Fiat Chrysler’s Sergio Marchionne dies, shares dive on profit slide

Fiat Chrysler boss Sergio Marchionne suffered serious complications after surgery on his right shoulder last month. (AFP/Piero CRUCIATTI)
Updated 25 July 2018
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Fiat Chrysler’s Sergio Marchionne dies, shares dive on profit slide

  • Former Fiat Chrysler chief executive has died aged 66
  • The announcement drew tributes from rivals and tears from his closest colleagues

MILAN: Former Fiat Chrysler chief executive Sergio Marchionne has died after a 14-year career in which he helped to rescue the carmaker, the news arriving on Wednesday moments before the group reported a surprisingly heavy fall in profit.
The announcement of the death of Marchionne, one of the auto industry’s most tenacious and respected CEOs, drew tributes from rivals and tears from his closest colleagues, a collective grief that overshadowed a big sell-off in Fiat Chrysler shares.
He had fallen gravely ill after what the company had described as shoulder surgery in a Zurich hospital. He was replaced as chief executive last weekend after Fiat Chrysler (FCA) said his condition had worsened.
FCA’s scheduled second-quarter earnings presentation, led by Marchionne’s successor and former lieutenant Mike Manley, began on Wednesday afternoon with a minute’s silence.
As eulogies flooded in, FCA shares fell up to 10 percent as investors digested an unexpected 35 percent fall in net profit, well below market forecasts.
“Unfortunately, what we feared has come to pass. Sergio Marchionne, man and friend, is gone,” FCA Chairman John Elkann, scion of the controlling Agnelli family, said in a statement.
Marchionne rescued Fiat and Chrysler from bankruptcy after taking the wheel of the Italian carmaker in 2004 and he multiplied Fiat’s value 11 times through 14 years of canny dealmaking. He was due to step down at FCA in April next year.
“The best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion,” Elkann added.

TRIBUTES PAID
Tributes arrived from industry figures and politicians worldwide, praising his perseverance, hard negotiating skills and candor.
Marchionne resurrected one of Italy’s biggest corporate names and revitalized Chrysler, succeeding where the US company’s two previous owners — Mercedes parent Daimler and private equity group Carberus — both failed.
“Sergio Marchionne was one of the most respected leaders in the industry whose creativity and bold determination helped to restore Chrysler to financial health and grow Fiat Chrysler into a profitable global automaker,” said Ford Motor Co. Executive Chairman Bill Ford Jr.
Daimler Chief Executive Dieter Zetsche in a post on Linkedin said, “The auto industry has lost a real giant. And many of us have lost a very dear friend: Sergio Marchionne.”
Marchionne flattened an inflexible hierarchy, replacing layers of middle management with a meritocratic leadership style. He slashed costs by reducing the number of vehicle architectures and creating joint ventures to pool development and plant costs.
A tough negotiator known for getting his way, in 2005 Marchionne forced GM to pay Fiat $2 billion not to exercise an option to sell its auto division to the US carmaker — a move that may not have helped his later merger overtures.
Marchionne’s track record with operational turnarounds was a little more patchy than his dealmaking.
Profitability in Europe is only now gradually recovering, and Alfa Romeo has yet to turn a profit.
In North America, however, Marchionne was quick to end production of unprofitable sedans and retool plants to build pricier SUVs and trucks, a move since emulated by Ford and GM.


Crisis at India’s Jet worsens as it grounds planes, faces strike

The debt-laden carrier has delayed payments to banks, suppliers, pilots and lessors. (Reuters)
Updated 20 March 2019
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Crisis at India’s Jet worsens as it grounds planes, faces strike

  • More than 20,000 people are employed in the company
  • The company had to stop more than 50% of their aircraft due to insufficient funds

MUMBAI: India's Jet Airways was fighting multiple crises Wednesday after grounding six planes, leaving it with only a third of its fleet flying, while pilots have threatened to walk out and a major shareholder is reportedly looking to offload its huge stake.

The problems at India's number-two carrier come as other airlines struggle to turn a profit despite the sector rapidly expanding in the country over recent years.

Jet, which employs more than 20,000 people, is gasping under debts of more than $1 billion and has now been forced to ground a total of 78 of its 119 aircraft after failing to pay lenders and aircraft lessors.

In a statement late Tuesday announcing its latest grounding, the firm it said it was "actively engaging" with lenders to secure fresh liquidity and wanted to "minimise disruption".

But with hundreds of customers left stranded, Jet's social media accounts have been flooded with often suddenly stranded passengers demanding information, new flight tickets and refunds.

"@jetairways We book our flights in advance so that we save on travel cost and you are sending cancellation (message) now?", read one irate tweet on Wednesday.

"I have sent a DM (direct message) regarding my ticket details. Please respond!", said Sachin Deshpande, according to his Twitter profile a design engineer.

Another, Ankit Maloo, wrote: "Received an email for all together cancellation of flight days before departure without any prior intimation or communication over phone!"

The firm is also facing pressure from its many pilots who have not been paid on time, with unions threatening they will walk off the job if salaries do not arrive soon.

"Pilots will stop flying jet planes from 1st April 2019 if the company does not disburse due salaries and take concrete decisions," a spokesperson for the National Aviator's Guild, a pilots union, told AFP.

India's aviation regulator on Tuesday warned Jet Airways to ensure that staffers facing stress are not forced to operate flights.

Meanwhile, Bloomberg reported that Etihad Airways of the United Arab Emirates has offered to sell its 24 percent stake in Jet to State Bank of India (SBI).

A collapse would deal a blow to Prime Minister Narendra Modi's pragmatic pro-business reputation ahead of elections starting on April 11.

India's passenger numbers have rocketed six-fold over the past decade with its middle-class taking advantage of better connectivity and cheaper flights.

The country's aviation sector is projected to become the world's third-largest by 2025.

But like other carries, Mumbai-based Jet has been badly hit by fluctuating global crude prices, a weak rupee and fierce competition from budget rivals.

Alarm bells for Jet first rang in August when it failed to report its quarterly earnings or pay its staff, including pilots, on time. It then later reported a loss of $85 million.

In February, it secured a $1.19 billion bailout from lenders including SBI to bridge a funding gap, but the crisis has since deepened.

"Jet Airways is rapidly reaching a point of no return and running out of assets to keep itself afloat," Devesh Agarwal, editor of the Bangalore Aviation website, told AFP.

"The only solution is equity expansion by diluting its stakes but Jet is just trying to cut losses and running out of options," Agarwal said.

Shares in Jet Airways were down more than five percent on Wednesday.