WSJ : Europe Sets Up Digital ‘SWAT’ Team for Aviation Cyber Threats

Europe Sets Up Digital ‘SWAT’ Team for Aviation Cyber Threats

European aviation agency’s team would identify and combat potential hacking attacks

Europe’s top air-safety official said he is hiring a group of high-level computer experts to identify and combat looming cyber threats to aviation.

Intended to be a kind of digital SWAT team for hacking attacks, the initiative launched last month goes beyond U.S. efforts and is the most dramatic example of the European Aviation Safety Agency’s increasingly aggressive approach to such risks.

The aim is to quickly provide technical assistance to carriers or national regulators anywhere in Europe in the event of a cyber attack, Patrick Ky, the agency’s executive director, said in an interview.

The move is also part of a broader campaign by the agency, which serves 32 member states, to expand its authority beyond traditional safety regulations. "We think the aviation system is quite vulnerable to cyber attacks,” Mr. Ky said.

Aviation authorities world-wide have said there hasn’t been a verified instance of an individual or a group successfully hacking into a commercial airliner’s power or flight-control systems while airborne. But, like many experts, Mr. Ky worries about growing potential threats as aircraft become more connected to ground-based computer networks, ranging from maintenance to navigation to cabin entertainment.

Mr. Ky said he has started to recruit cyber experts with the aim of reassuring political leaders and passengers that “we are ready and we are going to help” if aviation computer systems are compromised. The team will be supplemented by staff loaned from various national regulators.

He added that France, the U.K. and a number of Scandinavian countries have pledged to assist with the policy, and that he discussed the concept earlier this week with Peggy Gilligan, the top safety official at the U.S. Federal Aviation Administration.

Initially, the focus will be on cataloging and monitoring cyber-related hazards confronting commercial planes and other aircraft world-wide. But by late 2016, according to Mr. Ky, a core team of roughly a dozen troubleshooters should be ready to respond to specific incidents. He envisions 50 or 60 experts will eventually be dedicated to such work.

Leaders of EASA and the FAA have previously talked about cooperating on more-stringent design standards to insulate flight-controls and other safety-critical systems from potential cyber attacks. Each agency has asked its own phalanx of industry officials and outside experts to come up with recommendations.

But the U.S. and Europe are at odds over some principles, especially when it comes to the best way to safeguard smaller, private aircraft. Even if a joint approach emerges, sweeping regulations or legislation could take years to become final.

Rather than simply wait for that process to end, Mr. Ky and EASA’s policy-setting management board are intent on ensuring that timely, detailed technical assistance will be available to deter or minimize the impact of any computer breach.

“The aircraft when it’s flying, is quite immune” to such threats “at least for the time being,” according to the EASA chief.

But he said he is more worried about maintenance functions and other ground- based systems that can tap into onboard computers. “The risk is there,” he said.

Mr. Ky, who took over the agency more than two years ago, is now pushing to get certain security, operational oversight and aircraft-inspection responsibilities previously reserved for aviation regulators from individual countries. He has already shaken up the bureaucracy and clashed with some airline officials by moving into areas once considered strictly off-limits for the agency.

His campaign to broaden the agency’s purview will be debated by European legislators and politicians in coming months. Last year, the European Commission concluded that threats to “cyber security are increasing and may require new approaches to certification” of aircraft and major components.

Precisely how EASA will proceed, and what additional resources it will have, are expected to be a big part of the impending debate.

WSJ : Fiat Chrysler’s Goal for Alfa Romeo Slipping

Fiat Chrysler’s Goal for Alfa Romeo Slipping

Auto maker to revisit growth plan that counted on Italian sports car, China for big gains

Last June, in a lavish ceremony featuring tenor Andrea Bocelli, Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne unveiled the first new Alfa Romeo model in six years—the centerpiece of Mr. Marchionne’s plan to revive the group’s jumble of underperforming brands.

Today, the chief executive’s plans to transform Alfa Romeo into a success like Audi are delayed. Meanwhile, economic growth has slowed in China, and tanked in Latin America. Some analysts say the frothy U.S. car market could begin to plateau as soon as this year

All that is laying bare the cracks in Mr. Marchionne’s highly ambitious five-year plan for Fiat Chrysler—called “fantasyland” by Sanford C. Bernstein & Co. analyst Max Warburton—and creating a difficult backdrop for a company struggling to lessen its dependence on selling sport-utility vehicles and pickup trucks to American buyers. The auto maker’s huge debt and thin profit margins add challenges for it in an industry spending heavily on autonomous and electric cars.

Fiat Chrysler’s “business profile isn’t as strong as Ford and GM,” said Yasmina Serghini, a senior credit officer at rating firm Moody’s Investors Service. “The cash flow they generate internally might continue not to be sufficient to meet large capital expenditure requirements.”

At the moment, Fiat Chrysler, which can no longer count on outsize profits from Ferrari, a business it recently spun off, remains almost entirely dependent on its Jeep brand for sales-volume gains. That has Mr. Marchionne’s Italian-American mashup relying heavily on Jeep and the U.S. to offset lackluster results from other brands and regions.

At a time when a soaring U.S. market has sales there growing rapidly, Fiat Chrysler’s operating profit margin remains 40% lower than those of General Motors Co. and Ford Motor Co. Recalls of more than 11 million Fiat Chrysler vehicles last year will further depress earnings, the company has said. At the same time, Fiat Chrysler’s inventory is increasing, according to data provider WardsAuto.com; its 86 days worth of unsold cars on dealer lots in the U.S. at Nov. 30 was almost 50% more than the industry average there.

Later this month, Mr. Marchionne will present a rejiggered version of a 2014 plan that called for a 50% jump in world-wide revenue over five years and a more than doubling of operating profit. The original plan targeted sales of 7 million vehicles in 2018, a 60% increase from 2013.

“We’ll update the plan to reflect things we know now that we didn’t know in 2014,” Mr. Marchionne said earlier this month, while pledging to stick to financial targets even if volumes are lower than the firm had forecast.

Mr. Marchionne has already redirected investments and likely will announce delays in the rollout of new Jeep and Maserati vehicles. He has already dialed back ambitions for Alfa Romeo, but a sales expansion to 400,000 vehicles in 2018 is a cornerstone of his plan to beef up Fiat Chrysler.

Blaming the Chinese slowdown and the country’s import duties, Mr. Marchionne said the €5 billion ($5.46 billion) that Fiat Chrysler had planned to spend on Alfa Romeo though 2018 will now be spread a year or two further out, with delays in several model launches.

“A relatively significant portion of our volume ambitions for 2018 for Alfa were China driven,” Mr. Marchionne said in late October. “We need to be very careful not to create excessive expectations about what China can contribute to [Alfa Romeo’s] objective.”

But some wonder whether the new Alfa Romeo models will ever come to market.

“The structure of the Chinese market hasn’t really changed at all,” said Stephen Reitman, an analyst with Société Générale SA, who points to other problems with the expansion, including Fiat Chrysler’s lack of a local Chinese partner for the Alfa Romeo brand.

Fiat Chrysler declined to comment further.

Mr. Marchionne’s plan to squeeze more cash out of other legacy Fiat brands has stumbled as well. Two new Maserati models meant to compete with German luxury cars have done poorly, with volume and revenue down by a fifth in the third quarter compared with the same period the year before, while Maserati’s operating profit withered to just €12 million from €90 million. The company still plans to launch the first Maserati SUV at the Geneva motor show in March.

All that has left Mr. Marchionne woefully short of money to fund his expansion. Financing vehicle rollouts with debt rather than cash flow is problematic because Fiat Chrysler’s credit ratings from Moody’s and Standard & Poor’s are both below investment grade. The company’s €7.8 billion in net debt makes it expensive to borrow further. By contrast, GM is sitting on $18 billion in net cash and Ford has $9.4 billion.

>>> GSK break-up urged by star fund manager Neil Woodford

GSK break-up urged by star fund manager Neil Woodford

The influential fund manager Neil Woodford called for GlaxoSmithKline (LON:GSK) to be broken up in an interview broadcast on Radio 5, the BBC website reported. Woodford said the GBP 65bn (USD 94bn) UK-based pharmaceuticals group is too complicated and likened it to four FTSE 100-listed businesses joined together.

GSK is not an effective manager of its constituent elements and should concentrate on improving those parts which it can manage better, demerging the others to more experienced people, Woodford said. He added that the business’s current stock price does not reflect the true value of the sum of the company’s parts.

Woodford rarely gives press interviews and when he does his opinions are very influential, the report said. A market report in The Daily Mail noted that following his comments GSK’s shares rose 2%, pushing the stock price to 1371.5p and adding GBP 1.3bn to the company’s value.

BBC, Daily Mail

>>> Shell takeover of BG secures backing of ISS

Shell takeover of BG secures backing of ISS

Royal Dutch Shell (LON:RDSA, RDSB)’s proposed GBP 36bn (USD 52bn) takeover of rival gas and oil company BG Group (LON:BG) has been recommended by the influential proxy advisory group Institutional Shareholder Services, the Financial Times reported. ISS published a report yesterday, 8 January, in which it described the strategic rationale of the deal as “compelling”, while recognising that investors may be anxious because of the current volatility in oil’s spot prices.

When the deal was announced oil was worth approximately USD 56 per barrel but the price has since sunk to less than USD 40, the report noted. The agreed takeover price appears to be fair, according to the ISS report, even once the plummeting price of oil is taken into account.

The deal will be put to the vote by shareholders later this month and approval is required from 75% of BG investors and a majority of Shell’s shareholders, the report said. It added that the ISS report will be a significant help to the management of Shell, which is currently in final meetings with shareholders in the hope of reassuring them the company is not overpaying for BG.

Meanwhile, The Daily Telegraph reported that Standard Life Investments, which owns a 2.1% stake in Shell, announced its intention to vote to block the BG takeover. David Cumming, Standard Life’s head of equities, was quoted stating that the company believes the proposed deal to be “value destructive” as far as Shell investors are concerned.

Financial Times, Daily Telegraph

>>> Standard Life to vote against BG takeover by Shell

Standard Life to vote against BG takeover by Shell 

Standard Life will vote against Shell's takeover of BG, de Telegraaf reported, citing information obtained from Standard LIfe.

Standard Life currently owns 1.7% of Shell's shares, the Dutch language item added. Standard Life claims the conditions around the takeover would cause 'value destruction' for Shell's shareholders, the report noted.

The same report also said that Standard Life has doubts over BG's possesions in Brazil. Shell shareholders can vote on the takeover bid around the end of January, according to De Telegraaf report.

de Telegraaf

>>> Affymetrix Agrees to be acquired by Thermo Fisher for $14.00/shr in cash, va

Affymetrix Agrees to be acquired by Thermo Fisher for $14.00/shr in cash, valuing it at $1.3B 

Thermo Fisher Scientific and Affymetrix, a leading provider of cellular and genetic analysis products, announced that their boards of directors have unanimously approved Thermo Fishers acquisition of Affymetrix for $14.00 per share in cash. The transaction represents a purchase price of approximately $1.3 billion.

Affymetrixs eBioscience offering for cellular analysis will enhance Thermo Fishers leading biosciences capabilities. Specifically, the company specializes in a range of antibodies, multiplex RNA, and protein and single-cell assays. These technologies serve the fast-growing flow cytometry market segment as well as new high-growth applications including single-cell biology, immunotherapy and infectious disease research. Affymetrix adds complementary products in genetic analysis that are used in cytogenetics, genotyping and gene expression. The companys innovative microarray platform will strengthen Thermo Fishers presence in certain clinical and applied markets, including reproductive health and agricultural biotechnology. Affymetrix will benefit from Thermo Fishers access to the biopharma industry through its unique customer value proposition, as well as its world-class e-commerce capabilities and extensive customer channels. Thermo Fisher will also significantly extend the geographic reach of Affymetrixs products by leveraging its market presence and infrastructure in Asia-Pacific, particularly China.The transaction is expected to be immediately accretive to Thermo Fishers adjusted EPS, adding $0.10 of accretion in the first full year of ownership. Thermo Fisher expects to realize total synergies of approximately $70 million by year three following the close, consisting of approximately $55 million of cost synergies and approximately $15 million of adjusted operating income1 benefit from revenue-related synergies.

The transaction, which is expected to be completed by the end of the second quarter of 2016, is subject to the approval of Affymetrix shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals. Thermo Fisher intends to use cash on hand and short-term debt to finance the transaction.

TMO CEO: For shareholders, we expect the transaction to create value by generating attractive financial returns, including immediate accretion to our adjusted EPS.