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Lufthansa will cut thousands of jobs to improve efficiency
Two sources familiar with the matter say that Lufthansa will announce several thousand layoffs on Monday, at its first capital markets day for the entire company in six years. The airline is looking to reassure investors about its commitment to efficiency. After the announcement of planned cuts, shares in Lufthansa rose by 3.4%, reaching their highest level in over three weeks. Analysts and investors criticised Lufthansa's inability to reduce costs and grow the core business for two years after it delayed its target of an 8% operating margin by 2025. The group issued two profit warnings for 2024, and assured investors that it would implement a turnaround program. The exact number of redundancies is not known Two sources have confirmed that the airline group plans to cut its administrative staff by 20 percent in the next few years. However, the exact number is still being determined. Sources spoke under condition of anonymity due to the sensitive nature of the subject. The company said that its turnaround was progressing. The company is still facing labour issues, and a dispute over pensions will likely overshadow Capital Markets Day on Monday in Munich. A pilot strike is still possible. Lufthansa has declined to comment. A third source familiar with the discussions said that any redundancies would impact the entire group and not just the core carrier. Analysts predicted that the market will continue to pressure Lufthansa, to demonstrate its ability to build a more effective group. Bernstein stated in a note focusing on the airline's Capital Markets Day that despite having fewer aircraft and even less flying, the airline business employed 7% more employees than in 2019. CAN IT LEVERAGE NEW GERMAN OPERATIONS? The airline's ability to leverage Discover and City Airlines, its two new German operations, is key to the remaining hopes of a turnaround. Analysts say that the labour agreements of Lufthansa Classic are outdated, inflexible and expensive. However, the contracts for the employees of the newer subsidiaries can be more easily negotiated, according to an insider. Executives told reporters that increased flexibility would allow the group's resources to be moved from less-profitable subsidiaries to lower-cost options. Analysts said that convincing shareholders and analysts about progress will likely remain a challenge. Ruairi Cullinane is an analyst at RBC. She believes that Lufthansa needs to focus on the immediate and not mid-term goals. He said that analysts may want to know if Lufthansa will be able to meet its 2025 target of a significant rise in adjusted EBIT. (Written by Joanna Plucinska, edited by Barbara Lewis).
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MOL Hungary will resume crude oil exports to Iraqi Kurdistan
The Hungarian refiner MOL group has signed agreements for the resumption of international crude oil exports out of Iraq's Kurdistan Region, it announced on Friday. This is a major step towards restoring operations that have been halted since Spring 2023. These agreements include international exploration and production firms, the Kurdistan Regional Government and the Federal Government of Iraq. MOL anticipates that the crude oil pipeline linking the region with the Turkish port of Ceyhan will reopen within the next few days. MOL's statement said: "We are confident about the reopening and the positive impact that it will have on our operations." The closure of the pipeline earlier this year has disrupted crude oil exports from Kurdistan, affecting revenues for oil companies operating in Kurdistan. MOL owns a 20% stake of the Shaikan Oil Field in Iraqi Kurdistan. Reporting by Anna Wlodarczak Semczuk, Alan Charlish. Mark Potter edited the story.
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Foreign Minister says that Denmark does not intend to invoke NATO Article 4
Denmark does not plan to invoke NATO Article 4 following drone incursions near military and civilian sites which shut down air traffic earlier this week in the Nordic nation, Denmark's Foreign Minister said on Friday. According to Article 4 of NATO's treaty, members will consult each other whenever they believe that the territorial integrity, political independence, or security of one of their members is at risk. Reporters were told that Article 4 had been used nine times during the history of NATO, including twice in recent years in relation to Poland, and Estonia. Therefore, there is no reason for us to use it, said Foreign Minister Lars Lokke Rasmussen. Mette Frederiksen, the Danish Prime Minister, has linked the drone accident that closed Copenhagen Airport late Monday night to suspected Russian drone activity across Europe. However, she did not provide any evidence for this claim, which was strongly denied by Moscow. The Danish foreign minister announced Thursday that Denmark will also donate 2.7 billion Danish crowns (US$422.43million) to Ukraine. A large portion of the donation would go into Ukraine's defense industry. $1 = 6.3916 Danish crowns (Reporting and editing by Terje Solsvik, Louise Breusch Rasmussen)
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Source: FAA will return some 737 MAX and 787 ticketing authorities to Boeing
Sources say that the Federal Aviation Administration is allowing Boeing to issue airworthiness certifications for certain 737 MAX aircraft and 787 planes as of next week, after holding this authority for years. Since years, the FAA continues to inspect every 737 MAX or 787 aircraft prior to issuing an airworthiness certification and clearing for delivery. The FAA typically delegated the authority for issuing airline tickets to the manufacturer. Source: Under the new program, which will be announced on Friday, Boeing, FAA and other agencies will issue airworthiness certifications alternately every week. Boeing and the FAA did not immediately respond to our request for comment. After a mid-air blowout incident in which a new Alaska Airlines MAX aircraft was missing four bolts, the FAA did not lift its production cap for 38 737 MAXs per month. Reporting by Shivansh Tiwary, Bengaluru. Editing by Anil d'Silva and Tasim Zahid.
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Lufthansa will announce thousands of job reductions on Monday
According to sources familiar with the matter, Lufthansa will announce several thousand cuts in its first capital markets day for the company since six years on Monday, to demonstrate its commitment to efficiency. In 2024, the group issued two profit warnings as it battled rising costs and labour challenges. Investors were promised that an ambitious turnaround program would be implemented in the next few years. Two sources have confirmed that the airline group plans to cut its administrative staff by 20 percent in the next few years. However, the exact number is still being determined. Sources spoke under condition of anonymity due to the sensitive nature of the subject. Lufthansa has declined to comment. A third source familiar with the discussions said that any redundancies would affect the entire group and not just the core carrier. (Writing and editing by Barbara Lewis; Joanna Plucinska)
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Abra ends talks with Gol-Azul, ending the major Brazilian airline merger
A filing late Thursday showed that the airline group Abra had decided to end talks about a possible merger between Brazilian carrier Gol and Azul. This move puts an end to the possibility of creating a dominant airline for Latin America's biggest economy. The new carrier would have had roughly 60% of the domestic markets, surpassing LATAM Airlines, based in Chile. Abra Group, the majority shareholder in Gol and Colombia’s Avianca, and Azul signed the first memorandum in January to combine the two airlines. This followed months of discussions and speculation in the market. Azul filed for Chapter 11 protection in May. Analysts warned that this move would likely stop the merger between Gol and Azul, who emerged from their own bankruptcy proceedings in June. STRIKES IN THE INDUSTRY According to Gol, Abra informed Azul that "the parties have not meaningfully talked or progressed on a possible transaction since several months due to Azul's attention towards its Chapter 11 proceeding." Both companies filed for bankruptcy as the airline industry struggled to deal with debt, a sharp decline in traffic due to the COVID-19 epidemic, and delays in aircraft deliveries. Abra pointed out that the memorandum from January came "in a different scenario and at a different moment for the companies." Gol and Azul terminated also their codeshare agreement for 2024, which was being closely scrutinized by antitrust watchdog CADE. Concerns about competition Abra left the door wide open for future discussions. Abra said, "We still believe in the merits a business merger between Azul and Gol, and as such, Abra stands ready, willing, and available to engage the relevant stakeholders." Azul confirmed in a separate filing that the talks were over and reiterated its "commitment" to strengthening its capital. Azul anticipates that it will emerge from bankruptcy by the beginning of 2026. LATAM criticised the potential merger, but some experts called it "necessary" to maintain a financially sound sector in Brazil where air travel is restricted and costs are high. Brazil's government welcomed the end to the negotiations. Initially, it supported the merger in order to avoid either company failing, but then changed its mind due concerns about competition. The Minister of Ports and Airports, Silvio Costa Filho, wrote in X that "the outcome is a result of the strengthening and growth of Brazilian aviation." Reporting by Gabriel Araujo, Luciana Magnhaes and Kirsten Donovan; editing Jacqueline Wong.
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Poste Italiane is considering a digital identity fee. Analysts see a potential 100 million euro profit boost.
Analysts wrote Friday in their daily reports that Poste Italiane may introduce an annual fee for its users of the digital identity service. This follows a meeting with management. Intermonte analysts and Akros wrote in their report that the move, which involves around 20 million digital identity accounts active, could result in an additional operating profit of up to 100 millions euros (116.75) for the state-backed conglomerate. Poste has declined to comment. It is important because it marks a change for Poste. Until now, these services were provided free. Other providers are now charging for digital identification services. CONTEXT The Italian public digital identity system (SPID), which is used to access a variety of online government and private services, is called the Sistema Pubblico Di Identita Digitale. Poste is Italy's largest SPID provider. Reporting by Elvira pollina. Editing by Jane Merriman
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Orlen accepts that Poczta Poland will take a stake in the courier unit
Polish state-controlled refiner Orlen signed an agreement on Friday that will allow state-owned Poczta Polska postal service to invest in and possibly take over its courier unit. According to the preliminary agreement with Orlen Paczka, Poczta Polska initially will acquire a minor stake and has the option of eventually purchasing all the shares. Orlen didn't disclose the size of the stake or its value. Orlen stated that the deal would create a strong domestic logistics operator. Ipopema Securities analyst Robert Maj said it allowed the refiners to get rid of non-core assets. Orlen believes that its chances of establishing itself in this market are limited. Allegro, an e-commerce company, has also been increasing its competition as it expands its network of lockers. Orlen Paczka has over 14,000 points of pick-up, including 7,000 automated parcel lockers. Poczta Polska, on the other hand, has a network with more than 20,000 points including post offices and retail partners.
French LNG supply is disrupted after a weeks-long strike
Two representatives of the CGT union stated on Friday that workers at French LNG terminals would continue to block ships until they receive their salaries.
This week, the blockade of three of four terminals in the country has led to a reduction of gas exports and a rise in prices.
Elengy, the LNG terminal operator in France, has declared force majeure on its three sites due to the strike that lasted a month and says no ships will be discharged until October 2.
Analysts said that reduced deliveries from French LNG facilities contributed to a rise of 1.3% in the price for the Dutch TTF benchmark European gas contract front-month on Thursday. However, the impact on Friday was lessened due to an increase in flows from Norway where a maintenance phase is ending.
The union representatives stated that if the conditions aren't met, then they could continue to blockade beyond October 2, potentially causing prices to rise even more.
France is Europe's 4th largest gas importer. Most of its supply goes to neighboring countries. Since 2022, when Russian gas pipelines to the European Union were shut down following the invasion in Ukraine, its exports have increased. France is the biggest importer of Russian Liquefied Natural Gas in Europe. It bought around 4 million tonnes in the first eight month of the year, with a large portion of it going through Elengy’s Montoir Terminal on the westcoast.
A spokesperson for Elengy said that both of its Fos terminals are currently blocked, and Montoir is experiencing reduced gas outflows.
LSEG data shows that the last ship to dock in Fos and discharge was on 12 September, while the last ship to discharge in Montoir on 21 September. LSEG data shows that three LNG carriers are anchored in the port area, waiting to be discharged. Reporting by Forrest Crellin in Paris, America Hernandez in Oslo and Nora Buli at the LSEG office in Oslo. Editing by David Goodman and Kirby Donovan.
(source: Reuters)