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Boeing faces cash crunch as machinists’ strike weighs on production

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Boeing faces cash crunch as machinists’ strike weighs on production

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A strike at Boeing has cast doubt on the company’s production goals for the 737 Max and raised the spectre of a cash crunch, as its chief financial officer on Friday said the company would fight to preserve its investment-grade credit rating.

Boeing’s investment-grade rating is crucial to its operations and losing it would be a serious blow, meaning the company could face a punishing increase in borrowing costs given a debt load that has swelled to $53bn. The options to keep it would likely include some kind of securities offering to shore up cash.

About 33,000 workers with the International Association of Machinists District 751 walked out at 12:01am on Friday after rejecting a tentative agreement with the company. Chief financial officer Brian West said Kelly Ortberg, the new chief executive is “personally engaged” in addressing the situation.

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In June and July Boeing had been building roughly 25 Maxes a month, with plans to raise that to 38 by the end of the year. But West told investors on Friday that “now, obviously, that is going to take longer”.

“I can’t comment on 38 per month,” he said. “That rate is so dependent on the duration of the strike.”

Boeing’s share price closed down nearly 4 per cent at $156.77.

The company has slowed production of the Max this year as it tries to improve the quality of its manufacturing process. Boeing has been scrutinised by regulators, prosecutors and the flying public since January when a door panel, which was missing several bolts, blew off a commercial jet midflight. The US Federal Aviation Administration has capped the group’s production at 38 a month.

The slowdown has cost Boeing billions in free cash flow. A lengthy strike would impede the company’s ability to deliver planes to customers, further hurting its cash flow.

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The credit rating agencies are closely watching Boeing’s deliveries and ability to generate cash. All three have the group rated one notch above junk, on a negative outlook. Moody’s on Friday said it had placed the company on review for a downgrade.

“Boeing’s investment-grade credit rating has limited headroom for a strike,” said Fitch Ratings analyst Dino Kritikos. “If the current strike lasts a week or two, it is unlikely to pressure the rating. However, an extended strike could have a meaningful operational and financial impact, increasing the risk of a downgrade.”

When asked if Boeing may raise debt or equity before early 2025, West said the company had two priorities: keeping its investment-grade rating and stabilising its supply chain and factory floor.

“That last objective just got harder based on last night,” he said. “So we are perfectly comfortable to supplement our liquidity position to support these two objectives.”

West said it has told suppliers which are not behind on their deliveries to stop shipping to Boeing’s factories in Renton, Washington. Supply schedules remain untouched for the group’s South Carolina plant, which builds the 787 and is not unionised.

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The work stoppage is “disappointing”, West said, “because things were starting to move in the right direction”.

“We’re working every responsible lever to do what’s right to conserve cash,” he said. “Our expectation — and I don’t have any timetable — is to want to get back to the table and hammer out a deal.”

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'Baby Reindeer' is an Emmy favorite — and facing a lawsuit at the same time

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'Baby Reindeer' is an Emmy favorite — and facing a lawsuit at the same time

Richard Gadd as Donny Dunn (left) and Jessica Gunning as Martha (right) in Netflix’s Baby Reindeer.

Ed Miller/Netflix


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Ed Miller/Netflix

Netflix’s darkly comic Baby Reindeer was one of the breakout hits of 2024. It’s an Emmy favorite, with 11 nominations ahead of Sunday night’s awards, including for best limited or anthology series. But it’s also in the midst of a legal battle, brought on by a woman who believes she inspired a main character in the show.

Scottish comedian Richard Gadd, wrote, starred in, and executive produced the series, which he first developed for the stage. In Baby Reindeer, which spent three weeks as the top English-language TV show on Netflix this spring, he relates his experiences of being a struggling standup comic and bartender, stalked by a woman named Martha. In the story, they meet at a London pub where he works. She flirts with his character, Donny Dunn, and calls him her “baby reindeer” in a series of emails, DM’s and voicemails.

In a video for Netflix and in statements to the media, Gadd has said the story is autobiographical, and that he went to great lengths to disguise the real-life identities of the characters. In the show, he depicts his own tortured history and behavior, and shows Martha sexually assaulting him and attacking his lover. On-screen, Martha is portrayed as a convicted stalker who’s spent time in prison.

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The ‘real’ Martha?

After Baby Reindeer began streaming, a Scottish woman named Fiona Harvey claimed the character Martha was based on her. On the TV show Piers Morgan Uncensored in May, Harvey called the show “obscene,” and “a work of fiction, it’s a work of hyperbole.” She said she did meet Gadd a few times, but never sent him as many messages as Martha did in the show; she said she did have a toy reindeer, but “it was a joke.”

She’s suing Netflix for $170 million for defamation and has asked for a jury trial in California. Central to the lawsuit, filed in June in the Central District of California, is the fact that Baby Reindeer labels the show’s events a “true story” in the first episode — which the suit argues is “the biggest lie in television history.” Harvey claims, among other things, that she’s never been convicted of a crime and never sexually assaulted Gadd.

As a result of being depicted and “defamed” in Baby Reindeer, Harvey “was immediately identified by members of the public and received hate mail and death threats so intense that Harvey suffers from insomnia, panic attacks, and has a general fear of going outside,” according to a plaintiff’s statement in a recent filing in the case.

Netflix, which distributed the series, told NPR in a statement that the network intends to “defend this matter vigorously and to stand by Richard Gadd’s right to tell his story.”

Questions about the character — even before the lawsuit

Even before Harvey’s lawsuit, the character of Martha seemed to be raising questions. In May, Netflix’s Senior Director of Public Policy, Benjamin King, told the U.K.’s Culture, Media and Sport Select Committee that Martha was based on a “convicted stalker” – but later wrote to the committee chair to clarify: “The person on whom the show is based – who we have at no point sought to identify – was subject to a court order rather than a conviction.” According to a Netflix spokesperson, this letter “does not impact our legal position.”

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Though Baby Reindeer‘s first episode opens by calling the show a “true story,” each episode includes a line in the credits noting that, “This program is based on real events: however, certain characters, names, incidents, locations, and dialogue have been fictionalized for dramatic purposes.”

Gadd submitted a written declaration in July saying that the series is a fictionalized retelling, not a documentary.

The network’s attorney Marvin Putnam filed a statement in court that while Baby Reindeer “is inspired by Gadd’s real-life trauma and emotions, the characters, scenes, dialogue, and events convey Gadd’s story in an imaginative style.”

In the latest court filings, Putnam wrote, “Harvey did, in fact, harass and stalk Gadd in real life. She sent him thousands of emails, handwritten letters, and social media posts, and left him hours of voicemails. Many of those communications, which Gadd provided to the police, included prurient, violent and astoundingly racist, xenophobic, homophobic, and otherwise hateful content.”

Netflix’s motions to strike and dismiss the lawsuit are still pending before the court.

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US targets trade loophole used by ecommerce groups Temu and Shein

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US targets trade loophole used by ecommerce groups Temu and Shein

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The Biden administration is moving to close a trade loophole used by platforms like Temu, Shein and AliExpress to flood the US with cheap Chinese products.

The China-founded ecommerce groups have supercharged their growth by shipping cheap packages direct to American consumers by air and claiming what is known as the de minimis exemption to skip paying import tariffs on the shipments.

But the White House on Friday proposed new rules that would exclude a wide array of goods from being able to claim the exemptions, which extends to shipments of less than $800 in value. The proposed regulations will also make claiming duty free status more complex.

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The US said the number of shipments entering the country via the de minimis rule had jumped from about 140mn a year a decade ago to more than 1bn a year today. Officials said the vast number of parcels made it harder to block shipments of faulty products and illegal drugs like fentanyl.

The Biden administration’s proposed rules, which will go through a public comment period before being finalised, threaten the business model that the Chinese groups have used to undercut and gain market share from online retailer Amazon.

Amazon sellers typically ship their goods in bulk to its warehouses, forcing them to pay import taxes, which became more expensive during the Trump administration when a large swath of Chinese imports were hit with higher tariffs. 

The new US rules aim to ensure products that ship direct-to-consumer cannot avoid the higher duties, which the White House said covered 40 per cent of imports from China, including 70 per cent of textiles.

The higher taxes on clothing will be a particular challenge for fast-fashion group Shein, which is vying to list shares in London. The Nanjing-founded company has yet to receive permission from Chinese officials to sell shares abroad.

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US-listed depository receipts in Temu parent PDD Holdings were down about 2 per cent in Friday morning trading on Wall Street, while those in AliExpress parent Alibaba were down 1.3 per cent. The groups have begun to ship and warehouse more of their products locally in expectation that Washington would close the loophole.

Kim Glas, head of the National Council of Textile Organisations trade association, applauded the Biden administration’s announcement and said the existing rules “rewards Chinese ecommerce platforms and cheaters with a free trade agreement”.

“We also underscore the need for Congress and the administration to immediately eliminate this disastrous loophole once and for all in the coming weeks,” she said.

The US action follows similar concerns in the European Union, where Brussels is scrutinising the tax-free exemptions amid a similar onslaught of Chinese parcels. 

Temu said its “growth does not depend on the de minimis policy” and that it was reviewing the rule proposals, while Shein said “We look forward to working with all stakeholders on reform.” Alibaba did not immediately respond to a request for comment.

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“American workers and businesses can outcompete anyone on a level playing field, but for too long, Chinese ecommerce platforms have skirted tariffs by abusing the de minimis exemption,” US commerce secretary Gina Raimondo said.

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Putin May Amp Up Sabotage In Response to UK Missiles in Russia, Officials Say

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Putin May Amp Up Sabotage In Response to UK Missiles in Russia, Officials Say

Kremlin threats to NATO countries over Ukraine potentially using western-made missiles to hit military targets in Russia would likely take the form of increased sabotage, cyber and other hybrid attacks, said US and European officials.

Russia could also retaliate by directly or indirectly targeting US troops in other areas like the Middle East, another person said.

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