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AirBaltic CEO: AirBaltic is in negotiations with unions about reducing staff as part of restructuring.
AirBaltic has been in "talks" with the labour unions, to come to an agreement about an "adjustment" of the workforce. Erno Hilden, the Chief Executive Officer at AirBaltic told reporters on Monday that the Latvian airline had announced its voluntary Chapter 11 bankruptcy. Hilden stated that "we are currently conducting consultations with labour unions." He added that, with plans to reduce the capacity of the company, "a change in the workforce is a 'natural conclusion. When all of that has been concluded, it will be time to "really" come up with some numbers. AirBaltic filed for protection under 'Chapter 11' of the U.S. Bankruptcy Code on Monday in New York. The company is seeking to restructure their debt, avoid creditors and survive a sector-wide crisis exacerbated by the Iran War. Hilden was previously the CFO of Scandinavian Airlines, where he led the company through a similar bankruptcy process. He added that airBaltic would not experience any interruptions or changes during Chapter 11 proceedings. He said that the most significant changes will be made to the "wet leasing" business of the airline, which involves lending out its planes and crews for a fee.
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UK gilt yields are rising again and have reached new multi-year records
British government bond yields increased further on Monday. They 'hit new multi-year peaks across the ranges of maturities. According to LSEG, the 30-year gilt yield reached?its?"highest level since march 1998 at 5.951% and stood last 3 basis points higher on the day. Both the 10-year and 5-year yields rose by about?6 points in one day. The 10-year yield reached its highest level since July 2007, while the 5-year rate was at its highest since August 2008. Investors have increased their bets on the BoE tightening policy in the coming year due to the rising inflationary threat posed by the oil prices. Sahil Mahtani is the director of Ninety One Investment Institute, a?asset management firm. "Britain was hit by the same global shocks as other countries, but the market here is demanding substantially higher compensation for inflation risks. The government can't dismiss that part of the sale as imported. The move further erodes the buffer between Britain’s existing budget plans, and the fiscal regulations, which Finance Minister John Healey pledged to adhere to as he prepares his first Budget, due next month. Short-dated gilts have underperformed similar bond markets in other major economies. This is a common pattern when the price of oil or gas spikes, reflecting Britain's dependence on imported energy. Oil prices rose by?about 3 percent on Monday, as new attacks on Saudi Arabian civilian and energy infrastructure and Iranian attacks against ships in the Gulf?exacerbated supply concerns after the closure of an important Saudi oil pipeline. Investors fully priced in the possibility that the BoE would implement two quarter-point increases by the end of the year compared to only one last week. The economists polled unanimously agreed that the BoE would hold its interest rates at 3.75% during Thursday's meeting.
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Etihad Airways sees strong demand, higher passenger capacity despite Iran war, CEO says
Abu Dhabi's Etihad Airlines said Monday that its passenger capacity was above the year-earlier levels as Gulf carriers rebounded from disruption caused by Iran war. Its chief executive also predicted strong demand heading into winter travel season. In an interview, CEO Antonoaldo Neves stated that "we are back on track". He noted that the Available Seat 'Kilometres' - industry standard for measuring passenger carrying capacity - were 15 % to 17% higher today than they were a year ago. He said that the flights were "full, full and full". The load factor (which measures how well an air carrier fills available seats) was 92% in august, while the airline aims to achieve a load factor of 87% or more for the rest of the year. Fuel prices rose and flights were disrupted in the Middle East and elsewhere due to the Iran 'war'. Middle Eastern carriers - some of the world's largest - have had their networks disrupted by conflict. However, they have slowly resumed operations.
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EU truck manufacturers seek a 3-year delay in 2030 CO2 target
On Monday, Europe's truckmakers urged the EU to delay compliance with 2030 CO2 reduction targets by three year - due to insufficient charging networks and high energy costs. Manufacturers in the European Union must reduce CO2 emissions from new heavy-duty cars by 43% in 2030, compared with 2025 levels. They will also have to cut them by 64% in 2035, and 90% in 2040. There are fines for non-compliance, but there is the option to earn emission credits between 2025 and 2029. The European Automobile Manufacturers' Association (ACEA) said that only 2.4% new 'heavy duty' vehicles are currently zero-emission. This is far below the target for 2030. In a joint statement, the CEOs of Europe’s leading truck and bus producers, including DAF Trucks and Daimler Truck as well as Iveco, Scania and Iveco, said that compliance with 2030 should be deferred by three years. They added that policymakers should create conditions for accelerating?the roll-out?of charging station, speeding up grid connections, expanding CO2-based tolls, and reinvesting?revenues from emissions trading into infrastructure and promoting?zero emission vehicle adoption. After pressure from the automotive industry to relax green policies, EU policymakers are currently debating the European Commission's?proposal? to lift the bloc of 27 member countries' effective ban on new combustion engine cars by 2035.
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Poland finds suspected Russian drone near Baltic Sea
On Monday, the Polish defence minister announced that the Polish military had retrieved what appeared to be a Russian drone from the Baltic Sea?northern Poland. Drone incursions have been repeated in countries on NATO's east flank, causing fears that the conflict between Russia and Ukraine could spill over into the borders of NATO. Wladyslaw KOSINIAK-KAMYSZ wrote on X that "the military has 'located and recovered a droid from the Baltic Sea, near the beach in Rusinowo?near Jaroslawiec. "Preliminary examination indicates that it is a Russian drone." The Russian Embassy in Warsaw didn't immediately respond to a comment request. Jacek Góryszewski is a spokesperson for the Operational Command of the Polish Armed Forces. He told TVN24, that the drone could have come from international waters. It looked like a Gerbera, which is a cheap, long-range aerial robot made of plywood and foam. Gerbera drones are often used to decoy but they can also be loaded with explosives. He said that the object was recovered?by a hydrographic ship?off of the coast of Rusinowo...and is currently on the?beach", adding that safety checks were in progress. Donald Tusk, the Polish prime minister, has warned NATO nations that they should be prepared for a rise in Russian provocations. On Sunday, a Russian drone struck a passenger train near the border of Ukraine and Poland. This was just a few days after Boris Johnson, former British Prime Minister, and other European diplomats used essentially the same line.
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Grain prices rise on Black Sea export disruption fears
U.S. Wheat Futures climbed on Monday, as fears of further disruptions to Russian and Ukrainian exports were sparked by the Black Sea attacks. Corn fell and soybeans were a little?firmer as a stronger dollar made U.S. exports more expensive. Chicago Board of Trade's most-active wheat increased 0.5% at 1134 GMT to $7.29-1/4 a bushel. Soybeans increased 0.08%, to $12.97-12 a bushel. Corn fell 0.09%, to $5.29-3/4 bushel. After attacks on ports and ships, Black Sea exports between Russia and Ukraine are almost at a standstill. Matt Ammermann, StoneX commodity risk manager, said: "Wheat is being strengthened by concerns about the continued interruption of Russian Black Sea exports via ship. Attacks continue and there are no signs of significant peace talks." He said: "There are many headlines about possible peace initiatives in the Black Sea, but nothing concrete seems to have happened and the shipping disruption continues." Ammermann said that while the global demand for wheat has decreased, some demand may return this week due to tenders coming from Pakistan and Algeria. Pakistan has announced a massive tender for the purchase of 750,000 metric tonnes of wheat. Major importer?Algeria is looking for at least 50,000 metric tons, but usually buys more. The U.S. Department of Agriculture (USDA), which raised its forecast for soybean production on Friday, has limited the strength of soybeans. The USDA also forecasted a smaller U.S. crop of corn, but analysts expected a greater reduction. He said that the dollar's strength is causing corn and soybean prices to fall. Profit-taking was a response to the USDA crop forecast. The expectation of increased Chinese purchases of U.S. soybeans has limited the fall in soybean prices. He said that the beans were being prepared in anticipation of a visit by Chinese?President Xi Jinping to Washington.
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FOREX Dollar rallies amid rising oil prices and AI concerns
The U.S. Dollar rose to its highest level in two weeks on Monday, as the conflict in the Middle East drove up oil prices and pushed investors into the "safe-haven" currency. This weighed on the yen's recent gains. The dollar was boosted by the warnings from CEOs of frontier companies about AI's potential dangers. Meanwhile, rising bets placed on the Federal Reserve raising rates on Wednesday also helped the U.S. Dollar. The U.S. Dollar Index, which tracks currency against six major counterparts, rose last by almost 0.4%, after previously touching 99.6, the highest level since September 2. The euro dropped to its lowest level in a month at $1.153, and last fell by 0.4%. Meanwhile, the British pound slid 0.3% to reach $1.35. Brent crude rose 3% to $108 per barrel, unnerving investors. Global bond yields also returned to multi-year highs. The Houthi attacks on Saudi Arabia, the world's largest exporter, came after the Kingdom shut down its main pipe for bypassing Strait of Hormuz. This added to the concerns about energy supply. Diplomacy in the U.S.-Iran conflict appeared to be stumbling, as a meeting was postponed between Tehran and Gulf governments. Supply concerns were exacerbated by attacks on ships in the area. Francesco Pesole is a currency strategist with ING. He said, "Gulf developments are still concerning and AI-related headlines?are further weighing down on equities. In this environment, the dollar should be supported." The Japanese yen was a notable loser, giving up a portion of its recent gains. This has been driven by increasing bets that the Bank of Japan will raise rates. The U.S. Dollar rose 0.7% to 154.55 Japanese Yen from last week's nearly seven-month low of below 153. CENTRAL BANKS UNDER PRESSURE This week, the key question on the markets is whether or not the U.S. Fed raises interest rates this Wednesday as a response to the surge in energy prices which has driven diesel to new record highs. According to CME Group’s FedWatch tool, money markets on Monday indicated a 90% chance of an interest rate hike. This is up from 60% a week earlier. The U.S. Dollar has strengthened modestly this week as a result of expectations that the Fed would begin to tighten monetary policy, said Lee Hardman senior currency analyst at MUFG. Hardman also said that the Fed may be reluctant to raise rates too aggressively during an election year. This could limit the dollar's gains. Bond yields have reached multi-decade or multi-year highs in Japan, Europe, and the U.S. due to the increasing bets placed on rate hikes. The FX market is not yet feeling the full impact of the rate hikes, since yields are moving largely in tandem. The markets are almost certain that the Bank of Japan is going to raise interest rates this Friday. They will be searching for any clues as to whether there will be more. There are signs of a'shift in the market sentiment towards the yen. Speculators have taken a net-long position on the Japanese currency for the first since February. Bank of England will likely keep borrowing costs unchanged on Thursday. However, traders expect an increase in rates later this year as well as more in 2027 following the European Central Bank's hike last week.
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What you need to know about airBaltic, the Latvian flag carrier that files for Chapter 11.
AirBaltic, a Latvian airline, said it filed for Chapter 11 bankruptcy on Monday in the U.S. to?cut its mounting debts and survive a crisis affecting the entire sector brought about by?the Iran War. AirBaltic was the second airline to be affected by the war, after Spirit Airlines collapsed in May. Here are some facts about the Latvian flag airline and its financial problems. Who owns AIRBALTIC? Lufthansa, a German airline, holds 10% of airBaltic. AirBaltic, a joint-venture between the Latvian government and Scandinavian Airlines SAS, was founded in Riga, Latvia, in August 1995, following the collapse of Latvia's previous flag carrier Latavio. The two airlines held respective stakes in the venture of 51% and 28,5%. SAS sold its stakes in 2009. How big is AirBaltic? AirBaltic, the largest airline of the Baltic States, operates scheduled passenger flights throughout Europe and beyond. In 2025, it will carry 5.2 million passengers and employ more than 3,000 employees. Last year, it generated revenue of EUR779.3 millions ($899m) and a loss of EUR44.3m. Where does AIRBALTIC operate? The airline has tried to establish itself in the Baltics as the "dominant carrier", opening a hub at Vilnius in Lithuania in 2004, and then developing bases in Tallinn in Estonia and other European cities. AirBaltic has more than 70 destinations, and Riga is a hub for connecting northern and eastern Europe to the rest of Europe, as well as North Africa and the Middle East. Due to the war, Emirates suspended direct flights from March to Dubai until October. What jets does AirBaltic fly? It began with a Saab Turboprop and now operates a fleet of 54 Airbus A220-300 aircraft. During certain periods of the year, it also leases out aircraft and crews. The company announced in August that it would reduce its fleet from 100 aircraft to 36 by the end 2026. By 2031, they hoped to have a fleet of?about 40 aircraft. Why did Air Baltic run into trouble? AirBaltic warned in March of the liquidity pressures it would face if it did not hedge its jet fuel requirements. The airline proposed to raise up to EUR257,000,000?through super-senior bonds. The proposal, which would have subordinated the existing bondholders claims, increased investor concerns about credit risk, and caused a surge in yields on its EUR380,000,000 bonds due 2029. The Latvian government provided a EUR30m state loan to the airline in April but did not pledge further support. Analysts say that the EU's rules on state aid and political considerations make additional government assistance more difficult. What does Chapter 11 mean for AirBaltic? Chapter 11 allows companies to continue their operations while restructuring debt under court supervision. AirBaltic stated that flights, ticket sales and customer service will continue to be provided as usual during the process. AirBaltic has received a commitment from a group lenders for EUR350m in debtor-in possession financing, subject to approval by the court. The airline anticipates completing the restructuring by June 2027.
Brazil and China discuss rail from Peruvian port into Brazil territory
Simone Tebet, Minister of Planning in Brazil, said that Brazil and China are in discussions to build a railroad connecting the Chinese-built Chancay mega port in Peru with Brazilian regions.
Tebet, a local journalist for Carta Capital, said in an interview that "they are very interested in supporting Brazil and crisscrossing Brazil with railways".
The Chinese President Xi Jinping was present at the inauguration of deepwater port, which took place in November.
Beijing's $1.3 billion Chancay Project is its largest investment in South America, and part of a push to expand trade across the continent.
Tebet's team said it met with a Chinese group, representing the state-owned railroad company of China, just over a week ago to discuss the possibility of a route connecting the port to Brazil. The discussion was based on the belief that Chancay is on the shortest way to China and would reduce the distance for maritime trade by at least 10,000 km (6,210 mi).
Tebet stated that the Chinese initially considered a route via the Amazon region. However, the Brazilian government rejected this idea because of the presence and the indigenous peoples in the Amazon rainforest.
After a thorough analysis, "they came to understand, and now the idea is to chart a Southern Route," she said. She noted that the railway will pass through the states Acre and Tocantins before reaching Bahia, where it will connect to the West-East Integration Railway.
The FIOL rail, which is still under construction, will extend approximately 1,527 km from Figueiropolis, Tocantins, to the Atlantic Port of Ilheus, Bahia.
Tebet said that while the project will take some time to come into fruition, it will be transformative in terms of economic development for Brazil's poorer regions.
She added, "You might be looking at five to eight years for a project of this nature to be completed." (Reporting and Editing by Margueritachoy)
(source: Reuters)