Airbus Turbulence, Boeing Appeal
EADS, the parent of Airbus, books its first annual loss in five years. Boeing cries foul over the Air Force
NEWS AT A GLANCE
EADS reports first loss in five years
European Aeronautic Defence & Space Co., the parent of Airbus, reported a worse-than-expected $685 million loss for 2007, its first annual loss since 2002. The company was hurt by delays, especially with the Airbus A380 superjumbo jet, and the weak dollar. (Reuters) EADS posted a $397 million profit in the fourth quarter of 2007, however, and projected a return to annual profitability in 2008. (MarketWatch) Before the earnings report, news leaked that EADS is looking to acquire a U.S. company this year. (AFP in CNNMoney.com) “They are looking at U.S. takeovers to help balance the effect of the dollar,” said BGC Partners analyst Howard Wheeldon. (Bloomberg)
Boeing protests tanker deal
Boeing said it is filing a formal protest over the U.S. Air Force’s decision to award a $35 billion aerial refueling plane contract to Northrop Grumman and European archrival EADS. (Reuters) Boeing’s appeal will suspend the contract for up to 100 days, during which Boeing has to convince the Government Accountability Office, the investigative arm of Congress, that the Air Force violated Pentagon procurement rules or U.S. law. “I don’t think their chances are good,” said Jon Kutler at Admiralty Partners Inc. The Air Force “dotted every ‘i’ and crossed every ‘t’ because they knew how politically charged the whole thing would be.” (Bloomberg)
Societe Generale raises $8.5 billion
Societe Generale, France’s second-largest bank, raised $8.5 billion in a share offering, as it works to recover from an enormous trading scandal. The offering was oversubscribed by 184 percent, the bank said. (AP in Yahoo! Finance) Its success could help Societe Generale avoid a takeover. In the offering, existing shareholders were given the right to buy one new share at a discount for every four shares they owned. (MarketWatch) “The price was very interesting if you were an existing shareholder,” said Emmanuel Soupre at Neuflize Gestion in Paris. “It’s not a bad bank. It had a serious incident, but that doesn’t change the fact that it still makes large profits.” (Bloomberg)
The morning cup of coffee is getting more expensive. World coffee prices have jumped 23 percent in the past six months, fueled by speculative investing in commodities, and the weak dollar makes importing the bean somewhat more expensive. But without a drop in supply, the price hikes in U.S. grocery stores and coffee shops, which started with Starbucks last July, are hard to explain. “There is nothing fundamentally that suggests coffee should be higher,” said coffee buyer Jay Isais at Los Angeles-based Coffee Bean & Tea Leaf. Prices for low- to medium-quality beans are rising faster than for premium beans. (Los Angeles Times, free registration)
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