MNI: Fed: Policy Well Positioned To Respond To Risks

CANADA JUNE JOBS -1.4K VS FORECAST +20K, PRIOR +26.7K

MNI China Daily Summary: Friday, July 5

MNI BRIEF: PBOC Plans To Borrow Hundred Bln Yuan CGB - Press

MNI: PBOC Net Drains CNY48 Bln Via OMO Fri; Rates Unchanged

MNI: PBOC Sets Yuan Parity Lower At 7.1289 Fri; -0.35% Y/Y

MNI: BAKER HUGHES US RIG COUNT 585; OIL RIGS 479; GAS RIGS 101

EZ/UK T-Bill Calendar: Germany, France to Issue Bills Monday

EZ/UK Bond Supply Calendar: EU/UK Syndications Due Next Week

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Lufthansa (LHAGR; Baa3, BBB-, BBB-; S) {LHA GY Equity} Prelim 1Q Results

CONSUMER CYCLICALS
Credit BulletsBulletHomepagemarkets-real-timeCredit

Lufthansa disappointment may be first of many for Airlines that are facing rising staff costs & geopolitical disruptions. Equities have sold off this year while spreads have posted an impressive rally. Air-France is up next with Q1 results. We prefer cleaner play on air-traffic recovery through Dufry/Avolta (airport heavy retailer) that trades wide to IG Airlines.


  • We wouldn't ignore the -33% FCF cut vs. original guidance (-29% miss vs. analyst consensus) that Lufthansa has issued this afternoon.
  • Equities are muted but its coming off a -17% fall YTD (Air-France -33%) - moves which cash has traded through with strong compression YTD; LHA 29s -45bps & IAGLN 29's -70bps vs. €IG's -27bp rally.
  • We would be cautious at these levels with capacity constraints (on supplier issues) having mixed effects, negotiated wages kicking in & geopolitical disruptions continuing.
  • Air France (Nr, BB+, BBB-; S) comes with Q1 results in 2 weeks - its not expected to be pleasant; consensus looking for Adj. Net Income of -€390m & similar magnitude EBIT loss. Again drag from non-fuel costs and flight disruptions expected.
  • Air France didn't give much FY24 guidance when it reported Q4 results in late Feb (which missed on similar themes to above/Lufthansa today) - FCF is not expected to be positive this year, it is targeting capacity expansion & Capex is sizeable still. This is priced - it trades +20-30bps wide of IAGLN/LHA.
230 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.

Lufthansa disappointment may be first of many for Airlines that are facing rising staff costs & geopolitical disruptions. Equities have sold off this year while spreads have posted an impressive rally. Air-France is up next with Q1 results. We prefer cleaner play on air-traffic recovery through Dufry/Avolta (airport heavy retailer) that trades wide to IG Airlines.


  • We wouldn't ignore the -33% FCF cut vs. original guidance (-29% miss vs. analyst consensus) that Lufthansa has issued this afternoon.
  • Equities are muted but its coming off a -17% fall YTD (Air-France -33%) - moves which cash has traded through with strong compression YTD; LHA 29s -45bps & IAGLN 29's -70bps vs. €IG's -27bp rally.
  • We would be cautious at these levels with capacity constraints (on supplier issues) having mixed effects, negotiated wages kicking in & geopolitical disruptions continuing.
  • Air France (Nr, BB+, BBB-; S) comes with Q1 results in 2 weeks - its not expected to be pleasant; consensus looking for Adj. Net Income of -€390m & similar magnitude EBIT loss. Again drag from non-fuel costs and flight disruptions expected.
  • Air France didn't give much FY24 guidance when it reported Q4 results in late Feb (which missed on similar themes to above/Lufthansa today) - FCF is not expected to be positive this year, it is targeting capacity expansion & Capex is sizeable still. This is priced - it trades +20-30bps wide of IAGLN/LHA.