Euro survives 2012, further tests in store
Euro survives 2012, further tests in store
Athens in turn delivered on its part of the bargain — more stinging austerity, economic reforms and a tight budget — all with the aim of cutting its massive debt burden to a more sustainable 124 percent of GDP by 2020.
Then progress toward tighter economic and fiscal coordination in the euro zone, and a key first step toward a shared bank supervision regime, rounded out the gains, leaving the Europe in much better shape than seemed likely at the beginning of the year. "Many observers felt it was all over for Greece (and its) ... remaining in the euro zone. As year-end approaches, we know that these Casandras were wrong," EU Economics Commissioner Olli Rehn said.
For many months, all analysts could talk about was Greece's likely exit from the euro zone and what it would mean for the bloc's future.
Now, "the likelihood of a member state leaving the euro zone is gone," said Janis Emmanouilidis of the European Policy Centre (EPC) think-tank.
Reflecting the change, Standard and Poor's raised Greece's sovereign debt rating by a massive six notches because of what it termed the "strong determination of ... (euro zone) member states to preserve Greek membership."
Greek Finance Minister Yannis Stournaras said the decision "was a very important one that created a climate of optimism. But we know that the road is still long and hard, the hour is not one for easing up."
Analysts also highlighted agreement on the euro zone's Single Supervisory Mechanism (SSM) to regulate its banks, a first step in ring-fencing lenders who get into trouble and threaten financial disaster.
Perhaps the key breakthrough, giving purpose and backing to the other reforms, was A commitment by European Central Bank head Mario Draghi over the summer months to do anything necessary to save the euro.
In September, Draghi said the ECB would buy up the sovereign debt of any euro zone member state without limit, if that is what it took to keep the financial markets in check.
This pledge of "Outright Monetary Transactions" meant markets' could no longer enjoy a one-way bet against a member state as the ECB could step in on its side.
The immediate result was a sharp easing in borrowing costs, especially for Spain and Italy which had been tipped to follow Greece, Ireland and Portugal in needing a bailout.
That change, backed up a 100 billion euros euro zone lifeline for its banks, allowed the Spanish government to hold the line.
By year-end, few were talking of Madrid as the next debt crisis casualty, with its banks also being stabilized at a much lower-than-expected cost of some 40 billion euros. Some analysts said it was important not to get too carried away, however.
The outlook for the next two years "looks less unsettled and will be concerned above all with implementing the new supervisory regime and winding up mechanism for the banks," CM-CIC Securities analysts said in a note.
For Barclays, talks on closer integration in the euro zone could prove heated and even chaotic, with the emergence of deep differences running the risk of stoking fresh tensions on the markets. Above all, the uncertainties for the coming year are political, with elections due in Italy and then Germany, while the situation in "Greece is still on a knife-edge," said Emmanouilidis at the EPC.
The economic outlook is also clouded, with the euro zone in recession and expected to slow further while unemployment runs at a record 11.7 percent, rising to unprecedented levels around 25 percent in Spain and Greece.
Against that background, German Chancellor Merkel's guarded words on the outlook seem appropriate.
"We have already achieved a lot but I think we still have a very difficult time ahead," Merkel said after the last EU leaders summit of the year earlier this month.
Southwest challenged engine maker over speed of safety checks
- The proposed inspections would have cost $170 per engine for two hours of labor
- Southwest Airlines Chairman and CEO Gary Kelly explained the airline’s maintenance procedures in a 59-second video posted to Twitter
WASHINGTON/PARIS: Southwest Airlines clashed with engine-maker CFM over the timing and cost of proposed inspections after a 2016 engine accident, months before the explosion this week of a similar engine on a Southwest jet that led to the death of a passenger, public documents showed.
The proposed inspections would have cost $170 per engine for two hours of labor, for a total bill to US carriers of $37,400, the US Federal Aviation Administration said in its August 2017 proposal, citing the engine manufacturer.
The documents reveal that airlines including Southwest thought the FAA had “vastly understated” the number of engines that would need to be inspected — and therefore the cost.
The documents are part of the public record on the FAA’s initial proposal for inspections and the response from airlines made in October, within the designated comment period.
The FAA and CFM International made the inspection recommendations after a Southwest flight in August 2016 made a safe emergency landing in Florida after a fan blade separated from the same type of engine. Debris ripped a foot-long hole above the left wing. Investigators found signs of metal fatigue.
On Tuesday, a broken fan blade touched off an engine explosion on Southwest Airlines flight 1380, shattering a window of the Boeing 737 jet and killing a passenger. It was the first death in US airline service since 2009.
The FAA is not bound by any specified time periods in deciding whether to order inspections and must assess the urgency of each situation.
Southwest and other airlines in their responses in October objected to a call by CFM to complete all inspections within 12 months. The FAA proposed up to 18 months, backed by Southwest and most carriers. Southwest also told the FAA that only certain fan blades should be inspected, not all 24 in each engine.
“SWA does NOT support the CFM comment on reducing compliance time to 12 months,” Southwest wrote in an October submission.
CFM is a joint venture of General Electric Co. and France’s Safran.
Southwest said in its submission that the FAA’s proposal would force the carrier to inspect some 732 engines in one of two categories under review — much higher than the FAA’s total estimate of 220 engines across the whole US fleet.
“The affected engine count for the fleet in costs of compliance ... appears to be vastly understated,” it said.
Southwest spokeswoman Brandy King said on Thursday that the comments “were to add further clarification on items included in the proposed AD (airworthiness directive).”
She said the company had satisfied CFM’s recommendations, but she did not immediately answer questions about how many engines had been inspected and whether the failed engine had been inspected.
Late on Thursday, Southwest Airlines Chairman and CEO Gary Kelly explained the airline’s maintenance procedures in a 59-second video posted to Twitter. He said the airline hires GE to do heavy overhaul or maintenance work on all of its engines.
“So GE provides the guidelines for maintenance inspections and repairs over the life of the engines,” he said.
The airline on Tuesday evening said it would conduct accelerated ultrasonic inspections of the fan blades on CFM56 engines within the next 30 days.
“In addition to our accelerated inspections we are meeting with GE and Boeing on a daily basis regarding the progress of the inspections and we will continue to work with them throughout the rest of the investigation,” Kelly said in the video.
The FAA said on Wednesday it would finalize the airworthiness directive it had proposed in August within two weeks. It will require inspections of some CFM56-7B engines. FAA officials acknowledged that the total number of engines affected could be higher than first estimated.
The FAA, which has issued more than 100 airworthiness directives just since the beginning of this year, has said that the time it takes to finalize directives depends on the complexity of the issue and the agency’s risk assessment based on the likelihood of occurrence and the severity of the outcome.
The National Transportation Safety Board said on Thursday that investigators would be on the scene into the weekend but declined any new comment on the investigation.
Investigators said one of the fan blades on Tuesday’s Southwest flight broke and fatigue cracks were found.