Good morning. David Meyer here, filling in for Alan.
Having two CEOs can be a tricky balancing act to pull off... so how about three? That’s the situation Air France-KLM finds itself in, for now at least.
The beleaguered carrier group recently lost CEO Jean-Marc Janaillac due to his inability to end long-running French strikes over pay, and now it’s replaced him with a trio: CFO Fr?d?ric Gagey, who is stepping up as group CEO; and the Air France and KLM CEOs, Franck Terner and Pieter Elbers, who are now also both deputy group CEOs. Meanwhile, former French employment and labor minister Anne-Marie Couderc has become executive chairman of the group’s board.
This setup is being presented as transitional, while the company finds a proper replacement for Janaillac. But it doesn’t seem like the triumvirate will be able to do much to solve the issue that brought Janaillac down: those strikes (which must be viewed in the context of wider pushback against President Emmanuel Macron’s attempted labor reforms).
“Regarding the ongoing labor dispute at Air France, the Air France-KLM Board of Directors confirms that the Air France CEO does not have a new mandate to take decisions that would jeopardize the growth strategy approved by the Air France-KLM Board of Directors,” the company said.
As Bloomberg notes, that leaves the unions with no-one to talk to. So whoever ends up taking Janaillac’s seat will find it just as hot as he left it--if not more so.
Air France-KLM, along with investors that include Delta and China Eastern, must be hoping this holding pattern is very brief indeed. More news below.
Cohen Payments Again
The exposure of corporate payments to Trump lawyer Michael Cohen seems to have sparked multiple retirements. Last week it was AT&T Washington policy chief Bob Quinn; now it's Novartis general counsel Felix Ehrat. "Although the contract was legally in order, it was an error. As a co-signatory with our former CEO, I take personal responsibility to bring the public debate on this matter to an end," Ehrat said. Fortune
Soros and Tesla
Soros Fund Management has become a major backer of Tesla, buying $35 million worth of its bonds. Tesla is hemorrhaging money and leans heavily on bond offerings right now. George Soros's fund, which recently dumped all its Amazon stock, has also sold its small stake in Twitter. Its latest regulatory filing shows, however, that it has been buying into Netflix. CNBC
The Korean outlook is suddenly not looking so sunny anymore, with the North cancelling talks with the South over U.S.-South Korean military drills, and threatening to pull out of its planned talks with President Trump. The North Koreans accuse the White House of trying to "push us into a corner and force only unilateral nuclear abandonment." North Korean foreign affairs minister Kim Kye Gwan seems particularly irked by recent comments from Trump's new national security adviser, John Bolton. CNN
The World Trade Organization has partially upheld a ruling against the EU over illegal aid to Boeing rival Airbus--a decision that may bring the U.S. closer to levying tariffs on EU products. "Unless the EU finally takes action to stop breaking the rules and harming U.S. interests, the United States will have to move forward with countermeasures on EU products," said U.S. trade representative Robert Lighthizer. However, the WTO still needs to rule on the issue of the U.S. illegally subsidizing Boeing, and if the EU wins that one then it gets to impose its own tariffs on U.S. goods. Financial Times
Around the Water Cooler
Vodafone's CEO for the last decade, Vittorio Colao, will step down in October. His resignation comes just after the European telecoms giant agreed to buy many of Liberty Global's EU assets for $21.8 billion, and after Vodafone Group profits returned to the black. "Vittorio Colao has certainly chosen a good time to bow out," said Megabuyte analyst Philip Carse. The Register
The Japanese economy has shrunk for the first time in two years. Economists expected an annualized contraction of 0.2%, but they got 0.6%. Both capital expenditure and private consumption are down. Some analysts suggest that Japan's poor Q1 2018 was caused by bad weather and a global slowdown in the demand for electronics, and that things may be getting better already this quarter. BBC
A New York law firm that has regularly worked on investigating and defending corporations against sexual harassment allegations is now facing harassment and discrimination claims of its own. Connie Bertram, the head of Proskauer Rose's labor and employment practice, has sued the company for paying her less than her male peers, and for top executives allegedly making objectifying and lascivious comments about her. NBC
Amazon, which bought Whole Foods last year, is giving its Prime members more deals and discounts at the grocery chain. Prime members will get an extra 10% off items that are on sale. Whole Foods is discounting more items as it tries to shake off its pricy reputation, and with Amazon having just announced an increase in Prime subscription costs, extra perks will be most welcome for subscribers. Fortune