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Vol.
3 :: No. 10
October, 2001 (Ashoj-Kartik)
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World Brief
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World Brief |
Boeing Co. has announced it would lay off as many as 20,000 and 30,000 workers in its commercial jet unit by the end of 2002 in anticipation of a sharp drop in orders from a troubled airline industry rocked by the September 11 attacks on New York and Washington.
Boeing, the world’s biggest jet maker, cut its forecasts for aircraft deliveries and said the downturn could run into 2003 as U.S. airlines reduce capacity after hijacked passenger planes slammed into the World Trade Center in New York and the Pentagon near Washington.
The planned job cuts would represent between about 20 and 30 percent of the 96,600 people employed by Boeing’s commercial jet unit. However, the company said cuts would also be made in the business group that provides support services.
Boeing also informed that it might deliver just 500 jets this year, down from an earlier forecast of 538.
The company slashed its projection for 2002 deliveries to the low 400s compared to the 510 to 520 previously forecast and stated that the downtrend would likely continue into 2003.
Boeing also made known the sharp reduction in its forecast sales was in line with the 20 percent capacity reduction by U.S. carriers and its assessment of global air traffic.
The Bush administration is moving forward with a government bailout of the U.S. airline industry, which was already reeling from a softening economy before the nation’s fleet was grounded for two days and costly new security steps ordered in the wake of the attacks.
Britain’s mobile phone giant Vodafone Group Plc plans to raise its stake in Japan Telecom Co. to 66.7 percent from the current 45 percent through a takeover bid this month, a daily newspaper has reported.
Vodafone – the world’s largest mobile phone operator – would invest about 1.9 billion dollars to buy shares in Japan’s number three telecommunications group, targeting all shareholders, according to the Nihon Keizai Shimbun.
East Japan Railway Co., the second-largest shareholder in Japan Telecom, was expected to agree to sell 10 percent of its 15.1 percent stake to Vodafone, the business daily claimed.
Chinese researchers are working on an aircraft that can fly five times faster than the speed of sound and travel the globe in just seven hours, state media said.
A Chinese "hypersonic" aircraft, able to cover 6,105 kilometers (3,815 miles) an hour, could be developed in ten to fifteen years, the Xinhua news agency said, citing the Chinese Academy of Science.
The plane, according to the academy, will be key in the world aviation and space field to develop hypersonic aircraft in the 21st century. It however, did not specify what technological breakthroughs made China optimistic about being able to develop the advanced aircraft.
The United States, Russia, France and Germany are all conducting research on hypersonic aircraft, without so far succeeding in producing a plane that can actually be used, the agency said.
Four ailing Japanese lenders have announced plans to merge operations and slash 6,300 jobs by next March to create a "super regional bank" with a combined capital of 9.6 billion dollars.
Middle-sized lender Asahi Bank Ltd. will join the Daiwo Group-Daiwo Bank Ltd; Kinki Osaka Bank Ltd. and Nara Bank Ltd to form Daiwa Bank Holdings Inc; which will be based in Japan’s second city Osaka, 400 kilometers west of Tokyo, it is informed.
The new group, described as a marriage of weaklings by analysts, will slash its workforce by 26.08 percent or 6,300 people from a combined workforce of 23,536 and close 227 branches nation wide.
Daiwa Bank Holding has said that it hopes the merger and restructuring will save 68 billion yen annually, which will help the group as it attempts to write off a mountain of bad loans.
The banks have said in a statement that they have reached a basic agreement over management integration, pending approval of shareholders and affected government agencies.
Japan’s decade long slump has already prompted four mega banking mergers as lenders find profits elusive amid harsh economic conditions and rising bankruptcies. The latest merger, involving the last independent major Japanese banks, completes a process that started in September 1999 when Fuji Bank Ltd, Dai-ichi Kangyo Bank Ltd. and Industrial Bank of Japan Ltd. joined forces to launch Mizuho holdings Inc.
General Motors Corp is expected to pay more than US$1 billion for a slice of bankrupt Daewoo Motor’s sprawling operations.
GM and Daewoo’s creditors are said to be very cautious in providing details of talks aimed at rescuing at least some of the 16 plants operated by South Korea’s third-largest automaker, one of the most prominent casualties of Asia’s 1997/98 economic crisis.
Meanwhile two of Daewoo Motor’s four domestic plants are reported to have stopped production on key subcontractors, demanding the government back more of the automaker’s unpaid bills to suppliers, halting deliveries of car parts.
Daewoo Motor spokesman Hwang Nam-chul said the automaker owes its part suppliers, numbering over 700 at the end of last year, around US$ 1.08 billion.
Production halted at Daewoo’s main Pupyong plant, which rolls out around 650 automobiles a day, and also at the Kunsan plant, with a daily output of 500 units, Hwang informed.
GM and Italian partner Fiat, which stands to gain a foothold in one of Asia’s largest and most insular auto markets, made an undisclosed offer for Daewoo in May and the two sides have been in talks to finalize the deal since.
Internet firm tom.com Ltd controlled by tycoon Li Kashing, said that it will acquire stakes in five media related companies in China for a mix of cash and shares.
The five acquisitions would strengthen the company’s outdoor media business in China, tom.com said in a statement adding that it had signed a memorandum of understanding to take up a 50 percent stake in Beijing Yanhuang by paying 13.06 million Hong Kong dollars (1.68 million US) in cash and issuing 8.98 million new tom.com shares.
The firm has also agreed to buy a 65 percent stake in China Media Network for 27.3 million dollars, with a call option to acquire the remaining 35 percent within six months from June 30, 2003.
It will also purchase a 50 percent stake in Tianming Advertising Co. for 15.09 million HK dollars in cash and with the issues of 6.92 million new shares.
In another agreement, tom.com said it planned to acquire a 60 percent stake in Qilu International Advertising Co. for 21.74 million in cash and 14.95 million new shares.
Tom.com will also acquire a 51 percent stake in Qingdao Chunyu Advertising Co. for 9.24 million in cash and the issue of 6.35 million new tom.com shares.
Tom.com posted a net loss of 148 million HK dollars in the six months to June 2001.
Indian software firm Satyam Computer Ltd. announced that it had signed a deal with US-based SEEC Inc. to deliver e-business solutions.
The agreement will see the companies jointly deliver component and web services solutions that combine Satyam’s strategic consulting and implementation services with SEEC’s products.
Satyam said that SEEC provides unmatched capabilities for developing next-generation enterprise applications and Web services that reuse, extend and integrate with existing information assets.
Nasdaq-listed SEEC Inc is a leading provider of component and Web services solutions for insurance and other industries.
Ravi Koka, president and chief executive officer of SEEC, said large corporations were striving to build more mbusiness systems using the Internet.
SEEC in its turn said that the two firms would provide unique capabilities for developing these new systems, offering customers a faster return on their e-business investments, and helping them achieve sustainable growth and profitability.
Satyam, India’s fourth largest software exporter, has presence in 35 countries and customer base of more than 300 global companies.
The world’s biggest insurance market Lloyd’s of London estimated its total losses from this September 11 attacks on the United States at US$1.92 billion on its largest single payout.
Lloyd’s is made up of wealthy individuals and companies, known as names, whose money allows the market to underwrite insurance policies and pay out claims. Many names were bankrupted in the 1980s and 1990s by disasters like the Piper Alpha oil rig explosion, a series of devastating hurricanes and deaths and illness linked to asbestos.
But Lloyd’s has undergone a major restructuring in recent years and strengthened its capital so it can better withstand major shocks. Lloyd’s said that while a figure of this size will have a significant impact on its market, the market’s strong capital base will absorb this loss. And added that the long-term impact of the attacks for the global insurance industry was uncertain.
To date only U.S. insurer Berkshire Hathaway Inc. has revealed a bigger exposure to the attacks - $2.2 billion before tax.
Lloyd’s said its exposure was equivalent to 12 percent of the market’s 2001 capacity, or its ability to write insurance. Lloyd’s is underpinned by $27 billion of assets, including money invested by members and that held in its central reserve fund.
Lloyd’s is the world’s second-largest commercial insurer and eighth-largest reinsurer, accounting for five percent of the world’s reinsurance market. The United States is Lloyd’s largest single market.
The Lloyd’s market accounts for 13 percent of global marine insurance and 23 percent of aviation insurance accounts for 40 percent of Lloyd’s business.
It is projecting losses for 1999 and 2000 of 1.39 billion pounds and 694 million pounds respectively. Insurers worldwide were forced to raise forecasts for damage claims from the attacks on U.S. targets. Germany’s Allianz AG, Europe’s largest by market value, increased its pre-tax claims forecast to one billion euros from 700 million euros before due to higher than expected claims on business interruption.
India’s largest car firm, Maruti Udyog Limited, an equal venture between the government and Japan’s Suzuki Motor Corp, has announced a loss of IRS 2.69 billion (57 million dollars) in the year ending March 2001.
The loss was unveiled just a day after the government announced it would reduce its equity in the company before March 2002 as part of effort to spur privatization.
Maruti had a turnover of IRS 92 billion in the year ending March 2001.
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