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Air Lease warns on Boeing 777X, Lufthansa places order

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© Reuters. FILE PHOTO: A Plane Boeing 777X performs during the Dubai Airshow, in Dubai, United Arab Emirates, November 14, 2021. REUTERS/Rula Rouhana/File Photo

By Tim Hepher and Padraic Halpin

DUBLIN (Reuters) -Boeing Co was at the centre of a tug of war over the future of its newest jet on Monday as Germany’s Lufthansa ordered the 777X Freighter hours after an influential industry leader questioned the delayed programme’s viability.

The U.S. planemaker last month pushed back first delivery of the world’s largest twin-engined jetliner by more than a year to 2025, five years after it was originally due. The cargo version is a recent expansion of the delayed jet project.

Asked if he saw risks to the future of the 777X programme as a result of cumulative delays, Air Lease (NYSE:AL) Corp Executive Chairman Steven Udvar-Hazy, told financiers, “yes.”

Pressed on whether it was possible the whole programme could be cancelled, Udvar-Hazy, widely seen as the father of the modern leasing industry, said that would depend on what the Boeing (NYSE:BA) board looks like in 18 to 24 months.

“What I’m saying is that those decisions whether to continue with the programme or not, it will probably not be made by this board of directors anyway,” Udvar-Hazy told the Airline Economics conference in Dublin.

A Boeing spokesperson referred to comments last month by Chief Executive Dave Calhoun, who said, “We’ve got to give ourselves the time and freedom to get this right.” Boeing has also said it is highly confident in the 777X family.

Udvar-Hazy’s warning came days after the head of Dublin-based lessor Avolon told a different Dublin event hosted by Airfinance Journal that Boeing had “lost its way” after a barrage of problems and may need new management..

But the head of the world’s largest lessor, AerCap Holdings, threw his weight behind Boeing on Monday, saying the U.S. manufacturer would “bounce back.”

Plans to update the 777 mini-jumbo with a larger 400-seat version have been hit by certification problems, while regulatory issues have frozen deliveries of the smaller 787.

LUFTHANSA DEAL

Boeing won a respite from the woes affecting its core widebody programmes on Monday when Lufthansa said it would buy 10 cargo planes including seven of the 777X version, also known as 777-8F.

The carrier also boosted its order for Boeing 787s as part of a compensation deal for delays to the 777X passenger version. It is also a major customer for the Airbus A350.

Jefferies analyst Sheila Kahyaoglu said the deal highlighted the cost to Boeing of concessions to offset recent delays.

Udvar-Hazy said Air Lease had considered buying the recently announced freighter version of the 777X but had decided not to do so because there were “too many questions and delays.”

Air Lease became a launch customer in November for an Airbus A350 Freighter, though Boeing leads in the order race for the two models after deals with Qatar Airways and now Lufthansa.

Despite Monday’s order, the freezing of 787 deliveries remains a major sore point for airlines and leasing firms and a significant drain on cash for Boeing.

“I have never seen anything like (it),” Udvar-Hazy said, noting airlines can cancel airplanes once they are a year late.

Air Lease Chief Executive John Plueger said one airline had filed such a cancellation for a Boeing 787 in the past week.

Turning to delays at Airbus, Plueger did not rule out further delays to the new A321XLR single-aisle model after the European firm announced a three-month delay last week.

He said the delay could stretch to six or nine months, but was unlikely to reach a year or two.

Airbus wants to rely on the housing of the plane’s engines to absorb some impact in the event of a belly crash landing. But regulators are insisting on strengthening its redesigned fuel tanks to absorb the full impact and prevent fire, Plueger said.

Engineers have said such work could take several months.

Stock Markets

Dow Futures Tick Higher as Major Indices Rebound

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By Oliver Gray 

Investing.com – U.S. stock futures moved modestly higher on Tuesday evening after major benchmark indices rebounded from recent losses during regular trade, however, traders remain cautious of a potential recession after Federal Reserve Chair Jerome Powell noted at a Wall Street Journal conference on Tuesday that “there won’t be any hesitation” about raising rates until inflation is under control.

By 6:45pm ET (10:45pm GMT) Dow Jones Futures and Nasdaq 100 Futures were up 0.1% apiece while S&P 500 Futures gained 0.2%.

In extended deals, QualTek Services Inc (NASDAQ:QTEK) popped 23.1% after reporting Q1 losses of 20 cents per share, beating expectations of a 48 cents loss, while revenue came in at $148.2 million versus $137.51 million expected.

Corporacion America Airports (NYSE:CAAP) lifted 0.2% after reporting Q1 EPS of $0.16 versus x expected on revenues of $258.1 million versus $226.74 million expected.

QuickLogic Corporation (NASDAQ:QUIK) fell 6% after report Q1 losses of 6 cents per share versus losses of 7 cents expected. Revenue for the quarter came in at $4.1 million versus estimates of $4 million.

Agilysys Inc (NASDAQ:AGYS) gained 11.3% after reporting Q4 EPS of 24 cents, beating estimates of 17 cents, with revenues coming in at $46.6 million versus estimates of $43.78 million.

Corporate earnings are set to continue on Wednesday, with Target Corporation (NYSE:TGT) and Lowe’s Companies Inc (NYSE:LOW) reporting results before the opening bell. Ahead in the week, investors will be monitoring fresh data for housing starts and building permits due out Friday morning.

During Tuesday’s trading session, the Dow Jones Industrial Average jumped 431.17 points, or 1.34%, to 32,654.59, the S&P 500 added 2% to 4,088.85 and the NASDAQ Composite added 2.76% to 11,984.52.

Major financial players were boosted after Warren Buffett’s conglomerate revealed it added a nearly $3 billon stake in Citigroup Inc (NYSE:C) during the first quarter. Citizens Financial Group Inc (NYSE:CFG) gained 3.7% JPMorgan Chase & Co (NYSE:JPM) added 3.3%, Bank of America Corp (NYSE:BAC) lifted 3.4% and Morgan Stanley (NYSE:MS) gained 3.8%.

Travel related companies popped after United Airlines raised its revenue outlook for the second quarter on improved consumer demand. JetBlue Airways Corp (NASDAQ:JBLU) lifted 8.2%, Delta Air Lines Inc (NYSE:DAL) gained 6.7%, American Airlines Group (NASDAQ:AAL) added 7.7% and United Airlines Holdings Inc (NASDAQ:UAL) lifted 7.9%.

On the bond markets, United States 10-Year yields were at 2.995%.

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Glass Lewis backs McDonald’s directors in boardroom fight with Carl Icahn

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© Reuters. FILE PHOTO: A sign with the logo is on display near a McDonald’s restaurant in Moscow, Russia May 16, 2022. REUTERS/Evgenia Novozhenina

2/2

By Svea Herbst-Bayliss

BOSTON (Reuters) – Proxy advisory firm Glass Lewis on Tuesday recommended McDonald’s Corp (NYSE:MCD) investors vote for the company’s directors, dealing a setback to billionaire investor Carl Icahn’s efforts to replace two directors.

“The Dissident (Icahn) has failed to make a sufficiently compelling case to warrant the boardroom changes it is seeking here,” Glass Lewis wrote in the report seen by Reuters.

A representative for Icahn did not immediately have a comment.

The report came one day after Institutional Shareholder Services, Glass Lewis’ larger rival, also recommended that shareholders back the company’s nominees. McDonald’s shareholders will meet on May 26.

Icahn nominated candidates to the fast-food restaurant’s board to hold the company accountable for pledges it made a decade ago on sourcing pork.

McDonald’s says it has worked to change its pork sourcing. But it is behind schedule on a plan to stop buying pork from suppliers that confine pigs in small crates during pregnancy. Both ISS and Glass Lewis say Icahn has raised awareness for animal rights.

“We acknowledge (Icahn’s) efforts to seek improvements to animal welfare conditions is a worthy and noble endeavor,” Glass Lewis wrote. But the advisory firm also criticized Icahn, saying he had taken a “decidedly simplistic and myopic view of ESG concerns, with no substantive regard given to the economics of the Company’s business nor to the creation of shareholder value.”

McDonald’s said Icahn’s two nominees lack the broader expertise needed to serve on the company’s board. Glass Lewis wrote that Icahn’s candidates “lack the requisite background, qualifications and experience for serving on the board of a large multinational firm” like McDonald’s.

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China Eastern crash probe eyes intentional action – sources

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© Reuters. FILE PHOTO: Rescue workers work at the site where a China Eastern Airlines Boeing 737-800 plane flying from Kunming to Guangzhou crashed, in Wuzhou, Guangxi Zhuang Autonomous Region, China March 24, 2022. REUTERS/Carlos Garcia Rawlins/File Photo

By David Shepardson

WASHINGTON (Reuters) -Investigators probing the crash of a China Eastern Airlines (NYSE:CEA) jet are examining whether it was due to intentional action taken on the flight deck, with no evidence so far of a technical malfunction, two people briefed on the matter said.

The Wall Street Journal reported earlier Tuesday that flight data from one the Boeing (NYSE:BA) 737-800’s black boxes indicated that someone in the cockpit intentionally crashed the plane, citing people familiar with U.S. officials’ preliminary assessment.

Boeing Co , the maker of the jet, and the U.S. National Transportation Safety Board (NTSB) declined to comment and referred questions to Chinese regulators.

The Boeing 737-800, en route from Kunming to Guangzhou, crashed on March 21 in the mountains of Guangxi, after a sudden plunge from cruising altitude, killing all 123 passengers and nine crew members aboard.

It was mainland China’s deadliest aviation disaster in 28 years.

The pilots did not respond to repeated calls from air traffic controllers and nearby planes during the rapid descent, authorities have said.

The Civil Aviation Administration of China said on April 11 in response to rumours on the internet of a deliberate crash that the speculation had “gravely misled the public” and “interfered with the accident investigation work.”

China Eastern could not immediately be reached for comment Tuesday. The Wall Street Journal said the airline had said in a statement that no evidence had emerged that could determine whether or not there were any problems with the accident aircraft. The Chinese Embassy declined to comment.

The 737-800 is a widely flown predecessor to Boeing’s 737 MAX but does not have the systems that have been linked to fatal 737-MAX crashes in 2018 and 2019 that led to a lengthy grounding of the MAX.

China Eastern grounded its entire fleet of 737-800 planes after the crash, but resumed flights in mid-April in a move widely seen at the time as ruling out any immediate new safety concern over Boeing’s previous and still most widely used model.

In a summary of an unpublished preliminary crash report last month, Chinese regulators did not point to any technical recommendations on the 737-800, which has been in service since 1997 with a strong safety record, according to experts.

NTSB Chair Jennifer Homendy said in a May 10 Reuters interview that board investigators and Boeing had traveled to China to assist the Chinese investigation. She noted that the investigation to date had not found any safety issues that would require any urgent actions.

Homendy said if the board has any safety concerns it will “issue urgent safety recommendations.”

The NTSB assisted Chinese investigators with the review of black boxes at its U.S. lab in Washington.

Shares of Boeing closed up 6.5%.

A final report into the causes could take two years or more to compile, Chinese officials have said. Analysts say most crashes are caused by a cocktail of human and technical factors.

Deliberate crashes are exceptionally rare. Experts noted the latest hypothesis left open whether the action stemmed from one pilot acting alone or the result of a struggle or intrusion but sources stressed nothing has been confirmed.

In March 2015, a Germanwings co-pilot deliberately flew an Airbus A320 into a French mountainside, killing all 150 on board.

French investigators found the 27-year-old was suffering from a suspected “psychotic depressive episode,” concealed from his employer. They later called for better mental health guidelines and stronger peer support groups for pilots.

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