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Vulcan selling Stratolaunch world’s largest airplane for $400 million

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Stratolaunch, the world’s largest airplane, lands at the Mojave Air and Space Port in California after its first successful flight on April 13, 2019.

Stratolaunch

Stratolaunch, the world’s largest airplane that flew only once, is up for sale.

Holding company Vulcan is seeking to sell Stratolaunch at $400 million, people familiar with the matter told CNBC. Vulcan is the investment conglomerate of the late billionaire Paul Allen. A Microsoft co-founder, Allen passed away last October following complications of non-Hodgkin’s lymphoma.

Vulcan and Stratolaunch did not respond to multiple CNBC requests for comment. The hefty price tag includes ownership of the airplane as well as the intellectual property and facilities.

Allen’s vision of a massive flying airplane to launch rockets from the sky was at least partially fulfilled in April, when Stratolaunch flew for the first time after about eight years in development. Based in the Mojave Air and Space Port in California, the giant airplane flew for more than two hours before landing after what was deemed a successful first flight. Stratolaunch is the world’s largest airplane by wingspan, which stretches 385 feet – longer than an American football field. The airplane is powered by six jet engines salvaged from Boeing 747 aircraft.

Stratolaunch, the world’s largest airplane, lands at the Mojave Air and Space Port in California after its first successful flight on April 13, 2019.

Stratolaunch

The company has had various partnerships, as well as internal plans, for the rockets that Stratolaunch will carry. SpaceX was one of the company’s earliest partners but Stratolaunch later switched to a contract with Northrop Grumman-owned Orbital ATK to fly the Pegeasus XL rocket. Stratolaunch’s plan to develop its own fleet of rockets was scrapped in January.

Stratolaunch has been steadily downsizing this year, with much of the workforce laid off already, despite plans to launch a small Northrop rocket in 2020. The company is in the process of closing operations, Reuters reported last month.

One item holding up internal the sale of Stratolaunch, according to one of the people, is an internal disagreement between the company’s CEO Jean Floyd and Allen’s sister Jody, who serves as the chair of Vulcan as well as the executor of his estates. While Floyd appears to be petitioning that Vulcan keep the Stratolaunch program alive, especially by retaining the company’s intellectual property, Jody Allen would like to sell the company outright, the person said.

Branson expressing interest

There are number of possible suitors for Stratolaunch, especially the most active space industry trio of billionaires: Elon Musk, Jeff Bezos and Richard Branson.

While its unknown if either Musk’s SpaceX or Bezos’ Blue Origin are pursuing a purchase of Stratolaunch, people familiar told CNBC that the company has spoken to Branson about selling to his Virgin Group. Branson’s conglomerate owns three space companies: Virgin Galactic, The SpaceShip Company and Virgin Orbit. As the former two were built using similar technology to Stratolaunch – all three have a similar manufacturing heritage, as they all originated from designs prototype aerospace manufacturer Scaled Composites – Virgin may be an ideal destination for Stratolaunch.

For the first time ever, the Stratolaunch aircraft moved out of the hangar to conduct aircraft fueling tests.

But Branson was hesitant to pay full price for Stratolaunch, a person familiar said. Instead, the person said Branson countered Vulcan’s offer in a similar way to his low-ball offer for the supersonic Concorde fleet in 2003 (British Airways was planning to retire the airplane and Branson offered the airline $8.30 to take the planes off their hands and continue flying the Concordes for Virgin Atlantic).

Branson pitched Vulcan that he would buy Stratolaunch… for $1.

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Three Russians, one Ukrainian accused of 2014 downing of flight MH17

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Three Russians and a Ukrainian will face murder charges for the July 2014 downing of Malaysia Airlines flight MH17 over eastern Ukraine in which 298 people were killed, in a trial to start in the Netherlands next March, an investigation team said on Wednesday.

The suspects are likely to be tried in absentia, however, as the Netherlands has said Russia has not cooperated with the investigation and is not expected to hand anyone over.

Ukrainian rescue servicemen look through the wreckage of Malaysia Airlines flight MH17 on July 20, 2014 in Grabovo, Ukraine.

Rob Stothard | Getty Images

The Dutch-led international team tasked with assigning criminal responsibility for the plane’s destruction named the four suspects as Russians Sergey Dubinsky, Oleg Pulatov and Igor Girkin, and Ukrainian Leonid Kharchenko.

It said international arrest warrants for the four have been issued. MH17 was shot out of the sky on July 17, 2014, over territory held by pro-Russian separatists in eastern Ukraine as it was flying from Amsterdam to the Malaysian capital Kuala Lumpur. Everyone on board was killed.

Most of those on board were Dutch. The joint investigation team formed by Australia, Belgium, Malaysia, the Netherlands and Ukraine found that the plane was shot down by a Russian missile.

Last year Russian President Vladimir Putin called MH17’s downing a “terrible tragedy” but said that Moscow was not to blame and that there are other explanations for what happened.

The governments of the Netherlands and Australia have said they hold Russia legally responsible.

Asked if she expected the suspects to attend the trial, Silene Fredriksz, whose son Bryce was on the plane with his girlfriend Daisy, said: “No. No, I don’t think so. But I don’t care. I just want the truth, and this is the truth.”

Moscow has said it does not trust the investigation.

“Russia was unable to take part in the investigation despite expressing an interest right from the start and trying to join it”, Kremlin spokesman Dmitry Peskov told reporters earlier on Wednesday.

The investigation team said Girkin was a former FSB colonel who served as minister of defence of the Donetsk People’s Republic (DNR) in the summer of 2014.

It said Dubinsky was head of the military intelligence agency of DNR, while Pulatov was head of a second department of the DNR military intelligence agency.

Ukrainian national Kharchenko was head of a reconnaissance battalion for the second department, it said.

The team said it would ask the Russian government to allow it to question the suspects who are currently in Russia. It said Kharchenko was thought to be in Ukraine at the moment.

Prosecutors have previously said the missile system that brought down the plane came from the Russian 53rd Anti-Aircraft Brigade, based in the western Russian city of Kursk.

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American Airlines to become first US airline to order new Airbus plane

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Airbus A321XLR

Soruce: Airbus

American Airlines will become first U.S. airline to order new Airbus A321XLR, according to a source familiar with details of the agreement.

CNBC has learned American will order 50 XLR jets, converting orders and options previously placed for A321neos into firm order for the A321XLR. The deal will be formally announced later Wednesday at the Paris Air Show.

Airbus has targeted first deliveries of the XLR to start in 2023.

— CNBC’s Meghan Reeder contributed to this report.

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Hopes in China rise for a Trump-Xi trade deal

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Chinese President Xi Jinping (L) holds a grand ceremony to welcome U.S. President Donald Trump outside the Great Hall of the People in Beijing, China on Nov. 9, 2017.

Lan Hongguang | Xinhua News Agency | Getty Images

BEIJING – As the presidents of U.S. and China near a highly anticipated meeting on trade, the gap in both sides’ expectations regarding a deal remains wide.

Analysts with ties outside China see major obstacles, notably on how both sides can come to terms over the treatment of Chinese telecom giant Huawei. But after a tumultuous few weeks of increased tough talk from Beijing, the calculus of some with ties to the Chinese government is that President Donald Trump is ready to move toward an agreement.

Chinese President Xi Jinping broke his silence on Tuesday with state media announcing he is willing to discuss trade issues with Donald Trump at next week’s G-20 meeting. The reports came less than 20 minutes after Trump tweeted that he “had a very good telephone conversation with President Xi of China” and the two would have an “extended meeting” during the gathering.

“Xi Jinping emphasized, on the issue of trade, that both sides should resolve the problem through fair dialogue; the important thing is to protect the rational concerns of both sides,” state news agency Xinhua reported, according to a CNBC translation of the Chinese-language article. “We also hope the U.S. will fairly treat Chinese enterprises.”

U.S. and Chinese stock indexes jumped, partly in anticipation that the world’s two-largest economies will reach an agreement in the trade dispute that has lasted for over a year.

“The best we can hope for from this meeting is an agreement not to raise tariffs,” Tom Rafferty, principal economist for China at The Economist Intelligence Unit, said in a phone interview Wednesday.

The key will be finding the right language that balances U.S. and Chinese interests, he said. “The risk of this falling apart and the U.S. proceeding with tariffs is quite high.”

Warding off additional tariffs and cancelling ones applied during the last 18 months have been a priority for Beijing in the trade dispute.

Earlier this month, Trump threatened tariffs on an additional $300 billion Chinese goods if Xi didn’t attend the G-20 meeting. 

The Office of the U.S. Trade Representative began Monday a planned seven days of public hearings on proposed tariffs on $300 billion worth of Chinese goods. U.S. companies said at Monday’s hearing that China still offers better infrastructure and local talent than other countries, leaving few alternatives for producing clothes, electronics and other consumer goods, according to Reuters. 

If Trump doesn’t reach a deal at the G-20, he will need to add tariffs to these $300 billion, said Liang Ming, director of the Institute of International Trade, a research unit under the Ministry of Commerce.

Trump needs to respond to businesses’ complaints and increase his popularity in the near-term by reaching a deal, Liang said in Mandarin, according to a CNBC translation. “Other measures won’t have as great a boost.” Trump on Tuesday officially launched his campaign to be re-elected as president next year.

Wei Jianguo, a former vice minister at the Ministry of Commerce, also emphasized Trump’s need to boost his popularity among voters in an interview with CNBC Wednesday afternoon.

Three things have changed since trade talks took a turn for the worse in early May, he said, according to a CNBC translation of his Mandarin-language remarks. Wei is now vice chairman and deputy executive officer at Beijing-based think tank China Center for International Economic Exchanges.

“First, from early May to now, the U.S. has seen China isn’t that easy to defeat. China is not like other countries,” Wei said. Second, he noted that Americans from farmers to business people and consumers all oppose tariffs and Trump is lagging behind Joe Biden in the polls.

Third, Wei said Trump has yet to achieve major presidential campaign promises such as bringing manufacturing back to the U.S.

All this leads Wei to believe that Trump and Xi will agree to further talks on trade and wrap up a deal by the end of the year — one which essentially includes the U.S. changing its position on Huawei.

The Trump administration put Huawei on an “entity list” that effectively bans U.S. companies from selling to the telecom and smartphone company. China responded with the threat of an “unreliable entities list” but has yet to provide details. Huawei has said many times it does not want to be part of a trade deal.

“Huawei is the most critical watchpoint. Further trade negotiations are likely impossible unless China sees some potential lifeline for Huawei,” Michael Hirson, practice head, China and Northeast Asia, at Eurasia Group, said in a note released Wednesday morning Beijing time. “It is certainly possible that Trump will offer this, but it is complicated politically for both sides.”

“Trump will face bipartisan backlash in Congress if he attempts to fully roll back the current restrictions on Huawei, and will thus be under more pressure to show the trade deal is resolving difficult issues related to Beijing’s innovation policies, such as market access restrictions for U.S. firms and subsidies to domestic companies,” Hirson said.

He expects Trump and Xi will most likely agree to an extension of trade talks, potentially for 60 days.

That’s similar to what happened the last time both leaders met on the sidelines of the G-20 meeting in Argentina late last year. Then, the communication from both sides to their domestic audiences varied in the terms of what was discussed.

This time, it’s clearer that Beijing wants it to be seen that the U.S. is bending.

“(I) highly doubt a deal comes out of this meeting,” Jacob Shapiro, director of analysis at online publication Geopolitical Futures, said in an email. “(I) think both Xi and Trump still need to milk ‘looking tough’ to their domestic constituencies before either one of them is in a position to make compromises necessary for a deal.”

—CNBC’s Arjun Kharpal contributed to this report.

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