|Bid||16.81 x 948200|
|Ask||16.82 x 1900800|
|Day's range||16.77 - 17.20|
|52-week range||12.58 - 23.66|
|Beta (5Y Monthly)||0.85|
|PE ratio (TTM)||5.77|
|Earnings date||7 Nov 2019|
|Forward dividend & yield||0.80 (4.81%)|
|1y target est||N/A|
Foreign investors will be able to buy unlimited stakes in the holding company proposed by Germany's largest airline Lufthansa , German magazine Der Spiegel reported on Friday. Spiegel said the new structure proposed by Lufthansa was aimed at attracting more capital from abroad as at present the majority of the airline must be German-owned in order to retain its flying rights in many countries. Lufthansa said on Wednesday it was planning to adopt a holding structure and manage its core brand separately, following pressure from investors to simplify its operations and improve efficiency.
(Bloomberg Opinion) -- Michael O’Leary of Ryanair Holdings Plc is an unlikely spokesman for how aviation can avoid killing the planet. The budget travel evangelist has delighted in disparaging “eco-warriors” and casting doubt on climate science. But as chairman of the European airline association, A4E, he’s now front and center of the effort to persuade governments not to impose new climate taxes on the industry. It’s not going well.This week the European Commission’s president Ursula von der Leyen unveiled a plan to make the continent carbon neutral by 2050. Her Green Deal is still thin on detail, but it’s already prompted plenty of criticism — from the green groups who say it doesn’t go far enough to the big polluters who fear it will harm their competitiveness, such as coal-dependent Poland and the airlines.One aim of the Green Deal is to make the price of transport “reflect the impact it has on the environment.” Accordingly, Europe will review aviation’s tax exemptions — kerosene isn’t taxed — and consider cutting the free allowances allocated to airlines under Europe’s emissions trading system.The airlines think they’re being unfairly maligned. They contribute about 2% of global emissions, a fraction of what cars and trucks produce. But unlike road transport, the aviation industry doesn’t have a convincing plan to decarbonize. Europe’s airlines are spending 170 billion euros ($189 billion) on new fuel-efficient aircraft, but these will still spew out carbon. Synthetic fuels are expensive and battery limitations mean emission-free commercial flights are years away.Aviation is typical of the trade-offs we’ll have to make to get to net-zero emissions. So far we’ve only done the easy stuff that doesn’t force people to give up much or pay more for cheap products and services. The airlines are lobbying for better air traffic management in Europe’s crowded skies, which would cut the amount of fuel used. But there’s only a certain amount of carbon we can keep emitting before things go from bad to catastrophic.The question of who will have to cut back most on their polluting raises issues around economic growth and fairness: The top 10% of most frequent fliers took more than half of all flights from England last year, while almost half the population don’t fly at all. Airlines don’t even agree among themselves about whether to punish the business lounge elite or the weekend City breakers. IATA, the airline trade body, boasted this week that more than 4.5 billion passengers will take a flight this year as tickets become ever cheaper. The average return fare, adjusted for inflation and taxes, is almost two-thirds lower than it was 20 years ago. “Flying is freedom,” Iata’s Alexandre de Juniac intoned.But even flying fanatics are no longer convinced that its growth should be unconstrained. Over-tourism in the Mediterranean has brought this to wider attention. When the environmental impact of a business isn’t priced in, there can be such a thing as too much freedom. Ryanair makes the reasonable point that aviation taxes are a levy on the poor. Making flights more expensive will hurt those for whom 20 euros in new taxes, say, is the difference between flying and staying home. It’s fine to encourage people to take a train, but rail fares are often higher, and decent services are concentrated in richer European countries. A similar debate is raging in the car industry, where the cost of electric batteries could make small cars — often bought by the young and elderly — uneconomical.Hence the budget airline Wizz Air Holdings Plc struck a nerve with a video that calls for the business class cabins of its big legacy rivals to be banned.(2) “We think you’re doing great… harm to our planet… Are all those empty seats worth the damage they cause?” the narrator asks.Wizz is, of course, talking its own book; it doesn’t offer business class. But in a carbon-constrained world, abolishing business and first class isn’t so outlandish. Because of their ability to sell out flights and cram passengers on-board, Wizz and Ryanair are Europe’s two most efficient airlines when measured on CO2 per passenger km traveled.Naturally, the older carriers don’t see it that way. Ryanair’s promotion of tickets that cost less than 10 euros is “economically, ecologically and politically irresponsible,” according to the Lufthansa chief executive officer Carsten Spohr. KLM of the Netherlands is even encouraging consumers not to fly if they don’t have to.The airlines still hope to find a way out of the impasse. EasyJet Plc will offset the carbon produced by all its flights, for example by paying to plant trees. That will cost the airline just 25 million pounds a year, equivalent to about 26 pence per passenger or 3 pounds per ton of carbon produced. But such measures haven’t always delivered the promised benefits and have been likened to the old Catholic practice of selling indulgences. While the price of European carbon permits has risen above 20 euros a ton, that’s probably too low to really affect ticket prices or encourage the use of expensive synthetic fuels. In 2019 Ryanair paid 115 million euros for emission allowances, or less than 1 euro per passenger.(1) The Green Deal is billed as a “growth strategy” but nobody should pretend this won’t involve hard decisions. The noisy complaints are an industry realizing its license to expand and pollute is being revoked.(1) On flights lasting less than five hours(2) If you include air passenger duty, it claims the total for environment taxes is about 4 euros per passenger.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Germany's flagship carrier Lufthansa is planning to adopt a holding structure and manage its core brand separately, it said on Wednesday, following pressure from investors to simplify its operations to improve efficiency. Patrick Staudacher, who is joining the airline from Boston Consulting, will look after the Lufthansa brand's strategy and finances, Lufthansa said. "The appointment is also being made against the backdrop of the planned legal independence of the Lufthansa Airline," a company spokesman added.
Lufthansa will initiate the sale of the parts of its catering unit LSG it is not selling to Switzerland's Gategroup early next year, the German carrier said on Monday. Lufthansa announced last month it is selling the European operations of LSG to Gategroup. The businesses it is selling generated revenues of around 1.1 billion euros (945 million pounds) last year - about a third of LSG's total.
German airline Condor plans to more than double its operating profit margin, its chief executive said, hoping to lure in potential investors that will take it over following the collapse of its parent Thomas Cook. Condor, which filed for investor protection proceedings - which require that a business can still be saved - made adjusted earnings before interest and tax (EBIT) of 57 million euros ($63 million) in the last fiscal year. Its adjusted EBIT margin stood at about 3.4%, compared with 7.9% at larger rival Lufthansa.
Lufthansa's supervisory board approved the sale of the European operations of its airline caterer LSG to Switzerland-based Gategroup, Lufthansa said in a statement https://newsroom.lufthansagroup.com/english/newsroom/all/supervisory-board-gives-go-ahead-for-sale-of-lsg-group-s-european-business/s/af72116f-9817-4a1d-b14b-7d5adf20b78a on Tuesday. Germany's largest airlines said last month the sale was part of its new strategy to focus on its airline business.
Lufthansa responded coldly on Monday to a report that rival Qatar Airways was interested in taking a stake in or collaborating with the German airline. The Gulf carrier, which holds minority stakes in airlines including IAG , Cathay Pacific , and China Southern Airlines, has been seeking to boost collaborations. Its chief executive Akbar al-Baker was quoted by German news agency dpa on Sunday as saying he was interested in investing in Lufthansa to seize business opportunities in Europe's biggest economy.
Workers at Lufthansa's catering unit LSG have cancelled a 24-hour strike that was planned for Dec. 2, German union Verdi said on Sunday, after the airline made an improved offer to protect wages at the division. The strike was announced on Saturday and would have affected airports in Frankfurt, Munich, Duesseldorf, Cologne, Stuttgart and Berlin, Verdi had said. "We welcome the fact that Lufthansa is moving towards us," Katharina Wesenick, who is leading negotiations for Verdi, said in a statement.
Workers at Lufthansa's catering unit LSG will go on a 24-hour strike on Dec. 2, German union Verdi said on Saturday, adding this would also include staff at the country's largest airport in Frankfurt. Other locations to be affected by the strike are Munich, Duesseldorf, Cologne, Stuttgart and Berlin, Verdi said, adding that Lufthansa's offer to protect wages ahead of a planned ownership change of the unit was still insufficient. Lufthansa this week said it was in final negotiations on a sale of its LSG catering division's European operations to Switzerland's Gategroup as part of plans to focus on its airline business.
Lufthansa is in final negotiations on a sale of its LSG catering division's European operations to Switzerland's Gategroup as part of plans to focus on its airline business. The proposed sale announced on Tuesday comes as Lufthansa contends with low margins in a competitive market, with Lufthansa's supervisory board expected to sign off on the deal on Dec. 3, sources close to the matter said. "The sale is part of Lufthansa's new strategy to focus on its airline business," the Garman carrier said in a statement.
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European shares logged their worst day in three weeks on Wednesday on mounting worries that rising U.S.-China tensions could take a toll on trade negotiations between the two countries. "This deal is so not even there...there's a good reason it could fall through altogether," said Tom Martin, portfolio manager at Globalt in Atlanta. Expectations that the world's top two economies would strike a trade deal have been instrumental in driving the STOXX 600 to a four-year peak.
FRANKFURT/BERLIN (Reuters) - A trade union representing Lufthansa's cabin-crew on Wednesday threatened strikes that could fall during the busy Christmas period if Germany's biggest airline does not make concessions in a wage dispute. Trade union UFO said that if no progress was made during talks, it would announce next Thursday when and where strikes would take place and for how long they would last. A Lufthansa spokesman said the airline would use the time to try to come to an agreement with UFO, adding that a solution could only be found in joint discussions and arbitration.
(Bloomberg Opinion) -- Airplanes just aren’t selling like they used to.Monday marked the second day of the Dubai Air Show, and while there was the usual smattering of headlines with big-dollar figures, there was also fresh evidence that the robust aerospace cycle that’s propelled the industry’s stocks to new highs is getting long in the tooth. Carriers including Emirates and Etihad Airways rejiggered orders at the Air Show as they sought to adapt to a global growth slowdown and weaker demand for travel in the Middle East amid stubbornly low oil prices. This follows similar rethinks at British Airways-parent IAG SA and Deutsche Lufthansa AG earlier this month, with both carriers seemingly pushing out or putting on hold orders for Boeing Co.’s 777X wide-body model. The general takeaway is that the world doesn’t need as many planes right now as airlines might have thought just a few years ago, especially when it comes to the biggest jets used for long-distance international flights. The 777X in particular appears to be in trouble, with launch customer Emirates also reportedly contemplating cutting or delaying its order for 150 of the jets, perhaps in part by swapping in some of the smaller 787 Dreamliners. The Middle East is one of the more attractive markets for the 777 model, which is too big to fly in many other regions. So if airlines there are balking, then production rates may need to come down. Complicating things is a delay in the first deliveries of the 777X until 2021 due to durability issues with a General Electric Co. jet engine. Emirates chief Tim Clark has made it clear he’s fed up with a pattern of delayed rollouts, or worse, post-delivery glitches that force costly groundings, and the delay could factor into any decision. Stanley Deal, who took over as head of Boeing’s commercial airplanes division in October following the ouster of Kevin McAllister, told reporters over the weekend that the company was still in talks with Emirates on the 777X and a still yet-to-be-confirmed order for 40 Dreamliners. “Long term, the 777X’s value remains intact,” Deal said.Boeing has also trimmed its production targets for the Dreamliner after expected orders from China failed to materialize. Etihad Airways said at the Dubai Air Show that it will take 20 fewer Dreamliners over the next four years than originally planned as it grapples with eye-popping losses. Airbus SE models weren’t spared from weakening demand, either. Emirates finalized a $16 billion order for 50 Airbus A350 widebody jets — more than it had committed to in February — but appears to have backed away from an earlier commitment to buy 40 A330neos as well, meaning the total value of the deal before customary discounts is less than originally outlined.The news was better in the narrow-body market. Air Arabia inked a firm order for 120 of Airbus’s A320-model jets. Even Boeing’s troubled 737 Max got some love, with Turkish holiday carrier SunExpress exercising an option to add 10 more of the jets to its fleet. Indian low-cost carrier SpiceJet Ltd. may also seize on the dearth of Max orders as an opportunity to pick up some of the jets at a discount as it contemplates a new hub in the Middle East. In an interview with Bloomberg TV, SpiceJet chairman Ajay Singh wouldn’t rule out signing a deal at the air show, although the size and ultimate timing remain up in the air. Even so, the early returns on the Air Show would seem to be at odds with Airbus CEO Guillaume Faury’s comments last week that aviation demand continues to move “up and up.” Global passenger traffic is indeed still growing, but at a much lower rate than over the past few years. And that matters, because aviation stocks aren’t cheap right now. The SPDR S&P Aerospace and Defense ETF is up 42% so far this year, well outpacing the broader S&P 500 benchmark. The high valuations for aerospace stocks can hold to the extent margins are still on an uptrend and the rebound investors are positioning for in the manufacturing industry plays out, Denise Chisholm, Fidelity’s head of sector strategy, said in a Bloomberg TV interview. At least some airlines, though, are choosing to plan more conservatively.To contact the author of this story: Brooke Sutherland at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Gulf airlines Emirates and Air Arabia spent a combined $30 billion at list prices on Airbus jetliners as the Dubai Airshow burst into life on Monday, while Boeing won a symbolic first official order for the 737 MAX since its grounding in March. Emirates threw its weight behind the Airbus A350 with an expanded order for 50 jets worth $16 billion, but shelved plans to order the slightly smaller A330neo as the Middle East’s largest carrier embarked on a more diversified fleet structure.
Airbus and Boeing fought to save billions of dollars of jet deals on Sunday as host airline Emirates kept the Dubai Airshow in suspense over dozens of tentative orders designed to fine-tune the world's largest international airline network. The world's top jetmakers are trying to win final approval for more than $30 billion in orders from Emirates that have been on ice for up to two years as Emirates protests about industrial delays. Interlocking deals involving a total of 110 Boeing 787 and Airbus A330neo and A350 are up for grabs, but it remains unclear whether there was room for all them in Emirates' revised fleet, delegates said.
Wizz Air lifted the bottom end of its annual profit forecast and further raised its capacity growth outlook, as the budget airline flew more passengers and curbed costs in the first-half, while struggling rivals cut expansion plans. Wizz, which mainly flies to central and eastern Europe, said on Wednesday net profit for the financial year 2020 would be between 335 million euros to 350 million euros ($369.17 million to $385.70 million). Chief Executive Officer József Váradi said the airline was increasing its capacity growth rate to 22%, from 20% promised in July, while net profit for the six months ended Sept. 30 rose 87.1% to 371.5 million euros.
Lufthansa has agreed with its cabin crew labour union to enter arbitration over a wage dispute, the German airline and the union said on Tuesday, averting further strikes. Cabin crew held a strike over pay and pensions for two days last week, resulting in the cancellation of one in five flights, affecting around 180,000 passengers and costing the airline 10-20 million euros ($11-$22 million). The UFO labour union is obligated to "maintain industrial peace," Lufthansa said in a statement.
(Bloomberg Opinion) -- The high-pressure turbine blades in a Trent 1000 passenger jet engine have to withstand temperatures far above the melting point of the nickel alloy from which they’re made. It’s a fiendish technical challenge for the engine’s British manufacturer, Rolls-Royce Holdings Plc — comparable to trying to stop an ice cube melting inside a kitchen oven on full blast. The solution found by the company’s engineers was to blow cool air through tiny holes in the blades. Unfortunately this clever approach has encountered some unexpected problems.Boeing 787 aircraft operated by British Airways, Norwegian Air Shuttle, Virgin Atlantic and others have been grounded in recent months for inspections and repairs because the Trent 1000 engine blades have been degrading faster than anticipated. It’s the type of problem that’s becoming common in the industry as the demands placed on engines become ever greater.The expense of dealing with these things is rising too. Last week, Rolls-Royce quantified the cost of fixing various Trent 1000 issues at 2.4 billion pounds ($3.1 billion), a cash outflow the debt-laden manufacturer can ill afford.Few inventions have done more to transform our life over the past century than jet engines. They’ve let people travel faster and further, and they’re remarkably safe. Passenger fatalities like the one caused by a turbine failure on a Southwest Airlines flight last year are rare. Developed at enormous expense and using innovative new materials, the most recent “powerplants” (to use engines’ industry name) are comparatively quiet and fuel efficient.Yet these innovations have taken the technology closer to its technical limits and reliability issues have crept in. “By pushing the envelope on thrust and efficiency, things have started to go wrong elsewhere in the system,” says Nick Cunningham at Agency Partners. This is worrying because companies are under pressure to build even more efficient propulsion systems to curb carbon emissions. Rolls-Royce’s problems appear the most serious — some 40 787s powered by its engines are parked — but this is an industry-wide issue. Forced to ground planes and adjust flight schedules, airlines have resorted to leasing replacement aircraft and have told engine manufacturers to pay compensation.In September Tim Clark, the boss of Emirates, said manufacturers are delivering aircraft that don’t do what was promised. “Give us airframes and engines that work from day one. If you can’t do it, don’t produce them,” he said.The laws of science aren’t the only thing testing the engine makers. Airbus SE and Boeing Co. have brought several new passenger jets to market in quick succession and their powerplant suppliers have had to ramp up production rapidly. A lot of new demand is from emerging markets where dusty or polluted air can put additional strain on engines.Airbus production was thrown into chaos last year by engine glitches involving Pratt & Whitney’s geared turbofan (GTF) for the A320neo, Airbus’s top-selling jet. More recently the launch of Boeing’s 777x wide-body aircraft was pushed to next year after the premature wearing out of a General Electric engine component.It’s one thing for an engine to miss tough production targets, but quite another for engines to fail once they’re in service. “Engine manufacturers have always had teething problems but in four decades I’ve never seen anything like the list of technical issues they’re been having lately,” says John Strickland, director of JLS Consulting. This month India threatened to ground scores of Airbus A230neo jets operated by domestic carrier Indigo unless the Pratt engines were replaced by the end of January. The warning followed several incidents of engines shutting down in-flight.In October Lufthansa AG subsidiary Swiss temporarily grounded its Airbus A220(1) fleet so the Pratt engines could be inspected after a spate of powerplant failures (the debris from one such incident was recovered from a French forest last week). Since then Canadian regulators ordered the same aircraft not to operate at full power above a specified altitude.About 70% of airlines and lessors surveyed by Citi Research said groundings caused by engine issues were a key concern. Some are looking to operate mixed fleets to lessen the risk of one engine type being grounded. While that’s prudent, it’s more expensive than using a single type of equipment.The risk for engine manufacturers is that reliability issues cost them market share. Earlier this year Air New Zealand switched an order for 787 jet engines to GE after problems with its Rolls-Royce kit. Indigo placed a $20 billion order with the GE/Safran engine joint venture rather buy from Pratt (Pratt claimed the decision was price-related).The problems haven’t affected all new technologies. Rolls-Royce’s XWB powerplant for the Airbus A350 has proven reliable so far. The core gearing innovation underpinning Pratt’s GTF also appears to work as planned; a relief because it cost about $10 billion to develop. There’s more at stake, though, than airline flight schedules and manufacturers’ pride and profitability. As with the car industry, the aerospace sector is gearing up for an epochal effort to curb carbon emissions. Aviation accounts for 2%-3% of greenhouse gas emissions but the sheer volume of plane deliveries in coming years will counteract engine efficiency gains. Aviation’s share could rise to between 10% and 25% by 2050, a Roland Berger study found. Unlike carmakers, the airlines lack viable technological alternatives. Biofuels have potential but fully electric large commercial aircraft are probably decades awayEngine manufacturers are working on still more efficient jet engine designs. Rolls-Royce claims its Ultrafan technology will deliver a 25% improvement in fuel burn compared to the first generation of Trents. Bringing these innovations to market quickly is essential from a planetary perspective but rushing development could prove counterproductive. “My sense is that public opinion in Europe at least is moving quicker than the technology,” says Rob Stallard at Vertical Research Partners.Cunningham is even less optimistic. “Gas turbines are running out of road at just the point where the political impetus is toward greater decarbonization,” he says. “Jet engines are unlikely to get a lot better from here.”(1) The plane was developed by Bombardier Inc and was known as the C-Series before Airbus acquired a majority stake.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.