The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
2131 GMT - American Airlines is trimming some international and long haul routes later this year and next, citing delayed deliveries of Boeing Dreamliners. The airline is not ending service to any destinations but is cutting back on fall and winter flights on certain routes to Europe, South America and Hawaii and ending some summer seasonal routes earlier than planned. Other airlines have had to pull back schedules due to delayed Boeing jets, but American has said the impact is more minor since it is not depending on as many new planes. (alison.sider@wsj.com; @alyrose)
1925 GMT - An FAA quality control audit of Boeing's production processes "resulted in greater operational disruption and slower 737MAX production than Fitch previously anticipated during the first few months of 2024." Boeing has until late May to come up with a plan to address concerns and failures raised by the FAA, Fitch says, adding it believes Boeing "will continue to operate at a slower production pace in line with early 2024 levels." Fitch lowers its outlook on Boeing to negative from stable, citing its expectation Boeing could "issue new debt to de-risk early-2025 cash flow risks and bolster financial flexibility as the company works through operational milestones." (stephen.nakrosis@wsj.com)
1849 GMT - Two of the three largest railroad unions have reversed course and say they are supporting dissident board candidates for Norfolk Southern, two days after the company issued its first quarter results and signaled that some labor reductions are coming this year. The Brotherhood of Maintenance of Way Employes and The Brotherhood of Locomotive Engineers and Trainmen said they now support Ancora Holdings. These two unions represent 41% of the union workforce at Norfolk Southern. Initially, these union leaders said they had been against Ancora because they were wary about worsening working conditions and labor cuts if a new CEO comes onboard. Norfolk Southern CEO Alan Shaw recently replaced the chief operating officer with John Orr, a noted railroad executive with expertise in precision scheduled railroading. This replacement irked some union leaders. (esther.fung@wsj.com; @estherfung)
1747 GMT - Cargojet's sector may be under pressure from lower volumes in North America. TD Cowen's Tim James says in a report that recent cargo and freight industry financial results suggest that the speed of recovery in volume drivers for North American air cargo is slower than previously anticipated. But this uncertainty shouldn't be too much of a problem for Cargojet, which has about 80% of its pricing determined by long-term contracts. While there is some exposure to changing volume, James says Cargojet remains a strong investment opportunity "for capitalizing on the slowly materializing cyclical recovery, secular trend in dedicated air cargo," but also "a valuation that continues to reflect past capital allocation uncertainty and the fading challenges of post-pandemic normalization." (adriano.marchese@wsj.com)
1110 GMT - Traton's stronger-than-expected revenue is great, but perhaps the biggest takeaway from first-quarter earnings is the truck-and-bus maker's progress toward attaining an investment-grade rating, Bernstein analysts say in a note. The Volkswagen-owned company reiterated its goal to reduce 2024 debt with an operating cash flow of between EUR2.3 billion and EUR2.8 billion. If Traton achieves this goal, it would let the company increase the amount of available shares for trading, potentially up to 25% from the current 10%, the analysts say. "We continue to believe, once the credit status is fixed, this removes any obstacle to raising the free float," Bernstein says, adding that the higher free float would suggest a valuation of EUR60 a share. Shares rise 4.6% to EUR35.45. (david.sachs@wsj.com)
(END) Dow Jones Newswires
April 27, 2024 04:20 ET (08:20 GMT)
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