European jobless rate up modestly, Germany mulls stimulus

German Chancellor Angela Merkel and German Finance Minister and Vice-Chancellor Olaf Scholz arrive to address a news conference after coalition meetings over stimulus measures to reboot post-coronavirus economy, at the Chancellery in Berlin, Germany June 3, 2020. (Reuters)
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Updated 04 June 2020

European jobless rate up modestly, Germany mulls stimulus

  • Europe’s rise in unemployment has been moderate by international standards

BERLIN: Europe’s unemployment rate ticked up modestly last month, contained by use of labor programs that have kept millions of workers on payrolls, official data showed Wednesday.

The jobless rate in the 19 countries that use the euro rose to 7.3 percent in April, the first full month when pandemic lockdowns hit the continent, from 7.1 percent in March, statistics agency Eurostat said Wednesday.

Europe’s rise in unemployment has been moderate by international standards because employers are making extensive use of government-backed short-time work programs that allows them to keep employees on the payroll while they await better times.

In Germany, Europe’s largest economy, the federal labor agency pays at least 60 percent of the salary of employees who are on reduced or zero hours. Some 10.66 million people were registered for that program in March and April, and 1.06 million followed in May, the labor agency said — though it stressed that this doesn’t mean all of them were put on short-time work. Germany has a population of 83 million.

In the US, which has fewer automatic furlough schemes than Europe, the jobless rate has rocketed to almost 15 percent from 4 percent before the crisis.

The European jobless figures, however, also appear flattered by the fact that some unemployed people likely stopped looking for work and stopped counting as jobseekers.

On Wednesday, Chancellor Angela Merkel’s coalition was spending a second day hammering out a stimulus package meant to help kick-start the economy. It’s expected to be worth as much as €80-€100 billion ($89-112 billion).

Germany started loosening coronavirus restrictions on April 20, about a month after they were introduced, and the easing has gathered pace since. However, the economy went into a recession in the first quarter and that is expected to deepen in the current quarter.


American Airlines threatens to cancel some Boeing 737 MAX orders

Updated 11 July 2020

American Airlines threatens to cancel some Boeing 737 MAX orders

  • American’s stand comes as airlines are finding financing increasingly difficult and expensive
  • Airlines have canceled orders for more than 400 MAX planes so far this year

DALLAS: American Airlines is warning Boeing that it could cancel some overdue orders for the grounded 737 MAX unless the plane maker helps line up new financing for the jets, according to people familiar with the discussions.
American’s stand comes as airlines are finding financing increasingly difficult and expensive as the coronavirus pandemic has crippled their operations.
American had 24 MAX jets before they were grounded in March 2019. It has orders for 76 more but wants Boeing to help arrange financing for 17 planes for which previous financing has or will soon expire, according to three people who spoke Friday on condition of anonymity to discuss private talks between the companies.
If the companies can’t reach an agreement, American could use MAX financing that is about to expire to pay for jets from Boeing’s archrival Airbus, one of the people said.
Chicago-based Boeing said in a statement that it is working with customers during “an unprecedented time for our industry as airlines confront a steep drop in traffic,” but did not comment on the talks with American. The Fort Worth, Texas-based airline declined to comment.
News of American’s threat to cancel some orders was first reported by The Wall Street Journal.
The situation underscores the strain facing airlines during the coronavirus pandemic. It has grown more difficult and expensive for them to finance planes. American’s negotiating stance doesn’t reflect a loss of confidence in the plane’s safety, the sources said.
The MAX was Boeing’s best-selling plane before crashes in Indonesia and Ethiopia killed 346 people and led regulators around the world to ground all MAX jets.
The coronavirus pandemic has compounded Boeing’s problems by causing a sharp drop in air travel and a loss of interest in new planes. Nearly 40 percent of the world’s passenger jets are idled, according to aviation data supplier Cirium, as most airlines have more planes than they need until travel recovers.
That has made it more difficult to finance planes. United Airlines and Southwest Airlines found foreign lenders who agreed in April and May to buy MAX jets and lease them to the airlines, but those carriers are in stronger financial situations than American.
The 17 planes in dispute were supposed to have been delivered to American at least a year ago. That has given the airline the option of canceling the order without penalty and recovering its down payments now, according to one of the people familiar with the matter. The deliveries have been delayed while Boeing works to fix a flight-control system suspected of playing a role in the crashes.
Airlines have canceled orders for more than 400 MAX planes so far this year, and 320 are no longer certain enough to count in Boeing’s backlog. Some were dropped because the airline buyer ran into financial problems, while others were swapped for different Boeing planes. The company had taken 4,619 orders through May.
Air travel in the US fell about 95 percent from the beginning of March until mid-April. Traffic has recovered slightly since then, but remains down more than 70 percent from a year ago. With little revenue coming in, airlines are slashing spending and preparing to furlough thousands of workers this fall.
American has accepted $5.8 billion in federal aid to pay workers through Sept. 30, reached tentative agreement on a $4.75 billion federal loan, and lined up billions more in available cash from private lenders to survive the travel downturn.