Raphael Stevens

Challenges related to excessive rainfall look to be here for the foreseeable future.
Last summer heavy rain led to severe flooding in a number of European countries, causing deaths and significant damage to buildings and infrastructure.  

A man walks through the floods towards destroyed houses in Schuld near Bad Neuenahr, western Germany, on July 15, 2021.
Bernd Lauter | AFP | Getty Images

Climate affects the “economic growth story” and requires a response at the local, regional and international level, a climate scientist has told CNBC’s “Squawk Box Europe”.
Anders Levermann, who is head of the complexity science research department at the Potsdam Institute for Climate Impact Research, was speaking after a recent study published in the journal Nature found economic growth falls when the amount of “wet days and days with extreme rainfall” increases.

Scientists at PIK looked at data from over 1,500 regions between 1979 and 2019. In a statement last month, PIK said the analysis suggested that “intensified daily rainfall driven by climate-change from burning oil and coal will harm the global economy.”
The peer-reviewed study was led by Leonie Wenz, from PIK and the Mercator Research Institute on Global Commons and Climate Change.
“Economies across the world are slowed down by more wet days and extreme daily rainfall — an important insight that adds to our growing understanding of the true costs of climate change,” she said.
“While more annual rainfall is generally good for economies, especially agriculturally dependent ones, the question is also how the rain is distributed across the days of the year,” she added.
“Intensified daily rainfall turns out to be bad, especially for wealthy, industrialized countries like the US, Japan, or Germany,” Wenz said. PIK highlighted both the service and manufacturing sectors as being particularly affected.

Challenges related to excessive, heavy rain look to be here for the foreseeable future. According to the U.K.’s national meteorological service, the Met Office, as “global temperatures rise, the number of extreme rainfall days is expected to increase.”
Last summer, for example, heavy rain led to severe flooding in a number of European countries, causing deaths as well as significant damage to buildings and infrastructure.  
In response to what it called “catastrophic flooding and heavy rain”, Germany’s federal government said it would provide as much as 30 billion euros (around $34.3 billion) to assist parts of the country affected by the flooding.

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During an interview with CNBC at the end of last week, PIK’s Levermann sought to highlight some of the study’s main takeaways.
“What we found … is that even small changes in the number of rainy days can already impact the growth rate of the economy,” he said.
“It’s the change in variability, the things we’re not used to, that really hit us strongest,” Levermann later said, adding that this was “difficult to adapt to.”
He also emphasized the need for a systemic shift over the coming years. “We know what the transition from a … fossil energy system to [a] renewable [one] will cost us, and it is a transition,” he said.
“We have to set the path straight so that people can actually adapt to it and make money out of doing the transition quicker than their competitors.”
It would, Levermann concluded, “always be more expensive to let climate change evolve than to combat it.” More

View from the Gulf

For serious ski enthusiasts, the spectacular slopes of Lebanon are a particular draw.
For those with a more adventurous spirit, Pakistan in the wider region has several incredible ski resorts.
Saudi Arabia is about to get what’s described as the largest indoor ski slope and snow dome in the world.

A skier performs a jump during a contest as part of the “DXB Snow Week” at the Ski Dubai indoor resort.
KARIM SAHIB | AFP | Getty Images

DUBAI, United Arab Emirates — Skiing in the desert might sound absurd, but in the heart of one of Dubai’s busiest shopping destinations, Mall of the Emirates, this adrenaline-pumping pastime has been going strong since 2005.
It’s technically not real snow at Ski Dubai of course, yet this wintry wonderland remains hugely popular with tourists and residents who enjoy speeding down a 1,300-ft-long slope – or indeed tobogganing, bobsledding, ziplining, zorb balling, and hanging out with penguins.

Boasting “fresh” snow all year long, the park is chilled to -24.8 degrees Fahrenheit and has even been named the world’s best indoor ski resort for six years in a row, including this year.
And in a region known for one-upmanship, Saudi Arabia is about to get what’s described as the largest indoor ski slope and snow dome in the world at the massive new Mall of Saudi, currently under construction.
With a reported 40,000 square meter indoor snow slope, the Kingdom will be adding to several other “snow experience” centers, including Snow City in Riyadh.

Scenic mountains

These unabashedly unsustainable snow-in-the-desert resorts remain controversial due to the eye-watering energy intensity of what are essentially huge refrigerators. But aside from these types of mega-scale artificial venues, the Middle East is working hard to build on its winter sport offering to attract tourists looking for something a bit different.
For serious ski enthusiasts, the spectacular slopes of Lebanon are a particular draw due to scenic mountains covered by the white stuff from December to April.

Children take ski lessons at Mzaar Ski Resort on January 7, 2022 in Kfardebian, Lebanon.
Andreea Campeanu | Getty Images News | Getty Images

Although Lebanon’s winter sports season was hit hard by the coronavirus pandemic, mammoth resorts like Mzaar are back and thriving thanks to recent heavy snowfall and sensible Covid restrictions in place to reassure guests such as masking in busy areas and some social distancing. With 62 miles of terrain, the resort is home to some challenging slopes, while also offering plenty of runs for beginners and intermediate skiers.
For those with a more adventurous spirit, Pakistan in the wider region has several incredible ski resorts and mountain ranges that can compete with anywhere in the world in terms of “wow” factor.
One hidden gem — the Naltar Ski Resort in the Gilgit–Baltistan region in the extreme north of the country — boasts Pakistan’s highest chairlift and hosts major ski, ice hockey and snowboarding competitions. Naltar itself is a picturesque pine-scented village known for its wildlife and magnificent mountain scenery.
Turkey too has bountiful snow in the winter months, notably at Mount Erciyes which is part of a larger ski area that totals around 95 miles. The ski center here has the nearby town of Kayseri which has a plenty of top-notch hotels, such as the swanky five-star Radisson Blu.
There’s no snow park or terrain park at Mount Erciyes, but the resort is covered by 80% artificial snowmaking, so it’s a snow-sure winter fun destination. The area is also ideal for snow-kiting due to having big open planes that stretch for miles.

Erciyes Ski Centre has been set at Mount Erciyes (3916m) the highest summit of Anatolia, and located 25km south of Erciyes Province.
Ayhan Altun | Moment Open | Getty Images

Summer sports in winter

Back in the United Arab Emirates, as the country tries to move away from oil and toward tourism as its main economic driver, there’s a surge in new attractions aimed at pulling in global sports lovers over the winter months by offering top facilities for activities more traditionally enjoyed in the spring and summer.
A good example is the Meydan Hotel Dubai, which sits close to famous equestrian hotspot, the Meydan Racecourse. It has launched the Tennis 360 academy, serving up a raft of facilities such as eight floodlit courts – including a championship court – as well as three padel courts and two beach tennis courts.
“We continue to bring new, world-class attractions to The Meydan Hotel, and look forward to a long and successful partnership with Tennis 360, which has opened as the winter sports season gets under way,” Mohamed Shawky, hotel manager at The Meydan Hotel, told local media.
This month Dubai is also about to open EmiratesPadPro, the largest padbol facility in the world – padbol being a cross between soccer, tennis, volleyball and squash. Ever quick to capitalize on a hot trend, Dubai is looking to latch on to the booming global padsports scene by offering this impressive home for it in the Gulf Cooperation Council.

Covid rebound

Hussein Kapasi, co-founder of Emirates PadPro, says they are focused on attracting a new generation of sports enthusiasts during winter and highlighting the appeal of the regional climate.
“The Middle East is known for sunny skies and dry cooler months without rain and snow which is ideal for anyone looking to play sports outdoors at ease without worrying about the weather or transport, as the roads are clear and safe for everyone,” he told CNBC.
Tourism in general currently looks promising for the region, even with Covid still in play. Before the pandemic, the Middle East’s travel and tourism sector’s contribution to their economies was an impressive $270 billion, according to the World Travel and Tourism Council.
Covid may have brought things to a standstill in 2020, but by the end of 2021 Middle East tourism was pulling ahead of other regions — such as Europe and Latin America — with a year-on-year increase of $36 billion to its economy, the World Travel and Tourism Council also reported. More

Tesla excluded one of two electronic control units in the steering racks of Shanghai-built Model 3 and Model Y cars to deal with chip shortages, CNBC has learned.
Sources say that tens of thousands of cars with the tweaked power steering system are already shipping to customers in China, Australia, and Europe.
Tesla employees debated whether to tell customers about the change, but decided it wasn’t necessary since the part is considered a redundant backup, not needed for level 2 driver-assistance features.

Employees work at the Tesla Gigafactory in Shanghai, east China, Nov. 20, 2020. U.S. electric car company Tesla in 2019 built its first Gigafactory outside the United States in the new Lingang area, with a designed annual production capacity of 500,000 units.
Ding Ting | Xinhua News Agency | Getty Images

Under pressure to hit fourth-quarter sales goals while coping with widespread semiconductor shortages, Tesla decided to remove one of the two electronic control units that are normally included in the steering racks of some made-in-China Model 3 and Model Y cars, according to two employees and internal correspondence seen by CNBC.
Tesla did not disclose the exclusion, which has already affected tens of thousands of vehicles being shipped to customers in China, Australia, the U.K., Germany and other parts of Europe. It was not immediately clear whether Tesla would make similar changes to cars manufactured in or shipped to the U.S.

The omission indicates that Tesla had to make changes beyond what the company has publicly revealed to keep its factories and sales going from the final weeks of 2021 on, as the world faced an ongoing chip shortage that has affected everything from cars to laptop computers. It also means Tesla can’t turn all its existing cars into driverless vehicles with a mere software update, undercutting what CEO Elon Musk recently said on an earnings call:
“My personal guess is that we’ll achieve Full Self-Driving this year at a safety level significantly greater than a person. So the cars in the fleet essentially becoming self-driving via software update, I think, might end up being the biggest increase in asset value of any asset class in history. We shall see.”
Internally, Tesla employees said that adding “level 3” functionality, which would allow a driver to use their Tesla hands-free without steering in normal driving scenarios, would need the dual electronic control unit system and therefore require a retrofit at a service visit. They also said that the exclusion would not cause safety issues, since the removed part was deemed a secondary electronic control unit, used mainly as a backup.
At the time this manufacturing change was underway in Shanghai, CEO Elon Musk wrote in a tweet: “Oh man, this year has been such a supply chain nightmare & it’s not over!”
Tesla has struggled with manufacturing challenges throughout its history, but the completion of its Shanghai factory in 2019 helped it increase production, expand margins, and gain market share beyond North America. This latest decision reveals new pressures as the company pushes further into the mainstream, and aims to deliver on Elon Musk’s promises of a self-driving future.

What the omitted part does

The specific item omitted is an electronic control unit in the electric power assisted steering systems, which translate steering wheel movements into wheel turns on the street.
Before cars used so many electronic components, vehicles would rely on a pump, steering rack, and pinion to translate steering wheel movements into turns.
Richard Wallace, principal advisor for HWA Analytics in Ann Arbor and veteran transportation safety researcher, explains how that’s changed.
“There’s still a mechanical component of course. But in today’s vehicles, when you ‘turn the wheel’ you are providing an electronic signal telling your car to go left or right.”
Electric power assisted steering systems today also enable driver assistance features, Wallace notes, like the ability to automatically keep a car in the center of a lane.
Tesla removed the component because engineers deemed it redundant, primarily installed as a backup. Omitting the control unit will also save Tesla money near-term, as long as no problems arise as a result of the altered system.
There’s some precedent for the company removing options or components for business reasons. For example, last spring, Tesla removed lumbar support from passenger seats in Model 3 and Model Y vehicles to lower costs.
On January 26, 2021, Musk said during an earnings call that Tesla had faced down a “chip hell of many chips” in 2021. The company had a hard time obtaining “the little chip that allows you to move your seat back and forth,” he noted, along with other “basic chips.”
He did not mention the altered power steering systems.
Other automakers have taken similar steps, but typically make temporary cuts to options that aren’t part of a vehicle’s core functionality.
For example, in March 2021, General Motors said it was building some of its 2021 light-duty pickup trucks without a fuel management module, a move that hurt those trucks’ fuel economy. It blamed the chip shortage for the move.

Tesla’s self-driving future

Tesla currently offers several levels of driver assistance functionality in its cars. A basic version, dubbed Autopilot, comes with every car. Drivers can also buy a more advanced version, called Full Self-Driving, or FSD, for $12,000 or $199 a month (in the U.S.).
When Tesla made the decision to exclude an electronic control unit from its steering racks, there was an internal discussion about whether to notify customers, two employees told CNBC. These people asked to remain anonymous because they were not authorized to speak on behalf of the company.
Employees also discussed whether omitting the part would degrade any functionality in or reliability of customers’ cars. They worried whether the “depop,” or exclusion, of this component may interfere with customers’ ability to use FSD features.
Ultimately, they decided the tweak did not rise to the level of customer notification — at least until Tesla is ready to launch “level 3,” or hands-free driver assistance features.
Tesla vehicles can still use the current “level 2” versions of its driver assistance systems, Autopilot and Full Self-Driving (or FSD), without the dual-control steering system.
But employees told CNBC if Tesla launches a more sophisticated FSD update, owners with the affected cars who use that premium system will need to get a steering rack retrofit from a Tesla service center.
Generally, Tesla relies on service technicians to install missing parts or to repair or replace broken parts, before a car is delivered to a customer, making service a kind of extended arm of Tesla manufacturing.
Most of the cars with the single electronic control unit were going to customers in China initially, where FSD is not seeing significant uptake. According to internal communications seen by CNBC, just over 1% of all Tesla customers in China opted for the premium driver assistance package at the time they placed an order for a new car.
More recently, tens of thousands of the affected vehicles were exported to customers beyond China, including in Australia, the UK, Germany and throughout Europe, employees told CNBC.

The safety question

CNBC asked HWA Analytics’ Richard Wallace whether removing an electronic control unit from a power steering system in a modern vehicle could pose a safety risk.
“If something like a chip or an ECU is not providing additional functionality, if it is truly redundant, you may be able to turn it off or leave it out. With chips and software, there’s a little bit of wiggle room. I can reassign stuff here and there,” he said.
Much depends on a vehicle’s computing architecture, said IHS Markit Senior Principal Analyst Phil Amsrud.
He said, “I cannot think of a case where an automaker would say ‘You know what? We’ll take a component out of that module, even though it was there for a good reason and we’ll hope nothing happens.’ Going from a dual chip to a single chip variant in a vehicle can make a system simpler and make it better in some cases. But they’d really need to do a lot of validation.”
Most automakers would spend 1,000 hours on testing or more to make any big changes, he estimated. That can take upwards of four months. It can also take years for quality or safety issues to become clear after changes are made.
Tesla employees told CNBC that the company spent less than a few weeks discussing the change before moving ahead and didn’t view it as a big deal — more of a chip-famine survival tactic.
The company had previously produced earlier models that featured a power steering system with only one electronic control unit, and that gave them greater confidence. So too did Tesla’s frequently touted ability to push software updates “over-the-air” to vehicles to refine their functionality if needed.

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Frontier and Spirit, the country’s two largest discount airlines, announced a $6.6 billion merger.
The airlines overlap on 500 out of 2,800 routes.
Analysts say consumers shouldn’t expect fares to surge.

Spirit Airlines and Frontier Airlines expanded aggressively over the last decade offering travelers no-frills service in exchange for ultralow airfares.
Their executives vow to keep it that way, even if the carriers complete their $6.6 billion merger, which would turn them into a discount behemoth and the country’s fifth-largest airline. Frontier will have a controlling stake.

“Our business model is built on low fares — that stimulates travel,” Frontier CEO Barry Biffle said in an interview. “We’re going to give people even more low fares.”

Antitrust hurdles

The combined airlines’ ability to keep fares low will be key to regulators’ approval of the deal. President Joe Biden last year made boosting competition a priority. His Justice Department has already sued American Airlines and JetBlue Airways over their partnership in the Northeast, alleging it reduces competition and could drive up prices.

Passengers wait in line at the Spirit Airlines check-in counter at Orlando International Airport.
Paul Hennessy | LightRocket | Getty Images

The airlines denied that and have said the alliance was drawn up so they could better compete with United Airlines and Delta Air Lines in big, congested airports in the New York area and Boston.
The Frontier-Spirit deal would mean a bigger competitor for other carriers, but also one airline fewer for travelers to choose from.
“We believe the merits of the deal — everyone wins,” Biffle said. “We think we should get a warm reception because the administration has been looking for ways to increase competition and we think this is the answer.”

Without those key approvals, nothing is changing for customers just yet. The airlines expect the deal to close in the second half of the year. They haven’t decided on a new name or headquarters. Integrating an airline could take years.
While they both fly narrow-body Airbus jets, executives haven’t said whether they’ll change their distinct Airbus liveries: Spirit’s bright-yellow planes and Frontier’s planes that feature paintings of wildlife on their tails.

Pressure on rivals

If they raised fares after the merger, that could drive customers to look for cheaper tickets on other carriers, including other ultralow-cost airlines, which would be counterproductive, analysts said. 
Samuel Engel, senior vice president at consulting firm ICF, said the benefit to travelers would come not just from lower fares from the combined airline but from how rival airlines respond to their newest competitor.
Fare wars have broken out in the past when those airlines expanded in major carriers’ hubs. Spirit and Frontier have expanded flying capacity more than 467% since 2017, compared with the national average of 355%, according to aviation data and consulting firm Cirium.
The two carriers overlap on about 520 of more than 2,800 routes, Cirium data shows.

Cost control

One thing that could drive up fares for customers, and not just for these airlines, is rising costs. Higher fuel and labor costs have jumped as airlines increase their schedules. A lack of available employees, such as pilots, has forced airlines to scale back their growth plans.
“It’s not like you’re going to see Spirit and Frontier go from offering $49 fares to $149 fares,” said Henry Harteveldt, a former airline executive and founder of travel consulting firm Atmosphere Research Group. “The challenge is how do they continue to offer these low fares” as costs continue to climb, he said.
Those costs eventually get passed along to travelers.
But combining could help the two airlines expand. “They would not, actually, be able to grow unless they merged,” said Cowen & Co. analyst Helane Becker. “There’s only a finite amount of gate space available, a finite amount of infrastructure at airports around the country, and a finite amount of pilots.”
The larger fleet will give the company a better chance to improve their reliability and recover from potentially costly disruptions such as storms easier, said Jonathan Root, senior vice president at Moody’s Investors Service. A meltdown last summer cost Spirit around $50 million.

Segmenting in the skies

The deal also shows the changing way we fly. Major carriers including Delta, American and United over the past decade introduced their own no-frills tickets called basic economy. Those often strip out perks that used to come free, such as seat selection, for the lowest fare.
While ultralow-cost airlines have grown, some carriers are chasing the other end of the market. Delta calls itself the “premium airline of choice” and on an earnings call last month said revenue from premium products, from business class to extra-legroom seats, recovered faster than standard coach.
United, meanwhile, is revamping onboard services for its narrow-body planes including big overhead bins and new seatback entertainment systems, a bid for higher-paying customers such as business travelers.

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Astra postponed its first mission from Florida on Monday after an abort stopped the company’s small rocket from lifting off.
Earlier in the day, the New York Stock Exchange halted the stock for volatility shortly after the company’s launch attempt abort at around 1:50 p.m. ET.
Astra plans to make another attempt at launching the ELaNa 41 mission for NASA.

The LV0008 rocket briefly fires its engines during a launch abort on Feb. 7, 2022.

Astra postponed its first mission from Florida on Monday after an abort stopped the company’s small rocket from lifting off.
Shares of Astra fell 13.7% to close at $4.60. Earlier in the day, the New York Stock Exchange halted the stock for volatility shortly after the company’s launch attempt was aborted at around 1:50 p.m. ET.

The company plans to make another attempt at launching the ELaNa 41 mission for NASA. An abort is part of standard procedure in the space industry when an issue is identified before a rocket launches and does not mean the mission failed.

“Unfortunately the abort … was a minor telemetry issue that the team needs to work to resolve,” Astra director of product management Carolina Grossman said on the company’s webcast.
Astra is carrying four cube satellites with its LV0008 rocket on the NASA mission, which is the company’s first launch from Florida’s Cape Canaveral. The company reached orbit for the first time three months ago with its LV0007 rocket, launched from Kodiak, Alaska.

A close up look at Astra’s LV0008 rocket at LC-46 in Cape Canaveral, Florida.
John Kraus / Astra

Astra’s vehicle stands 43 feet tall and fits in the small rocket segment of the launch market. Astra’s goal is to launch as many as its small rockets as it can, aiming to hit a rate of one rocket per day by 2025 and drop its $2.5 million price point even further.
Notably, for this launch Astra received the first Federal Aviation Administration license under Part 450 – a new space industry framework designed to streamline the regulatory process for companies requesting both launch and spacecraft reentry licenses. Astra said the FAA approval process took about three months. This latest development will “make it easier for Astra to launch at a higher frequency out of more launch sites in the United States,” the company said.
The company partnered with NASASpaceflight — a space industry content organization that is not affiliated with the U.S. agency — to webcast the launch.

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