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Auto & Transport Roundup: Market Talk

9 Sep 2017 8:20 am

The latest Market Talks covering the Auto and Transport sector. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

2112 GMT - New York Times Co. (NYT) says Dara Khosrowshahi, the recently appointed CEO of Uber Technologies, had stepped down from its board. In a regulatory filing, officials at the newspaper company reported that on Thursday Khosrowshahi informed them that "in light of his new role and increased responsibilities," at Uber he was resigning immediately. He had been a director since 2015. (ezequiel.minaya@wsj.com)

2045 GMT - After a raft of airlines' downbeat 3Q earnings guidance and an 18% selloff in their shares since late July, Wolfe lowers estimates for nine US carriers for 2H, citing higher fuel and lower revenue. The firm didn't even mention hurricane disruptions. "Airlines are in the midst of a historically awful stretch entirely because of their own questionable choices and poor communication...about those choices," the firm says, tipping its hat also to an escalating fare war between United Continental (UAL) and Spirit Airlines (SAVE). That said, Wolfe expects $15.1B of aggregate earnings next year, down just $300M from when the selloff began. It's likely airlines will rein in their planned capacity growth after Labor Day, which could help stabilize fares, which is what they did last year in similar circumstances, the firm says. (susan.carey@wsj.com)

2044 GMT - Three major credit rating agencies on Friday assigned junk status to the debt carried by auto parts supplier Delphi Automotive Plc's (DLPH) soon-to-be spun-off powertrain operations. That lower profit margin, engine-focused departing business, known for now as Delphi Jersey Holdings Plc, earned speculative credit ratings from Fitch Ratings, Moody's Investors Services and S&P Global Ratings. "The credit profile there is certainly weaker," Stephen Brown, a senior director of corporate ratings at Fitch, told WSJ, noting the spin-off's smaller revenue stream, lack of an independent managerial track record and more traditional product line. Delphi Automotive said in May it would hive off the $4.5B powertrain business by year-end and refocus on the higher profit margin automotive electronics and software business. (chester.dawson@wsj.com; @DecodeTheFirm)

2019 GMT - CSX has cancelled an appearance at an industry conference next week so executives can focus on handling the impact of Hurricane Irma. It's the second CSX event that has been impacted by the storm, as executives want to spend time preparing and responding to Irma's aftermath. Federal regulators this week postponed a hearing scheduled for next Tuesday where CSX customers were to speak about the railway's service problems over the summer. (paul.ziobro@wsj.com; @pziobro)

1734 GMT - Argentina's railway infrastructure could be a key focal point of investment over the next decade, BMI Research says, citing "robust external financing" from multilateral organizations and the Chinese government. "The expansion of Argentina's railway infrastructure will provide substantial opportunities for firms specialized in railroad development over the coming years," BMI says. The research firm adds that non-Chinese firms may lose out on projects funded by the Asian nation, though. "An increased role for the Inter-American Development Bank and other multilaterals in financing will, however, generate a broader range of opportunities for international firms active in the market such as Italian firm Ghella which is currently undertaking a $3B project to tunnel the Sarmiento Line, another commuter rail line in Buenos Aires." (taos.turner@wsj.com; @taos)

1424 GMT - Peugeot (UG.FR) shares are down 3.9% at 17.89 euros following a media report that French fraud authorities are investigating the car maker in relation to alleged cheating on emissions tests. According to the report in French newspaper Le Monde, more than 1.9 million Peugeot vehicles may have been outfitted to sidestep pollution control. The company could potentially face a fine of EUR5 billion, according to the report in Le Monde. In a statement, Peugeot says it was never contacted by authorities and again says it complies with regulations in all countries in which it operates. (marc.bisbalarias@dowjones.com; @bamarc)

1336 GMT - Hurricane Irma is likely to destroy fewer cars than Hurricane Harvey did, says Cox Automotive. Cox estimates that 130,000-200,000 vehicles in Miami, West Palm Beach and Fort Myers-Naples could be affected by Irma, less than the 300,000-500,000 vehicles that Cox estimates were severely damaged or destroyed by Harvey. "The vehicle damage rate is expected to be lower when compared to Hurricane Harvey of last month due to several factors: the nature of the storm itself, the evacuation and preparation time, and a slightly lower vehicle density," Cox says. (nicole.friedman@wsj.com; @NicoleFriedman)

1307 GMT - If Irma stays on current path and hits southern Florida, wind and storm damage will be the cause of much of the damage, and residential property will be hardest hit, S&P Global Ratings says. That is different than Harvey, where flooding was the major cause of damage. Standard private-sector homeowner policies exclude flood damage. "As a result, we expect the difference between insured losses and economic losses to be narrower," S&P says. Many US home insurers use reinsurance to lay off risk, so many of the claims will be paid via reinsurers. Also, S&P doesn't expect auto insurers to face significant exposure to losses, as they did with Harvey, what with Florida having ordered coastal evacuations in preparation of potential landfall Sunday. (leslie.scism@wsj.com)

1153 GMT - Patee Sarasin, CEO of Thailand's NOK Airlines, expects concerns the International Civil Aviation Organization has raised about the country's safety oversight will be lifted by year-end. Mr. Sarasin also says after an unprofitable year in 2016, marred by operational problems and the death of Thailand's king, NOK Airlines is seeing more favorable business conditions and heading toward a profit. (robert.wall@wsj.com)

1129 GMT - Southwest Airlines (LUV) is the latest air carrier to lower its forecast for unit revenue as a result of Hurricane Harvey and a weaker pricing environment. LUV says it expects 3Q operating revenue per available seat mile to be down 1% to slightly up from a year ago, compared with its prior forecast of growing by 1%. LUV follows Delta Air Lines (DAL) and United (UAL), which also this week lowered projections for unit revenue. Shares in LUV, DAL, UAL, and American Airlines (AAL) are all down at least 15% of their highs this year. LUV shares are inactive premarket. (bowdeya.tweh@wsj.com; @BowKnowsBiz)

1056 GMT - Daimler (DAI.XE) is on the way to restructuring into a holding, a move that may boost shareholder value long-term, says Evercore ISI, which upgrades the German car maker to outperform from in-line. The possible spin-off of the company's truck and bus businesses, which Evercore values at 32 billion euros ($38.6 billion) or 46% of Daimler's enterprise value, could add further value for shareholders in the next two to three years. The company's current under-performance and valuation therefore hold a very attractive risk-reward ratio, says Evercore. Evercore raises the price target to EUR85 from EUR69. Shares trade up 0.1% at EUR65. (Max.Bernhard@dowjones.com; @mxbernhard)

1033 GMT - As the Indian government gets ready to sell its stake in flag carrier Air India, one local airline isn't looking to bid. Budget carrier SpiceJet doesn't plan to make a bid, the airline's chairman Ajay Singh says, noting the airline lacks scale. He hopes the transaction will be a success to strengthen India's overall air transport sector. (robert.wall@wsj.com)

(END) Dow Jones Newswires

September 09, 2017 04:20 ET (08:20 GMT)

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