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U.S. opens $3 billion aviation manufacturing wage subsidy program


A United Airlines passenger jet takes off with New York City as a backdrop, at Newark Liberty International Airport, New Jersey, U.S. December 6, 2019. REUTERS/Chris Helgren/File Photo

WASHINGTON, June 15 (Reuters) – The U.S. Transportation Department said Tuesday it had launched a $3 billion aviation manufacturing payroll subsidy program that will cover up to half of eligible companies’ compensation costs for as long as six months.

The program, funded by Congress, requires companies to commit to not conducting furloughs without employee consent or laying off employees covered by subsidies during the six-month period. Applications must be filed by July 13.

Companies eligible include aircraft, engine, propeller or component manufacturers and companies that repair or overhaul airplanes and parts.

The subsidy program cannot cover more than 25% of an employer’s total U.S. workforce as of April 2020 and can only cover employees with total annual compensation of $200,000 or less.

To qualify, a company must have involuntarily furloughed or laid off at least 10% of its total workforce, or have experienced at least a 15% decline in 2020 total operating revenues.

More than 100,000 jobs have been lost in the aerospace industry since the start of the COVID-19 pandemic, according to the Transportation Department. Before then, the U.S. aerospace industry was estimated to employ approximately 2.2 million workers, including 1.2 million who worked in various parts of the supply chain nationwide.

Boeing Co (BA.N), which has had extensive job cuts, Raytheon Technologies (RTX.N) and Spirit Aerosystems (SPR.N) did not immediately respond to questions about whether they are considering applying. General Electric’s (GE.N) aviation unit said it would not seek assistance from the program.

The International Association of Machinists and Aerospace Workers had strongly urged Congress to fund the program.

Congress has provided assistance to other aviation industry firms, including giving U.S. airlines $54 billion for payroll since March 2020 and that funding will continue to pay much of airline workers’ salaries through Sept. 30.

Reporting by David Shepardson
Editing by Chizu Nomiyama

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U.S. downgrades Mexico air safety rating, offers assistance


Screens show flight information at the almost empty Benito Juarez international airport, as the spread of the coronavirus disease (COVID-19) continues in Mexico City, Mexico, June 11, 2020. REUTERS/Edgard Garrido

The United States on Tuesday downgraded Mexico’s aviation safety rating, an action that bars Mexican carriers from adding new U.S. flights and limits the ability of airlines to carry out marketing agreements with one another.

The U.S. Federal Aviation Administration, in announcing the action, said it is “fully committed to helping the Mexican aviation authority improve its safety oversight system to a level that meets” international standards. The agency also said it is “ready to provide expertise and resources” to resolve issues raised in the safety assessment process.

The FAA downgraded Mexico – the most common destination for U.S. air travelers last month – from a level called Category 1, which signifies compliance with international standards, to Category 2, the lowest level.

That rating, according to the FAA, means Mexico lacks “necessary requirements to oversee the country’s air carriers in accordance with minimum international safety standards, or the civil aviation authority is lacking in one or more areas such as technical expertise, trained personnel, record keeping, inspection procedures or resolution of safety concerns.”

The FAA action sent shares in Mexican airlines down.

A similar FAA downgrade of Mexico in 2010 over suspected shortcomings within its civil aviation authority lasted about four months. Only a few countries currently are rated Category 2 by the FAA, including Bangladesh, Pakistan, Thailand and Malaysia.

Plans for the FAA downgrade were first reported on Friday by Reuters. read more

The FAA said its reassessment of the Agencia Federal de Aviacion Civil from October 2020 through February identified several areas of non-compliance with minimum international safety standards.

The Mexican government did not immediately respond to a request for comment.

Mexican President Andres Manuel Lopez Obrador on Monday had urged U.S. authorities not to downgrade Mexico, arguing that his country was complying with all relevant norms.

The downgrade means current U.S. service by Mexican carriers is unaffected, but they cannot begin new flights. U.S. airlines also will no longer be able to market and sell tickets with their names and designator codes on Mexican-operated flights and the FAA will increase scrutiny of Mexican airline flights to the United States.

Mexico has been a top vacation spot for U.S. travelers during the COVID-19 pandemic, spurring U.S. airlines to redirect capacity they had previously flown to Europe before transatlantic travel restrictions were imposed last year.

Mexico was the by far the busiest foreign air destination in April – with nearly 2.3 million passengers on U.S.-Mexico flights – more than three times that of the Dominican Republic, the next most-popular country destination, according to industry data.

Delta Air Lines said on Tuesday an FAA downgrade was not about (DAL.N) its partner Aeromexico (AEROMEX.MX) and that the action will have little impact on customers. read more

Delta said it will need to reissue reservations for some Aeromexico operated flights that were booked through Delta.

“This is not about Aeromexico. This is about the Mexican version of the FAA not having some of the right protocols in place,” Delta president Glen Hauenstein said at a Wolfe Research conference.

Delta has a codeshare arrangement with Aeromexico enabling the two air carriers to sell seats on each other’s flights. Delta will be forced to remove its codes on Aeromexico flights following the downgrade, though Aeromexico could continue to code on Delta flights and members of Delta’s loyalty program could still receive SkyMiles on Aeromexico flights that would normally carry the code, Hauenstein added.

Pablo Casas, general director of the National Institute of Legal-Aeronautical Research think tank, said the downgrade could impact the Mexican economy and carriers trying to recover from the business effects of the pandemic.

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EXCLUSIVE China’s Tencent in talks with U.S. to keep gaming investments -sources


Tencent Holdings Ltd (0700.HK) is negotiating agreements with a U.S. national security panel that would allow it to keep its ownership stakes in U.S. video game developers Riot Games and Epic Games, according to people familiar with the matter.

Tencent has been in talks with the Committee on Foreign Investment in the United States (CFIUS), which has the authority to order the Chinese technology giant to divest U.S. holdings, since the second half of last year, the sources said.

CFIUS has been looking in to whether Epic Games’ and Riot Games’ handling of the personal data of their users constitutes a national security risk because of their Chinese ownership, the sources added.

Tencent owns a 40% stake in Epic Games, the maker of popular video game Fortnite. Tencent also bought a majority stake in Riot Games in 2011 and acquired the rest of the company in 2015. Riot Games is the developer of “League of Legends,” one of the world’s most popular desktop-based games.

Tencent is negotiating risk-mitigation measures with CFIUS so it can keep its investments, according to the sources. The details of the proposed measures could not be learned. They typically involve ringfencing the owner of a company from operations that have national security implications. They often call for the appointment of independent auditors to monitor the implementation of these agreements.

One of the sources said Epic Games has not been sharing any user data with Tencent.

The sources cautioned there is no certainty that Tencent will clinch deals to keep its investments and asked not to be identified because the matter is confidential.

A Tencent logo is seen in Beijing, China September 4, 2020. REUTERS/Tingshu Wang

Tencent, Epic Games and a CFIUS representative at the U.S. Treasury Department declined to comment.

A Riot Games spokesman said the Los Angeles-based company operates independently of Tencent and that it has implemented “industry-leading practices” to protect player data. He declined to comment on Riot Games’ discussions with CFIUS.

CFIUS has been cracking down on Chinese ownership of U.S. technology assets in the last few years, amid an escalation in tensions between Washington and Beijing over trade, human rights and the protection of intellectual property. U.S. officials have expressed concerns that the personal data of U.S. citizens could end up in the hands of China’s Communist Party government.

President Joe Biden’s administration has maintained the hawkish stance against China inherited in January from his predecessor Donald Trump, albeit with more of a focus on geopolitical issues such as the future of Taiwan and Hong Kong, as well as China’s persecution of the Uyghurs in Xinjiang.

Yet many key CFIUS roles have not yet been staffed. This has provided a reprieve to China’s ByteDance, which was ordered by Trump last year to sell its popular short video app TikTok but balked at a transaction that would have involved Oracle Corp (ORCL.N) and Walmart Inc (WMT.N). CFIUS has not sought to enforce the divestiture order under Biden.

Epic is locked in a legal fight with Apple Inc (AAPL.O) over access to the iPhone maker’s app store. It alleges that Apple forces developers to use its in-app payment systems – which charge commissions of up to 30% – and to submit to app-review guidelines that discriminate against products that compete with Apple’s own.

Apple argues that Epic Games broke their contract when it introduced its own in-app payment system in Fortnite to circumvent Apple’s commissions. It says the way it runs the app store inspires trust in consumers to open up their wallets to unknown developers. read more

Tencent’s vast businesses include video games, content streaming, social media, advertising and cloud services. China has in recent months sought to curb the economic and social power of Tencent and other internet companies such as Alibaba Group Holding Ltd (9988.HK), in a clampdown backed by President Xi Jinping. Reuters reported last week that Beijing was preparing a substantial antitrust fine for Tencent. read more

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