Lufthansa embarks on ill-fated no-frills odyssey 9 Jul 2014 New CEO Carsten Spohr is pushing the German carrier into a high-risk experiment – pioneering low-cost, long-haul flights. The strategy rests on an unproven business model and is hobbled by inconsistencies. Lufthansa might want to cancel the flight.
French persist in dead-end strong-euro moaning 8 Jul 2014 The Airbus CEO is the latest to complain about the strength of the single currency, echoing similar grumbles by the French prime minister a week ago. But the ECB is right: exchange rates can’t be a primary target of monetary policy.
Rakuten’s airline adventure a worry for investors 2 Jul 2014 Taking an 18 pct stake in AirAsia’s new budget carrier may be small for Japan’s $18 bln e-commerce giant. But the justification – boosting its travel website – is a stretch at best. Rakuten’s patchy investment track record is another reason to be sceptical about the new venture.
Alcoa tries to fly over Chinese aluminum glut 26 Jun 2014 The manufacturer is paying some $3 bln to buy private equity-owned Firth Rixson and expand its aerospace parts business. The deal looks pricey, but it does jet in handy cost savings and, potentially, fast growth in a high-margin business free of irrational Chinese competition.
China may get less than it bargains for from UK 18 Jun 2014 Britain’s $23.5 bln package of Chinese trade and investment comes with unspoken terms: keep quiet on politics, and don’t expect reciprocity. That’s not such a bad deal. Rule of law means Chinese money buys less influence in the UK than it would back home. China may be getting more rambunctious, but openness is still the best response.
New Lufthansa chief starts with crash landing 11 Jun 2014 A few weeks into office, Lufthansa’s new CEO Carsten Spohr shocked investors by admitting the carrier will miss its 2014 profit target due to tough competition. The group will have to double down on cost-cutting. But regaining credibility will be a long-haul flight.
Etihad’s Alitalia grab not as loony as it looks 2 Jun 2014 After spending another 300 mln euros on struggling Air Berlin, the Abu Dhabi carrier gives Italy’s stricken flag carrier another lease of life. Acquiring yet another minority stake in a loss-making peer does make sense. And Etihad buys much-needed political clout in Europe.
China’s state-private battle takes to the skies 27 May 2014 Spring Airlines is typical of companies taking on government-backed rivals with a good idea and a knack for cutting costs. Help can come from unexpected places, like vain local authorities. Even if the upstarts don’t win the war, China is better off for their efforts.
Ryanair’s strategic restart can take off faster 19 May 2014 Europe’s biggest low-cost carrier has reacted quickly to tougher competition. The gains from better customer service, more advertising and wooing business customers could come more quickly than management’s cautious guidance implies. But investors are already on board with that.
China’s big airlines stuck in economy 29 Apr 2014 Earnings have plunged as a weaker currency adds to pressure from high-speed rail, and cheap carriers like Spring Airlines. But budget valuations don’t reflect two things: the benefits of rapidly rising incomes, and a government happy to put the brake on competition.
Edward Hadas: How can a plane vanish in a small world? 19 Mar 2014 The information vacuum around flight MH370 is as unusual as it is disturbing. In the interconnected globalised economy, things usually work well. When they don’t, the causes are identified, and changes often follow to prevent recurrence. MH370 is, so far, the distressing exception.
Market wakes up to Lufthansa turnaround 13 Mar 2014 Shares in the German carrier are up 36 pct in six months. Successful cost-cutting and a strong operating performance explain the upswing. Lufthansa shares still trade at a discount – but it is only midway through its turnaround plan, and its 2015 profit targets look ambitious.
State aid may just prolong Qantas’ pain 28 Feb 2014 The Australian carrier, which just cut 5,000 jobs, is struggling to compete against its loss-making, foreign-backed rival. Lifting a cap on foreign ownership will only help if Qantas can find a deep-pocketed investor. A state guarantee for its debt may just extend the price war.
United Tech activist defenses look mostly robust 11 Feb 2014 Talk of the $100 bln conglomerate selling chopper-maker Sikorsky raises questions about whether a breakup could unlock value. A Breakingviews analysis suggests the pieces are worth just 8 pct more than the whole. But a performance slip could weaken the ramparts to an attack.
Ryanair’s loss highlights need to change 3 Feb 2014 Revenue at the low-cost airline has stalled, plunging the group to a heavy third-quarter loss. The shares, however, are up smartly. Investors are relieved that guidance is unchanged. But they are putting a lot of faith in the company’s new strategy to be nice to its customers.
Travel tech IPO charts familiar round trip 28 Jan 2014 Seven years after taking airline reservations operator Sabre private for $5 bln, TPG and Silver Lake are making the return journey to public markets. It’s one of many big buyouts that should land safely despite a badly timed takeoff. The tardiness will cost investors, though.
EasyJet’s shares flying into ever thinner air 23 Jan 2014 Decent quarterly results show that the no-frills carrier has not yet reached the limits of its business model. The steep rise of its share price, which quadrupled in the last two years, is still likely to end. EasyJet’s fundamentals have yet to catch up to its sky-high valuation.
Boeing needs to push hard to keep defying gravity 17 Dec 2013 A big dividend hike and fresh buybacks show the jet maker in high spirits after its shares nearly doubled this year. Investors should keep their feet on the ground. Despite strong deliveries, aerospace remains a cyclical business. And there are structural clouds on the horizon.
Qantas needs help to escape financial nosedive 5 Dec 2013 The Australian carrier, which warned on profits, is a political hybrid. As a national champion it faces limits on raising foreign capital, but it lacks the financial advantage openly state-backed rivals enjoy. Something has to give, but Qantas could also do more to help itself.
Amazon’s drone promise is yet more jam tomorrow 2 Dec 2013 The online retailer expects airborne deliveries just a few years hence. It’s a striking vision, but it seems as overly optimistic as investors’ expectations of the company overall. Amazon’s market value has ballooned to $180 bln despite big profits always hovering in the future.