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Despite challenges, Asia’s aerospace industry plots rebound at Singapore air show

As a depleted Singapore Airshow winds down, delegates reported growing optimism as the hard-hit Asian aerospace market begins to recover despite emerging concerns around labor shortages, rising costs, and supply chain challenges.

Organizers had estimated attendance of more than 13,000 ahead of the four-day show – still a shadow of previous years — but attendees said that even on Tuesday, the busiest day, only a few thousand people appeared to be at the show. Final numbers are yet to be compiled, organizers said.

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Still, repeat visitors such as Eric Noel, an executive at a flight training center in Arizona, said the atmosphere was livelier than the last show in February 2020, when late exhibitor dropouts due to the emergence of COVID-19 left empty spaces and half-finished booths, giving an eerie feel to the display hall at a time of significant market uncertainty.
Attendees at the show on Thursday ventured outside into the scorching midday sun to watch the final set of flying displays,
including a flyby of a US B-52 bomber, a design that first flew in the 1950s.
This year’s show was the largest event of any kind in Singapore since the start of the pandemic, though the low turnout was a prime example of the devastating effect that strict health and border controls have had on the aviation industry over the last two years.

Yet there is optimism about a reopening in Asia, with host country Singapore on Wednesday announcing an opening to
quarantine travel from more countries after an initial pausewhen the omicron variant emerged late last year.
“People want to get back face to face because we have all figured out Zoom is fine, but it doesn’t really make it happen,” Domhnal Slattery, chief executive of aircraft lessor Avolon, said at the show.
His firm on Wednesday signed a deal to lease at least 100 flying taxis to AirAsia Aviation Group, which aims to launch an air ridesharing business in Southeast Asia.
With passenger travel down during the pandemic, Asian airlines have relied on the cargo market for survival, and freight was the star of the show in terms of major deals.
Singapore Airlines on Wednesday finalized an order for seven Airbus A350 freighters, while Etihad Airways placed a provisional order for seven of the same model.
Singapore Technologies Engineering also racked up more orders for passenger-to-freighter conversions, a business that has helped keep its hangars and workforce occupied during the slowdown in passenger travel.
On the defense side, there were no major deals but manufacturers were hopeful of a rebound as Asian countries emerge from the economic rubble of COVID-19 and look for cost-effective ways to upgrade their militaries.
As demand begins to bounce back, there are growing concerns about cost inflation and difficulties in the supply chain, for both commercial and defense manufacturers.
Sean Padfield, senior vice president, aerospace at seatbelt manufacturer SCHROTH Safety Products said his lead times for
parts from his company’s suppliers had doubled, making it harder to meet customer commitments.
“We’re really trying to smooth out by adding some robustness to our supply chain, like having multiple suppliers for the same parts,” he said on the sidelines of the show. “But one thing we realized in the aviation space, some of these parts are so specialized, it takes a long time to get another supplier up and running to deliver at the same quality and quantity.”
Other industry challenges revolve around labor after major workforce cuts made when demand collapsed in 2020, leading led
some workers to retire or change industries.
“There is a general labor shortage and the only way to get labor back to work is higher rates,” said Kailash Krishnaswamy,
senior vice president of aftermarket services at Spirit AeroSystems. “Where we have the opportunity we are trying to pass off that pricing to the customer. We are trying to build in automation where needed if possible.”

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Ryanair cabin crew in Spain announce 12 new days of strikes in July

Spain-based cabin crew at Ryanair plan to strike for 12 days this month to demand better working conditions, the USO and SICTPLA unions said on Saturday, raising the prospect of travel chaos as the summer tourist season gets under way.

The announcement came on the final day of the crews’ current strike, which began on Thursday and forced Ryanair to cancel 10 flights in Spain on Saturday.

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Cabin crew will strike on July 12-15, July 18-21 and July 25-28 across the 10 Spanish airports where Ryanair operates, the unions said in a statement.

“The unions and crew of Ryanair … demand a change of attitude from the airline,” they said in a statement, calling for Ryanair to resume negotiations on working conditions.

The unions also urged the government “not to allow Ryanair to violate labor legislation and constitutional rights such as the right to strike.”

Airline workers across Europe have been staging walkouts as the sector adapts to a resumption of travel after pandemic lockdowns.

Spain-based cabin crew at easyJet are striking for nine days this month for higher pay. The airline cancelled five flights from Spain on Saturday.

Workers at Paris’ Charles de Gaulle airport went on strike on Friday and into Saturday, forcing the cancellation of about 10 percent of flights.

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Tesla braces for delayed delivery due to China plant shutdown

Tesla Inc. is expected to announce quarterly production and delivery figures this weekend that will likely be among the worst of the year – and break its multi-quarter streak of record-setting results – due largely to an extended shutdown of its factory in Shanghai.

The electric vehicle maker may have delivered more than 261,000 vehicles globally during the three months ended in June, according to nine analysts surveyed by Bloomberg, ending a two-year stretch of consecutive quarterly gains.

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Tesla handed over more than 310,000 vehicles in the first three months of the year, more than any previous quarter.

“We cut our second-quarter deliveries estimate by 65,000 to 245,000 units, reflecting a prolonged Covid 19-related shutdown and logistical challenges in the Shanghai factory,” wrote Emmanuel Rosner of Deutsche Bank in a research note to clients. “Recall that during the first-quarter call, CEO Elon Musk had provided directional guidance of sequentially flat deliveries for the quarter but the situation in China worsened subsequently,” only improving in early June.

Shares of Tesla rose 1.2 percent to close trading Friday at $681.79, but the stock is down about 35 percent so far this year.

Deliveries are one of the most closely watched metrics at Tesla. They underpin the Austin, Texas-based company’s financial results and are widely seen as a broad barometer of consumer demand for EVs amid a wider shift away from the internal combustion engine.

Many large automakers will announce US sales results Friday but Tesla, which reports global totals, hasn’t specified a release date.

Dan Levy, an analyst with Credit Suisse, reduced his delivery estimate for the period to 242,000 units. “In aggregate, we believe the Shanghai shutdown accounted for about 90,000 units of lost production in the second quarter,” Levy wrote in a note to clients.

Tesla makes the Model S, X, 3 and Y vehicles at its plant in Fremont, California. It also produces Models 3 and Y at a factory near Shanghai. The company has begun delivering the first Model Ys from its new plant near Berlin and held a “Cyber Rodeo” event for 15,000 people in April to celebrate a new factory in Austin.

‘Money Furnaces’

However, both Berlin and Austin have been slow to ramp up production, with Musk warning in a late May interview that both plants are “gigantic money furnaces.”

Analysts and investors are also worried that the price hikes automakers are imposing to combat soaring raw material costs will weigh on demand. Tesla had boosted its sticker prices by as much as $6,000 a car earlier this month, according to Electrek.

A stronger-than-expected delivery number could provide a boost to Tesla’s stock, which is down more than 35 percent this year amid wider market concerns about rising energy costs, inflation and a potential recession.

Musk shares many of those concerns and is in the process of laying off 10 percent of Tesla’s salaried work force while pushing others to return to the office.

Earlier this week, Tesla laid off roughly 200 people on its Autopilot team, mostly hourly employees who worked as data annotation specialists.

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Regulator urges Germans to prepare for possible gas shortage

Fearing Russia might cut off natural gas supplies, the head of Germany’s regulatory agency for energy called on residents Saturday to save energy and to prepare for winter, when use increases.
Federal Network Agency President Klaus Mueller urged house and apartment owners to have their gas boilers and radiators checked and adjusted to maximize their efficiency.
“Maintenance can reduce gas consumption by 10 percent to 15 percent,” he told Funke Mediengruppe, a German newspaper and magazine publisher.
Mueller said residents and property owners need to use the 12 weeks before cold weather sets in to get ready. He said families should start talking now about “whether every room needs to be set at its usual temperature in the winter – or whether some rooms can be a little colder.”
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The appeal came after Russia reduced gas flows to Germany, Italy, Austria, the Czech Republic and Slovakia earlier this month, as European Union countries scramble to refill storage facilities with the fuel used to generate electricity, power industry and heat homes in the winter.
Russian state-owned energy company Gazprom blamed a technical problem for the reduction in natural gas flowing through Nord Stream 1, a pipeline which runs under the Baltic Sea from Russia to Germany.
The company said equipment getting refurbished in Canada was stuck there because of Western sanctions over Russia’s invasion of Ukraine.
German leaders have rejected that explanation and called the reductions a political move in reaction to the European Union’s sanctions against Russia after it invaded Ukraine.
Vice Chancellor Robert Habeck, who is also Germany’s economy and climate minister and responsible for energy, has warned a “blockade” of the pipeline is possible starting July 11, when regular maintenance work is due to start. In previous summers, the work has entailed shutting Nord Stream 1 for about 10 days, he said.
The question is whether the upcoming regular maintenance of the Nord Stream 1 gas pipeline will turn into “a longer-lasting political maintenance,” the energy regulator’s Mueller said.
If the gas flow from Russia is “to be lowered for a longer period of time, we will have to talk more seriously about savings,” he said.
According to Mueller, in the event of a gas supply stoppage, private households would be specially protected, as would hospitals or nursing homes.
“I can promise that we will do everything we can to avoid private households being without gas,” he said, adding: “We learned from the coronavirus crisis that we shouldn’t make promises if we’re not entirely sure we can keep them.”
He said his agency “does not see a scenario in which there is no more gas coming to Germany at all.”
Also on Saturday, German chemical and consumer goods company Henkel said it was considering encouraging its employees to work from home in the winter as a response to a possible supply shortage.
“We could then greatly reduce the temperature in the offices, while our employees could heat their homes to the normal extent,” Henkel CEO Carsten Knobel told daily newspaper Rheinische Post.
Earlier this month, Habeck activated the second phase of Germany’s three-stage emergency plan for natural gas supplies, warning that Europe’s biggest economy faced a “crisis” and storage targets for the winter were at risk.
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