fell from a five-month high above $71 a barrel after Russia signaled a possible easing of a supply-cutting deal with the Organization of the Petroleum Exporting Countries.

Brent, the global benchmark, rose to $71.34 a barrel, the highest since November, but later settled down 49 cents at $70.61 per barrel. U.S. crude also hit a November high of $64.79, but settled down 42 cents at $63.98.

Gold rose to its highest in more than a week as the dollar and equities weakened.

US gold futures settled 0.5% higher at $1,308.3 an ounce.

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Airbus, Boeing battle for stealth orders in Farnborough Airshow

FARNBOROUGH, England - The Farnborough Airshow is typically one of the world's most publicity-focused business events, with plane giants and airline bosses battling to win headlines for deals signed under the roar of stealth fighter displays.

Not so this week, when Airbus and Boeing announced almost 300 orders from unnamed buyers, reversing the PR rulebook.

Airbus led the anonymous jetliner haul with almost 200 orders worth $24 billion at list prices, while Boeing said it had signed provisional deals with 4 unnamed customers for a total of 94 planes worth almost $11 billion at catalogue prices.

Airbus declined to discuss the identity of the buyers, but industry sources said its list was dominated by Chinese-related leasing companies.

Chief Commercial Officer Eric Schulz linked the reticence to global trade tensions, telling analysts some Asian customers had asked Airbus not to fan growing disputes. "Undisclosed or disclosed, either way the order is there," he said.

"If that is enough to make airline customers want anonymity, what might they do if the trade disputes were to escalate?," Jefferies analyst Sandy Morris commented in a note.

Several top delegates cautioned against overstating the link with trade tensions, however. Numerous factors are at play when deciding when to reveal order plans, such as waiting for board or government approvals, they said.

Winning the air show competition also has something to do with the sequence of announcements, 2 industry sources said. Airbus is behind Boeing in the race for orders this year.

AIRASIA SUSPENSE

Airbus listed orders for 80 A320neo narrowbody jets from an unidentified leasing company, another for 100 similar narrowbody aircraft, plus 14 large jets - 8 A350-900 and 6 A330neo.

On Tuesday, Reuters reported that the first order for 80 aircraft came from China's ICBC Leasing.

Several industry sources said the largest order for 100 jets had been placed by Dublin-based global leasing giant Avolon, owned by China's HNA Group.

An Avolon spokesman said: "We are in constant dialogue with (manufacturers) and when we have an order to announce we will do that."

Airbus is currently tackling payment delays from HNA Group which led to a backlog of undelivered wide-body A330 jets, first reported by Reuters last week.

One has been delivered and others are expected to follow.

Avolon is owned by HNA vehicle Bohai Leasing and made changes in its bond structure earlier this year to insulate itself from the parent group's financial difficulties.

Avolon CEO Domhnal Slattery told Reuters this week those measures were working smoothly, but did not discuss order plans.

Planemakers often strike deals during the rest of the year with customers shy about disclosing their identity, especially in countries like China with complex approval processes.

But when opting to announce at an air show, buyers are usually keen to promote their plans and firms like Airbus and Boeing invest in lavish facilities with space for briefings.

Some high-profile orders did get announced on Wednesday with Boeing bagging a provisional 100-plane order from budget carrier VietJet and Airbus confirming an order from Mexico's VivaAerobus after Reuters reported the two sides were negotiating a deal.

Market sources did not rule out a headline-grabbing finale.

AirAsia boss Tony Fernandes has left Farnborough in suspense over whether he would fly in from Malaysia to confirm an order for Airbus A330neo planes or defect to the Boeing 787, though he said earlier this week he had "no plans" to make the trip.

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Airbus to sell 60 smaller planes to JetBlue

NEW YORK - Airbus announced Tuesday a deal to sell US airline JetBlue 60 airplanes that were formerly part of Canadian manufacturer Bombardier's C series.

It was the first contract since the aircraft were rechristened by the European aerospace giant as the A220-300, which can carry between 100 and 150 passengers.

Airbus signed a memorandum of understanding with US carrier JetBlue for a contract worth about $5.4 billion based on list prices, the company said.

The aircraft is the larger of two C-series planes produced by Bombardier prior to a joint venture with Airbus that went into effect July 1. 

Airbus held a ceremony earlier Tuesday at its Toulouse, France headquarters, calling the rebranding of the planes "an historic moment."

The two companies announced their joint venture in October, a move that initially gave the European company a leg up on rival Boeing in the small-jet market.

However, Boeing last week said it reached a similar deal with Brazil's Embraer that would give it a line of smaller planes to compete in that segment.

Airbus said it also reached a deal with JetBlue to convert 25 current orders for the Airbus A320neo into orders for the larger A321neo.

"JetBlue's selection of the A220 aircraft as a complement to its growing A320 Family fleet is a tremendous endorsement, both of the A220 itself and of the way these two aircraft can work together to provide airline network flexibility and a great passenger experience," said Eric Schulz, chief commercial officer for Airbus.

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Boeing's Embraer takeover reshapes global jet duopoly

SAO PAULO/PARIS -- Boeing Co struck a deal for a controlling stake in the commercial aircraft arm of Brazilian planemaker Embraer SA under a new $4.75 billion joint venture, the firms said on Thursday, reshaping a global passenger jet duopoly.

The new company, encompassing Embraer's airliner business, thrusts Boeing into the lower end of the market, giving stiffer competition to the CSeries jets designed by Canada's Bombardier Inc and backed by European rival Airbus SE.

The memorandum of understanding signed by Boeing and Embraer values the Brazilians' commercial aircraft operations, the world's third-largest, at $4.75 billion and Boeing's planned 80-percent stake in the venture at $3.8 billion.

The Boeing-Embraer alliance, following on the heels of the Airbus-Bombardier tie-up announced last year, represents the biggest realignment in the global aerospace market in decades, strengthening established Western planemakers against newcomers from China, Russia and Japan, analysts say.

Chief Executive Paulo Cesar Silva told employees in a note reviewed by Reuters that consolidation in the aerospace supply chain had also forced Embraer's hand.

"This has been happening with both our suppliers and our clients. They have started to organize in big blocs, making it harder for companies of Embraer's size to negotiate," he said.

Embraer shares fell 10 percent in New York and nearly 15 percent in Sao Paulo on disappointment at the financial terms of the long-awaited deal.

The price tag for Embraer's commercial aviation unit was "significantly lower" than early reports, according to analysts at Vertical Research Partners, who underscored in a client note that a deal must still clear political and regulatory barriers before closing as proposed at the end of next year.

"We also see strong odds of Embraer shareholders demanding a higher price for the stake in the commercial segment," wrote BTG Pactual analysts Renato Mimica and Samuel Alves in a note.

The partnership, which adds a 70- to 130-seat family to Boeing's lineup, is expected to boost the US firm's earnings per share from 2020, generating annual pre-tax cost savings of about $150 million by the third year, the companies said.

Boeing shares were little changed on Thursday.

CASH AND DEBT

Embraer will transfer much of its debt to the new venture and receive cash from Boeing, Embraer executives told analysts.

About a fifth of the cash payment will go to taxes and the rest could be split between share buybacks, a special dividend, deleveraging and new product development, they said.

Silva told employees in his note that Embraer would improve its cash position by $1 billion once the deal closes, allowing more investment in new projects.

Embraer will hold the remaining 20 percent of the Boeing joint venture and keep control of its defense and business jet operations. Concern over US influence in military programs had raised flags in the Brazilian government, which holds a strategic veto at Embraer dating back to its privatization.

However, recent signals from Brazil's President Michel Temer and military officials suggest the government is satisfied with the new structure of the tie-up, as long as Brazilian jobs are maintained and Embraer continues to develop new technology.

One government official said the deal as announced on Thursday was likely to get approval in Brasilia. Another official said government approval was not certain and would depend on the final details presented later this year. Both spoke on the condition of anonymity.

In addition to the passenger jet deal, Boeing and Embraer will deepen a sales and services partnership on the new KC-390 military cargo jet through a separate defense venture that is likely to eventually receive a joint investment, Silva said.

A union of metalworkers in Sao Jose dos Campos, where Embraer is based, said in a statement it would "pressure" the federal government to use the golden share it owns in Embraer to veto the deal.

The Embraer-Boeing tie-up took shape more than 2 years after the idea was first presented internally to Boeing's board and reflects a longstanding affinity between the two planemakers, a person familiar with the discussions said.

However, the pressure for an alliance accelerated when Airbus last year announced it would take control of the CSeries jet, which had been struggling in its battle with Embraer at the small end of the airliner market.

That deal put enormous marketing weight behind Embraer's competitor, while for Boeing the transatlantic tie-up threatened to expand the revenue base of its European arch-rival.

"The Boeing-Embraer announcement confirms the strong market potential in the 100- to 150-seat category," Airbus said through a spokesman. "Boeing and Embraer are following Airbus and Bombardier."

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Airbus to offer sleeping berths down in cargo hold

PARIS, France - Soon when you fly in an Airbus jet and you fancy a bit of shut-eye, all you will need do is make your way down to the cargo hold.

European aircraft giant Airbus announced on Tuesday that it is teaming up with Zodiac Aerospace to develop and market lower deck sleeping facilities for passengers that could be operational in A330 wide-body jets from 2020.

The sleeper compartments "would fit inside the aircraft's cargo compartments," Airbus said in a joint statement with Zodiac, a subsidiary of the French aerospace company Safran.

The modules "will be easily interchangeable with regular cargo containers,"the statement said. 

"Airlines will initially be able to choose from a catalog of certified solutions by 2020 on A330," for the sleeper pods, with the possibility of fitting them into A350 XWB airliners also being studied.

Airbus and Zodiac said the sleeping berths would not only improve passenger comfort, but also enable airlines to add value for their commercial operations.

"This approach to commercial air travel is a step change towards passenger comfort," said Geoff Pinner, head of Airbus' cabin and cargo program.

"We have already received very positive feedback from several airlines on our first mock-ups." 

Christophe Bernardini, head of Zodiac's aerospace cabin division, said the project "reaffirms our expertise in lower-deck solutions. An improved passenger experience is today a key element of differentiation for airlines." 

In November 2016, the Air France-KLM had put forward the idea of sleeping berths for passengers in the economy class, either down in the hold or above the cabin in aircraft of the group's new low-cost subsidiary, Joon.

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Trump victory shocks global firms reliant on open trade

HONG KONG/SHANGHAI - Donald Trump's victory in the U.S. election sent shockwaves through industries that rely on open trade, from airlines to cars and IT outsourcing, although shares of some companies rebounded in afternoon trading.

Throughout his presidential campaign, Trump has vowed to revive the U.S. economy by slashing taxes, preventing companies from making products overseas, renegotiating trade accords and imposing tariffs on imports from countries like China.

"This is part of a much broader problem that we've seen in the world, in which countries are turning inwards and reacting against globalization and open borders," said aerospace analyst Richard Aboulafia, vice president of Virginia-based Teal Group.

In Asia, shares in airlines with significant exposure to global trade, such as cargo giant Korean Airlines (003490.KS), fell as much as 5 percent as Trump closed in on the White House. Air China's (0753.HK) Hong Kong-listed shares tumbled to their lowest level since June, and automakers like Toyota (7203.T), for whom the United States is a top market, fell 6.5 percent.

Many executives remain unsure what Trump's protectionist rhetoric will mean in practice.

Shares of the three largest U.S. airlines - American (AAL.O), Delta (DAL.N) and United (UAL.N) - rose more than 1 percent in afternoon trade.

"We would think they would be down today, but I’m thinking that it’s a play on more economic growth" from new policies, said Jim Corridore, analyst at CFRA Research. Protectionism "would be a longer term (outcome) that would hang over the industry but it's going to take a long time to get to that point."

Investors at a major Airline Economics finance gathering in Hong Kong last week expressed alarm at a surge in unconventional politics from Britain to Washington and the Philippines - a trend that many expect will leave its mark regardless of how it translates into real policies.

That comes as an industry that depends entirely on the flow of goods and people faces doubts over its own economic cycle.

POPULIST POLITICIANS
"We have seen a large section of the population that has not benefited in the past decade and we are seeing support for populist politicians with simple answers," Brian Pearce, chief economist of the International Air Transport Association told Reuters ahead of the election.

"Unfortunately, a lot of those answers are for protectionist policy solutions and air transport flourishes with open borders, so that is quite a dangerous development."

International trips make up 64 percent of global air traffic, according to IATA.

Executives at U.S. auto companies said they were concerned about Trump’s stance on free trade, especially his tough talk on the North American Free Trade Agreement. They all have production sites in Mexico.

But industry executives and analysts said aviation had a history of riding out economic and political shocks. On average, plane makers insist, air traffic doubles every 15 years.

"If there are brakes on trade, there could be some impact on international travel. But you have seen more or less 5 percent annual growth in traffic for decades," said veteran U.S. aerospace consultant Jerrold Lundquist, managing director of The Lundquist Group.

And the defense industry could benefit, as a Trump administration spends more on the military and encourages even allies to shoulder more of the security cost. Defence stocks, including listed land mine manufacturer Ishikawa Seisaku (6208.T), jumped.

REALITY BITES?

After a bitter election campaign, trade experts said it remained unclear how Trump's statements in favor of protectionist trade measures and tough immigration controls would translate into policy.

"The honest answer is that no one knows; even Trump himself doesn't know," said Bertrand Grabowski, a managing director at Germany's DVB Bank which specializes in financing trade.

"He campaigned not on ideas but on anger and frustration."

Tighter rules could impact Indian IT services firms supporting companies in the United States. Shares in companies like Infosys (INFY.NS) and Tata Consultancy Services (TCS.NS) were sharply down as Trump closed in on the White House.

ALSO IN AEROSPACE & DEFENSE

But Narayana Murthy, co-founder of Infosys and a key figure in India's outsourcing industry, said realism would prevail.

"They may fine tune it here and there, but let’s remember that he is the president of 300 million U.S. people and I’m sure he’ll do what is in the best interest of America. And what is in the best interest of America is for its corporations to succeed, for its corporations to create more jobs," he said.

For now, acquisitions at least will cool off, especially Chinese purchases of U.S. companies, as a Trump presidency pushes up regulatory scrutiny.

"If he now requires a certain percentage of manufacturing parts to be made in America, it's going to be protectionist... and that increases the risk and cost of doing business," said Stephanie Yuen, an M&A lawyer in Singapore.

"He's not just building a Mexican wall, he builds an economic wall around America."

And for key sectors, competition will heat up. Europe's Airbus and U.S. rival Boeing (BA.N) in the $100 billion annual jet market could become even fiercer with more government lobbying support, adding stridency to efforts to compete for jobs.

Trump's victory may also raise questions over plans to sell over 200 Western airplanes to Iran under a deal to lift sanctions that the president-elect has severely criticized.

Airbus (AIR.PA) is seen close to finalizing a tranche of 17 jets, but needs U.S. approval to complete plans for another 80 or so because the jets are built with many U.S. parts.

Boeing has U.S. approval to finalize a deal for some 100 jets but Middle East sources say progress has been slow so far.

"It further reduces the prospect of the deals going ahead," Aboulafia said.

(Additional reporting by Adam Jourdan in SHANGHAI, Norihiko Shirouzu in TOKYO, Euan Rocha in MUMBAI, Anshuman Daga in SINGAPORE, and Jeffrey Dastin in NEW YORK; Editing by Bill Tarrant and Bill Trott)

source: www.abs-cbnnews.com