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U.S. court rejects J&J bankruptcy strategy for thousands of talc lawsuits

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Jan 30 (Reuters) – A U.S. appeals court on Monday shot down Johnson & Johnson’s (JNJ.N) attempt to offload tens of thousands of lawsuits over its talc products into bankruptcy court. The ruling marked the first major repudiation of an emerging legal strategy with the potential to upend U.S. corporate liability law.

J&J is among four major companies that have filed so-called Texas two-step bankruptcies to avoid potentially massive lawsuit exposure. The tactic involves creating a subsidiary to absorb the liabilities and to immediately file for Chapter 11.

The court ruled the healthcare conglomerate improperly placed its subsidiary into bankruptcy even though it faced no financial distress. J&J’s two-step sought to halt more than 38,000 lawsuits from plaintiffs alleging the company’s baby powder and other talc products caused cancer. The appeals court ruling revives those lawsuits.

Reuters last year detailed the secret planning of Texas two-steps by Johnson & Johnson and other major firms in a series of reports exploring corporate attempts to evade lawsuits through bankruptcies.

Monday’s decision by the U.S. 3rd Circuit Court of Appeals in Philadelphia dismissed the bankruptcy filed by the J&J subsidiary in 2021. Before the filing, J&J had faced costs of $3.5 billion in verdicts and settlements.

J&J shares closed down 3.7% – the biggest one-day percentage decline in two years. The company said in a statement that it would challenge the ruling and that its talc products are safe.

Plaintiffs attorneys and some legal experts have argued the two-step could set a dangerous precedent, providing a blueprint for any corporation to easily avoid undesirable litigation. The appeals court decision could force companies considering the strategy to more carefully consider its risks, two legal experts said.

“It is a push back on the notion that any company anywhere can use the same tactic to get rid of their mass tort liability,” said Lindsey Simon, a professor at University of Georgia School of Law.

Bankruptcy filings typically suspend litigation in trial courts, forcing plaintiffs into often time-consuming settlement negotiations while leaving them unable to pursue their cases in the courts where they originally sued.

The 3rd Circuit ruling does not directly impact three other Texas two-step bankruptcies, filed by subsidiaries of Koch Industries-owned Georgia Pacific, global construction giant Saint-Gobain(SGOB.PA), and Trane Technologies (2IS.F). Those cases fall under the jurisdiction of the 4th Circuit appeals court. 3M (MMM.N) attempted a similar maneuver, which is currently pending in the 7th Circuit.

Those companies did not comment on the 3rd Circuit ruling or did not immediately respond to inquiries. All have previously defended the bankruptcies as the best way to fairly compensate claimants. Plaintiffs’ attorneys have countered that the Texas two-step is an improper manipulation of the bankruptcy system. The strategy uses a Texas law to split an existing company in two, creating the new subsidiary meant to shoulder the lawsuits.

New Jersey-based Johnson & Johnson, valued at more than $400 billion, said its subsidiary’s bankruptcy was initiated in good faith. J&J initially pledged $2 billion to the subsidiary to resolve talc claims and entered into an agreement to fund an eventual settlement approved by a bankruptcy judge.

“Resolving this matter as quickly and efficiently as possible is in the best interests of claimants and all stakeholders,” J&J said.

A three-judge panel on the appeals court rejected J&J’s argument, finding the company’s subsidiary, LTL Management, was created solely to file for Chapter 11 protection but had no legitimate need for it. Only a debtor in financial distress can seek bankruptcy, the panel ruled. The judges pointed out that J&J assured that it would give LTL plenty of money to pay talc claimants.

“Good intentions – such as to protect the J&J brand or comprehensively resolve litigation – do not suffice alone,” the judges said in a 56-page opinion. “LTL, at the time of its filing, was highly solvent with access to cash to meet comfortably its liabilities.”

‘PROJECT PLATO’

The decision could force J&J to fight talc lawsuits for years in trial courts. The company has a mixed record fighting the suits so far. While the firm was hit with major judgments in some cases before filing bankruptcy, more than 1,500 talc lawsuits have been dismissed and the majority of cases that have gone to trial have resulted in verdicts favoring J&J, judgments for the company on appeal, or mistrials, according to its subsidiary’s court filings.

A December 2018 Reuters investigation revealed that J&J officials knew for decades about tests showing that the company’s talc sometimes contained traces of carcinogenic asbestos but kept that information from regulators and the public. J&J has said its talc does not contain asbestos and does not cause cancer.

Facing unrelenting litigation, J&J enlisted law firm Jones Day, which had helped other companies execute Texas two-step bankruptcies to address asbestos-related lawsuits.

J&J’s effort, as Reuters reported last year, was internally dubbed “Project Plato,” and employees working on it signed confidentiality agreements. A company lawyer warned them to tell no one, including their spouses, about the plan.

Jones Day did not immediately respond to a request for comment.

The Texas two-step has garnered criticism from Democratic lawmakers in Washington, and inspired proposed legislation that would severely restrict the practice.

Senator Sheldon Whitehouse, a Democrat from Rhode Island, cheered Monday’s appeals court decision. Whitehouse chaired the first congressional hearing scrutinizing two-step bankruptcies in February of last year.

“Bankruptcy is meant to give honest debtors in unfortunate circumstances a fresh start,” he said, not to allow “large, highly profitable corporations” to avoid accountability for wrongdoing with a legal “shell game.”

Reporting by Tom Hals in Wilmington, Delaware; Mike Spector in New York; and Dan Levine in San Francisco; additional reporting by Dietrich Knauth and Chuck Mikolajczak in New York; editing by Bill Berkrot and Brian Thevenot

Our Standards: The Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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World

Nepal plane crash searchers rappel, fly drones to find last two people

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KATHMANDU, Jan 17 (Reuters) – Searchers used drones and rappelled down a 200 metres (656 feet) deep gorge in Nepal’s second-biggest city on Tuesday to search for two people unaccounted for after the country’s deadliest plane crash in 30 years killed at least 70 people.

Difficult terrain and inclement weather was hampering rescue efforts near the tourist city of Pokhara, where the Yeti Airlines ATR 72 turboprop carrying 72 people crashed in clear weather on Sunday just before landing.

“There is thick fog here now. We are sending search and rescue personnel using ropes into the gorge where parts of the plane fell and was in flames,” Ajay K.C., a police official in Pokhara who is part of the rescue efforts, told Reuters.

Searchers found two more bodies on Monday before the search was called off because of fading light.

“There were small children among the passengers. Some might have been burnt and died, and may not be found out. We will continue to look for them,” K.C. said.

An airport official said 48 bodies were brought to the capital Kathmandu on Tuesday and sent to a hospital for autopsies, while 22 bodies were being handed over to families in Pokhara.

Medical personnel in personal protective equipment and masks helped transport shrouded bodies from stretchers to a vehicle before they were flown to Kathmandu, Reuters pictures showed.

Television channels showed weeping relatives waiting for the bodies of their loved ones outside a hospital in Pokhara.

On Monday, searchers found the cockpit voice recorder and flight data recorder from the flight, both in good condition, a discovery that is likely to help investigators determine what caused the crash.

Reuters Graphics

Under international aviation rules, the crash investigation agencies of the countries where the plane and engines were designed and built are automatically part of the inquiry.

ATR is based in France and the plane’s engines were manufactured in Canada by Pratt & Whitney Canada (RTX.N).

French and Canadian air accident investigators have said they plan to participate in the probe.

Reporting by Gopal Sharma, writing by Shilpa Jamkhandikar; Editing by Jamie Freed

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World

Nepal finds black boxes of aircraft after deadliest crash in 30 years

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  • Searchers find bodies of two of four missing passengers
  • Rescue efforts paused after poor weather hampers operation
  • Cockpit voice, flight data recorders found in good shape
  • Nepal observes day of national mourning, launches probe

KATHMANDU, Jan 16 (Reuters) – Searchers found the cockpit voice recorder and flight data recorder on Monday from a passenger flight that crashed, killing at least 70 people in Nepal’s worst plane accident for 30 years, officials said.

The data on the recorders may help investigators determine what caused the Yeti Airlines ATR 72 aircraft, carrying 72 people, to go down in clear weather on Sunday just before landing in the tourist city of Pokhara.

Reuters Graphics

Both recorders were in good shape and will be sent for analysis based on the recommendation of the manufacturer, Teknath Sitaula, a Kathmandu airport official, told Reuters.

Under international aviation rules, the crash investigation agency of the country where the plane was designed and built is automatically part of the inquiry.

ATR is based in France and the plane’s engines were manufactured in Canada by Pratt & Whitney Canada (RTX.N).

Nepal’s Civil Aviation Authority has inspected all ATR 72 and ATR 42 aircraft operating in the country since the crash and found no technical faults in them, it said in a statement on Monday.

There are currently 16 ATR 72 aircraft and three ATR 42s with multiple airlines in the country, an aviation authority official said.

Rescuers battled cloudy weather and poor visibility on Monday as they scoured a river gorge for passengers who are unaccounted for, more than 24 hours after the crash.

Two more bodies were recovered on Monday, taking the death toll to 70, said Navin Acharya, an official at the rescue coordination centre at Kathmandu airport. The search was called off for the remaining two missing people as darkness descended and will resume on Tuesday, he said.

Pokhara police official Ajay K.C. said all bodies had been sent to a hospital.

In the capital Kathmandu around 100 people lit candles at a gathering in memory of the crash victims and called on the government to ensure proper safety standards, witnesses said.

Condolences poured in from around the world, including the Vatican.

“His Holiness Pope Francis sends his condolences to you and to all affected by this tragedy, together with his prayers for those involved in the recovery efforts,” Cardinal Secretary of State Pietro Parolin said in a message to Nepal’s president.

[1/7] A rescue team recovers the body of a victim from the site of the plane crash of a Yeti Airlines operated aircraft, in Pokhara, Nepal January 16, 2023. REUTERS/Rohit Giri

Reuters footage from the crash site showed rescuers looking at the charred remains of the plane near a mountain gorge.

The plane, on a scheduled flight from Kathmandu to Pokhara, gateway to the scenic Annapurna mountain range, was carrying 57 Nepalis, five Indians, four Russians, two South Koreans, and one person each from Argentina, Ireland, Australia and France.

The aircraft had flown more than 1,700 times in the past one year.

Minutes before the aircraft was to land on Sunday, the pilot asked for a change of runway, a spokesperson for Pokhara airport said on Monday. “The permission was granted. “We don’t ask (why), whenever a pilot asks we give permission to change approach,” spokesperson Anup Joshi said.

Sunday’s crash underlined the need for the government to break up the Civil Aviation Authority of Nepal (CAAN), which both regulates airlines and manages airports, experts said.

“The government must immediately separate the regulatory body and service provider by splitting the Civil Aviation Authority of Nepal (CAAN) which is doing both works now,” K.B. Limbu, an aviation expert and a retired pilot, told Reuters.

“This leads to a conflict of interests.”

Asked for comment, Sitaula, the Kathmandu airport official, denied there was any such conflict in the functioning of CAAN.

“The regulatory and service provider (airport management) officials are separate and there is no cross-movement between the two bodies operating under the same organisation,” he said, referring to the CAAN.

There are nine domestic airlines in Nepal, including Yeti Airlines and its unit Tara Air. Yeti and Tara plane crashes have killed at least 165 people in Nepal since 2000 out of a total of 359 dead from aviation accidents, according to data from CAAN.

Reuters Graphics

An additional 75 people have died in helicopter crashes this century in Nepal, which is home to eight of the world’s 14 highest mountains, including Everest, and where sudden weather changes can make for hazardous conditions.

Experts say air accidents are usually caused by a combination of factors, and investigations can take months or longer.

Anju Khatiwada, the co-pilot of Sunday’s ill-fated aircraft, lost her husband Dipak Pokhrel in a similar crash in 2006. Khatiwada’s remains have not been identified but she is feared dead.

Nepal observed a day of national mourning on Monday and set up a panel to investigate the disaster and suggest measures to avoid such incidents in future.

Reporting by Gopal Sharma, writing by Shilpa Jamkhandikar and Shivam Patel; Editing by Gerry Doyle, Raju Gopalakrishnan and Mark Heinrich

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Business

Google to pay nearly $400 million to settle U.S. location-tracking probe

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WASHINGTON, Nov 14 (Reuters) – Alphabet’s Google (GOOGL.O) will pay $391.5 million to settle allegations by 40 states that the search and advertising giant illegally tracked users’ locations, the Michigan attorney general’s office said Monday.

The investigation and settlement, which was led by Oregon and Nebraska, is a sign of mounting legal headaches for the tech giant from state attorneys general who have aggressively targeted the firm’s user tracking practices in recent months.

In addition to the payment, Google must be more transparent with consumers about when location tracking is occurring and give users detailed information about location-tracking data on a special web page, the Iowa attorney general’s office said.

“When consumers make the decision to not share location data on their devices, they should be able to trust that a company will no longer track their every move,” Iowa Attorney General Tom Miller said in a statement. “This settlement makes it clear that companies must be transparent in how they track customers and abide by state and federal privacy laws.”

Google spokesperson Jose Castaneda said: “Consistent with improvements we’ve made in recent years, we have settled this investigation, which was based on outdated product policies that we changed years ago.”

Google said in a blog post on Monday that it would be “making updates in the coming months to provide even greater controls and transparency over location data.”

Those changes include making it easier to delete location data. New users will have auto-delete controls that allow them to order Google to delete certain information when it hits a certain age.

The state attorneys opened a probe in 2018 following a report that Google recorded location data even when users instruct it not to. The probe found that Google had misled consumers about location-tracking practices since at least 2014, in violation of state consumer protection laws.

Arizona filed a similar case against Google and settled it for $85 million in October 2022.

Texas, Indiana, Washington State and the District of Columbia sued Google in January over what they called deceptive location-tracking practices that invade users’ privacy.

Google had revenue of $111 billion from advertising in the first half of this year, more than any other seller of online ads. A consumer’s location is key to helping an advertiser cut through the digital clutter to make the ad more relevant and grab the consumer’s attention.

Writing by Diane Bartz and Alexandra Alper; Editing by Anna Driver and Aurora Ellis

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Diane Bartz

Thomson Reuters

Focused on U.S. antitrust as well as corporate regulation and legislation, with experience involving covering war in Bosnia, elections in Mexico and Nicaragua, as well as stories from Brazil, Chile, Cuba, El Salvador, Nigeria and Peru.

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Business

Europe’s debt market strains force some governments to rework trading rules

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Oct 31 (Reuters) – Some euro zone countries have eased rules for the banks that manage the trading of their government debt to help them cope with some of the most challenging market conditions in years, officials told Reuters.

Out of 11 major euro area debt agencies Reuters contacted, officials in the Netherlands and Belgium told Reuters they have loosened various market-making obligations dictating how actively these banks should trade their debt.

France, Spain and Finland said their rules are already structured to automatically take account of market tensions. Germany and Austria said they do not set such rules.

As the European Central Bank unwinds years of buying the region’s debt, while the war in Ukraine, an energy shock and turmoil in Britain are making investors wary of loading up on government bonds, debt managers are adjusting to a less liquid, more volatile market.

That in turn, could raise borrowing costs for governments, already squeezed by climbing interest rates and energy-related spending, and bring more uncertainty for institutions, such as pension funds, which seek in government debt safety and stability.

Euro zone government debt bid-ask spreads, the difference between what buyers are offering and sellers are willing to accept and a measure of how smooth the trading is, have risen up to four-fold since the summer of 2021, data compiled by MarketAxess (MKTX.O) for Reuters showed. The data tracked German, Italian, French, Spanish and Dutch bonds, markets which account for the vast majority of euro zone debt with nearly 8 trillion euros outstanding.

Bond bid-ask spreads soar

LOOSENED OBLIGATIONS

Wider spreads mean more volatility and higher transaction costs. So governments expect, and some formally require their primary dealers – banks that buy government debt at auctions and then sell to investors and manage its trading – to keep those tight.

In markets with formal requirements, they also face other “quoting obligations” to ensure the best possible liquidity. Those obligations have been loosened in some countries to account for heightened market stress.

Jaap Teerhuis, head of dealing room at the Dutch State Treasury, said several of its quoting obligations, including bid-ask spreads, had been loosened.

“Volatility is still significantly higher compared to before the (Ukraine) war and also ECB uncertainty has also led to more volatility and more volatility makes it harder for primary dealers to comply,” he said.

Liquidity has been declining since late 2021 as traders started anticipating ECB rate hikes, Teerhuis said. The Netherlands then loosened its quoting obligations following the invasion of Ukraine.

Belgium’s quoting obligations also move with changes in trading conditions. But it has relaxed since March the rules on how many times per month dealers are allowed to fail to comply with them and has also reduced how much dealers are required to quote on trading platforms, its debt agency chief Maric Post said.

The two countries also loosened rules during the COVID-19 pandemic. Belgium’s Post said that lasted only four months in 2020, but it has kept obligations looser for much longer this time.

Finland said it has not changed its rules, but could not rule out acting if conditions persist or worsen.

Outside the bloc, Norway has also allowed dealers to set wider bid-ask spreads.

In Italy, debt management chief Davide Iacovoni said on Tuesday it was considering adjusting the way it ranks primary dealers each year to encourage them to quote tight spreads. Such rankings can affect which banks get to take part in lucrative syndicated debt sales.

Debt offices where obligations adapt automatically said attempts to enforce pre-determined bid-ask spreads in volatile markets would discourage primary dealers from providing liquidity and cause more volatility.

“If the market is too volatile, if it’s too risky, if it’s too costly, it’s better to adjust the bid-offer to what is the reality of the market than to force liquidity,” France’s debt chief Cyril Rousseau told an event on Tuesday.

Britain’s September sell-off highlighted how liquidity can evaporate fast in markets that are already volatile when a shock hits. In that case, the government’s big spending plans triggered large moves in debt prices, forcing pension funds to resort to fire sales of assets to meet collateral calls.

‘FRAGMENTED MARKET’

Allianz senior economist Patrick Krizan said with bond volatility nearing 2008 levels, a fragmented market for safe assets was a concern.

The euro zone is roughly 60% the size of the U.S. economy but it relies on Germany’s 1.6 trillion euro bond market as a safe haven – a fraction of the $23-trillion U.S. Treasury market.

In the case of a volatility shock “you can very easily fall into a situation where some markets are really drying up,” Krizan said. “For us it’s one of the biggest risks for the euro area.”

For example, the Netherlands like Germany has a top, triple A rating. But like other smaller euro zone markets it does not offer futures, a key hedging instrument, and so far this year the premium it pays over German debt has doubled to around 30 basis points.

Smaller governments pay premium over bigger rating peers

Efforts by debt officials are welcomed by European primary dealers, whose numbers have dwindled in recent years because of shrinking profit margins and tougher regulation.

Two officials at primary dealer banks said that fulfilling the quoting obligations in current conditions would force them to take on more risk.

“If (issuers) want private sector market-making, it needs to be profitable, or why would anyone do it? And it can’t be if rates move around 10-15 basis points a day,” one said of moves of a scale that had rarely been seen in these markets in recent years.

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Reporting by Yoruk Bahceli and Dhara Ranasinghe; additional reporting by Belen Carreno in MADRID, Lefteris Papadimas in ATHENS and Padraic Halpin in DUBLIN; editing by Tomasz Janowski

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World

British PM Truss vows to carry on as her party support dwindles

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  • Truss says she’s sorry for mistakes
  • Says she is ‘sticking around’
  • Economic agenda that caused market rout scrapped
  • Some Conservative MPs calling on her to quit

LONDON, Oct 18 (Reuters) – British Prime Minister Liz Truss warned of tough times ahead after she scrapped her vast tax-cutting plan and said she would carry on to try to put the economy on a stronger footing, defying calls for her resignation.

After weeks of blaming “global headwinds” for investors dumping the pound and government bonds, Truss on Monday said she was sorry for going “too far and too fast” with her radical economic plan to snap Britain out of years of tepid growth.

It was not clear whether the apology would quell a growing rebellion in her Conservative Party, with a handful of lawmakers urging Truss to quit just six weeks after she became prime minister.

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Truss has said she will fight on and told her top ministers she wanted to level with the public that there were tough times ahead.

A new YouGov opinion poll showed that even among Conservative Party members who backed her for prime minister, more than half of those polled said she should resign. A third wanted her predecessor, Boris Johnson, to return.

Markets, which plunged after Truss’s Sept. 23 “mini-budget”, are still under strain even after her finance minister Jeremy Hunt tore up her plans on Monday.

“I do want to accept responsibility and say sorry for the mistakes that have been made,” Truss told the BBC late on Monday.

“I wanted to act to help people with their energy bills, to deal with the issue of high taxes, but we went too far and too fast.” Truss said she was “sticking around” and that she would lead the Conservatives into the next election due in about two years time, although the statement was accompanied by a laugh.

Earlier on Monday, Truss watched silently in parliament as Hunt ripped up the plan she proposed less than a month ago, and which triggered a bond market rout so deep that the Bank of England had to act to prevent pension funds from collapsing.

‘HONEST’

For some in the party, the sight of a prime minister humbled in parliament provided little confidence she could fight on.

James Heappey, a minister for the armed forces, said Truss, his boss, could not afford to make any more mistakes.

Truss was due to speak later to her Brexit-supporting lawmakers, who are angry that she has abandoned her tax-cutting drive. Members of parliament have been urged by government to hold off from any move to oust her before it presents its medium-term fiscal plan on Oct. 31.

“The prime minister said she wanted to be honest with the public that times would be tough but by addressing long-standing issues now, we can put the country on a stronger path for the future,” her spokesperson quoted her as telling ministers on Tuesday.

Truss was elected by Conservative party members, not the broader electorate, on a promise to slash taxes and regulation to fire up the economy in a policy dubbed by critics as a return to 1980s Thatcherite-style “trickle-down” economics.

But markets reacted so dramatically that borrowing costs surged, lenders pulled mortgage offers and pension funds fell into a tailspin.

Ryanair (RYA.I) boss Michael O’Leary described Britain’s economic situation as a “car crash” which he blamed on the country’s decision to vote to leave the European Union in 2016.

SPENDING SQUEEZE

With Britain’s economic reputation shattered, Hunt may now have to go further in finding public spending cuts than the government would have done had Truss not unleashed her economic plan at a time of surging inflation.

Truss’s spokesperson said the government could not yet make commitments in individual policy areas, despite previous pledges, but it was focused on protecting the most vulnerable. He said Truss stood by her pledge to increase defence spending by 2030.

Torsten Bell, the head of the Resolution Foundation, a think tank, said the government may need to cut public spending by around 30 billion pounds ($34 billion) – a politically very difficult task after successive Conservative governments cut departmental budgets over the last 10 years.

One area of spending already to go is Truss’s vast two-year energy support package that was expected to cost well over 100 billion pounds, which Hunt said would now last until April before it is reviewed.

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Writing by Kate Holton and Elizabeth Piper; Additional reporting by William James, Andrew MacAskill, Kylie MacLellan and Paul Sandle; Editing by Raissa Kasolowsky, Gareth Jones and Tomasz Janowski

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World

Russia signals an end to U.N. aid into Syria from Turkey

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A boy carries food aid given by UN’s World Food Programme in Raqqa, Syria April 26, 2018. REUTERS/Aboud Hamam

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UNITED NATIONS, July 8 (Reuters) – Russia on Friday signaled an end to a long-running U.N. aid operation into northwest Syria from Turkey after vetoing a one-year extension and then failing in its own push for a six-month renewal and greater international reconstruction efforts.

The current U.N. Security Council mandate for U.N. humanitarian aid – including food, medicine and shelter – to some 4 million people in opposition-controlled northwest Syria from Turkey expires on Sunday.

Russia’s Deputy U.N. Ambassador Dmitry Polyanskiy said the only solution that Moscow would not veto was its own. That draft resolution failed on Friday after only Russia and China voted in favor. The United States, Britain and France voted against the Russian text, while the remaining 10 council members abstained.

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“I do not see at this point any other option. Given the fact of the words that have been said today, I think this has been made almost impossible,” Polyanskiy told reporters, adding that another council member could again put Russia’s text to a vote.

Before its own draft resolution failed, Russia had vetoed a proposal for a one-year extension – drafted by Ireland and Norway – which received 13 votes in favor. Despite a “no limits” strategic partnership with Moscow, China abstained on the vote.

“This is a life and death issue and tragically, people will die because of this vote and the country who shamelessly deployed the veto,” U.S. Ambassador to the United Nations, Linda Thomas-Greenfield, told the council.

‘NOT DAUNTED’

China’s U.N. Ambassador Zhang Jun called on all council members “not to give up” and to continue negotiations, while Ireland’s U.N. Ambassador Geraldine Byrne Nason said: “We’re not daunted by this veto. This is not the end of the road.”

However, when asked if Russia would again veto any draft text that was not its own, Polyanskiy replied: “Obviously.”

Russia argues that the U.N. aid operation violates Syria’s sovereignty and territorial integrity. It says more aid should be delivered from inside the country, raising opposition fears that food and other aid would fall under government control.

The United States, Britain and France said on Friday that a six-month extension is not long enough for aid groups to plan and operate effectively.

Western powers are also against funding broad reconstruction efforts until progress is made toward a political solution in Syria, where a crackdown by President Bashar al-Assad on pro-democracy protesters in 2011 led to civil war.

The Security Council vote on the authorization of the aid operation has long been a contentious issue, but this year also comes amid heightened tensions between Russia and Western powers over Moscow’s Feb. 24 invasion of Ukraine.

In 2014, the Security Council authorized humanitarian aid deliveries into opposition-held areas of Syria from Iraq, Jordan and two points in Turkey. But veto powers Russia and China have whittled that down to just one Turkish border point.

U.N. Secretary-General Antonio Guterres appealed to the council last month to extend its approval of the aid operation, telling the body: “We cannot give up on the people of Syria.”

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Reporting by Michelle Nichols; Editing by Mary Milliken, Nick Macfie and Jonathan Oatis

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Business

Airline SAS says survival at stake as pilot strike grounds flights

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  • Strike to ground roughly half of airline’s flights
  • SAS says will affect about 30,000 passengers per day
  • Strike raises uncertainty of loss-making airline’s future
  • Biggest airline strike since BA pilots in 2019

STOCKHOLM, July 4 (Reuters) – Wage talks between Scandinavian airline SAS (SAS.ST) and its pilots collapsed on Monday, triggering a strike that puts the future of the carrier at risk and adds to travel chaos across Europe as the peak summer vacation period begins.

The action is the first major airline strike to hit when the industry is seeking to capitalise on the first full rebound in leisure travel following the pandemic.

It follows months of acrimony between employees and management as the airline seeks to recover from the impact of lockdowns without taking on costs it believes would leave it unable to compete.

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At the same time, employees across Europe are demanding wage rises as they struggle with surging inflation.

A strike could cost SAS nearly 100 million Swedish crowns ($10 million) per day, Sydbank analyst Jacob Pedersen calculated, and the company’s future ticket sales will suffer. Shares in SAS were down 4.7% by 1511 GMT.

“A strike at this point is devastating for SAS and puts the company’s future together with the jobs of thousands of colleagues at stake,” SAS Chief Executive Anko van der Werff said in a statement.

“The decision to go on strike now demonstrates reckless behaviour from the pilots’ unions and a shockingly low understanding of the critical situation that SAS is in.”

Sydbank’s Pedersen said the strike could erase up to half of the airline’s cash flow of more than 8 billion crowns in the initial four-to-five weeks alone in a worst-case scenario, and was bound to leave “deep wounds” among affected travellers.

“SAS has too much debt and too high costs, and is thus not competitive. SAS is in other words a company flying toward bankruptcy,” he said in a research note.

TRADING BLAME

Union leaders blamed SAS.

“We have finally realised that SAS doesn’t want an agreement,” SAS Pilot Group chairman Martin Lindgren told reporters. “SAS wants a strike.”

Lindgren said the pilots were ready to resume talks, but called on SAS to change its stance.

The unions said nearly 1,000 pilots in Denmark, Sweden and Norway will join the strike, which is one of the biggest airline walkouts since British Airways pilots in 2019 grounded most of the carrier’s flights in a dispute over pay.

Further disruption looms as British Airways staff at London’s Heathrow airport in June voted to strike over pay. read more

Scandinavian Airlines (SAS) flights are seen listed at Copenhagen Airport Kastrup in Copenhagen, Denmark, July 3, 2022. REUTERS/Andrew Kelly

Read More

In addition, Spanish-based cabin crew at Ryanair (RYA.I) and easyJet (EZJ.L) plan to strike this month to demand better working conditions and workers at Paris’ Charles de Gaulle airport stopped work at the weekend to demand a pay rise. read more

Sofia Skedung, 38, arrived at Stockholm’s Arlanda airport to find the SAS flight she and her family were booked on for a charter trip was cancelled.

“I was going to go with my family to Corfu on holiday for a week, which we really had looked forward to since we haven’t travelled in a really long time,” she said as searched the departure hall in vain for SAS staff.

“Everything is very, very confused here,” she added.

BUSIEST WEEK

Loss-making SAS is seeking to restructure its business through large cost cuts, raising cash and converting debt to equity. read more

“This is all about finding investors. How on earth is a strike in the busiest week of the last 2.5 years helping find and attract investors?” van der Werff told reporters.

The airline, which is part-owned by the governments of Sweden and Denmark, estimated the strike would lead to the cancellation of around 50% of scheduled SAS flights and impact around 30,000 passengers per day, roughly half its daily load.

Denmark has said it is willing to provide more cash and write off debt on condition the airline brings in private investors as well, while Sweden has refused to inject more money.

Norway sold its stake in 2018, but holds debt in the airline, and has said it might be willing to convert that into equity. read more

Denmark’s Finance Minister Nicolai Wammen in an e-mailed comment to Reuters said he hoped the parties would reach a solution as soon as possible.

The collective agreement between the airline and the SAS Pilot Group union expired on April 1. Months of negotiations, which began last November, have failed to conclude a new deal.

Pilots were angered by SAS’ decision to hire pilots through two new subsidiaries – Connect and Link – instead of first rehiring former employees dismissed during the pandemic, when almost half of its pilots lost their jobs.

A strike would include all pilots from parent company SAS Scandinavia, but not Link and Connect, a union that organises the 260 pilots attached to the two units. Neither would it affect SAS’ external partners Xfly, Cityjet and Airbaltic, the company has said.

SAS had already cancelled many flights ahead of the summer, part of a wider trend in Europe, where, in addition to the upheaval of strike action, operators have responded to staff shortages created by slow rehiring after the pandemic.

($1 = 10.3436 Swedish crowns)

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Additional reporting by Stine Jacobsen in Copenhagen and Alex Cornwall in Dubai; writing by Niklas Pollard; editing by Barbara Lewis and Emelia Sithole-Matarise

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Britain to defy EU with ‘relatively trivial’ N.Ireland law

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  • UK to set out legislation on Monday
  • Move risks triggering trade dispute with EU
  • EU says unilateral action will break international law
  • Ireland accuses UK of a new low

LONDON, June 13 (Reuters) – Britain will set out plans on Monday to override some of the post-Brexit trade rules for Northern Ireland, scrapping checks and challenging the role played by Brussels in a fresh clash with the European Union.

As Ireland warned of a “new low” from London and Brussels talked of damage to trust, British Prime Minister Boris Johnson vowed to plough ahead, saying the “relatively trivial” steps were needed to improve trade and simplify bureaucracy.

Tensions have been simmering for months after Britain accused the bloc of taking a heavy handed approach to the movement of goods between Britain and Northern Ireland – checks that were needed to keep an open border with EU-member Ireland.

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Always the toughest part of the Brexit deal to crack, the situation in the region has sent alarm bells ringing in European capitals and Washington, and among business leaders.

It has also heightened political tensions, with pro-British communities saying their place in the United Kingdom is being eroded.

A power-sharing administration has broken down and the Democratic Unionist Party (DUP) said it would only return to parliament if it is sure the bill will become law. read more

The new legislation comes as the UK faces its toughest economic conditions in decades, with inflation forecast to hit 10% and growth stalling. Johnson said any talk of a retaliatory trade war by Brussels would be a “gross, gross overreaction”.

“All we are trying to do is have some bureaucratic simplifications between Great Britain and Northern Ireland,” he told LBC Radio.

NEW CLASH

Britain has been threatening for months to rip up the protocol, an agreement that kept the region under EU rules and forced an effective customs border between Northern Ireland and the rest of the UK to prevent a back door from opening up into the EU’s vast single market.

Under the legislation, London is expected to introduce a “green channel” for goods moving from Britain just to Northern Ireland, change the tax rules and end the role of the European Court of Justice as sole arbiter.

The bill, which will be presented to parliament by Foreign Secretary Liz Truss, could take around a year to pass. It comes as Johnson seeks to recover from a large rebellion against his leadership by winning back the support of lawmakers, including those who want a tough stance against Brussels.

The legislation, like Brexit itself, has split legal and political opinion, with supporters of the UK’s divorce saying it does not go far enough and critics saying it undermines London’s standing in the world by challenging an international agreement.

Truss told European Commission vice-president, Maros Sefcovic, that London was still open to a “negotiated solution”. He said any unilateral action damaged trust. read more

Brussels believes any unilateral change may breach international law. It could launch legal action or eventually review the terms of the free trade deal it agreed with Britain.

EU officials have said that Britain will not be allowed to join its 95 billion euro Horizon Europe research programme until outstanding disputes, notably Northern Ireland, are resolved.

U.S. House of Representatives Speaker Nancy Pelosi has also said there will be no U.S.-UK trade deal if London scraps the protocol.

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Additional reporting by Paul Sandle, Andrew MacAskill and Kylie MacLellan; Editing by Louise Heavens, Mark Potter and Ed Osmond

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World

Ryanair forces South Africans to prove nationality with Afrikaans test

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  • Ryanair says move to curb entry of fraudulent passport holders
  • Afrikaans spoken by only 12% of South Africans
  • South African government clamping down on fake documents

DUBLIN/JOHANNESBURG, June 6 (Reuters) – Ryanair (RYA.I) is requiring South African passengers to prove their nationality before travelling by completing a test in Afrikaans, a language used by just 12% of the population that has long been identified with apartheid and the white minority.

Europe’s largest airline by passenger numbers, which does not operate flights to and from South Africa, said it required any UK-bound passengers from the country to fill in the “simple questionnaire” due to what it described as a high prevalence of fraudulent South African passports.

“If they are unable to complete this questionnaire, they will be refused travel and issued with a full refund,” a spokesman for the Irish airline said.

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South Africa’s Home Affairs department, which has warned of syndicates selling fake passports, said it would issue a statement on the Ryanair test.

The UK High Commission in South Africa said on Twitter that the Ryanair test was not a British government requirement to enter the United Kingdom. The Irish High Commission did not immediately respond to a request for comment.

The low cost carrier said the test would apply to any South African passport holder flying to Britain from another part of Europe on the carrier. The airline did not immediately respond to a query about why it would apply to those routes, given Britain says it is not a requirement.

Zinhle Novazi, a South African attorney, faced the test when travelling by Ryanair from Ibiza, Spain, to London on May 29.

A Ryanair aircraft lands on the southern runway at Gatwick Airport in Crawley, Britain, August 25, 2021. REUTERS/Peter Nicholls/File Photo

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Some of the questions include naming the highest mountain in South Africa, its largest city and one national holiday.

“I was able to answer the questions,” said Novazi, who learnt Afrikaans in school but is not a native speaker of the language. She was then allowed to board the plane.

Novazi wrote to South Africa’s Department of International Relations and Cooperation on June 1 but has not received a response.

The department did not respond to a request for comment.

The test triggered a backlash from South Africans in Johannesburg.

“It’s very discriminatory to a whole host of South Africans who don’t speak Afrikaans,” Siphiwe Gwala told Reuters.

“They’re using this (test) in a manner that is utterly absurd,” Conrad Steenkamp, the chief executive officer of the Afrikaans Language Council, said.

Afrikaans is the third most spoken of 11 official languages in South Africa, used by 12% of the 58 million people in the country. It has long been identified with the ideology of apartheid andwas considered the official language until the end of apartheid in 1994.

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Reporting by Padraic Halpin in Dublin, Promit Mukherjee and Nqobile Dludla in Johannesburg; Editing by Alison Williams and James Macharia Chege

Our Standards: The Thomson Reuters Trust Principles.

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