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Space agency considers using SpaceX to close out mission; Boeing says craft is safe for crew

The astronauts who flew to orbit on Boeing’s BA -1.19%decrease; red down pointing triangle Starliner spacecraft are waiting for NASA and the company to determine whether it will get them home.

Boeing has vouched for the craft. Not everyone at NASA is convinced, according to people close to the discussions, and the agency is working on backup plans that depend on SpaceX.

Barry Wilmore and Sunita Williams have been aboard the International Space Station since June 6, when they became the first astronauts to fly in Boeing’s Starliner vehicle. The temporary failure of several thrusters and discovery of helium leaks in the ship’s propulsion system turned the planned weeklong visit to the ISS into an extended stay.

Tensions between Boeing and some NASA leaders surfaced last week, when officials couldn’t agree on using Starliner to take Wilmore and Williams back, and a detailed review of Starliner’s readiness for the flight back was postponed, according to people familiar with the situation.

NASA has been buying time as it deals with internal dissent over whether Starliner should return the two astronauts. The agency on Tuesday pushed back a planned SpaceX launch of a new ISS astronaut crew, delaying it from mid-August to Sept. 24, allowing more time to finalize return plans for Wilmore and Williams.

NASA officials are scheduled to discuss Starliner during a briefing Wednesday.

Starliner’s inaugural flight has led to a summer of scrutiny on a craft that Boeing has been developing for years. NASA wants both Boeing and SpaceX vehicles available to ferry crew to the space station, which officials have said would help ensure continuous access.

The mission originally was planned to last eight days. It has dragged out as NASA and Boeing officials assess problems with the thrusters and leaks, and what kinds of risks they might pose. Engineers have been studying both for weeks.

The thrusters are needed to position Starliner in space after it undocks, to prepare for deorbiting. Helium is needed to provide pressure in the propulsion system.

Boeing believes that Starliner is ready to fly. The company issued a statement Friday describing the in-orbit and on-the-ground testing that it and NASA have conducted.

Data from the testing supported “flight rationale”—NASA’s term for a space operation that is safe enough to pursue—for using the vehicle to return Wilmore and Williams, Boeing said.

Starliner is among the problems being inherited by Robert “Kelly” Ortberg, the aerospace giant’s incoming chief executive, who starts his new job on Thursday. Should NASA provide a final certification to Starliner, which Boeing is trying to secure with the current flight, the company is under contract to conduct another half-dozen flights with the vehicle.

It is possible that Boeing won’t be permitted to try to bring Wilmore and Williams back to Earth on Starliner. Instead, NASA may call on SpaceX to handle the mission’s last leg. That possibility has been discussed during recent NASA briefings. The agency is keeping all options on the table, a person familiar with NASA discussions said.

A SpaceX spokesman didn’t respond to a request for comment.

NASA turning to SpaceX to complete the mission would be a tough outcome for Boeing, which has deep ties to NASA that date to the Apollo moon landings. The company declined to comment further.

During a late July briefing, Boeing’s vice president overseeing Starliner, Mark Nappi, said he was confident in its ability to safely return the crew.

NASA said Tuesday that the agency and company continue to evaluate Starliner’s readiness, and no final decision had been made about its return.

Since starting development of Starliner more than a decade ago, Boeing has struggled with costly technical hurdles that put the spacecraft behind schedule and behind SpaceX. Elon Musk’s space company has been NASA’s sole U.S.-based option for launching crewed missions to low-Earth orbit. SpaceX successfully completed its first crewed flight to the space station more than four years ago.

Starliner’s launch in June with the two NASA astronauts on board was celebrated by current and former space executives at Boeing, some of who had spent a good part of their recent professional lives preparing the vehicle for the high stakes of transporting astronauts in space.

Wilmore and Williams have been following NASA and Boeing’s work on the challenges with Starliner, conducting scientific research and servicing equipment during their unexpected longer stay on ISS. Wilmore recently worked on assembling a centrifuge that will support future experiments, while Williams participated in a study looking into making optical fibers in microgravity.

The space station has plenty of food and supplies, officials have said. On operational missions, astronauts stay at the station for about six months.

The astronauts, both experienced former military pilots who have traveled to the space station before, last month expressed confidence in Starliner.

“Failure is not an option. That’s why we are staying here,” Wilmore told reporters during a July press conference from the ISS. “We’re going to get the data that we need.”

Starliner has flown twice before on test missions without anything on board. Boeing has struggled with software, valves and other problems with the spacecraft.

Last week, the company recorded a $125 million loss related to the Starliner program, according to a securities filing, adding to the roughly $1.4 billion in losses it previously recorded.

Resurgent Japanese currency forces speculators to shut down years’ worth of bets that could run into trillions of dollars

The global unwinding of the world’s biggest “carry trade” has the potential to destabilise markets further, analysts have said, as the resurgent Japanese currency forces speculators to shut down bets that could run into hundreds of billions of dollars.

Over the past three years, the yen version of the carry trade — borrowing in a low-interest-rate country to fund investment in assets elsewhere that offer higher returns — has exploded because of Japan’s ultra-low rates.

A stronger yen, buoyed by last week’s Bank of Japan interest rate rise, has forced hedge funds and other investors to rapidly unwind their carry trades. This has contributed to turbulence in global markets, including a dramatic sell-off on Monday, as investors rushed to dump assets they had purchased by borrowing in yen.

“You can’t unwind the biggest carry trade the world has ever seen without breaking a few heads,” said Kit Juckes, a currency strategist at Société Générale, referring to the now global hunt to identify the next casualties in bond, equity and alternative asset markets around the world.

By some estimates, the yen carry trade has grown to become one of the biggest ever iterations of the bet, with the cheap fundraising in yen pouring into everything from emerging market currencies such as the Mexican Peso to Taiwanese equities, real estate and US tech stocks.

The size of the trade is very difficult to estimate, say analysts, due to its scale and use by everyone from hedge funds, through family offices and private capital, to Japanese companies.

While a chunk of the trade involves hedge funds and other short-term investors taking short positions in the yen, the long period of ultra-low rates in Japan has, for years, enticed Japanese households, pension funds, corporates and banks to look overseas for higher yields in a form of carry trade.

In a call with clients this week, James Malcolm, a global strategist at UBS, estimated the cumulative dollar-yen carry trade size built since 2011 at about $500bn, with about half of that extended during the past two to three years. He said about $200bn of those positions had been ditched over the past few weeks, or about three-quarters of the trades he ultimately expected to be unwound.

“There was a lot of irrational use of the carry trade over recent years, so it was inevitable that there would be a very big unwinding of that at some stage,” said a senior Japanese official.

According to the Bank for International Settlements, cross-border yen borrowing — not all of which is necessarily carry trades — has increased by $742bn since the end of 2021. Cross-border loans originating in Japan hit ¥157tn ($1tn) as of March 2024, up 21 per cent from 2021, according to ING analysts.

However, the recent dynamic was radically altered when the Japanese authorities intervened to strengthen the yen and then, last week, the BoJ hit the market with a surprise interest rate increase and a strong hint that there would be more tightening to come. 

Some analysts and traders suspect that the majority of the more speculative bets for which the carry trade was used have now been liquidated. Others believe there could be plenty more liquidation to come as the selling moves from hedge funds to “real money” investors.

“The reality about the yen carry trade is that nobody exactly knows how big it is, or how much has now unwound. But there is certainly a sense at this stage that some of the shakiest yen shorts that were funding speculative trades have been wiped clean,” said Benjamin Shatil, a currency strategist at JPMorgan in Tokyo. The cash-based carry trade, he said, had probably now been reduced from its extreme, “but still has some way to go”.

In a note to investors published after the BoJ’s surprise rate increase, Osamu Takashima, an currency analyst at Citi, said he believed that yen carry positions that have accumulated during the past few years were quite large not only at leveraged investors but also at long-term investors and corporates.

Predicting that “the current adjustment is only the beginning of the end”, Takashima estimated that the yen could hit ¥129 against the dollar by 2026 before hitting ¥116 the year after. It is, at present, touching ¥145.8.

Nicholas Smith, chief Japan strategist at CLSA Securities, said that “estimates for the size of the yen carry trade vary, but most suggest several trillion US dollars. In recent years, the two biggest, most consensus — hence crowded — trades globally had been short-yen and long-tech.  

“Year to date, the yen has been statistically more correlated with the Philadelphia Semiconductor index than with the [Japanese equity benchmark] Topix,” he said.

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Cybersecurity remains a white-hot space for investors. In the latest example of that demand, EQT has bought a majority stake in Acronis, a security company that specializes in data protection, cloud and integrated security solutions for managed service providers (which resell services to consumers) and corporate IT teams.

The size and value of the stake, as well as the enterprise value of Acronis are not being disclosed. EQT and Acronis say that the deal values Acronis higher than its last disclosed valuation, which was $3.5 billion, based on an investment in 2022. Some sources indicate that the actual valuation in this deal was around $4 billion.

For some context on growth, Acronis itself says that today its solutions are used by 20,000 service providers and more than 750,000 businesses. In 2022, it had said it had 5.5 million “home users” and 500,000 business customers, and in 2021, it said it had 10,000 service providers on its books. Employees now stand at 2,000, from 1,700 in 2022. Gaidar Magdanurov, Acronis’ president, told TechCrunch that the company’s cloud business’ annual recurring revenue is growing at 40%.

In 2021, the company told TechCrunch that it was profitable. It has raised more than $600 million in equity and debt over the years prior to this latest deal. Its investors include BlackRock, CVC, and Goldman Sachs.

“The founders, management, and several existing investors – including Black Rock, CVC and Springcoast – will remain as minority investors,” Magdanurov told TechCrunch. He added that its founders, Serg Bell (who used to go by Serguei Beloussov) and Stanislav Protassov, will retain a material stake in the company, too.

“Today’s announcement is great progress. It has always been important for Stanislav and myself – the founders to find a partner that aligns perfectly with Acronis’s culture and vision,” Bell said in a statement to TechCrunch. “With the amount and intensity of cyber threats constantly growing, we are confident that Acronis is uniquely placed to be the best platform for service providers to profitably protect and operate their customers’ information technology infrastructure.”

Going forwarded, he added, the two founders will focus more on another project they have, the Constructor Group, with a focus on AI and metaverse applications.

This deal is long in the making and underscores how private equity continues to be a very common exit option for enterprise technology companies at a time when the IPO window largely remains closed.

Acronis has been around since 2003, originally getting its start in Singapore before reincorporating in Switzerland. It originally started as a spinoff of Russian-founded, virtualization specialist Parallels with a focus on data recovery and backup (which turns out was actually SWsoft, which rebranded in the name of its most popular product at one point). Over the years, it has expanded into a one-stop shop of servces that include continuous data protection, cloud security, endpoint protection, patch management, anti-malware, and more. Its competitors include Commvault, Veritas and others.

Acronis will continue to operate, now with major investment from EQT behind it.

“We are thrilled to have EQT as a major shareholder to support our strategic expansion and share our vision for growth,” said Ezequiel Steiner, current CEO of Acronis, in a statement. “We would like to thank our existing investors for their support to date and are pleased that many will remain invested as we move forward. But most of all, I’d like to thank the Acronis team for their work in getting us to this stage.”

“Acronis is a strongly positioned cybersecurity and data protection software platform with a clear value proposition to Managed Service Providers,” added Johannes Reichel, partner and co-head of technology for EQT’s PE team. ” advisory team, said: “EQT has followed the company’s journey for many years and continues to be impressed by its performance and innovative strength. We are very excited to partner with Acronis, the management team and existing investors on its next phase of growth.”

Cathay Pacific announces $13bn investment to ‘get back to being very best in the world’

Airline under pressure to boost services as completion of third runway in Hong Kong nears

Cathay Pacific has announced it will spend $13bn over seven years on new aircraft, airport lounges and cabin revamps as it tries to restore its pandemic-hit reputation and regain its global premium airline crown.

Patrick Healy, chair of Hong Kong’s flagship carrier, said it was “turning the page” with “bold” plans to invest more than HK$100bn (US$12.8bn) on its fleet, cabins and airport lounges in Hong Kong, Beijing and New York, as well as other upgrades.

Cathay announced on Wednesday it would buy 30 Airbus widebody aircraft and now has more than 100 new aircraft in its delivery pipeline. It expects to launch improvements to first-class seats in 2025 and a fresh flatbed business-class product in 2026.

“We want to get back to being the very best in the world,” Healy said. “And this requires investment. We need to invest in the customer products, in the fleet . . . to be able to maintain the premium pricing position that we’ve enjoyed.”

He added that the carrier was “confident” continuing results would be “sufficient to fund the investment programme”.

Cathay has been ranked by consultancy Skytrax as world’s best airline four times, most recently in 2014. It was ranked as the world’s fifth-best airline this year.

The carrier reported a first-half profit of HK$3.6bn (US$460mn) on Wednesday, down from HK$4.3bn a year earlier. It attributed the drop principally to lower ticket prices despite “robust” demand for travel.

Cathay, which declared an interim dividend of 20 HK cents per ordinary share, said it was on track to a full post-pandemic recovery in passenger capacity by the first quarter of next year. Its Hong Kong shares closed 2.4 per cent lower.

Business travel demand, including on routes from the US to Hong Kong and mainland China, as well as leisure travel from its home market in Hong Kong were strong, the carrier said. But passenger yields — an indicator of profitability — were lower as flights were added.

It was the second consecutive year that Cathay recorded a first half-year profit, after a three-year streak of losses amid the coronavirus pandemic and Hong Kong’s tough quarantine curbs. The airline has been on a recovery path after a pilot exodus and the effects of the pandemic had tarnished its reputation.

The airline has also been under pressure from Hong Kong’s government to boost capacity and service quality as a third runway nears completion this year at its home base. Growth of Cathay’s international network would help boost Hong Kong’s status as a global aviation hub.

Rival Singapore Airlines recorded a surge in profits to S$2.7bn (US$2bn) in May for its financial year to March. But global airlines in recent weeks have warned of downward pressure on ticket prices as the two-year travel surge post-reopening shows signs of losing steam.

Healy said the lowering of airfares had so far been “fairly benign” and “manageable” in affecting profits. Cathay chief executive Ronald Lam added that short-haul prices had come down faster than long-haul, but ticket pricing and revenue for this summer were still “satisfactory”. 

JPMorgan analyst Karen Li wrote in a note last month that Cathay benefited from “healthy demand across leisure [and] business” as well as transit passengers in Hong Kong going to and from mainland China.