Thursday, February 27, 2014

Cargolux: Blogging over blogging in a Blog by Wort.lu

















My Orchids in a Blog. Photo ET

Cargolux: Blogging over blogging in a Blog by Wort.lu


This is a story that is a bit dated.  But it is interesting to note that the argument in favor of standalone and of potential financial partners gets some place in the light. Though the piece assumes an essentially anti-Chinese bias, I wouldn't assume that it places the writer in an unconditional pro-Chinese bias either. This is about a sustainable strategic orientation, and partnerships have ALL had their difficulties: Lufthansa, Swissair, Qatar Airways.

With HNCA, the good news is, it IS the standalone option, though only for several years, until internal competition builds up through the famous JV. Unfortunately the standalone in this case is conceived in a way that it carries obligations that are forecast to generate significant losses.

If and when the deal is finalized. Which is not yet the case.























Sunday, February 16, 2014

Ball Lightning seen on February 12th, 2014.





















My Orchids. Brushstrokes with a Zoom. Photo ET

Ball Lightning seen on February 12th, 2014.

On February 12th, I traveled on Jet Blue from JFK to Fort Myers, on flight JB 1729, aboard an Embraer 190, seat 21D, a right window seat. The flight was very shaky as the whole US East Coast was under an important winter storm.

Two hours into the flight I saw at my right side, a bit aft, at the distance of about the span of the wing from the plane and maybe 20 feet behind the right wing, a dancing fireball with sparkles of a white-yellowish color. It was swirling and exploded. Though I was wearing headphones, I heard a muffled explosion. The event lasted maybe 2 seconds. No one else on the plane seems to have witnessed it. Indeed many were a bit frightened by the turbulences, and clinging to their seats. And there were only 4 rows on the plane behind me who could have seen it. A few moments later we were at the height of a thunderstorm, with some lightning going.

I tried to find an explanation to the phenomenon. As a former student majoring in aerodynamics, I could imagine a reason for the swirl but not the fireball, unless it was static electricity surrounding the plane.

I found literature that describes the extremely rare phenomenon of "ball lightning", which still is not well explained. Therefore I post this out there for anyone who wants to think about it.


One explanation has been advanced that explains that a lightning strike on the ground vaporizes silicon from the soil, which then elevates as a fiery ball. I don't think that there was silicon several thousand feet above ground. This needs another explanation. Maybe this helps those who chase this elusive phenomenon for an explanation. A good first look at it can be found on Wikipedia: http://en.wikipedia.org/wiki/Ball_lightning



Saturday, February 15, 2014

BNP Being Investigated by N.Y., Federal Regulators



































My Orchids. Phalaneopsis. Whiter than White. Photo ET

BNP Being Investigated by N.Y., Federal Regulators


" The Paris-based lender said Thursday it set aside $1.1 billion for possible violation of laws, in particular those of the U.S. Treasury's Office of Foreign Assets Control, related to transactions dating from 2002 to 2009."

A violation of the only OFAC list costs an arm and a leg. Though this investigation covers a time period before 2010, it is amazing that still today financial institutions treat this risk with benign neglect. Or worse, that willfully might try to circumvent the provisions of the law. And many foreign financial institutions might ignore the long arm and the reach of OFAC compliance, until one element of a transaction banned by OFAC hits US shores.


The record fines until now were paid by HSBC last year, at $1.92 billion!



Tuesday, February 11, 2014

Cargolux: How to play a bad hand?


















My Orchids. Phalaneopsis "Shut Up". Photo ET

Cargolux: How to play a bad hand?

As promised to some, translated from feierwon.blogspot.com,


In the debate over the sale of a 35 % stake in Cargolux, owned by the Luxembourg government, to a Chinese entity in Henan Province, there seem to appear a number of incongruities. Maybe those can be explained? This was not done until now. However, it is arrogant to deny the debate and to hide issues from the Luxembourg taxpayer, the employees of Cargolux and even the governing bodies of the company, if not such experts as outside counsel. And to selectively ignore advice that is not in favor, while retaining only those favoring the deal.

The public’s right to know is well established: Cargolux is a matter of concern to all taxpayers, so to everyone. Cargolux indeed is not like any other companies. It is almost 100% owned by the state, when considering the parastatals. It matters to us. What Cactus or any other private company however decides, is none of our business.

The facts, the leaks and the rumors

Explaining the partnership between Cargolux and HNCA is not easy. In any case explanations were not communicated spontaneously, exhaustively, nor frankly. Or the partnership agreement has serious shortcomings, and there is no other explanation than to admit that either we were not up to the task, or at least that the agreement lacks consistency and balance. Without direct and open responses, there will be more leaks, which then obviously are not rumors. They are facts, hidden from the public for a purpose, obtained by stealth, and most cannot be trivialized. But unanswered questions about the dark corners of the partnership with HNCA, that leaks do not expose, that vacuum will be filled by rumors.

Mr. Helminger tried to address this lack of communication within the company in a letter to employees. It lists the reasons to be optimistic about the HNCA parnership, including the business plan over five years. But it ends with the warning that "rumors" must stop to avoid ruining the chances of finding new management professionals, and therefore ruining the chances of success for Cargolux . This is a pre-emptive strike of the same kind as the one used by Mr. Schaus towards the Executive Committee, which he called “dysfunctional ", thus potentially endangering the great Chinese project. This is summed up in the simple slogan: if the deal is successful, it will be thanks to us, if it fails, it will be because of you. Unfortunately, such statements cannot reassure the world, as unintentionally it is a subconscious statement exposing one’s own uncertainty about the success of the project one defends.

But the preemptive strikes had their effects, as trade unions have deliberately fallen silent since. Just as did the two members of the Executive Committee, who chivalrously refused to elaborate on the reasons for their resignations. It is true that those speak for themselves. And so do leaks. Some media outlets have contributions that are aligned with the thought that the debate must end.  They mention an “offensive" by Mr. Helminger to defend the project. Which more adequately would be called a “defensive” that became necessary to try to calm the game. Still, it is a good starting point to improve internal and public communication.

Rumors and propaganda are equally harmful

Other initiatives to calm the game are less fortunate. I do not know who inspired an article in “Wort” ( 1) , which for some unknown reason attacks the "myth" of  a Cargolux "stand alone". So this vision of a standalone Cargolux, according to the government, would be a fancyful and impossible vision. And that’s why this idea of a ​​partnership with HNCA is such a great idea! It is interesting to see a newspaper, known to be an outlet for an opposition party, come along and lend its support to the Chinese " good solution ", using a product pitch that seems to have grown in the garden of a biased Ministry. The mystery deepens as to the motivation of Wort, although some continuity with the past is undeniable. The argument against the standalone though is simplistic and defeats itself through its restricted vision, and is awash in sophistry. This isn’t very clever, because people will be wondering what lies behind these bold and wrong assertions, which provides new grounds for rumors. Here are those assertions:

The standalone is not possible, because the 2012 results are bad. 615,286 tons of freight is less than the peak year of 2008, a record 788,286 tons. Unfortunately, this argument is a demonstration against the partnership and in favor of the standalone. The bad year of 2012 was one of a partnership with Qatar Airways, a demonstration that the worst year was when CV was not a standalone. We hasten to ignore also the year 2013. CV is standalone again, after the departure of Qatar Airways. After the miserable year of 2012, 2013 will be a profitable year, as I am told. This provides evidence that the argument that the standalone is not sustainable is misleading. The opposite is rather true.

The second argument is that the company lost 253 million euros since 2007, and that a capital increase of 175 USD is necessary. Forgive me to remind you of a painful detail: the total fines paid by Cargolux these past years totals over USD 250 million. Don’t you see a relationship between the fines and those losses, and capital requirements? CV has operated very well this year. Without those old fines, the numbers would add up nicely. We would be talking about future financing needs only, if any, of 300-400 million. There are investors ready to move in for this, including in Luxembourg, right now.

Based on these two false arguments, one would make us believe the wrong conclusion that there is no alternative to the Joint Venture with the Chinese group. That’s an extreme lack of logic. The conclusion would be correct, but the result of a fallacy? Well, let’s elaborate a bit on that fallacy: it is suggested that  if the Joint Venture were not pursued, the Luxembourg state would have to pay in case of the standalone’s failure. But let’s calm down. In reality the state would also have to pay in the event the JV crashes. Which of the two options is riskier, the partnership or the standalone? In the case of Qatar Airways, it was the partnership with Qatar Airways, not the stand alone. See how the year 2012 worked out, with its poor results!

The final argument is that the various consultants Clifford Chance, UBS and even Arendt & Medernach (!?) could not provide better visions for Cv’s future. Add even Robert Schaus. I would oppose to those two leading experts , Robert Van de Weg and Peter Van De Pas, and Shearman and Sterling, and even Akbar Al Bakr , CEO of Qatar Airways, whom I quote as saying in 2011 : " ... Cargolux, a sound , healthy and profitable company and a leading all- cargo carrier ..... " . He spoke of the standalone.

The most tremendous contradiction in this demonstration is that it explodes under its own arguments: standalone, no, JV with Chinese group, yes! But in fact, in this case stand alone and JV are virtually the same. Cargolux will operate for at least three years as a virtual standalone, which only benefited from a Chinese cash investment. The only differences from another capital investment are multiple obligations that CV has to honor, as a result of an after all very small Chinese investment. Those obligations are bound to trigger losses and lost opportunities to which we have acquiesced in advance. In a nutshell, that amounts to a very costly new shareholder. Even considering the remedy to these planned (!) losses through a USD 15 million relief fund. What a pessimistic prospect! The most worrying aspect is that politicians, who never have even run a lemonade stand, and who consider advice selectively, are making these decisions on behalf of the taxpayer, and affect the future of a multi-billion company and its nearly 1,500 employees.

Omission that would make the difference

Why is there so much mystery around simple and legitimate questions of price, veto and other conditions generally very in favor of the Chinese side? Maybe we as taxpayers should demand that a debate in those circumstances should be held before the Chamber of Deputies. I refer to Article 99 of the Constitution that says ... any significant financial commitment of the State must be authorized by a special law." Although this article refers to real estate transactions, the only transactions conceivable when this was written a century and a half ago , when nobody thought to acquire or sell other securities, such as shares of an airline, it nevertheless indicates that it would have been wise to seek the debate in Parliament and to back the transaction by a special law. The Budgetary Act of 8 June 1999, in Article 80 confirms the merits of such a cautious approach: " Must be permitted by law: sub. d) - any other financial commitment, including state guarantees, the amount of which exceeds the sum of Euros 7,500,000 (seven million five hundred thousand)" This was done for the granting of a guarantee of 3,000. 000,000 of FLux (€75,000,000 million) for the SES before the launch of Luxembourg’s first satellite Astra (1A) in 1988. In case there would be a secret part to a contract with a Chinese official entity (they are all official entities in a planned economy), the Constitution would say . . "Secret treaties are abolished" Tell us all there is. Such a special law would have shed the light on the project, allowed for necessary amendments, and by a clean vote would have ended all discussions. Memo: This is a note to the dossier "Revision of the Constitution."

I would conclude for the rest, that there will be no new divorce of the kind with Qatar Airways. Technically, the Chinese government as the ultimate authority could still refuse approval for the signed project. But HNCA’s contract is too good to give it up. The Luxembourg Government on the other hand has lost its freedom of action by signing up with a Province under Beijing rule. CV is left to assume, and to prepare the first money losing flights to Zhengzhou. An idea for the ​​internal PR effort: on every flight, take a dozen Cargolux employees along to visit Zhengzhou. This would round the corners, and make them happy like Ulysses, who made a nice voyage.... And those who still complain, will not be part of the journey, if I understand the new line correctly.



Monday, February 10, 2014

Sunday, February 9, 2014

Victoria Nuland and the EU





















My Orchids. Phalaneopsis"Blushing". Photo ET

Victoria Nuland and the EU

Victoria Nuland, Assistant Secretary of State of the USA is said to have launched the F-bomb on the European Union. Which is a bit risqué, as it is a continuation of diplomacy by other means. It worked like a coup de théâtre, as we entered new land in diplomacy . However, should we point out that the information behind the news was illegally gleaned by the Soviets Russians from the intimacy of a phone call. That opens a new dossier.

I always liked Ms Nuland as a spokeswoman of the Department of State. Though I would be reluctant to endorse the couloirs' talk that her successors at that desk are loud teenage interns wearing Ersatz Coco Chanel, and who, belligerent and a bit blasé, zealously and breathlessly recite their talking points. Certainly, Victoria by contrast has a royal bearing, though it is not for me to comment on all that. But how can I not comment now? Victoria makes her points in a quiet expert and reassuring way. There is no arrogance. I honestly believe you cannot improve on how she is delivering her points in her unique laid back and still authoritive way. C'est magnifique! Irving Berlin would call her Madam.

As a former soldier turned diplomat at one point, I can measure the pent up frustration that comes from controlling your language. As already mentioned, military response is the continuation of diplomacy by other means. That includes language. Inevitably some military language comes to mind, when the frustration is high and time is right. For instance General McAuliffe's "Nuts" in Bastogne, Belgium, to the German emissaries. Germans are still perusing their Langenscheidt's for a translation that would make sense. "Nüsse?" I wonder what Europeans are scanning now under "F" in their Larousse?

But the "Nuts" language was by far less profane than Pierre Cambronne's, Napoleon's commander of the Guard, at Waterloo.  I wonder if Victoria would care to relate her pertinent remark to the somewhat different one he made, when he was advised to surrender at Waterloo, and his monumental answer was "MERDE". Which guarantees him a place in History for ever.

If I may put Cambronne's liberating outburst  in another way, we come full circle back, to Victoria. Honni soit qui mal y pense. She'll have her place in History too.

I have understanding for those feelings expressed in a new effort of post-Snowden transparency, and precisely directed at the gloating and sizzling Europeans in their diminished entente cordiale settings. But "Europe, whom to call?' asked Colin Powell, who therefore also has a place in History.

In the spirit of compromise, and having carefully reviewed all reactions, may I put forward the concept of a transcription, an acronym to allow for a more casual use of the "bombe" word, that is now out there in the diplomatic discourse. Best, and simplest to understand would be the acronym: FEU. Acronyms are a widely used standard at the UN: UNESCO, UNDP, WHO, etc. Although we must assume some réciprocité is just around the next tour de table. Or worse, we may see a European-Russian-Syrian rapprochement using every acronym available in the UN family: FUSA, FUK, FF, FG, even FLux, and FUN for the UN!? These acronyms could be very helpful to smoothen the diplomatic talk again, mostly in the presence of children. They still might be perceived by some less progressive diplomats as shocking, though pasteurisé by the use of the alphabet only, they should kerry a broad consensus.


All this is getting complicated. Things are now comme-ci, comme-ça. Russians spying on US diplomats' phone calls, and boasting about it. It was supposed to be the other way round. The "Reset Button", which by the way I found silly at the time, as the event was poorly choreographed, that Reset Button obviously malfunctioned. We were reset into the Cold War. No wonder contentious Winter Games come out of that cold. C'est la vie.



Saturday, February 1, 2014

Air Cargo World: Cargolux flying in the face of uncertainty?






















My Orchids. Phalaneopsis. Photo ET

Air Cargo World: Cargolux flying in the face of uncertainty?

What are specialists at ACW thinking? Their views in " Cargolux flying in the face of uncertainty? "

A quote:

" Which has led to some suggestions that as HNCA was the only real game in town, it was able to push through a deal from which it gains greatly and which Cargolux benefits little. It also seems that the Luxembourg government’s agenda was driven by embracing closer trade ties with China, rather than seeking commercial gain for its national carrier."


Why not so say so, or say it isn't so. If it isn't so, the deal is a bad deal.