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Boeing’s CEO, Kelly Ortberg, has issued a stark warning as the aerospace giant grapples with soaring losses estimated at approximately $6 billion (£4.6 billion). Ortberg, who assumed leadership in August, emphasized that the company is at a “crossroads” and is working “feverishly” to stabilize its operations and repair its tarnished reputation following a series of manufacturing and safety concerns.

The company’s challenges are further compounded by a strike involving over 30,000 workers in the United States, which has persisted for more than a month and significantly disrupted the production of several aircraft models. As workers prepare to vote on Wednesday regarding Boeing’s latest pay and benefits proposal, the company faces mounting pressure to reach a resolution. Ortberg expressed optimism that the proposed plan, which includes a 35% pay increase over four years, will be accepted, although he acknowledged that substantial obstacles remain in the path to resetting the business.

“This is a big ship that will take some time to turn, but when it does, it has the capacity to be great again,” Ortberg stated in prepared remarks. He further noted that Boeing is “saddled with too much debt” and has disappointed customers due to performance lapses across its operations.

The current crisis for Boeing intensified in January when a dramatic mid-air incident involving a passenger plane raised safety concerns. Additionally, the company’s space division faced setbacks when its Starliner vessel was forced to return to Earth without carrying astronauts, casting further doubt on its reliability.

The ongoing strike has exacerbated Boeing’s issues, leading to a significant slowdown in production rates. The commercial aircraft segment reported operating losses of $4 billion in the last quarter, while the defense unit incurred losses nearing $2.4 billion.

Despite these challenges, Ortberg reassured investors that Boeing maintains a robust backlog of approximately 5,400 aircraft orders. However, he cautioned that restarting production facilities after the strike concludes will be a complex process. “It’s much harder to turn this on than it is to turn it off,” he warned, underscoring the need for precision in managing the transition.

Boeing also announced earlier this month plans to cut roughly 10% of its workforce, while thousands of employees are already on a rolling furlough due to the ongoing strike, impacting suppliers as well. Ortberg emphasized that his primary focus is on instigating a “fundamental culture change” within the company. “We need to prevent the festering of issues and work better together to identify, fix, and understand root causes,” he stated.

As Boeing navigates this turbulent period, the company faces the dual challenge of resolving labor disputes and restoring confidence in its operations amid growing financial pressures.

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BMW Reports Sharp Profit Drop Amid Recall and Slump in Chinese Sales

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BMW AG, the iconic German automaker, has reported a dramatic decline in quarterly profits, weighed down by a massive vehicle recall and slumping sales in China. The company, which includes the Mini and Rolls-Royce brands, saw its pre-tax profits fall by nearly 80% to €838 million for the three months ending 30 September, compared to the same period last year.

Revenue also took a significant hit, dropping over 15% year-on-year, while return on sales plummeted from 10.6% to just 2.6%, reflecting a tough quarter for the company.

The poor performance can largely be attributed to a global recall of 1.5 million vehicles due to a faulty integrated braking system (IBS) supplied by Continental AG. The recall led to a drop in vehicle deliveries and higher warranty costs, which “notably impacted earnings,” according to BMW’s financial report. In total, deliveries in the automotive segment were down by 13%, with a particularly steep decline of almost 30% in the Chinese market.

“The challenging market environment in China is also having an effect. Despite the stimulus measures implemented by the Chinese government, the general economy remains affected by low consumer confidence, which is having a knock-on effect on sales volumes,” the company said in its statement.

However, BMW’s electric vehicle (EV) sales showed strong growth, providing some positive news amid the downturn. The company reported a 19.1% increase in battery electric vehicle (BEV) sales for the first nine months of 2024. The rise in EV sales is expected to continue, with BMW anticipating that lower commodity prices, particularly for battery materials and precious metals, could further boost this segment.

Despite challenges in China and potential trade tariff impacts from the upcoming US administration, BMW is finding some relief in its European markets. While no individual market showed growth in the quarter, vehicle sales in Europe declined by just 1% from July to September, and overall deliveries for the year-to-date grew by 1.4%.

Looking ahead, BMW expects further challenges in the remainder of 2024. The company predicts a continued drop in profits due to the lingering effects of the IBS recall and ongoing low consumer confidence in China. “The delivery stops related to the supplied Integrated Brake System (IBS) and a sustained drop in consumer confidence in China will continue to have an impact for the rest of the reporting year,” BMW warned.

The automaker has also indicated that deliveries are expected to remain lower in the final quarter of the year, with no significant recovery in sight for the Chinese market.

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Bank of England’s Rate Cut May Stall Amid Inflation Concerns Following Budget

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The Bank of England’s latest decision to cut interest rates may mark the last reduction for a while, as new forecasts suggest inflation could climb following recent Budget measures. The Bank cut its interest rate from 5% to 4.75%, a widely anticipated move, but it signaled caution over future cuts due to expected inflationary pressures from the Budget’s spending increases.

Governor Andrew Bailey indicated that while rates are set to decline gradually, any additional cuts would be approached conservatively. “We must be careful not to reduce rates too quickly or by too much,” Bailey said, hinting that the Bank is likely to keep rates steady during its December meeting. Investors, in turn, now anticipate no further reductions this year.

Despite falling below the Bank’s 2% target in September, inflation is expected to tick up in the near term, partly driven by higher gas and electricity prices last month. The Bank previously forecast inflation would stabilize at 2% by 2026, but this target has now been pushed back to 2027.

The Monetary Policy Committee (MPC) voted 8-1 in favor of the recent rate cut, with member Catherine Mann dissenting. Mann argued that the Budget’s provisions, such as VAT on private school fees and a national bus fare cap, are likely to spur higher inflation and suggested caution in lowering rates further.

Sarah Coles, head of personal finance at Hargreaves Lansdown, noted that the new Budget introduces additional borrowing, a higher national living wage, and employer National Insurance contribution increases, all of which could drive inflation. “The Bank of England has delivered one more cut, but we don’t expect any further reductions soon. With these budgetary changes, the Bank remains wary of pushing rates down too much,” Coles said.

The slower pace of rate reductions means mixed news for consumers. Savers could see slightly higher returns, but mortgage borrowers may face continued challenges, as average mortgage rates remain high. Moneyfacts, a financial data company, reported that the current average two-year fixed mortgage rate is 5.4%, while a five-year fixed rate is 5.11%.

Over a million mortgage borrowers on tracker or variable-rate deals will see a decrease in their payments due to the recent cut. However, mortgage rates are still high compared to much of the past decade, putting added pressure on household budgets.

The rate cut also impacts savers, as returns on accounts may drop. Current easy-access accounts are averaging around 3% interest annually, and some consumers are concerned about declining returns. Claire Hopwood and Gavin Laking, who are saving for a house purchase, said recent cuts have already affected their savings. “We enjoyed a 4.5% rate, but now it’s dropped to 3.9%,” Laking noted.

Last week’s Budget included £28 billion in additional annual borrowing and £40 billion in tax-raising measures, with the largest being a rise in employer National Insurance contributions. Economists say that companies might pass these costs on to consumers, potentially slowing wage growth.

The Bank also adjusted its growth forecast for 2025 and projected that unemployment could fall from 4.7% to 4.1%, reflecting a cautiously optimistic outlook on the economic impact of the Budget’s increased spending. Chancellor Rachel Reeves welcomed the rate cut, acknowledging it as a relief for families but stressing the significant challenges many still face following previous fiscal policies.

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Netflix Offices in Paris and Amsterdam Raided in Tax Fraud Investigation

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Paris, France – French and Dutch authorities conducted raids on Netflix offices in Paris and Amsterdam as part of a collaborative investigation into alleged tax fraud, according to French judicial sources. The investigation, which began in November 2022, focuses on potential tax evasion and unreported earnings by the global streaming giant.

Netflix, headquartered in Los Gatos, California, has yet to comment on the raids directly, but the company reiterated its commitment to adhering to tax laws in every region it operates. The office in Amsterdam, Netflix’s European headquarters, oversees operations across Europe, the Middle East, and Africa.

The investigation in France is being led by the National Financial Prosecutor’s Office (PNF), a specialized unit responsible for handling high-profile financial crimes. Officials from the PNF are reportedly scrutinizing Netflix for allegedly “covering up serious tax fraud and off-the-books work.” The inquiry includes examining Netflix’s tax filings for 2019, 2020, and 2021, years during which the company is suspected of minimizing reported profits to reduce its tax burden in France.

Authorities in the Netherlands conducted simultaneous searches at Netflix’s Amsterdam office, working closely with French investigators. Officials from both countries have been coordinating efforts for months, according to French judicial sources.

The investigation was initially prompted by concerns that Netflix may have shifted revenue from France to the Netherlands, allowing it to benefit from more favorable tax arrangements. French media outlet La Lettre reported last year that until 2021, Netflix declared its French-generated revenue in the Netherlands, effectively lowering its tax payments in France. After changing this practice, Netflix reported a sharp increase in revenue in France, jumping from €47.1 million ($51.3 million) in 2020 to €1.2 billion in 2021.

However, the authorities are now investigating whether Netflix continued efforts to limit reported profits after 2021. If confirmed, such actions could indicate an ongoing strategy to minimize tax obligations.

Netflix launched its streaming service in France over a decade ago, opening a dedicated Paris office in 2020. Since then, the company has garnered around 10 million subscribers in the country, according to AFP news agency, making it one of the largest streaming platforms in the region.

The outcome of the investigation could have significant implications, as European governments have been increasing pressure on tech giants to ensure fair tax practices. The European Union has previously taken steps to address tax loopholes and boost transparency, particularly concerning companies with multinational operations that generate significant revenue from European consumers.

This investigation marks one of the latest moves by European authorities to address concerns about tax evasion by large technology firms. Depending on the findings, Netflix may face financial penalties or be required to alter its financial reporting practices in the region. The developments also come amid a broader push by European governments to standardize corporate taxation and prevent revenue shifting across borders.

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