Siemens weighs carving out Gas and Power unit

Siemens CEO Joe Kaeser attends a signing ceremony ahead of a news conference with German Chancellor Angela Merkel and Iraqi Prime Minister Adil Abdul-Mahdi at the Chancellery in Berlin, Germany. (File/Reuters)
Updated 04 May 2019

Siemens weighs carving out Gas and Power unit

MUNICH: German industrial conglomerate Siemens is weighing options for its Gas and Power unit, carving out all or part of the business to prepare it for a potential stock market listing or a merger with a peer, two people close to the matter said.
The business caters to the oil and gas industry as well as to power generators and distributors.
The sources said Siemens’ supervisory board may decide on a potential carve-out at a meeting on Tuesday and could present the plans at the company’s capital markets day on Wednesday.
Siemens declined to comment on the future strategy for the Gas and Power unit, whose gas turbines business has seen orders slump as utilities shift toward renewable energy sources.
“The situation on the global market for fossil power plant technology remains unchanged. Siemens began tackling these challenges back in early 2015,” a company spokesman said.

 

Chief Executive Joe Kaeser has embarked on a strategy to simplify Siemens’ operations by separating the conglomerate into what he has termed “a fleet of ships” which thrive under their own steam.
The move is designed to enable the businesses to raise their own funds for acquisitions and investments as well as crystallising their standalone market value, removing some of the “conglomerate discount” that weighs on Siemens’ valuation.
As part of this push, Siemens listed its health care unit Healthineers last year.
Siemens also has a separately listed renewable power business, Siemens Gamesa.
Kaeser tried to combine its train segment Siemens Mobility with listed peer Alstom, but scrapped the deal earlier this year as antitrust concerns mounted. Analysts expect that Siemens will eventually opt for a stock market listing for the Mobility unit.
Siemens has told investors that its capital markets day would focus on its Gas and Power, Smart Infrastructure and Digital Industries businesses, none of which have so far have been set up as independent companies.
Gas and Power, headquartered in Houston, Texas, makes gear for oil and gas extraction and production, as well as gas and steam turbines and technology for power grids, including high-voltage transmission systems.
The unit was set up weeks ago as part of a reshuffle Siemens’ business units.

FASTFACTS

Siemens’ gas and power unit is headquartered in Houston.


British Airways burning through cash, CEO urges unions to engage

Updated 04 June 2020

British Airways burning through cash, CEO urges unions to engage

  • Job losses necessary as cash reserves of IAG, British Airways’ parent company, would not last forever

LONDON: The boss of British Airways said its parent company IAG was burning through $223 million a week and could not guarantee its survival, prompting him to urge unions to engage over 12,000 job cuts.
British Airways came under heavy attack from lawmakers in parliament on Wednesday, who accused it of taking advantage of a government scheme to protect jobs while at the same time announcing plans to cut its workforce by 28 percent.
Planes were grounded in March due to coronavirus restrictions, forcing many airlines to cut thousands of staff as they struggle without revenues. Airlines serving Britain now face an additional threat from a 14-day quarantine rule.
In an internal letter to staff seen by Reuters, Alex Cruz, the chief executive of British Airways said the job losses were necessary as IAG’s cash reserves would not last forever and the future was one of more competition for fewer customers.
BA also wants to change terms and conditions for its remaining workers to give it more flexibility by, for example, making all crew fly both short and long-haul.
Cruz said IAG, which also owns Aer Lingus, Iberia and Vueling, was getting through $223 million a week, meaning that it could not just sit out the crisis. The group had €10 billion of liquidity at the end of April.
“BA does not have an absolute right to exist. There are major competitors poised and ready to take our business,” Cruz said in the letter.
He urged two unions which represent cabin crew and other staff, GMB and Unite, to join in discussions to mitigate proposed redundancies. Pilots union BALPA is “working constructively” with the airline, he added.
Cruz also joined other airline bosses in criticizing Britain’s quarantine rule, due to come into effect on June 8, calling it “another blow to our industry.”