Boeing Said to Win $8.4 Billion United Order for 100 Jets

By Thomas Black, Mary Schlangenstein and Susanna Ray - Jul 10, 2012 4:15 AM GMT+0700

Boeing Co. is set to win an order this week from United Continental Holdings Inc. (UAL) for 100 of the planemaker’s 737 jets in a transaction that may be valued at about $8.4 billion, people familiar with the matter said.

The accord includes options for as many as 100 more jets and will be announced July 12 in Chicago, where both companies are based, said two of the people, who asked not to be identified because details aren’t public. The order will include the upgraded 737 Max model, the people said.

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The Boeing Co. 737 MAX 9. Source: Boeing Co. via Bloomberg

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The Boeing Co. 737 MAX 8. Source: Boeing Co. via Bloomberg

A deal later this week would be a boost for Boeing as it promotes the Max at the Farnborough International Air Show outside London. The company wasn’t offering the jet at the June 2011 expo in Paris, where Airbus SAS routed Boeing with sales and commitments for its revamped single-aisle A320neo.

“It’s one of many positives for Boeing,” said Ray Neidl, a Maxim Group LLC analyst who covers Boeing and United. “We all knew for a long time the airlines were starving for a more fuel- efficient narrowbody. Now that one’s available in the next few years, airlines are falling over themselves to get them.”

Boeing opened the air show today by announcing a $7.2 billion order for 75 single-aisle 737 Max aircraft from Air Lease Corp. (AL), the first such purchase by a lessor. General Electric Co. (GE)’s jet-leasing unit also is poised to purchase 100 737s, people familiar with that transaction said.

Exclusive Supplier

United’s mix of Max jets and current 737s will determine the list value of its order. The 737-8, the top-selling existing model, retails for $84.4 million, and the Max 8, the equivalent new plane, is $95.5 million, according to Boeing’s website.

The order is United’s first since the 2010 merger creating the carrier from former United parent UAL Corp. and Continental Airlines Inc. Boeing was Continental’s exclusive plane supplier for two decades, and the accord deepens ties between the world’s largest airline and the biggest aerospace company.

United declined to comment, said Christen David, a spokeswoman. A Boeing spokesman, Tim Bader, said the company had no comment.

Boeing rose 0.5 percent to $74.03 at the close in New York. United fell 1.4 percent to $23.90, declining along with most carriers in the Bloomberg U.S. Airlines Index. (BUSAIRL)

United held talks over about six months on a possible mixed order of current and new-model 737s and A320s before opting to stay with Boeing, people familiar with those discussions said in April.

Planemaker Competition

The U.S. planemaker is trying to reclaim the top spot in commercial production lost to Airbus in 2003. Toulouse, France- based Airbus had record orders of 1,419 aircraft in 2011, while Boeing’s tally was 805. Airbus won 95 percent of narrow-body sales at the Paris show, and has said 2012 orders may fall by half as an initial flurry of A320neo purchases wanes.

United’s order will make it the last of the four biggest U.S. carriers to announce single-aisle jet purchases in less than a year.

Delta Air Lines Inc. agreed in August to acquire 100 737s, a month after AMR Corp.’s American Airlines split a record order for 460 jets between Boeing and Airbus. Southwest Airlines Co. agreed in December to buy 208 737s in an order that was the first for the Max.

Boeings make up about 78 percent of United’s mainline jets, with the rest made by Airbus. The 555-plane regional fleet is split about evenly between Bombardier Inc. (BBD/B) and Embraer SA. (EMBR3)

United Fleet

Narrow-body jets made up 78 percent, or 545 planes, of United’s 701 mainline planes, according to its latest annual report. Boeing 757-200s are the oldest of United’s single-aisle jets, with an average age of 18.2 years, followed by 737-500s that average 16.6 years old. Both models are out of production.

Separately, United said today it plans a special livery for the Boeing 787 Dreamliners it will begin receiving in September, with a gold line running along the fuselage. United, the first North American carrier to receive the composite-plastic plane, expects to start flying five of the jets this year.

The airline has firm orders for 50 Dreamliners with deliveries through 2019.

To contact the reporters on this story: Thomas Black in London at tblack@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Susanna Ray in Seattle at sray7@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net

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Goldman’s Hawker Beechcraft Accepts $1.79 Billion Offer

By Susanna Ray and Thomas Black - Jul 10, 2012 4:36 AM GMT+0700

Hawker Beechcraft Inc., the business- jet maker owned by Goldman Sachs Group Inc. (GS) and Onex Corp. (OCX), may draw more bids in an auction after agreeing to sell itself to Superior Aviation Beijing Co. for $1.79 billion.

Superior will make payments over the next six weeks to help keep bankrupt Hawker in business until the deal closes, according to a statement today from the companies. The sale, which doesn’t include the planemaker’s defense business, remains subject to U.S. Bankruptcy Court approval and the auction process.

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Hawker traces its history partly to Walter and Olive Beech, who started Beech Aircraft Corp. during the Great Depression in 1932, according to the company’s website. Photographer: Larry W. Smith/Bloomberg

Hawker Beechcraft sought bankruptcy protection in May after the company and other private-jet manufacturers struggled with lower demand following the recession. The planemaker’s debt included a term loan and notes used for the portion of its 2007 takeover price of $3.3 billion that wasn’t covered by $1 billion cash from buyers Goldman Sachs and Onex.

“Superior has had a long-standing interest in the commercial aircraft business of Hawker Beechcraft, having first approached the company several years ago” about a strategic partnership, said Chief Executive Officer Steve Miller. The merger would provide more “access to the Chinese business and general aviation marketplace, which is forecast to grow more than 10 percent a year for the next 10 to 15 years.”

Perella Weinberg

Hawker retained Perella Weinberg Partners LP as a financial adviser in December and hired Miller, a turnaround specialist, in February. Before its May 3 bankruptcy filing, the company and Perella Weinberg identified 35 potential buyers from strategic purchasers to private-equity firms, according to a court filing.

Net losses totaling more than $900 million in two years due to shrinking plane sales and declining U.S. military contracts prompted Hawker’s bankruptcy. The company received eight bids from mid-May through mid-June, according to the filing.

Hawker’s aircraft include the Hawker 4000 business jet and the Beechcraft King Air propjet. The company competes with planemakers including Textron Inc. (TXT)’s Cessna Aircraft Co., Embraer SA (EMBR3), Gulfstream Aerospace Corp. and Bombardier Inc. (BBD/B)

Textron is interested in buying Hawker for its propeller- driven business planes and military training aircraft, Chief Executive Scott Donnelly said in an interview today at the Farnborough air show near London before Superior’s announcement.

Textron Interest

Donnelly said Textron sees the most value in the Beechcraft King Air planes and the T-6, known as the trainer because the military uses the planes as a training aircraft. The Hawker 4000 and 900, which are jet planes that carry about 10 passengers, are struggling against the competition, he said.

“There are problematic parts and there are good parts. For the right number, you could manage that and we could make it a win for our shareholders,” Donnelly said. “But there’s no reason for a company like ours to overpay for that asset.”

Mahindra & Mahindra Ltd. (MM), India’s biggest maker of utility vehicles, also was considering bidding for the planemaker, a person with knowledge of the matter said July 5. Mahindra also builds turboprop aircraft, as does Hawker.

The Indian company has majority stakes in component maker Aerostaff Australia and Gippsland Aeronautics, and has been in talks with India’s National Aerospace Laboratories on possibly partnering for a regional jet.

Attractive Bid

Bill Boisture, chairman of Hawker Beechcraft, said the decision to move forward with the Chinese bidder was “based on two key factors: the bid for the company was the most attractive we received during the strategic review process and the going- forward plan offered the most continuity for our business.”

Superior is committed to maintaining Hawker Beechcraft’s strong presence in the United States as well as its employee base and management team, Boisture said.

Hawker traces its history partly to Walter and Olive Beech, who started Beech Aircraft Corp. during the Great Depression in 1932, according to the company’s website. With designer Ted Wells, they built the Beech Model 17, a biplane for business executives that sold for about $15,000, according to the U.S. Centennial of Flight Commission.

A reorganization plan that Hawker filed June 30 would give control of the company to secured creditors holding debt valued at $921.6 million, canceling other interests in the company. New York-based Goldman Sachs and Toronto-based Onex each owned 49 percent of Hawker Beechcraft stock, while former managers and directors held the remainder.

The company said it would borrow an unspecified amount to exit court protection and repay a $400 million loan that financed operations while in bankruptcy.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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On Bus Tour in Ohio, Obama Pushes Trade, Hammers Bain

By Kate Andersen Brower - Jul 6, 2012 5:31 AM GMT+0700

Jim Watson/AFP/Getty Images

President Barack Obama with his campaign bus at Toledo Express airport in Ohio on July 5, 2012.

President Barack Obama told voters in the battleground state of Ohio today that his administration filed a claim with the World Trade Organization against China, charging it with unfair tariffs on U.S. autos, a welcome message in the U.S. rust belt.

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July 5 (Bloomberg) -- President Barack Obama speaks about a claim that his administration filed with the World Trade Organization against China, charging it with unfair tariffs on U.S. autos. Obama, speaking in Maumee, Ohio, at the start of a two-day campaign bus tour, also talks about last week’s decision by the U.S. Supreme Court to uphold the health-care law. (Source: Bloomberg)

“Americans aren’t afraid to compete. We believe in competition,” Obama said while campaigning in Maumee, Ohio. “But we’re going to make sure competition is fair.”

The WTO complaint came as Obama began a two-day bus trip in Ohio and Pennsylvania. The “Betting on America” tour, as his campaign has dubbed it, runs through areas reliant on the auto industry. The label is designed to draw a contrast with presumed Republican presidential nominee Mitt Romney, a former private- equity executive whose business made investments overseas.

Romney’s experience “has been in owning companies that were called ‘pioneers of outsourcing,’” Obama said. “My experience has been in saving the American auto industry, and as long as I’m president, that’s what I’m gonna be doing.”

The duties in the WTO claim cover more than 80 percent of US auto exports to China including cars manufactured in the Ohio cities of Toledo and Marysville, Ohio, White House press secretary Jay Carney told reporters on Air Force One.

Carney said the WTO claim, the seventh such action against China taken by the administration, was “in development for quite a long time,” and that it was not politically driven.

Health-Care Ruling

Obama also spoke about the health-care law upheld last week by the Supreme Court. The affirmation means it’s time to put the acrimony behind and focus on its protections, he said.

“In America, nobody should go bankrupt because they get sick,” he said. “The law I passed is here to stay.”

Obama’s campaign spokeswoman, Jen Psaki, told reporters that Romney was flip-flopping on whether the law’s penalty for those who don’t get insurance is a tax.

While Romney now says it’s a tax, he and his advisers previously described it as a penalty. Romney is “being impacted by the push from the right” including congressional Republicans and “the Rush Limbaughs of the world,” Psaki said, referring to the talk radio host.

Obama touched briefly on the health-care ruling later in the day at what the campaign said was an ice cream social in Sandusky, Ohio. He told a crowd of about 350 people that “we don’t need to re-argue the last two years.”

‘Worst’ Crisis

Standing inside a wooden gazebo wearing khaki slacks and a short-sleeve shirt, Obama said he favors investments in infrastructure and education and sought to distinguish that approach from his rival’s.

“We’ve got two fundamentally different visions in this election. Mr. Romney and his Republican allies in Congress” believe in “trickle-down” economics, including providing a $5 trillion tax cut for the rich, Obama said.

“Here’s the problem: we tried that,” Obama said. “Not only did it not work, it led to the worst financial crisis we’ve had in our lifetime.”

Polls show that linking Romney to the outsourcing of U.S. jobs when he was at Boston-based Bain Capital LLC, which he co- founded, is an effective approach with voters in the swing states of Ohio and Pennsylvania, where Obama will end the trip.

“If the election’s about Romney and Bain, then the president’s going to win,” said Stu Rothenberg, editor of the nonpartisan Rothenberg Political Report in Washington. “For Romney, it has to be about Obama: Obama and jobs, Obama and leadership, Obama and the economy, and Obama and health-care.”

Jobs Report

The president may be shadowed on his trip by new data showing weakness in the U.S. economic recovery. The Labor Department’s monthly jobs report, set for release tomorrow, is likely to show the U.S. unemployment rate held steady at 8.2 percent, according to the median forecast of economists surveyed by Bloomberg News. In May, the jobless rate rose to the 8.2 percent figure from 8.1 percent in April.

Ohio and Pennsylvania, both of which Obama won in 2008, have a combined 38 electoral votes in this year’s election. Since filing for re-election in April 2011, Obama has visited Ohio nine times and Pennsylvania eight times.

During his tour, Obama was stopping in small towns including Maumee and Sandusky in northern Ohio before entering Pennsylvania. He will cap off the trip at Carnegie Mellon University in Pittsburgh.

‘Close Contest’

Paul Beck, a professor of political science at Ohio State University, said the president’s decision to visit counties he won in 2008 shows that he’s not taking anything for granted.

“It’s going to be a very close contest here and when you have that kind of focus you have two battlegrounds: independent voters and you need to make sure that you squeeze every vote out of your core constituency that you can,” Beck said.

Romney’s campaign also recognizes the electoral importance of winning in Ohio and Pennsylvania. His events in the region have included a speech in Cincinnati on June 14 -- the same day Obama was speaking across the state in Cleveland. A trip in early May that officially began Obama’s re-election bid included a stop in Columbus, Ohio’s capital.

The Ohio Republican Party plans to capitalize on what it calls apathy among Democrats and an eagerness among Republicans to mobilize to defeat Obama.

Republican Response

“From his underwhelming stop in Cleveland last month, to his absolute flop of a campaign kickoff in Columbus, Ohioans are showing over and over again that they have had enough of Barack Obama’s failed economic policies and repetitive, empty rhetoric,” said Ohio Republican Party spokeswoman Izzy Santa.

Obama led Romney by nine percentage points in Ohio and six in Pennsylvania, according to a “Swing State Poll” conducted June 19-25 by Hamden, Connecticut-based Quinnipiac University. The poll of 1,237 Ohio voters and 1,252 Pennsylvania voters had a margin of error of plus or minus 2.8 percent. In 2008, Obama beat Republican John McCain in Ohio by five percentage points and in Pennsylvania by 11.

Still, Obama lost the 2008 Democratic primaries to Hillary Clinton in Ohio and Pennsylvania, and Republican George W. Bush won Ohio in 2000 and 2004.

Beck said many white middle-class voters in the region don’t feel loyal to Obama and some still have trouble voting for a black president. “While most people have gotten beyond racial prejudice, it still exists there and it’s something Obama will have to work against,” he said.

Economic Data

If the economic data “is suggesting economic problems ahead and slowdown, the harder it will be to keep the focus on Romney,” putting Ohio at risk for Obama, Rothenberg said.

Ohio’s economy has been recovering faster than most of the country. It ranks sixth in improving economic health in the Bloomberg Economic Evaluation of States from the first quarter of 2011 through the first quarter of this year, the most recent data available. The unemployment rate in Ohio was 7.3 percent in May, lower than the national rate of 8.2 percent for that month and down from a high of 10.6 percent from July 2009 through January 2010.

The Obama campaign started airing a television ad July 3 in nine states including Ohio and Pennsylvania that says Romney’s team at Bain “were pioneers in outsourcing U.S. jobs to low- wage countries.” The ad says Obama “believes in insourcing” and “fought to save the U.S. auto industry.”

Through July 2, the campaign aired two ads 504 times on stations that reach Ohio voters, blaming Romney and Bain Capital for job losses at a steel company. Another ad from the Obama campaign, citing a Washington Post article that Bain sent jobs overseas, was run 247 times on stations that reach Ohio voters beginning June 27 through July 2, according to data from Kantar Media’s CMAG, which tracks campaign advertising.

Priorities USA Action, the super-political action committee backing Obama, has produced four television ads that have run 2,357 times in Ohio; three of those ads also either ran or are running in Pennsylvania 2,591 times.

To contact the reporter on this story: Kate Andersen Brower in Washington at kandersen7@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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VW to Pay $5.6 Billion for Rest of Porsche After Seven-Year Saga

By Chad Thomas and Dorothee Tschampa - Jul 5, 2012 5:53 AM GMT+0700

Volkswagen AG (VOW) agreed to buy the 50.1 percent stake in Porsche SE (PAH3)’s automotive business that it doesn’t already own for 4.46 billion euros ($5.6 billion), ending a seven-year takeover saga that divided two of Germany’s most powerful families.

VW was able to proceed with the transaction after reaching an agreement with German tax authorities, it said in an emailed statement late yesterday. The cash deal is based on an equity value of 3.88 billion euros and also includes what the Porsche holding company would have received in dividend payments and half of the forecast synergies from the combination.

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A customer browses Porsche 911 automobiles on display outside a dealership in Stuttgart, Germany. Photographer: Guenter Schiffmann/Bloomberg

The agreement means Wolfsburg, Germany-based Volkswagen can now fully fold the Porsche automaking business into its stable of brands, which range from Audi sedans to Ducati motorbikes. The two companies agreed to combine in 2009 after Stuttgart- based Porsche racked up more than 10 billion euros of debt in an unsuccessful attempt to take over Europe’s largest carmaker.

“We can now cooperate even more closely and jointly leverage new growth opportunities in the high-margin premium segment,” VW Chief Executive Officer Martin Winterkorn said in an e-mailed statement. “Combining their operating business will make Volkswagen and Porsche even stronger -- both financially and strategically -- going forward.”

VW said it expects Porsche’s automaking business to be fully consolidated in its accounts from Aug. 1. Porsche’s earnings contribution for this year will be mainly offset by the purchase price, VW said. By revaluing its existing shares in Porsche, VW expects to book a non-cash gain of more than 9 billion euros and predicts a liquidity drain on its own automaking division of about 7 billion euros.

U.S. Lawsuits

The two companies scrapped the plan for a full merger last year with the Porsche holding company, which is controlled by the Piech-Porsche family and still owns 50.7 percent of VW’s common stock, because of lawsuits against Porsche in the U.S. and Germany over the failed VW takeover.

The deal announced yesterday allows VW to purchase Porsche’s automotive business without having to pay the taxes associated with exercising a put-call option it had to buy the stake. The agreement will result in 320 million euros in additional synergies due to the earlier completion.

Botched Takeover

“I am not surprised by the deal as such, only by the timing,” said Albrecht Denninghoff, a Frankfurt-based analyst at Silvia Quandt Research. “Both parties have wanted the integration for a long time.”

Volkswagen shares have climbed 11 percent this year, valuing the carmaker at 57.2 billion euros. Shares in the Porsche SE holding company are up 1.5 percent in 2012, giving the company a market value of 12.8 billion euros.

Porsche’s attempt starting in 2005 to take over Volkswagen, which makes more cars in a week than the sports-car maker does in a year, split the controlling family. Ferdinand Piech, VW’s chairman, crossed his cousin Wolfgang Porsche to thwart the plan, which ultimately fell apart after Porsche’s debt rose in the midst of the financial crisis.

Piech, 75, the former VW CEO who was elected to a third term as chairman in April, has since solidified control of Volkswagen. His wife, Ursula, took a seat on the company’s supervisory board earlier this year. In April, VW agreed to acquire Italian motorcycle maker Ducati, fulfilling Piech’s vision of a company with a range spanning two-wheelers to 50-ton trucks. VW also controls truck makers MAN SE and Scania AB.

“To have the Porsche clan as owners and the anchor shareholder is good for Volkswagen and for Germany,” said Christoph Stuermer, an IHS Automotive in Frankfurt. “This has changed the cultural heart of the company. Volkswagen has become substantially stronger and long-term oriented.”

To contact the reporters on this story: Chad Thomas in Berlin cthomas16@bloomberg.net Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net.

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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BMW Apple-Like Geniuses Sell Luxury Models with Tablets: Cars

By Chris Reiter - Jun 1, 2012 5:00 AM GMT+0700

Oliver Watkins struggles to explain to car shoppers that his job is to be a genius for Bayerische Motoren Werke AG. (BMW)

“We tell them we work for BMW in a new, exciting role, and we sometimes refer to ourselves as the ‘geeks’ of BMW,” said the 21-year-old, who joined Cooper Norwich, a BMW dealer in eastern England in September as one of the carmaker’s first two geniuses. More are on their way.

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In the new 800-square-meter Paris boutique, the four cars in the showroom are displayed beneath a light screen that can simulate conditions like driving through a forest. Photographer: Balint Porneczi/Bloomberg

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April 5 (Bloomberg) -- Bayerische Motoren Werke AG displays its 2013 BMW 6 Series Gran Sport luxury sedan at the 2012 New York International Auto Show. (Source: Bloomberg)

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April 9 (Bloomberg) -- Bayerische Motoren Werke AG displays its BMW i8 and i3 all-electric concept vehicles at the 2012 New York International Auto Show. (Source: Bloomberg)

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April 4 (Bloomberg) -- Ian Robertson, global head of sales and marketing at Bayerische Motoren Werke AG, talks about the automaker's first-quarter sales record, the importance of the U.S. and emerging markets to the company, the evolution of the BMW 3 Series line of cars, technology to boost vehicle fuel efficiency and customer behavior. He speaks with Bloomberg's Jamie Butters at the 2012 New York International Auto show. (Source: Bloomberg)

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Models stand at the entrance as guests arrive for the opening of the first brand store for Bayerische Motoren Werke AG in Paris. Photographer: Balint Porneczi/Bloomberg

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BMW's head of sales and marketing Ian Robertson said, “We want to bring the car environment into the shopping environment.” Photographer: Balint Porneczi/Bloomberg

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Guests look at a BMW 353i automobile, produced by Bayerische Motoren Werke AG, during the opening of the company's new brand store in Paris. Photographer: Balint Porneczi/Bloomberg

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A set of BMW branded golf balls for Bayerische Motoren Werke AG, are seen on display inside the company's new brand store in Paris. Photographer: Balint Porneczi/Bloomberg

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A BMW M6 convertible, produced by Bayerische Motoren Werke AG, is seen on display inside the company's new store in Paris. Photographer: Balint Porneczi/Bloomberg

Borrowing an idea from Apple Inc. (AAPL)’s stores, BMW plans to add tablet-toting product experts to the staff of its 3,000 dealers worldwide. Watkins and his colleagues will help customers link a car with an iPhone and sort through options like Night Vision and Active Steering without selling pressure.

Seeking to defend its lead in luxury-car sales, BMW will add geniuses to outlets in France, the U.K., China and the Netherlands this year and later in the U.S. The extra showroom staff are part of an overhaul of BMW’s retail approach as competition with Volkswagen AG (VOW)’s Audi and Daimler AG (DAI)’s Mercedes- Benz for wealthy car buyers intensifies.

The strategy kicked off last week when BMW opened a new store near the Champs-Elysees in Paris. The site is the first of a series of shops that focus on showcasing the brand to casual shoppers to broaden its appeal. Audi is joining BMW in introducing less-pushy sales tactics, which include a focus on urban buyers and better integration of showrooms with the web and smartphone presentations. The goal is to win new fans and catch up with Mercedes in retaining customers.

Brand Loyalty

“Loyalty is key because the market is saturated,” said Andy Turton, global development director at consumer-research company TNS in London. “The only way to grow is to take customers from others, but you have to hold on to your own first. Otherwise, it’s like pouring water into a leaky bucket.”

About 47 percent of BMW buyers stuck with the brand last year, compared with an industry-leading 62 percent for Mercedes, according to market research company Strategic Vision in San Diego. Audi’s retention was 37 percent last year.

“The traditional showroom model, where you’ve got a sales hustler closing deals, doesn’t work well in the luxury segment,” TNS’s Turton. “Customers in this space are looking for an experience.”

BMW, which is targeting a 20 percent increase in car sales to 2 million vehicles by 2016, is projected to have its lead over Mercedes tumble 72 percent to 30,400 vehicles in 2013 from 109,500 this year, according to figures from IHS Automotive.

Mercedes in Manhattan

Mercedes, which is seeking to retake the luxury-car sales lead from BMW by the end of the decade, sparked the retail battle after opening a store focused on promoting the brand more than selling cars in March 2009 in central Munich, BMW’s hometown. That was followed in June last year by a $220 million dealership in Manhattan, a few blocks from BMW’s new store.

The Stuttgart-based carmaker also attracted more than 410,000 visitors to a showroom that opened in Tokyo in July. The store, which includes a coffee bar and Mercedes merchandise, marked the first of about 10 urban outlets targeted at boosting the brand’s appeal with younger consumers.

“Mercedes has continued to find increased retention, partially due to a wide range of product choices and consistently better messaging” about the brand’s attributes, said Alexander Edwards, head of the automotive practice at Strategic Vision. “It is easier for customers to be loyal because there are so many opportunities to be loyal.”

Those possibilities will increase as the brand adds more entry-level models like the CLA compact coupe and doubles the variants of the S-Class flagship to six.

Audi is upgrading its store concept to target high-end neighborhoods in large cities, said Moritz Drechsel, a spokesman for the Ingolstadt, Germany-based brand. The focus of the approach is on the combination of web-based services with the personal touch and knowhow of a dealer, he said.

Larger Line-Up

In addition to adapting to changing buying habits, BMW’s retail strategy is also a reaction to a lineup that’s outgrowing most showrooms. Since 1999, when BMW’s range consisted of three sedans and a roadster, the brand has added four sport-utility vehicles, the 6-Series coupe and the 1-Series compact. More models are on their way, including the i8 plug-in hybrid supercar, the X4 SUV and a line of front-wheel-drive vehicles.

In the new 800-square-meter (8,600-square-foot) Paris boutique, the four cars in the showroom are displayed beneath a light screen that can simulate conditions like driving through a forest. The music is computer generated and changes based on the activity in the wood-framed space, while mirrors reflect the two cars in the display windows to passersby. The store is flanked by a Cartier and a Hermes shop and is down the street from Louis Vuitton’s mega store.

“We want to bring the car environment into the shopping environment,” Ian Robertson, head of sales and marketing for the BMW brand, said at the opening, which was attended by Monaco princess Charlotte Casiraghi. “There’s no doubt that the retail experience will play a huge role in being successful. The car industry is about 100 years old and basically hasn’t changed. The future could look very, very different.”

The investment in the retail strategy, which will include about 20 brand stores in major cities such as London, New York and Shanghai as well as the addition of geniuses, is “significant,” Robertson said, declining to provide figures.

For Watkins, the BMW pioneer from Norwich, it gave him a chance to pursue his passions for cars and gadgets after previously working at a PC World computer store.

“I love the interaction with the people and helping them better understand the cars and the technology,” he said. Also, his mom’s “very proud” to have a BMW genius in the family.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net.

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net.

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Shale Glut Means $1-a-Gallon Savings at the Pump

By Eduard Gismatullin and Jeremy van Loon - May 22, 2012 9:59 PM GMT+0700

Tomohiro Ohsumi/Bloomberg

A liquefied natural gas (LNG) tanker operated by Energy Advance Co., a unit of Tokyo Gas Co., is moored at the company's Sodegaura plant in Sodegaura City, Chiba Prefecture, Japan, on Thursday, March 22, 2012.

Chad Porter wants to run his 18- wheeler trucks on frozen natural gas along a highway that crosses Canada’s Rocky mountains even before the world’s longest chain of refueling stations gets built to keep them fueled.

The chief operating officer of oil services company Ferus Inc. bought two vehicles to test liquefied natural gas and reckons switching from diesel may cut 22 percent from his fuel bill, or about $1 a gallon. At the moment, Calgary-based Ferus uses mobile tankers to refuel his trucks, which cost about C$100,000 ($99,000) more than conventional vehicles, adding expense to a project that’s about saving money. A Royal Dutch Shell Plc (RDSA) project will make it easier to fill up.

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A Shell natural gas liquefying plant. Source: Shell

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“Gas in our view will be the fuel of the future,” said Royal Dutch Shell Plc Chief Executive Officer Peter Voser. Photographer: F. Carter Smith/Bloomberg

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Shell’s plan to spend $250 million on an LNG plant and a string of filling stations is the biggest single investment yet in making frozen gas a transport fuel, a shift advocated by proponents of energy independence including billionaire investor T. Boone Pickens. Photographer: Jacob Kepler/Bloomberg

Shell’s plan to spend $250 million on an LNG plant and a string of filling stations is the biggest single investment yet in making frozen gas a transport fuel, a shift advocated by proponents of energy independence including billionaire investor T. Boone Pickens. Switching engines to run on LNG is becoming economic because a glut of fuel from North America’s shale rocks has made the U.S. the world’s largest natural-gas producer and forced prices to record discounts versus crude oil.

“LNG holds great potential as a transport fuel,” Mark Williams, Shell’s director for downstream, said in a speech this month. “North America, for example, now has a century of gas supplies at current consumption rates. So gas is likely to gain market share in transportation.”

Special Coolers

Using LNG in vehicles has limitations, from fuel evaporation to the special coolers needed at filling stations to keep the gas at minus 162 degrees Celsius (minus 259 Fahrenheit), making it mostly suitable for long-haul trucks with large gas tanks. U.S. truckers spent more than $135 billion on fuel last year, according to American Trucking Association.

“We would take advantage of any infrastructure that gets built,” Ferus’s Porter said in an interview from his office in Calgary.

Shell agreed to work with filling-station owners Flying J Inc. to offer LNG to trucks along the highway, from Fort McMurray in Alberta, the heart of Canada’s oil industry, to Vancouver on the Pacific coast, more than 900 miles (1,600 kilometers) to the southwest. At today’s diesel prices, fuel for each run on the route by a typical 33,000-pound, 60-foot truck costs about C$550.

The roadway, which comes within about 235 miles of Mt. Robson, the range’s highest peak at 12,972 feet, passes through part of Canada’s oil and gas producing region, as well as the mining and forestry operations of companies including Teck Resources Ltd. (TCK/B)

‘See Opportunities’

“We see opportunities for a concept like this one in other areas of the world as well,” said Jose-Alberto Lima, Shell’s vice president for LNG and gas sales in Americas. He said Shell, based in The Hague in the Netherlands, doesn’t expect a rebound in gas prices anytime soon.

In addition to being cheaper, natural gas burned in trucks emits as much as 25 percent less carbon dioxide, as well as almost eliminating particulate matter and sulfur dioxide produced by diesel-powered vehicles, according to the Calgary- based Van Horne Institute. Using natural gas, a fuel where North America is self-sufficient, would also cut demand for imported crude oil.

Shell eventually plans to deploy LNG technology to power trains, ships and mining industry engines. Gas overtook crude oil to account for more than 50 percent of the company’s production for the first time this year. It expects to expand the use of LNG as a transport fuel beyond North America to Europe, China, Latin America and Australia.

Future Fuel

“Gas in our view will be the fuel of the future,” Shell Chief Executive Officer Peter Voser told shareholders today. The company has more than 40 trillion cubic feet of gas resources in North America, about 12 percent of the continent’s total at the end of 2010, based on data from BP Plc (BP/)’s Statistical Review of World Energy.

The Anglo-Dutch company’s Green Corridor project in Canada will make 300,000 tons of LNG a year. It plans to start production at its first small-scale gas liquefaction plant at Jumping Pound near the route’s halfway point next year.

“These trucks are more expensive than the traditional diesel trucks today,” Shell’s Lima said. “You need to have economies of scale to bring these costs down.”

Shell is cooperating with Vancouver-based Westport Innovations Inc. (WPT), the maker of cryogenic fuel tanks and the only currently available 15-liter gas-powered engine suitable for heavy-duty trucks running on LNG.

Compressed Gas

The second Canadian maker of gas powered engines is Cummins Westport Inc., which makes smaller 8.9 liter heavy-duty unit. The Vancouver-based joint venture of U.S.’s Cummins Inc. (CMI) and Westport has designed a motor able to run on either compressed natural gas, CNG, or LNG.

CNG is used for light- and medium-duty vehicles, such as buses and garbage trucks. LNG, which is using a cryogenic technology to chill gas and reduce it to one-six-hundredth of its original volume at low temperature, is offered mostly as a fuel for heavy-duty vehicles.

CNG, which is stored at ambient temperature, requires tanks with thicker walls to hold the pressure and provides less energy per volume. Therefore, long-haul trucks can take more LNG on board in lighter chilled tanks with less time required for refueling per energy unit.

“Drivers have been very receptive to LNG trucks, especially since they drive like diesel trucks,” said Cara West, a spokeswoman at Paccar Inc., which designs and manufactures trucks under Kenworth, Peterbilt and DAF nameplates and where Ferus bought its vehicles. “Dealers are receiving multiple inquiries from customers anxious to learn more about LNG trucks.”

Market Share

Paccar currently equips some of its Kenworth and Peterbilt models with LNG engines. The Washington state-based maker expects the gas-powered-truck market share in North America to expand to about 20 percent in the next several years, up from about 6 percent now.

With natural gas fuel taxed about 20 Canadian cents less a liter than diesel on equivalent basis, it takes less than five years for a driver to return extra investment benefiting from cheaper fuel, according to the Canadian Natural Gas Vehicle Alliance. Canada has more than 100 LNG powered trucks almost equally split between western and eastern parts of the country operated by Vedder Transport, a milk hauler in British Columbia, and Robert Transport, which operates in Quebec and is expanding the fleet.

In January, President Barack Obama said tax breaks for natural-gas powered trucks will help cut dependence on imported oil in the world’s largest crude-consuming country. “We, it turns out, are the Saudi Arabia of natural gas,” Obama said. The U.S Senate and House have been reviewing the bill to boost greater use of the gas.

Huge Resource

“The potential is there, and when you have this huge resource in the U.S., and you’ve got almost 10 million barrels per day imported being used for transportation fuels,” said Theepan Jothilingam, an analyst at Nomura Holdings Inc. At some stage, the U.S. government “will need to give a tax break and encourage both the technology and the execution of this technology.”

Billionaire investor Pickens has been lobbying for incentives to stimulate greater use of natural gas as a vehicle fuel to replace imported oil. Pickens is the largest shareholder of Clean Energy Fuels, a natural-gas supplier for bus and truck fleets, which is building America’s Natural Gas Highway across the U.S. to fuel long-haul trucks with LNG starting from the end of this year.

About 30 percent of U.S. “classic trucks” can be converted to run on LNG, which needs highly utilized vehicles running lots of miles to pay back for the additional engine costs by fueling it with cheaper LNG, said James Burns, Shell’s general manager for LNG in Transport, Americas. “Emissions is a key issue here as well both on local air emissions and green- house gas emissions.”

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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Sukhoi SuperJet Disappears During Indonesia Demo Flight

By Yudith Ho and Andrea Rothman - May 10, 2012 6:01 AM GMT+0700

The search continued for a Russian Sukhoi SuperJet 100 that vanished from radar screens during a brief promotional flight in Indonesia yesterday with 50 people on board, as poor weather complicated the rescue effort.

Indonesia’s National Search & Rescue Agency deployed more than 100 people to track down the aircraft that disappeared in the afternoon in West Java. Helicopters were forced to abort an earlier mission and will resume their search today. Sukhoi representatives said they were heading for Jakarta to support the effort, along with Russia’s Ministry of Industry & Trade.

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Relatives of passengers on the ill-fated Russian Sukhoi Superjet 100 grieve at the arrival area of Halim airport in Jakarta on May 9, 2012. Photographer: Romeo Gacad/AFP/GettyImages

The twin-engine aircraft, which can carry about 100 people, lost contact after descending to 6,000 feet (1,828 meters) on its second flight of the day during a promotional tour of Asian countries. The SuperJet, developed with support and equipment of Western partners, is the spearhead in Russia’s attempt to revive the nation’s aerospace industry and modernise the fleet following the 1991 collapse of the Soviet Union.

“I cannot say that it has crashed,” Daryatmo, head of the Search and Rescue Agency, said at a press briefing at Halim Perdana Kusumah airport. “What we can say at the moment is that it has lost contact.” .

The terrain in the West Java province reaches 10,000 feet around the peak of the Ciremai volcano. The Sukhoi had taken off from the Halim Perdana airport as part of a tour of Asia that had included previous stints to Myanmar, Pakistan and Kazakhstan. Further appearances were planned in Laos and Vietnam, Olga Kayukova, a spokeswoman for Sukhoi owner United Aircraft Corp., said by telephone.

Proper Condition

The aircraft has an operating range of as much as 4,578 kilometers (2,845 miles) and is a challenger to similar-sized jets from Bombardier Inc. (BBD/B) and Brazil’s Embraer SA. (EMBR3) Sukhoi said the jet used in Jakarta had gone through the “full pre-flight check” and displayed the “proper technical condition.”

The second demonstration flight for the day followed a first tour that had gone “without any technical problems,” Sukhoi said in a statement on its website. Commanding the jet were a “very experienced crew” consisting of Chief Test Pilot Alexander Yablontsev and co-pilot Alexander Kochetkov, it said.

The Sukhoi SuperJet carried 42 passengers and eight crew, Sunaryo, an official from PT Trimarga Rekatama, said at a press conference yesterday in Jakarta. Trimarga Rekatama is Sukhoi’s agent in Indonesia.

Prone to Accidents

The SuperJet was developed in a venture with Finmeccanica SpA (FNC)’s Alenia Aeronautica SpA, which is helping market the plane. Russia’s aviation industry has sought to overcome the image of outdated aircraft prone to accidents. Last year, the country suffered 99 deaths after five jetliner accidents through late September, according to the most recent figures available from researcher Ascend Worldwide Ltd.

Following an accident last year when a plane carrying the Lokomotiv Yaroslavl hockey team failed to gain altitude, then- President Dimitry Medvedev said Russia might turn to foreign aircraft producers to ensure safety of air travel.

The age of Russia’s domestically manufactured single-aisle aircraft fleet is between 25 and 30 years, while the U.S. fleet averages around 13 years, according to figures published late last year by Ascend, a London-based aviation consultant company.

“It’s a setback, but we don’t know anything about the causes yet,” said Richard Aboulafia, vice president of the Teal Group, an aviation forecaster in Fairfax, Virginia. “Russia’s jetliner industry completely lost its competitiveness after the Cold War and shrank to almost nothing.”

Muted Interest

Customers for the SuperJet included Armenia’s Armavia and Russia’s flagship airline OAO Aeroflot, and the eight aircraft in service for two carriers have accumulated more than 3,500 flights. PT Sky Aviation, an Indonesian carrier, has ordered 12, and the Asian tour was an attempt to raise the aircraft’s profile with prospective customers.

While European carriers including Air France-KLM Group and Deutsche Lufthansa (LHA) AG initially said they were studying the plane, neither has so far placed orders. The SuperJet’s main competitors are the CRJ900 built by Bombardier and the E175 and E190 models by Embraer.

Seating five abreast, the plane is powered with engines built by PowerJet, a joint venture between French engine maker Snecma, a unit of Safran SA (SAF), and NPO Saturn. Safran’s Messier- Dowty unit also provides the integrated landing gear system, with B/E Aerospace providing the doors. Italy’s Avio provides the gearbox for the propulsion systems and Safran’s Aircelle unit provides the engine nacelles.

Development and capital costs were about $1 billion, according to Fairfax’s Teal, with another $1 billion for the engines and customer support. The list price is $28 million. The aircraft had 170 orders in total, according to Teal. Sukhoi itself has not disclosed order numbers.

To contact the reporters on this story: Yudith Ho in Singapore at yho35@bloomberg.net; Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Neil Denslow at ndenslow@bloomberg.net

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Jaguar F-Type Revisits Swinging ‘60s to Challenge Porsche: Cars

By Steve Rothwell - May 9, 2012 7:35 PM GMT+0700

Jaguar is invoking its iconic E-Type roadster to challenge Mercedes-Benz and Porsche with its first two-seat sports car in almost four decades.

The F-Type, due to be unveiled in September and go on sale as soon as next April, will be Jaguar’s smallest auto in more than a half-century as the marque seeks a return to its sporting tradition following decades spent focusing on luxury sedans.

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Jaguar says the F-Type, a production version of its C-X16 concept car, seen here, minus the hybrid engine, is more than just a marketing ploy, and that the model will make money. Photographer: Jason Alden/Bloomberg

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May 9 (Bloomberg) -- The Jaguar C-X16 concept sports car is seen in a promotional video from Jaguar Land Rover Plc. The company's F-Type production roadster, due to be unveiled in September, is based on the C-X16. (Video courtesy of Jaguar Land Rover Plc. Source: Bloomberg)

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May 9 (Bloomberg) -- Bloomberg's Betty Liu and Dominic Chu report that Jaguar is invoking its iconic E-Type roadster to challenge Mercedes-Benz and Porsche with its first two-seat sports car in almost four decades. They speak on Bloomberg Television's "In The Loop." (Source: Bloomberg)

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The E-Type, seen here, introduced at the 1961 Geneva Motor Show, was described by Ferrari founder Enzo Ferrari as “the most beautiful car ever built,” and became synonymous with the London of the “Swinging Sixties.” Source V&A via Bloomberg

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Beijing auto show attendees walk past a large poster for a Jaguar automobile. Photographer: Nelson Ching/Bloomberg

“If the product can do what the original E-Type did for Jaguar, it will be a huge boost,” said Peter Schmidt, managing director of Warwick, England-based Automotive Industry Data. “What they’re doing is laudable, it’s good for the brand and it’s good for the image. But nobody should expect miracles.”

The E-Type, introduced at the 1961 Geneva Motor Show, was described by Ferrari founder Enzo Ferrari as “the most beautiful car ever built,” and became synonymous with the London of the “Swinging Sixties.” Yet it has taken the $2.5 billion purchase of Jaguar by India’s Tata Motors Ltd. (TTMT) in 2008 for a pure-bred sports model to return to favor at the British manufacturer.

Tata, which acquired the Jaguar and Land Rover brands from Ford Motor Co. and combined them into a single unit, plans to invest $12 billion over five years to win a bigger slice of an upscale market dominated by German automakers.

Tata Motors fell 1.2 percent to 292.85 rupees in Mumbai trading today. The shares have still advanced 64 percent this year, exceeding gains of 30 percent for Bayerische Motoren Werke AG (BMW), 18 percent at Volkswagen AG (VOW), parent of luxury carmaker Audi, and 13 percent at Daimler AG (DAI), which owns Mercedes-Benz.

‘Twin Job’

Jaguar says the F-Type, a production version of its C-X16 concept car minus the hybrid engine, is more than just a marketing ploy, and that the model will make money.

“We’re too small a company for it not to be a viable business proposition,” spokesman Angus Fitton said. “It’s got to pay for itself and generate profit, but it has got to do a twin job in that it will be a brand-building job as well.”

Jaguar has yet to say how much the F-Type will cost, though the “speculated price” for the first variant, a convertible, is about 55,000 pounds ($89,000), putting it in a niche where there’s little overlap with competitors’ models and helping to reduce the average age of Jaguar’s customer base, Fitton said.

The third generation of Porsche AG’s Boxster roadster went on sale in Germany last month at 48,300 euros ($62,800), while the Carrera Cabriolet, the cheapest convertible version of the Stuttgart-based company’s 911 model, sells for 100,500 euros.

Three Models

The F-Type will also sit between the Mercedes SLK compact roadster, which costs 38,700 euros, and the Daimler brand’s new SL, available in Europe from March 31 and priced from 93,500 euros, as well as the 31,500-euro TT Roadster and 123,200-euro R8 Spyder from VW’s Ingolstadt-based Audi. BMW’s only two-seat convertible is the 36,400-euro Z4.

Jaguar’s current lineup is based on three models, two of them sedans, with the XJ positioned to compete with the BMW 7- Series and Mercedes S-Class and the mid-range XF an alternative to the 5-Series and E-Class from the two German companies.

The third model, the XK, is available as a four-seat convertible for 99,400 euros and was regarded as the closest thing to an E-Type successor when it was introduced in 1996 to replace the XJS, which itself ousted the 1960s icon in 1975.

The F-Type will be made at Jaguar’s Castle Bromwich plant near Birmingham, England. The company, which currently operates from three U.K. sites, said March 21 it had agreed to form a venture with Chery Automobile Co. Ltd. to build cars in China.

The new model will come with a 3-liter supercharged V6 engine tuned to either 335 or 375 horsepower and later with a 5- liter V8, according to Fitton. With a top speed of 155 miles per hour, it will only be produced in a two-seat layout.

Production Plans

While that may help restore Jaguar’s sporting credentials established with the 100-mph SS100 in 1938 and buoyed by seven victories in the Le Mans 24 Hour Race with models including the C-Type and D-Type, the F-Type won’t deliver the volumes needed for the part-sharing and economies of scale required to compete with larger manufacturers, said Garel Rhys, director of Cardiff University’s automotive industry research center.

BMW, the Munich-based luxury-car leader, boosted deliveries 13 percent last year to 1.38 million cars and sport-utility vehicles, while Audi ranked second with 1.3 million autos and Stuttgart-based Mercedes-Benz placed third with 1.26 million.

SUV-Led

Jaguar Land Rover, by contrast, sold 314,433 vehicles in the 12 months ended March 31. While that represented a 29 percent increase from a year earlier, deliveries of Land Rover SUV’s accounted for more than 80 percent of total output.

“You can’t go on like that,” Rhys said. “You need that volume, you really do. There has to be much more carry-over between Jaguars and Land Rovers under the skin of the cars.”

The relatively narrow model range also leaves Jaguar vulnerable to sudden shifts in consumer taste, especially as buyers begin to switch to smaller, more fuel-efficient models, according Andrew Jackson, an analyst at Datamonitor in London.

“Because they only have three vehicles, they’re somewhat exposed once they get to the end of their life cycle,” he said. “The competition could be providing something that might be a bit cheaper, that looks better or might be better fitted.”

Rhys said he reckons Jaguar Land Rover wants to lift deliveries to as many as 650,000 a year by 2016 and predicts it will announce a new model in the next six months aimed at competing with BMW’s best-selling 3-Series in the small- to mid- sized sedan market.

“They do need something like that,” he said. “Unless you have a vehicle with sales of 150,000 a year, you’re really going to be hard-pressed to justify the Jaguar brand long-term.”

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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Titanic II Planned by Billionaire Palmer in Chinese Yard

By David Fickling and Elisabeth Behrmann - Apr 30, 2012 5:38 PM GMT+0700

Australian mining billionaire Clive Palmer plans to build a 21st-century replica of the Titanic and sail it from England to New York accompanied by the Chinese navy by the end of 2016.

He has signed a first-stage agreement with Nanjing-based CSC Jinling Shipyard to build the ship as part of a planned fleet of luxury liners, the Gold Coast, Queensland-based businessman said in an e-mailed statement today.

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The Titanic sits under scaffolding in the spring of 1911 in this photo made available to the media by the Library of Congress. Source: Library of Congress (George Grantham Bain Collection) via Bloomberg

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April 30 (Bloomberg) -- Australian billionaire Clive Palmer plans to build a 21st century replica of the Titanic and sail it from England to New York accompanied by the Chinese navy by the end of 2016. (Source: Bloomberg)

Audio Download: Oceanograper Ballard Describes Discovering Titanic

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Clive Palmer, chairman of Mineralogy Pty. Photographer: Patrick Hamilton/Bloomberg

Palmer, whose investments include golf courses, hotels, coal and iron-ore mining projects, a nickel smelter, a soccer team and a horse stud, said the ship will have the same dimensions as the original Titanic. A move into the cruise market, where ships typically cost at least $500 million to build, is an ambitious step, Greg Johnson, an analyst with Shore Capital Group in London, said by phone.

“You’re starting from scratch with no experience,” Johnson said. “A $500 million punt is quite sizable.”

The Titanic, commissioned by White Star Line, was the largest liner in the world when built at just under 270 meters (about 880 feet) and 53 meters high. It sank on April 15, 1912, after hitting an iceberg east of Newfoundland, costing the lives of more than 1,500 passengers and crew, according to the statement. The Titanic II will, like its predecessor, have 840 rooms on nine decks, Palmer said.

Swimming Pools

“It will be every bit as luxurious as the original Titanic, but of course it will have state-of-the-art 21st century technology and the latest navigation and safety systems,” Palmer said, along with gymnasiums and swimming pools.

Palmer, 58, a former media adviser to Queensland’s late state premier Joh Bjelke-Petersen, is known for ambitious projects in varied fields.

In March he was quoted by the Sydney Morning Herald promising to invest in a blind trust to encourage media diversity in Australia, and saying that Australia’s Greens party was funded by the CIA.

He unveiled the Titanic II plan just over an hour before a separate announcement that he would stand against Australian Treasurer Wayne Swan in his seat of Lilley at a federal election due next year.

Challenge to Build

A person on duty at the managing director’s office of CSC Jinling said by phone that while he wasn’t aware of the deal, it may have been signed by the company’s marketing and sales department. Today is a public holiday in China.

The move into the cruise-ship industry, one of the few areas of heavy manufacturing still dominated by European companies, would be a challenge for a Chinese company, said Hur Sung Duck, an analyst at HI Investment & Securities Co. in Seoul.

“That’s a huge jump for a country that builds mostly bulk ships” used for carrying coal, iron ore and grains, Hur said. “I seriously find it difficult to believe it can be built by that time.”

Italy’s Fincantieri Cantieri Navali Italiani SpA, Norway’s STX Europe AS and Germany’s Meyer Werft GmbH, are the largest players in the cruise ship-building market, according to a 2010 presentation by Samsung Heavy Industries Co.

Mitsubishi Heavy Industries Ltd. (7011) last November completed two ships for Carnival Corp. (CCL), while STX Europe is owned by Changwon, Korea-based STX Corp.

‘Major Player’

“The Chinese ship-building industry with our assistance wants to be a major player in this market,” Palmer said in the statement.

The ship would sail under his company, to be name Blue Star Line in reference to the Titanic’s owner. China’s navy would be invited “to escort Titanic II on its maiden voyage to New York,” Palmer said.

Blue Star Line was registered on April 18 as a wholly-owned subsidiary of Palmer’s Mineralogy Pty., according to its only document filed with Australia’s securities regulator. Palmer and Derek Payne, manager of his Cold Mountain horse stud, are the only officers listed in the three-page filing.

The mining magnate has a fortune of A$5.05 billion ($5.3 billion) and is Australia’s fifth-richest person, according to BRW magazine rankings. He is developing coal and iron-ore mines in Australia, including the $8 billion China First coal project in Queensland state. Last year, he dropped plans to sell shares in his company Resourcehouse Ltd. in Hong Kong after commodity prices fell.

To contact the reporters on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net; David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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N.J. State Police Investigating Sports-Car ‘Death Race’

By Terrence Dopp and Elise Young - Apr 24, 2012 4:32 AM GMT+0700

New Jersey State Police are investigating whether troopers escorted a “Death Race” convoy of Porsches, Lamborghinis and Ferraris speeding at 100 miles per hour to Atlantic City.

Witnesses said they saw two cruisers on March 30 escorting a pack of sports cars, according to two complaints filed with the authority that runs the Garden State Parkway.

“It shouldn’t have happened; it was a dumb thing to do,” Republican Governor Chris Christie said in his first public comments on the matter. “Those people who made this mistake should be held accountable for it, and I’m sure they will.”

A witness, Wayne Gantt of Little Egg Harbor, dubbed the incident “Death Race 2012” in his complaint. The State Police cruisers had flashing lights on, and the sports cars were weaving in and out of traffic and had license plates covered with tape, according to the complaints.

Former New York Giants running back Brandon Jacobs was in the group, the Newark Star-Ledger said, citing an unidentified person with knowledge of the trip. Jacobs drove to Atlantic City last month, though it was unclear whether it was the occasion under investigation, his agent said today.

Another Jaunt?

“Yes, he went down to Atlantic City in a group that included a police escort,” Justin Schulman, Jacobs’s Irvine, California-based agent representative, said in a telephone interview. “I don’t know, nor does he know, if that was his caravan.”

Jacobs, 29, was released in March by the Giants after seven seasons. He signed a one-year contract in April with the San Francisco 49ers.

The complaints filed with the New Jersey Turnpike Authority, which oversees the 148-mile (238-kilometer) Turnpike and 173-mile Parkway, spurred the investigation, said State Police Lieutenant Stephen Jones. He declined in a telephone interview today to go into specifics of the allegations.

Gantt, who didn’t return a voice-mail message left at his home, said in his complaint that “the state is very lucky no one was killed.”

“I had the great pleasure today of nearly being killed by, not one, but two, Lamborghinis traveling in excess of 110 mph in a NJSP-escorted ‘caravan’ of approximately 30 exotic vehicles all traveling well over 100 mph,” Gantt wrote in a March 30 complaint provided by the Turnpike Authority.

‘Above the Law’

John W. Kennedy reported the pack of cars on April 1, according to his complaint.

Kennedy said he and his wife were traveling to Atlantic City when the caravan approached as he drove in the left lane. After pulling over, he said, he saw many cars struggle to get out of the way of the police-led pack. Once in town, Kennedy said he spotted one of the drivers parked and removing the tape from his plates.

“I felt bad for all of the drivers pulled over during the trip, because it was obvious that the authorities were abetting others to break the laws,” Kennedy said in the complaint. “Some remain above the law.”

Kennedy, a vice president for Cofely Airport Services and a Madison resident, said in a telephone interview today that he didn’t want to discuss the incident.

“I sent a complaint based on an observation,” Kennedy said. “The fact that it was leaked was very disappointing to me.”

The Death Race incident was reported earlier by the Star- Ledger.

It’s not the first time speed has drawn scrutiny to the state police. A trooper driving then-Governor Jon Corzine at 91 miles per hour on the parkway in April 2007 caused a near-fatal crash. Corzine was the front passenger of the sports utility vehicle and wasn’t wearing a seatbelt. The trooper was sanctioned after an investigation found that he could have prevented the wreck.

Christie said the new investigation left him chagrined.

“I just shook my head, but what are you going to do?” he said. “It’s a completely ridiculous story.”

To contact the reporters on this story: Terrence Dopp in Newark at tdopp@bloomberg.net; Elise Young in Trenton at eyoung30@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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