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Showing posts with label Business News.. Show all posts
Showing posts with label Business News.. Show all posts

May 16, 2022

Business News | After Three Decades McDonald Would Exit From Russia | Monday, May 16, 2022:

 Source: wsj.com

McDonald’s to Exit From Russia After Three Decades

Dean Seal

McDonald’s Corp. MCD -0.41% said it would quit Russia and sell its business there, ending more than three decades in the country over its invasion of Ukraine.

In deciding to sell, the fast-food giant joins a raft of Western companies, from auto makers to brewers, in exiting Russia having initially opted to pause its operations in the country.

McDonald’s had in March said it would temporarily close its 847 restaurants in Russia while continuing to pay the 62,000 people it employs there. Since then, pressure has mounted on Western companies—particularly from the Ukrainian government—to pull the plug on their Russian operations. Moscow has also pressured companies, threatening legislation to nationalize assets and compel executives to resist Western sanctions.

The departure of McDonald’s from Russia is particularly notable given its arrival was emblematic of a rush among Western companies in the 1990s to enter the country, seeking to profit from its move from communism to capitalism. McDonald’s opened its first Russian location in Moscow’s Pushkin Square in 1990, when thousands of locals lined up to get their first taste of the American chain’s burgers and fries.

On Monday, McDonald’s said that continued ownership of its business in Russia was no longer tenable nor consistent with its values, as well as posing practical and commercial challenges.

“We have a commitment to our global community and must remain steadfast in our values,” Chief Executive Chris Kempczinski said in a statement.

McDonald’s said it would now pursue the sale of its entire portfolio of restaurants in Russia to a local buyer. It said those restaurants would no longer use the McDonald’s name, logo, branding or menu. The company owns and operates 84% of its restaurants in Russia, with the rest run by franchisees.

Russia’s state-run TASS news agency reported Monday that McDonald’s restaurants in the country would reopen under a different name next month.

In connection with the exit, McDonald’s said it expects to record an accounting charge of between $1.2 billion and $1.4 billion, and recognize a significant foreign currency translation loss.

Russia and Ukraine accounted for around 9% of McDonald’s revenue last year, given the high percentage of company-owned restaurants in those markets. The countries accounted for 2% of sales at all McDonald’s restaurants—including those owned by franchisees—and less than 3% of operating income, the company has said.

McDonald’s owns around 100 restaurants in Ukraine that remain closed.

The decision from McDonald’s came the same day another big Western company, French auto maker Renault SA, reached a deal to cede its 68% stake in Russia’s biggest car maker, AvtoVAZ, to a state-backed entity. Unlike McDonald’s, though, Renault has kept an option to take back some of its assets in a few years, a potentially valuable hedge on the Russian market stabilizing in the medium term.

Western companies across sectors have been under pressure to divest their operations in Russia since the country invaded Ukraine in late February. That move triggered waves of sanctions from Western governments that have also made it hard to continue to do business in the country.

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In recent months, companies have exited or signaled their intention to pull back in various ways.

Oil major Shell PLC has been exiting its Russian businesses in phases, saying most recently it would sell its retail gas stations and lube business to Russian giant Lukoil PJSC. Shell said it took a $3.9 billion posttax charge related to its decision to leave Russia. BP PLC has said it would exit its joint venture stake in Russian producer Rosneft, taking a $25.5 billion hit. It hasn’t said how it would do that.

French banking giant Société Générale SA said last month that it would exit Russia, selling its operations to one of Russia’s richest people, and taking a more than $3 billion hit.

Budweiser brewer Anheuser-Busch InBev SA initially said it would suspend its license for the Bud brand in Russia, but otherwise took a wait-and-see approach in terms of its joint venture there. It changed course last month, saying it would seek to sell its stake in the business to its partner.

McDonald’s had also kept its options open until now. In an email to McDonald’s operators, employees and suppliers, Mr. Kempczinski said the decision to leave wasn’t easy and wouldn’t be simple to execute given the size of its business in Russia and the challenges of operating there.

Mr. Kempczinski said he had focused on five questions: could the company legally operate in Russia; could it meet the needs of customers and workers unimpeded; was its presence in Russia brand-enhancing; and does it make good business sense. He said the answer to each was no and that he didn’t see that changing for the foreseeable future. The fifth question was whether operating in Russia aligned with the company’s values.

Mr. Kempczinski also emphasized the brand’s history in Russia. McDonald’s had first begun eyeing the Russian market in the late 1970s, and it took repeated discussions with government officials to provide food for the 1980 Moscow Olympics and, later, open restaurants in the country.

Some of McDonald’s locations in Russia eventually became among the chain’s top-performing stores.

On Monday, some ordinary Russians said they would simply get their fast food elsewhere.

“Let McDonald’s leave. In fact, I am happy they are leaving,” said Alexander Vishnyakov, 35, a driver from St. Petersburg. “I will now switch to Russia’s own fast-food outlets.”

Write to Dean Seal at dean.seal@wsj.com

May 4, 2022

Business News | Kindred Urged to Consider Sale | Wednesday, May 4, 2022:

 Source: reuters.com

Kindred shareholder urges Swedish gaming group to consider sale

May 4, 20226:42 AM GMT-5Last Updated 8 min ago

May 4 (Reuters) - Swedish online gaming group Kindred's (KINDsdb.ST) shares rose 5% on Wednesday after a major shareholder told the board to consider a sale of the company.

New York-based hedge fund Corvex Management, which holds more than 10% of Kindred shares, said it had urged the board to hire a financial adviser to look at strategic alternatives, including the potential value that could be achieved via sale or a business combination.

"We believe Kindred has built a strategic position in the rapidly growing global online gaming space," said Corvex,

"A fully informed Board will be in the best position to weigh any strategic alternatives, compared with Kindred's stand-alone business plan," the hedge fund said.

Kindred told Reuters it had noted the shareholder's statement and said it welcomed a dialogue with all its owners, but did not have any further comment.

ABG Sundal Collier analyst Oscar Rönnkvist said Kindred should be an attractive asset in the consolidating online gaming market, especially for U.S. companies such as Florida-based digital sports platform Fanatics.

"While Kindred has a proprietary developed platform, it also has market access to 11 US states and a licence in the Canadian province Ontario," Rönnkvist said.

He said there were also other potential buyers and strategic decisions Kindred could make.

Pareto Securities analyst Georg Attling said the news was not a big surprise as the ownership of Swedish online gaming companies has shifted from Swedish institutions to foreign investors over the last few years.

Kindred's Swedish peer LeoVegas on Monday received a $607-million bid from U.S. casino operator MGM Resorts International (MGM.N).

Reporting by Marie Mannes in Gdansk; editing by Milla Nissi and Jane Merriman

Apr 4, 2022

Business News | Monday Aprl 4, 2022:

Source: reuters.com

Musk takes 9% stake in Twitter to become top shareholder

April 4, 20228:29 AM GMT-5

  • Summary
  • Companies
  • Stake valued at about $3 billion
  • Twitter shares surge 20%

April 4 (Reuters) - Tesla Inc (TSLA.O) top boss Elon Musk revealed a 9.2% stake in Twitter Inc (TWTR.N), worth nearly $3 billion, likely making him the biggest shareholder in the micro-blogging site and triggering a more than 20% rise in its shares.

Musk's move comes close on the heels of his tweet that he was giving a "serious thought" to building a new social media platform, while questioning Twitter's commitment to free speech.

A prolific Twitter user, Musk has over 80 million followers since joining the site in 2009 and has used the platform to make several announcements, including teasing a go-private deal for Tesla that landed him in regulatory scrutiny.

Of late, however, he has been critical of the social media platform and its policies, saying the company is undermining democracy by failing to adhere to free-speech principles. read more

"It does send a message to Twitter ... having a meaningful stake in the company will keep them on their toes, because that passive stake could very quickly become an active stake," said Thomas Hayes, managing member at Great Hill Capital LLC.

Musk, also among the world's richest, has been selling his stake in Tesla since November, when he said he would offload 10% of his holding in the electric-car maker. He has already sold $16.4 billion worth of shares since then.

Tesla CEO Elon Musk speaks during a conversation with legendary game designer Todd Howard at the E3 gaming convention in Los Angeles

Tesla CEO Elon Musk speaks during a conversation with legendary game designer Todd Howard (not pictured) at the E3 gaming convention in Los Angeles, California, U.S., June 13, 2019. REUTERS/Mike Blake

A regulatory filing on Monday showed that Musk owns 73.5 million Twitter shares, which are held by the Elon Musk Revocable Trust, of which he is the sole trustee. Vanguard is Twitter's second-biggest shareholder, with an 8.79% stake, according to Refinitiv data.

"Musk's actual investment is a very small percentage of his wealth and an all-out buyout should not be ruled out," CFRA Research analyst Angelo Zino wrote in a client note.

Twitter was the target of activist investor Elliott Management Corp in 2020, when the hedge fund argued its then-boss and co-founder, Jack Dorsey, was paying too little attention to Twitter while also running Square.

Dorsey, who owns a more than 2% stake in Twitter, stepped down as CEO and chairman in November last year, handing over the reins to 10-year company veteran Parag Agrawal.

Meanwhile, Musk and Dorsey have found some common ground in dismissing the so-called Web3, a vague term for a utopian version of the internet that is decentralized. read more

Shares of Twitter were trading at $47.19. They have fallen 38% in the past 12 months through Friday close. Twitter did not respond to a Reuters request for comment.

Shares of other social media firms, including Meta Platforms (FB.O) and Snapchat owner Snap Inc (SNAP.N), were also trading higher on the news.

Reporting by Nivedita Balu, Eva Mathews, Akash Sriram and Praveen Paramasivam in Bengaluru; Editing by Anil D'Silva

Mar 30, 2022

Business News | Wednesday, March 30, 2022:

Source: reuters.com

U.S. SEC proposes boosting blank-check company disclosures, liability

March 30, 20223:28 PM GMT-5Last Updated 3 hours ago

  • Summary
  • Law firms
  • Proposal requires SPACs disclose conflicts during, after listing
  • Disclosures must be issued at least 20 days before deal vote
  • Rule would strip SPACs of legal safe harbor for projections

WASHINGTON, March 30 (Reuters) - Wall Street's watchdog on Wednesday unveiled a draft new rule to enhance blank-check company investor disclosures and to strip them of a legal protection critics argue has allowed the shell companies to issue overly optimistic earnings projections.

The move by the U.S. Securities and Exchange Commission (SEC) is part of a broader crackdown on special purpose acquisition companies (SPACs) after a frenzy of deals in 2020 and early 2021 sparked concerns that some investors are getting a raw deal.

Wall Street's biggest gold rush of recent years, SPACs are shell companies that raise funds through a listing to acquire a private company and take it public, allowing the target to sidestep the stiffer regulatory scrutiny of a traditional initial public offering (IPO).

The SEC proposal, which is subject to consultation, broadly aims to close that loophole by offering SPAC investors protections similar to those they would receive during the IPO process, the SEC said.

"Today's proposal, if adopted, would represent a sea change to the rules applicable to SPACs," John Ablan, a partner at law firm Mayer Brown who advises companies on IPOs and otherdeals, wrote in an email to Reuters. "The SEC is clearly focused on creating incentives ... to undertake the same amount of due diligence that would be done in a traditional IPO."

The rule would require SPACs to disclose more details about their sponsors, their compensation, conflicts of interest and share dilution.

It would also enhance disclosures about the target takeover, known as the "de-SPAC," more information, including the sponsor's view on whether the deal is fair to investors and whether the proposed transaction has been vetted by third parties. Such disclosures would have to be issued at least 20 days prior to any solicited votes on the acquisition.

"Companies raising money from the public should provide full and fair disclosure at the time investors are making their crucial decisions to invest," SEC Chair Gary Gensler said.

A street sign marks Wall Street outside the New York Stock Exchange (NYSE) in New York City, where markets roiled after Russia continues to attack Ukraine, in New York, U.S., February 24, 2022. REUTERS/Caitlin Ochs

The rule would also strip SPACs of a liability safe harbor for forward-looking statements, such as earnings projections.

The SEC has stepped up oversight of SPACs amid worries of inadequate disclosures and lofty revenue projections. Reuters reported last year that the SEC was considering new guidance to rein in SPACs' growth projections.

SPAC sponsors say the projections are important for investors, especially when targets are unprofitable startups, but investor advocates say they are frequently wildly optimistic or misleading but have been shielded by the legal safe harbor.

"The elimination of the statutory safe harbor ... will cause SPAC issuers and their advisers to be more cautious in including pro forma and other financial information with respect to a proposed business combination," said Morris DeFeo, a New York-based partner at law firm Herrick, Feinstein LLP.

If SPACs do not meet certain conditions they may have to register as investment companies, subjecting them to a slew of other rules, the SEC said.

Those conditions include: maintaining assets in certain forms, entering into a deal with a target within 18 months of the SPAC IPO, closing the transaction within 24 months and ensuring that the newly merged company engages primarily in the same business as the target.

Gatekeepers who facilitate the deals, such as auditors, lawyers and underwriters, should also be held responsible for their work before and after the SPAC listing, Gensler added.

The U.S. SPAC market experienced a wild ride in 2021, with an explosion in deals during the first half of the year that quickly cooled off in the second half. All told, 604 SPACs raised $144 billion in 2021, according to data from Renaissance Capital.

Writing by Michelle Price; additional reporting by Krystal Hu, editing by Bernard Orr

Our Standards: The Thomson Reuters Trust Principles.

Washington-based reporter covering U.S. regulation at the Securities and Exchange Commission and the Consumer Financial Protection Bureau, previously e3xperience in Ecuador, alumnus of Morehouse College and Northwestern University’s Medill School of Journalism.

Business News | Wednesday, March 30, 2022:

 

Source: wsj.com

The LNG Export Boom Is Draining U.S. Natural-Gas Supplies and Lifting Prices

Ryan Dezember

The U.S. is shipping more natural gas than ever overseas, which is keeping domestic inventories lean and power prices high. 

Natural-gas prices usually decline into spring, when heating demand drops but before air-conditioning season begins. Gas producers and traders use the off-season to build up inventory for summer, socking away fuel in storage facilities until the weather turns and demand and prices rise.

This year prices climbed into spring, thanks to record export volumes and promises from the White House to support the shipment of even more liquefied natural gas, or LNG, to allies across the Atlantic to supplant Russian supply. 

U.S. natural gas futures for May delivery ended Wednesday at $5.605 per million British thermal units, more than double the price from a year ago. So far in 2022, natural-gas prices have risen 50%. The last time there was such a sharp run-up to start a year was in 2008, when energy prices surged ahead of the financial crisis. A deep recession and the shale-drilling boom’s bounty of fuel kept prices depressed for more than a decade after.

War in Europe is driving the recent rise, along with weather events last year that drained gas stockpiles around the world. Also, U.S. producers have been wary of torpedoing prices and sinking their profitability by drilling too much. The amount of gas in storage in the lower 48 states is 17% below the five-year average for this time of year despite production that has eclipsed pre-pandemic highs, according to the Energy Information Administration.  

Just as the advent of shale drilling ushered in a domestic fuel glut that kept a lid on prices, America’s rise as the world’s most prolific LNG exporter is putting a new floor beneath them, analysts say. 

“We are in a new phase for U.S. gas markets,” said Ryan Fitzmaurice, senior commodity strategist at Rabobank. He expects benchmark U.S. prices to range between $4.50 and $6, up from the $2 to $3.50 that natural gas has traded around the past several years.

That forecast is echoed by energy producers. The bulk of oil and gas executives surveyed this month by the Federal Reserve Bank of Dallas said they expect natural-gas prices to end the year between $4 and $5.50. Over much of the past decade, it took blizzards to push prices that high.

Goldman Sachs Group Inc. analyst Samantha Dart said she expects natural-gas prices of $4.50 this summer and $5.15 in winter, up from her previous forecast of $3.45 and $3.55, respectively. She said it should be 2025, however, before enough additional LNG export terminals come online in the U.S. to really tighten domestic inventories and tether prices to more expensive international markets. 

“U.S. gas demand will be primarily driven by U.S. LNG export capacity additions going forward,” Ms. Dart wrote in a note to clients on Tuesday.

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What price increases are you seeing in your natural gas and electricity bills?

Higher gas prices have contributed to inflation at home by boosting manufacturing costs for plastics, fertilizer, concrete and steel. They have also meant some of the highest electricity and heat bills in years for Americans this winter. Consolidated Edison Inc. , which provides electricity around New York City, has already passed on big price increases to customers this year and told them this month to brace for higher bills yet. “You pay what we’ve paid,” the utility said in an email to customers. 

Just before the pandemic, prices dipped below $2 per million British thermal units as domestic production reached new highs. The fuel got even cheaper as economic activity was choked off, hitting its lowest price since the mid 1990s. Buyers abroad canceled LNG cargoes. Inventories swelled.

Economic stimulus and two sweltering summers brought back demand. LNG prices soared in Asia and Europe, making it more economically attractive than ever to buy U.S. shale gas, freeze it to a liquid state and ship it overseas in specialized tankers. The invasion of Ukraine, which was met with sanctions against the aggressor, has presented an urgent need in Europe to replace gas from Russia.

Last week, President Biden agreed to more than double the volume of LNG that the U.S. exports to Europe in the coming years. Europe last year imported a record from the U.S., which overtook Qatar and Australia and in December became the world’s largest exporter of LNG. 

Overseas sales increased in January and, though they declined in February because fog in the Gulf of Mexico delayed cargoes, analysts expect export volumes to increase this year as new facilities ramp up output. The Energy Information Administration predicts LNG exports will average 11.3 billion cubic feet per day this year, up 16% from 2021.

In recent weeks an expansion of the Cheniere Energy Inc. terminal at Sabine Pass in Louisiana began filling tankers, as has a closely held liquefaction plant built about 50 miles to the east. Those facilities are expected to add 2 billion to 3 billion cubic feet of daily export capacity, though construction of several more export terminals will be needed to fulfill the White House’s promises to Europe.

Why Your Electricity Bill May Be Higher Than Your Neighbor’s

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Why Your Electricity Bill May Be Higher Than Your Neighbor’s

Why Your Electricity Bill May Be Higher Than Your Neighbor’sPlay video: Why Your Electricity Bill May Be Higher Than Your Neighbor’s

Retail energy companies compete with local utilities to give U.S. consumers more choice. But in nearly every state where they operate, retailers have charged more than regulated incumbents, meaning you may be paying more for your electricity than your neighbor. Here’s why. Photo Illustration: Jacob Reynolds

Write to Ryan Dezember at ryan.dezember@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Business News | Wednesday, March 30, 2022:

 

Sourse:wsj.com

Judge Approves $18 Million Activision Settlement With EEOC

Sarah E. Needleman

Ruling had faced opposition from a state department that is suing the videogame company

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A California judge has approved an $18 million settlement between Activision Blizzard Inc. and the Equal Employment Opportunity Commission, marking a win over objections from a state department that sought to intervene.

Activision previously agreed in September to settle with the EEOC, which had been investigating the videogame giant for allegations of sexual harassment and retaliation. But the company and the federal agency became locked in a monthslong legal battle with the California Department of Fair Employment and Housing after the state agency sought to block the settlement, saying it could ruin the department’s lawsuit against Activision.

California District Judge Dale S. Fischer late Tuesday ruled against the DFEH, saying any approved claimants must waive their right to recover any sexual harassment, pregnancy discrimination or related retaliation stemming from the agency’s case against Activision. A spokeswoman for the California agency didn’t immediately respond to a request for comment.

In addition to the $18 million fund to compensate eligible claimants, Activision has agreed to engage a neutral, third-party equal employment opportunity consultant—a nonemployee who must be approved by the EEOC—who will oversee Activision’s compliance with its agreement, among other resolutions.

Santa Monica, Calif.-based Activision, known for its Call of Duty, World of Warcraft and Candy Crush franchises, has around 10,000 employees, and it posted close to $9 billion in revenue for 2021.

“Our goal is to make Activision Blizzard a model for the industry, and we will continue to focus on eliminating harassment and discrimination from our workplace,” Activision Chief Executive Bobby Kotick said Tuesday ahead of the ruling.

During a press conference held over Zoom on Wednesday morning, EEOC acting district director Christine Park-Gonzalez said the Activision settlement is one of the largest the agency has ever reached and that she expects it to bring about “meaningful change” at the company.

The DFEH’s case against Activision was filed in July and alleges that the company ignored numerous complaints by female employees of harassment, discrimination and retaliation. Activision has said the lawsuit includes distorted, and in many cases, false descriptions of its past, and that it strives to pay all employees fairly.

Separately, the Securities and Exchange Commission is also investigating Activision over its handling of employees’ allegations of sexual misconduct and workplace discrimination, The Wall Street Journal reported in September. The federal agency subpoenaed Activision and several of its senior executives, including Mr. Kotick. A spokeswoman for the company has said it is cooperating with the SEC.

Microsoft Corp. in January agreed to buy Activision in an all-cash deal valued at about $75 billion. Microsoft’s videogame boss Phil Spencer has said he is confident that Activision management is addressing workplace issues.

The proposed acquisition is being reviewed by the U.S. Federal Trade Commission, the Journal reported in February. The companies have targeted 2023 for closing the transaction.

Activision shares slipped 0.3% to $80.50 in midday trading Wednesday.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

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Mar 28, 2022

Business News | Monday, March 28, 2022:

 

Source: wsj.com

Tesla to Request Shareholder Approval for Stock Split

Will Feuer

Shares of electric-vehicle maker rise, though it has yet to specify timing and split ratio

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Tesla Inc. said it would request shareholder approval at its annual meeting for an increase in the number of shares of the electric-car maker to enable a stock split, though it didn’t specify when such a split would take place or what the ratio of shares would be.

Tesla shares were up nearly 8% to $1,088 a share in Monday trading. The company typically holds its shareholder meeting in the fall.

Tesla is currently authorized to issue 2 billion shares. As of Jan. 31, the company had 1.03 billion shares outstanding.

The move comes after Amazon.com Inc. this month said it would split its stock 20-for-1. Google parent Alphabet Inc. said on Feb. 1 that it would enact a 20-for-1 stock split, giving shareholders 19 more shares for every one they own.

Stock splits change the stock price, not the total value of an investor’s holding, although they have a history of generating a short-term rally in a company’s stock price.

The proposal comes almost two years after Tesla enacted a 5-for-1 stock split as shares of the company run by Elon Musk rode to new heights. Tesla, at the time, said it was making the move “to make stock ownership more accessible to employees and investors.”

Tesla shares surged last year as the company’s vehicle deliveries rose strongly despite global supply-chain constraints, and its profit advanced, too. The rally has turned Mr. Musk into the world’s richest person, according to the Bloomberg Billionaires Index.

The stock is down around 4% this year amid wider market turmoil following Russia’s attack on Ukraine that began last month. Tesla shares are still up more than 60% over the past year, though.

Tesla’s stock-split announcement comes as the company is temporarily idling its factory in Shanghai amid wider Covid-19 lockdown measures in China. Mr. Musk on Monday also tweeted he has again tested positive for the virus.

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Write to Will Feuer at will.feuer@wsj.com

Mar 20, 2022

Business Ties of Elon Musk in China Creat Unease in Washington | Sunday, March 20, 2022:

 Source: wsj.com

Elon Musk’s Business Ties to China Create Unease in Washington

Brody Mullins and Susan Pulliam

Elon Musk’s ties to China are causing unease in Washington, including among some Republican lawmakers who have been among the billionaire entrepreneur’s ardent supporters.

The concerns center on the potential for China to gain access to the classified information possessed by Mr. Musk’s closely held Space Exploration Technologies Corp., including through SpaceX’s foreign suppliers that might have ties to Beijing.

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What might Congressional concerns over Elon Musk’s ties to China mean for his companies? Join the conversation below.

Some lawmakers also are troubled by the lack of clear lines between SpaceX and auto maker Tesla Inc., which also is run by Mr. Musk and has extensive operations in China. Tesla has developed advanced battery packets sought by the Chinese, and China has adopted a less-expensive battery technology championed by Mr. Musk.

The concerns come amid a fierce rivalry between the U.S. and China that recently has been stoked by China’s focus on space technology. Tensions are also rising because of Chinese President Xi Jinping’s partnership with Russian President Vladimir Putin.

Rep. Chris Stewart (R., Utah), is seeking confidential briefings on Capitol Hill with officials from agencies including the National Reconnaissance Office, which coordinates the launch of intelligence satellites, to determine whether the Chinese government has any direct or indirect links to SpaceX.

Rep. Chris Stewart (R., Utah) said he wants confidential briefings to determine whether the Chinese government has any direct or indirect links to SpaceX.

Photo: Al Drago/Press Pool

“I am a fan of Elon Musk and SpaceX, but anyone would be concerned if there are financial entanglements with China,” said Mr. Stewart, a senior member of the House Intelligence Committee. “Congress doesn’t have good eyes on this.”

Representatives of Mr. Musk, SpaceX and Tesla didn’t respond to requests for comment.

Mr. Stewart also wants to find out whether any companies with Chinese ties have invested in SpaceX, which isn’t publicly traded.

Tesla is publicly held, and in 2017 Chinese technology giant Tencent Holdings Ltd. disclosed that it bought 5% of the car maker’s stock. Mr. Musk said it was more than just an investment: In announcing the development, he tweeted that he was “glad to have Tencent as an investor and advisor to Tesla.”

What China's New Data Rules Mean for Tesla and the Auto Industry


What China's New Data Rules Mean for Tesla and the Auto Industry

What China's New Data Rules Mean for Tesla and the Auto IndustryPlay video: What China's New Data Rules Mean for Tesla and the Auto Industry

Cars today offer high-tech features and gather troves of data to train algorithms. As China steps up controls over new technologies, WSJ looks at the risks for Tesla and other global brands that are now required to keep data within the country. Screenshot: Tesla China

Tencent disclosed in 2018 that its ownership dropped to 4.97%, with no further disclosures since. When asked if Tencent still owns Tesla stock, a Tencent representative said he couldn’t provide any information.

Tencent owns the WeChat messaging app that former President Donald Trump sought to ban in the U.S., and which remains under a security review by the Biden administration.

China is one of Tesla’s biggest markets, thanks in large part to support of China’s Communist Party and Mr. Xi. Chinese authorities gave Mr. Musk low-interest loans, cheap land and other incentives for a Shanghai facility that opened in 2019 where Tesla vehicles and battery packs are assembled.

In 2018 and early 2019, Tesla was facing financial problems as its U.S. manufacturing plant failed to produce enough cars to meet expectations and the company ran low on funds.

In 2019 and 2020, Tesla received two loans from Chinese banks, according to the company’s 2021 annual report, including a $1.4 billion facility to help with construction of its factory in Shanghai. Last year, Tesla paid back $614 million it owed the banks under the agreements and terminated both facilities, the company said.

A Tesla facility in Shanghai, in 2020.

Photo: Qilai Shen/Bloomberg News

The White House declined to comment on potential security risks from Mr. Musk’s China ties.

Commerce Secretary Gina Raimondo, whose department shares responsibility for safeguarding U.S. technology, said U.S. companies need to take extra care in dealing with China.

“It’s certainly true that China’s coercive practices, anticompetitive practices, practices trying to steal our IP or steal our technology and know-how are well documented,” she said. “And so any businessperson doing business with China should be extremely wary. And I hope would never engage in any behavior that puts our national security at risk.”

The Chinese embassy didn’t respond to a request for comment.

Sen. Marco Rubio (R., Fla.), the top Republican on the Senate Intelligence Committee, introduced a bill in December to address the threat of China gaining access to space technology secrets via third parties.

The bill would bar the National Aeronautics and Space Administration and other U.S. government agencies from awarding contracts to companies with suppliers who have ties to China, and would require more disclosure of Chinese investments in U.S. companies involved in the private space-launch industry.

“Any company operating in China is going to be pressured and exploited by the Chinese Communist Party,” Mr. Rubio said in a statement to The Wall Street Journal, referring to Mr. Musk’s Tesla operations in China.

Sen. Marco Rubio (R., Fla.) has introduced a bill that would bar NASA and other federal agencies from awarding contracts to companies with suppliers who have ties to China.

Photo: OCTAVIO JONES/REUTERS

Mr. Rubio is a top recipient of campaign donations from Mr. Musk, and Florida is home to several launch facilities, including NASA’s Kennedy Space Center, that SpaceX uses.

The concerns over potential security risks have been exacerbated by Mr. Musk’s praise for China, lawmakers said. Along with being seen as a security threat, China has aligned itself with Russia and has been accused of oppressing Uyghur minorities in its remote Xinjiang region, an accusation that Beijing disputes.

On Dec. 31, Mr. Musk opened a showroom in the Xinjiang capital of Urumqi, just a few weeks after President Biden signed a bill approved by Congress to require U.S. companies that import products from Xinjiang to prove that they weren’t manufactured with forced labor.

“Nationless corporations are helping the Chinese Communist Party cover up genocide and slave labor in the region,” read a tweet from the Senate office of Mr. Rubio, responding to Mr. Musk’s move.

Earlier this month, Mr. Musk hosted China’s ambassador to the U.S., Qin Gang, at Tesla’s factory in Fremont, Calif. “Had an inspiring talk with @elonmusk today,“ Mr. Qin tweeted afterward, “on cars on the road, stars in the sky, research of human brain, meaning of life on earth and our future into the space.”

Tesla CEO Elon Musk attended a 2021 event in Beijing via a video link; in 2019 and 2020, Tesla received two loans from Chinese banks, according to the company’s 2021 annual report.

Photo: Roxanne Liu/REUTERS

On the 100th anniversary last year of China’s Communist Party, Mr. Musk tweeted that the “economic prosperity that China has achieved is truly amazing, especially in infrastructure!”

“China rocks in my opinion,” Mr. Musk said in a July 2020 podcast from Automotive News. “People there—there’s a lot of smart, hardworking people…whereas I see in the United States increasingly much more complacency and entitlement.”

Former Republican Sen. Cory Gardner of Colorado called such comments “tone deaf to the legitimate national security concerns that members of Congress have.”

In 2019, Mr. Gardner tried to add a provision to NASA-related legislation that would have required the space agency to consider whether SpaceX or other U.S. space-launch companies had financial ties to Chinese and foreign-controlled companies.

After members of the Senate Commerce Committee agreed to include Mr. Gardner’s provision, lobbyists for SpaceX undertook an effort to successfully kill the bill, Mr. Gardner said.

“We had heard through the grapevine that it was SpaceX, but we never heard from them directly,” said Mr. Gardner, who lost his 2020 reelection campaign.

The SpaceX facility in Brownsville, Texas.

Photo: Mark Felix/Bloomberg News

Several Democrats on the Senate Intelligence Committee are also wary of Mr. Musk’s ties to China and are monitoring his moves, according to a committee aide.

Like Republicans, Democrats have mixed views on Mr. Musk. Many Democrats praise him for building enthusiasm for electric vehicles and championing efforts to address climate change. At the same time, Tesla uses a nonunion workforce, displeasing Mr. Biden and other pro-union Democrats. Tesla is the world’s leading electric-vehicle maker, but Mr. Musk wasn’t among the auto executives invited to the White House last year for an event to rally support for the industry.

Many Republicans, meanwhile, remain fans of Mr. Musk for challenging federal regulators on some issues, and they have praised him for creating competition in the space-launch industry.

“Tesla and SpaceX are great American companies. And Elon is one of our country’s greatest innovators and a true patriot,” said Matt Sparks, a spokesman for House Minority Leader Rep. Kevin McCarthy (R., Calif.), an early champion of Mr. Musk.

“There is absolutely nothing to suggest forced technology transfers of any kind, whether at Tesla or SpaceX,” Mr. Sparks said.

—Alex Leary contributed to this article.

Write to Brody Mullins at brody.mullins@wsj.com and Susan Pulliam at susan.pulliam@wsj.com

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Jan 19, 2022

Business News U. S. - UK. on Wednesday, January 19, 2022:

 Source: reuters.com

U.S., UK agree on talks to resolve steel, aluminum dispute

January 19, 202212:13 PM GMT-5Last Updated 5 minutes ago

WASHINGTON, Jan 19 (Reuters) - The United States and Britain on Wednesday agreed to launch discussions aimed at resolving their trade dispute over steel and aluminum, the countries said in a joint statement.

No specific date was given for the talks but discussions will address "steel and aluminum excess capacity and the deployment of effective solutions, including appropriate trade measures, to preserve our critical industries," officials.

Reporting by David Shepardson and David Lawder; writing by Susan Heavey

Jan 4, 2022

Business News: How Many Americans Quit Jobs in November?

 Source: reuters.com

Record 4.5 million Americans quit jobs in November

January 4, 202210:30 AM -05Last Updated 7 hours ago

A hiring sign is posted near an Ellume building that is under construction in Frederick, Maryland, U.S., November 18, 2021. Picture taken November 18, 2021. REUTERS/Leah Millis

WASHINGTON, Jan 4 (Reuters) - The number of Americans voluntarily quitting their jobs surged to a record 4.5 million in November, a show of confidence in the labor market and an indication that higher wages could prevail for a while.

The 370,000 increase in quits reported in the Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday was led by the accommodation and food services industry.

There were also big increases in the health care and social assistance fields as well as the transportation, warehousing and utilities sectors. All four U.S. regions reported a rise in the number of people quitting their jobs.

Job openings, a measure of labor demand, dropped by 529,000 to a still-high 10.6 million on the last day of November. Economists polled by Reuters had forecast 11.075 million vacancies. There were large declines in job openings in the accommodation and food services, construction and nondurable goods manufacturing industries.

Hiring was little changed at 6.7 million.

Reporting by Lucia Mutikani Editing by Paul Simao

Dec 22, 2021

Business News:

 Source: bbc.com

Zee-Sony merger will create an Indian entertainment giant

BBC News

A man wearing a face mask is seen standing in front of a banner with a Sony liv logo in Mumbai.Image source, Getty Images

Image caption,

The merger will pose a direct challenge to top rival Walt Disney, which owns streaming platform Hotstar

Japanese conglomerate Sony's Indian arm has finalised a deal with local rival Zee Entertainment to form the country's second largest entertainment network.

The merged entity will include more than 75 television channels, film assets and two streaming platforms.

It is poised to become a major player in the country's fast-growing entertainment industry, challenging rivals such as Walt Disney's Hotstar.

India has more than 900 million TV viewers and some 800 channels.

These channels offer a variety of shows ranging from sports, melodramas to reality television.

As per the merger, which was announced on Tuesday, the combined entity will be nearly 51% owned by Sony Pictures Networks India (SPNI). It will be headed by Zee's Chief Executive Officer Punit Goenka after a 90-day due diligence period.

Mr Goenka called the deal a "significant milestone".

"The combined company will create a comprehensive entertainment business, enabling us to serve our consumers with wider content choices across platforms," he said, according to an official release.

Both firms have operated in India for years and own streaming platforms ZEE5 and SonyLIV. They also have a vast TV following with popular channels such as Sony MAX and Zee TV.

"It's a hugely complementary deal," media and entertainment industry specialist Vanita Kohli Khandekar told the BBC.

"For example Sony does not have the pan-India, small town and regional reach that Zee has. And Zee does not have a kids or sports business like Sony."

Ms Khandekar said the deal will also propel Zee onto an international stage. "The company has now been absorbed by Sony, a $82bn (£61bn) corporation. So, Zee now becomes a foreign company, which gives it a bigger platform."

Although most Indians are still dependent on direct-to-home TV entertainment, the country is also a lucrative destination for streaming platforms that have been tapping into the vast internet market to target a young digital audience.

The past few years have seen a surge of competition from streaming platforms including Netflix, Amazon Prime Video and Hotstar as many users desert television for digital shows.

Experts say the merger between Sony and Zee is expected to further ratchet up this competition.

Dec 9, 2021

Finance | Business News: Evergrande, Kaisa cut by Fitch to default after missed payment deadlines.

 Source: reuters.com

5-7 minutes

  • Summary
  • Cross defaults triggered for both companies - Fitch
  • Kaisa starts work on $12 bln offshore debt restructuring -source
  • Kaisa to sign NDA with adviser of some bondholders soon -sources
  • Decisions on forbearance, financing plan to take time -sources

HONG KONG/LONDON, Dec 9 (Reuters) - Ratings agency Fitch downgraded property developers China Evergrande Group and Kaisa Group on Thursday, saying they had defaulted on offshore bonds, while a source said Kaisa had started work on restructuring its $12 billion offshore debt.

The downgrades to so-called "restricted default" status come even though Evergrande(3333.HK) and Kaisa(1638.HK) have not officially announced defaults that could result in drawn-out debt restructuring processes.

The fate of Evergrande, which has more than $300 billion in liabilities, and other indebted Chinese property companies has gripped financial markets in recent months amid fears of knock-on effects around the world, although Beijing has repeatedly sought to reassure investors.

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In its note on Evergrande, Fitch said the developer did not respond to its request for confirmation on coupon payments worth $82.5 million that were due last month, with the 30-day grace period ending this week, and so assumed "they were not paid."

Evergrande did not immediately respond to Reuters' requests for comment on Fitch's decision while Kaisa declined to comment.

"The defaults of Evergrande and Kaisa move us to the second step of this China Property downturn, with systemic risk being gradually replaced by idiosyncratic risk," said Robin Usson, credit analyst at Federated Hermes.

"It will be interesting to see the role played by SOEs (state-owned enterprises) in the restructuring process, the level of 'control' exerted by the government over this 'marketed-oriented approach'," Usson added.

People's Bank of China (PBOC) Governor Yi Gang said on Thursday rights of Evergrande shareholders and creditors would be "fully respected" based on their legal seniorities, and the risk caused by a few Chinese real estate companies in the short term would not undermine Hong Kong's capital market. read more

Dollar-bonds issued by Evergrande gained but remain in deeply distressed territory, trading between 18-29 cents. , Kaisa dollar-bonds, most of which are trading around 34-35 cents on the dollar, nudged higher. ,

Fitch defines a restricted default as indicating an issuer has experienced a default or a distressed debt exchange, but has not begun winding-up processes such as bankruptcy filings and remains in operation.

The non-payment has triggered an "event of default" on Evergrande's bonds and its other U.S. dollar notes will become due immediately and payable if the bond trustee or holders of at least 25% in aggregate amount declare so, Fitch said.

The same "cross default" is true for Kaisa, which, according to Refinitiv data, has note maturities totalling $2.8 billion next year, and $2.2-3.2 billion of maturities each year between 2023 and 2025.

A sign of the Kaisa Group Holdings is seen at the Shanghai Kaisa Financial Center, in Shanghai, China, December 7, 2021. REUTERS/Aly Song

Fitch said there was limited information available on Kaisa's restructuring plan after it missed $400 million in offshore bonds repayment on Tuesday.

Evergrande said last week it planned to forge ahead with a restructuring of its debt.

"Banks and bondholders (both local and foreign) will welcome debt re-profile exercises from companies with liquidity problems, as long as they are conducted in a fair, transparent and candid manner," Gustavo Medeiros at Ashmore Group (ASHM.L) wrote in a recent note to clients. The UK-listed asset management firm had exposure to both Evergrande and Kaisa bonds, according to recent filings.

KAISA TALKS

Kaisa is expected to soon sign a non-disclosure agreement (NDA) with Lazard, the adviser of a group of bondholders, the source and another person told Reuters. The bondholders hold over 25% of Kaisa's $12 billion offshore bonds.

The NDA will lay the groundwork for further discussions on forbearance and financing solutions, the people said, who declined to be named as the talks are confidential.

But an agreement is unlikely in the next few weeks as the talks are still at an early stage, the first source said.

Kaisa said it was open to talks on forbearance, but declined to comment on details. Lazard declined to comment.

The group of Kaisa offshore bondholders, which says it owns 50% of the notes that were due on Dec. 7, sent the company draft terms of forbearance late on Monday. read more

The group previously offered $2 billion in fresh debt to help Kaisa repay its onshore and offshore debts, sources have said. Other financing ideas are also on the table. read more

Kaisa is also in talks with another bondholder group, the first person said.

Kaisa's default came after it failed last week to secure the minimum 95% approval needed from offshore bondholders to exchange the bonds that were due Dec. 7 for new notes due June 6, 2023, at the same interest rate.

Trading in Kaisa's shares, which have lost 75% this year, was suspended on Wednesday. Evergrande's stock has plunged 88% this year.

Reporting by Clare Jim in Hong Kong and Karin Strohecker in London, additional reporting by Andrew Galbraith Writing by Sumeet Chatterjee Editing by Himani Sarkar, Mark Potter and Nick Zieminski

Nov 29, 2021

Business News: UnitedHealth forecasts 2022 profit below estimates.

 Source: reuters.com

November 29, 20215:02 PM -05Last Updated 11 minutes ago


The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake

Nov 29 (Reuters) - UnitedHealth Group Inc (UNH.N) on Monday forecast profit for 2022 below Wall Street estimates, as it grapples with a surge in insurance claims due to the COVID-19 pandemic.

The U.S. health insurer said it was expecting to post an adjusted profit of $21.10 to $21.60 per share in 2022. Analysts on average were estimating a profit of $21.65 per share, according to Refinitiv IBES data.

UnitedHealth, however, raised the lower end of its 2021 adjusted earnings forecast by 10 cents. It had previously forecast a range of $18.65 per share to $18.90 per share.

Jul 22, 2021

Business News: China offers a masterclass in how to humble big tech, right?

 

Source: economist.com

6-8 minutes


ANTITRUST USED to be as American as apple pie. The Boston Tea Party was, in part, a protest against the monopoly of the British East India Company. The word itself stems from the trusts, such as Standard Oil, that lorded it over the American economy in the 19th century. For stretches of the 20th it became America’s charter not just for free enterprise, but for political freedom. Contrast this with China, a Communist dictatorship whose AntiMonopoly Law, introduced in 2008, has more often than not been used only to cudgel foreign firms. In such hands, it is easy to dismiss trustbusting as Orwellian gobbledygook.

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And yet suddenly antitrust in China has come to life in the way police internal affairs have done thanks to the British cop show “Line of Duty”: as a source of unending fear and fascination, carried out by agencies with impenetrable acronyms and a keenness for Stasi-like dawn raids. In short order, it has transformed the country’s erstwhile tech giants into simpering poodles.

The onslaught marks the rise of a new sort of regulatory authoritarianism. Both America and China have similar qualms about the influence of their big technology firms. But since President Xi Jinping gave the nod to his trustbusting warriors last autumn, China has leapfrogged America in the speed, scope and severity of its antitrust efforts, giving new impetus to the word “techlash”. For those frustrated at the power of the tech giants in America, China offers a masterclass in how to cut them down to size. If only, that is, America could emulate it.

Start with speed, the Communist Party’s biggest edge over America’s democratic ditherers. When overweening tech barons treat politicians like patsies, don’t invite them to mind-numbing congressional hearings. Force them to keep a low profile for a while, as China did with Jack Ma, co-founder of Alibaba, China’s biggest e-commerce firm, who also founded its fintech stablemate, Ant Group. In no time, the billionaire class got the message. It took just over six months after the humbling of Mr Ma for the founders of two other Chinese tech giants, Pinduoduo and ByteDance, to announce they were retreating from public life. It also took less than four months of antitrust investigation for Alibaba to be clobbered with a $2.8bn fine in April. By contrast, a trial date for Google, sued last October by America’s Department of Justice (DoJ) and 11 states for alleged monopolistic abuse by its search business, will not come before 2023. Yawn.

Next, scope. Don’t let pesky courts stand in your way, as they do in America. Throw the book at mischief-makers using whatever tools a one-party system affords you. As Angela Zhang puts it in “Chinese Antitrust Exceptionalism”, a book written before the latest tech crackdown, Chinese regulation of monopolies starts with agencies jostling for power and influence. Their recent rampage has been supercharged by modified laws in an array of subjects. They have slapped fines on firms for crimes ranging from online price discrimination to merchant abuse and irregularities in tech merger deals. The recent crackdown on Didi, a ride-hailing giant, days after its initial public offering in New York, focuses on concerns encompassing data security and spying.

Do not expect Didi, or the alleged monopolists, to seek protection from the courts. In China trustbusters are almost never subject to judicial checks and balances. Chinese agencies, writes Ms Zhang, handle “investigation, prosecution and adjudication”. In other words, they are police, judge and jury rolled into one. In America the reverse is true. In June an American judge threw out a six-month-old lawsuit by the Federal Trade Commission (FTC), America’s antitrust regulator, against Facebook, arguing that the government never proved that the social network had monopoly power. Round two to the totalitarians.

Third, severity. It isn’t the fines tech titans fear most. It is having their business models torn apart, as Ant’s was, as well as the reputational damage; bureaucrats can use state media and populist outrage to wreak havoc on a miscreant’s sales and share price. This year, amid the crackdowns, the value of China’s five biggest internet firms has plummeted by a combined $153bn. In America, despite lawsuits, probes and hearings, the value of Alphabet, Amazon, Apple, Facebook and Microsoft has soared by $1.5trn. As Chinese firms capitulate, American ones fight back, publicly challenging their antagonists, such as Lina Khan, who heads the FTC. Jonathan Kanter, President Joe Biden’s Google-bashing pick to run the DoJ’s antitrust division, can expect similar treatment.

Be careful what you wish for

Presumably all this would arouse envy among trustbusters in Washington, DC—were “China” not an even dirtier word than “tech” these days. Not only has China taken up the antitrust mantle from its superpower rival. It has done so strategically. It strengthens Mr Xi’s control over potential rivals for popular adulation: the tech billionaires. It gives the central government more oversight of an ocean of digital data. And it encourages self-reliance; the aim is to have a thriving tech scene producing world-beating innovations under the thumb of the Communist Party.

But autarky carries its own risks. Already, Chinese tech darlings are cancelling plans to issue shares in America, derailing a gravy train that allowed Chinese firms listed there to reach a market value of nearly $2trn. The techlash also risks stifling the animal spirits that make China a hotbed of innovation. Ironically, at just the moment China is applying water torture to its tech giants, both it and America are seeing a flurry of digital competition, as incumbents invade each other’s turf and are taken on by new challengers. It is a time for encouragement, not crackdowns. Instead of tearing down the tech giants, American trustbusters should strengthen what has always served the country best: free markets, rule of law and due process. That is the one lesson America can teach China. It is the most important lesson of all.

This article appeared in the Business section of the print edition under the headline "War war v jaw jaw"

Jul 13, 2020

News | Business News: Life after Zoom: corporate travel agents plot safe return to business trips

Jamie Freed



SYDNEY (Reuters) - Corporate travel agents are using the coronavirus-induced lull in bookings to work with companies on how to get their staff out of Zoom videoconferences and safely back in the air.


FILE PHOTO: People wearing face masks are seen at Hongqiao International Airport in Shanghai, following the coronavirus disease (COVID-19) outbreak, China May 21, 2020. REUTERS/Aly Song/File Photo

They are launching new tools to provide on-the-ground information about local mask requirements, social distancing regulations and quarantine rules, as well as details of hotel, airline and ground-transport hygiene.
Travellers are moving away from cheaper online bookings to seek counsel from experienced consultants amid a slow but growing rebound in the corporate travel industry, which normally accounts for $1.4 trillion of annual spending.
“I am seeing a trend now starting to pick up ... We can Zoom or Microsoft meetings but nothing beats the face to face,” said Jo Sully, regional general manager Asia-Pacific at American Express Global Business Travel.
“I think it will be a gradual recovery in terms of that. People will maybe think ‘Should I just do this via Zoom?’ but the overall response is people will go back to travelling for meetings,” the Sydney-based executive said.
Her firm predicts a return to around 60%-70% of usual volumes in 2021, with pre-pandemic travel levels taking until 2022 or 2023.
New Zealand, which emerged from lockdown in May, is already back to half of last year’s domestic booking levels, said Jamie Pherous, managing director of Brisbane-based Corporate Travel Management Ltd (CTM) (CTD.AX).
“There is pent-up demand,” he said. “I was visiting some customers (in Australia) and the key feedback I get is that we’ve got critical decisions building that I can never resolve over a video conference.”
A CTM survey found 90% of its customers in Australia and New Zealand had experienced a negative impact on business growth due to their inability to travel.
Chinese domestic bookings are around 60% of pre-pandemic levels and some European markets have begun to pick up as border restrictions there ease, said Chris Galanty, the London-based global chief executive of Flight Centre Travel Group Ltd’s (FLT.AX) corporate divisions.
“As countries get control of the actual health crisis and the number of COVID cases stabilise and local policy enables travel – i.e. lockdowns end and people can physically travel - business travel picks up,” he said.
“It doesn’t pick up to pre-COVID levels. It picks up to reasonable amounts in domestic and local regions.”
Among other factors slowing the return of business travel is the disruption to the corporate events calendar and the need for companies to be stricter about approving trips, with duty of care to staff for now trumping price, said Akshay Kapoor, CWT senior director, multinational customer group, Asia Pacific.
“If I’m looking to travel the company is going to be asking me to go through many levels of approval,” the Singapore-based executive said.
“That element of pre-trip approvals is going up. The companies are keeping a very close eye on the purpose of travel and if people have to travel making sure they know where they are and they are safe.”

Reporting by Jamie Freed; Editing by Stephen Coates

May 20, 2020

News | Business: Rolls-Royce to cut 9,000 jobs amid virus crisis

4minutes - Source: BBC



Rolls-Royce engine Image copyright Reuters
Rolls-Royce has said it will cut 9,000 jobs and warned it will take "several years" for the airline industry to recover from the coronavirus pandemic.
The firm, which makes engines for planes, said the reduction of nearly a fifth of its workforce would mainly affect its civil aerospace division.
"This is not a crisis of our making. But it is the crisis that we face and must deal with," boss Warren East said.
The bulk of the job cuts are expected to be in the UK.
Rolls-Royce employs 52,000 people globally and Mr East told the BBC's Today programme the company had not yet concluded on "exactly" where the job losses would be, due to having to consult with unions.
But he said: "It's fair to say that of our civil aerospace business approximately two-thirds of the total employees are in the UK at the moment and that's probably a good first proxy."
Air travel has ground to a virtual standstill since the coronavirus began spreading across the world and many airlines have announced steep job cuts.
Rolls-Royce said the impact of the pandemic on the company and the whole of the aviation industry "is unprecedented".
It added that it is "increasingly clear that activity in the commercial aerospace market will take several years to return to the levels seen just a few months ago".
As well as the job losses, the company said it would cut costs in areas such as its plants and properties.

Job cuts a heavy blow

This morning's job losses are hardly unexpected - airlines have cut their flying hours by 90% or more, and Airbus and Boeing have slashed their production numbers for the next few years - but they are still a heavy blow to one of the UK's few world-class manufacturing companies.
While the details of where the cuts will fall have not been finalised, it is likely that two-thirds will go in the UK.
The cuts are part of a bigger scheme that will reduce Rolls-Royce's costs by about £1.3bn a year.
The company has already used the government's furlough scheme to help pay the wages of about 4,000 staff, but Warren East, Rolls-Royce's chief executive, said companies could not expect the government to continue such a scheme for several years.
There was also a clear hint this morning that some factories may close - the company said it would review its future manufacturing footprint.
Some questions remain for Roll-Royce. Investors are scratching their head about when the company's revenues - much of which rely on aircraft to be flying for money to flow - will return.
The company has not yet tapped its shareholders for more money - some expect that may eventually come.

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