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Owner of ship that caused Baltimore bridge collapse to pay $100M
WASHINGTON | The owner and manager of the cargo ship that caused the Baltimore bridge collapse have agreed to pay more than $100 million to settle a lawsuit brought by the Justice Department, officials said Thursday.
The settlement comes a month after the Justice Department sued Dali owner Grace Ocean Private Ltd. and manager Synergy Marine Group, both of Singapore, seeking to recover funds the government spent to clear the underwater debris and reopen the city’s port, which was closed to most maritime traffic for months after the deadly collapse.
The settlement does not include any damages for rebuilding the bridge, officials said in a news release announcing the agreement. The construction project could cost close to $2 billion. The state of Maryland filed its own claim seeking those damages, officials said.
“This resolution ensures that the costs of the federal government’s cleanup efforts in the Fort McHenry Channel are borne by Grace Ocean and Synergy and not the American taxpayer,” Principal Deputy Associate Attorney General Benjamin Mizer said in a statement.
The Justice Department alleged that the electrical and mechanical systems on the ship, the Dali, were improperly maintained, causing it to lose power and veer off course before striking a support column on the Francis Scott Key Bridge in March. The ship was leaving Baltimore for Sri Lanka when its steering failed because of the power loss.
Six men on a road crew, who were filling potholes during an overnight shift, fell to their deaths. The collapse snarled commercial shipping traffic through the Port of Baltimore for months before the channel was fully opened in June.
Grace Ocean and Synergy filed a court petition just days after the collapse seeking to limit their legal liability in what could become the most expensive marine casualty case in history.
Court records show attorneys for both parties said in a joint filing Thursday that they had reached a settlement agreement and requested dismissal of the Justice Department’s claim, which sought $103 million in cleanup costs.
The claim is one of many filed in an expansive liability case that will ultimately determine how much the ship’s owner and manager will owe for their role in causing the disaster. The other claims are still unresolved. They’ve been filed on behalf of the victims’ families, companies whose business has suffered as a result of the collapse, municipal entities and more.
FBI agents boarded the Dali in April amid a criminal investigation into the circumstances leading up to the collapse.
When it was filed last month, the Justice Department civil claim provided the most detailed account yet of the cascading series of failures that left the Dali’s pilots and crew helpless in the face of looming disaster. The complaint pointed to “excessive vibrations” on the ship that attorneys called a “well-known cause of transformer and electrical failure.” Instead of dealing with the source of the excessive vibrations, crew members “jury-rigged” the ship, the complaint alleged.
It also noted cracked equipment in the engine room and pieces of cargo shaken loose. The ship’s electrical equipment was in such bad condition that an independent agency stopped further electrical testing because of safety concerns, according to the lawsuit.
No end for Boeing labor strike as workers reject
latest proposal
SEATTLE | Boeing factory workers voted against the company’s latest contract offer and remain on the picket lines six weeks into a strike that has stopped production of the aerospace giant’s bestselling jetliners.
Local union leaders in Seattle said 64% of members of the International Association of Machinists and Aerospace Workers who cast ballots Wednesday voted against accepting the contract offer.
“After 10 years of sacrifices, we still have ground to make up, and we’re hopeful to do so by resuming negotiations promptly,” Jon Holden, the head of the IAM District 751 union, said in a statement Wednesday evening. “This is workplace democracy — and also clear evidence that there are consequences when a company mistreats its workers year after year.”
A spokesperson for Boeing said officials didn’t have a comment on the vote.
The labor standoff comes during an already challenging year for Boeing, which became the focus of multiple federal investigations after a door panel blew off a 737 Max plane during an Alaska Airlines flight in January.
The strike has deprived the company of much-needed cash that it gets from delivering new planes to airlines. On Wednesday, the company reported a third-quarter loss of more than $6 billion.
Union machinists assemble the 737 Max, Boeing’s best-selling airliner, along with the 777 or “triple-seven” jet and the 767 cargo plane at factories in Renton and Everett, Washington.
The latest rejected offer included pay raises of 35% over four years. The version that union members rejected when they voted to strike last month featured a 25% increase over four years.
The union, which initially demanded 40% pay boosts over three years, said the annual raises in the revised offer would total 39.8%, when compounded.
Boeing has said that average annual pay for machinists is currently $75,608.
Boeing workers told Associated Press reporters that a sticking point was the company’s refusal to restore a traditional pension plan that was frozen a decade ago.
“The pension should have been the top priority. We all said that was our top priority, along with wage,” Larry Best, a customer-quality coordinator with 38 years at Boeing, said on a picket line outside a Boeing factory in Everett, Washington. “Now is the prime opportunity in a prime time to get our pension back, and we all need to stay out and dig our heels in.”
Theresa Pound, a 16-year Boeing veteran, also voted against the deal. She said the health plan has gotten more expensive and her expected pension benefits would not be enough, even when combined with a 401(k) retirement account.
“I have put more time in this place than I was ever required to. I have literally blood, sweat and tears from working at this company,” the 37-year-old said. “I’m looking at working until I’m 70 because I have this possibility that I might not get to retire based on what’s happening in the market.”
The strike started Sept. 13 and has served as an early test for Boeing CEO Kelly Ortberg, who became chief executive in August.
In his first remarks to investors, Ortberg said earlier Wednesday that Boeing needs “a fundamental culture change,” and he laid out his plan to revive the aerospace giant after years of heavy losses and damage to its reputation.
Ortberg repeated in a message to employees and on the earnings call that he wants to “reset” management’s relationship with labor “so we don’t become so disconnected in the future.” He said company leaders need to spend more time on factory floors to know what is going on and “prevent the festering of issues and work better together to identify, fix, and understand root cause.”
Ortberg, a Boeing outsider who previously ran Rockwell Collins, a maker of avionics and flight controls for airline and military planes, said Boeing is at a crossroads.
“The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company, which have disappointed many of our customers,” he said.
But Ortberg also highlighted the company’s strengths, including a backlog of airplane orders valued at a half-trillion dollars.
“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” he said.
In recent weeks, Ortberg announced large-scale layoffs — about 17,000 people — and a plan to raise enough cash to avoid a bankruptcy filing.
Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represented the second-worst quarter in the manufacturer’s history. Boeing lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research had expected a loss of $10.34 per share.
Revenue totaled $17.84 billion, matching Wall Street estimates.
The company burned nearly $2 billion in cash, in the quarter, weakening its balance sheet, which is loaded down with $58 billion in debt. Chief Financial Officer Brian West said the company will not generate positive cash flow until the second half of next year.
Boeing’s fortunes soured after two of its 737 Max jetliners crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed this January, when a panel blew off a Max during an Alaska Airlines flight.
Ortberg needs to convince federal regulators that Boeing is fixing its safety culture and is ready to boost production of the 737 Max — a crucial step to bring in much-needed cash. That can’t happen, however, until the striking workers return to their jobs.
Early in the strike, Boeing made what it termed its “best and final” offer. The proposal included pay raises of 30% over four years, and angered union leaders because the company announced it to the striking workers through the media and set a short ratification deadline.
Boeing backed down and gave the union more time. However, many workers maintained the offer still wasn’t good enough. The company withdrew the proposed contract on Oct. 9 after negotiations broke down, and the two sides announced the latest proposal on Saturday.
Charles Fromong, a mechanic who has worked at Boeing for 38 years, said Wednesday night after the results were announced that the company needs to take care of its workers.
“I feel sorry for the young people,” he said. “I’ve spent my life here and I’m getting ready to go, but they deserve a pension and I deserve an increase.”
The last Boeing strike, in 2008, lasted eight weeks and cost the company about $100 million daily in deferred revenue. A 1995 strike lasted 10 weeks.
Merger of handbag makers Tapestry, Capri halted
NEW YORK | A U.S. District judge has halted the merger between the makers of Coach and Michael Kors handbags, saying it would reduce competition and hurt consumers.
In her ruling Thursday, U.S. District Judge Jennifer Rochon noted that Tapestry Inc. and Capri Holdings are “close competitors” and that the merger would result in “the loss of head-to-head competition” and raise prices for shoppers.
The decision followed seven days of testimony.
In after hours trading shares of Capri fell more than 50% while shares of Tapestry rose 12%.
The ruling came six months after the FTC sued to block Tapestry’s $8.5 billion acquisition of Capri, saying that the deal would eliminate direct competition between the fashion companies’ brands like Coach and Michael Kors in the so-called affordable luxury handbag arena.
The agency also said that the deal announced in August 2023 threatens to eliminate the incentive for the two companies to vie for employees and could depress employees’ wages and workplace benefits. The combined Tapestry and Capri would employ roughly 33,000 people worldwide, the agency said.
The two companies’ brands cover a wide array of items from clothing to eyewear to shoes. Tapestry has been on an acquisition binge for the past several years, and already owns Kate Spade New York, Stuart Weitzman and Coach. Capri owns the Versace, Michael Kors and Jimmy Choo brands.
Specifically, Tapestry’s Coach and Kate Spade brands and Capri’s Michael Kors brand are close rivals in the handbag market. The FTC had said that they continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or reduce handbag prices.
Tapestry said in an emailed statement to The Associated Press on Thursday that the decision granting the FTC’s request for a preliminary injunction was “disappointing” and “incorrect on the law and the facts.”
“Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants,’” Tapestry said in a statement. “We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer. “
The company said it intends to appeal the decision, consistent with its obligations under the merger agreement.
Capri could not be immediately reached for comment.
Neil Saunders, managing director of GlobalData, said in a published note that the blocking of Tapestry’s acquisition of Capri will come as a blow to both companies.
“For Tapestry, it puts an end to the goal of becoming a bigger house of brands, and it leaves its plans for future growth in tatters,” he said. He noted that in a slower market, Tapestry will now need to rely on pushing its existing brands harder, which he believes will be challenging. He noted that the group could, in time, also look to make smaller acquisitions.
The ruling leaves Capri “in poor shape and, in betting on being acquired, has neglected the hard work that needs to be done to course correct many of its weak brands,” Saunders said.
Capri will either need to find another party to buy it or it will have to embark on a major reinvention plan, he said.
U.S. applications for jobless benefits fall
The number of Americans filing for unemployment benefits fell last week, but the total number of those collecting benefits rose to its highest level in almost three years.
The Labor Department reported Thursday that applications for jobless claims fell by by 15,000 to 227,000 for the week of Oct. 19. That’s less than the 241,000 analysts forecast.
— From AP reports
