Paradoxes of Ryanair

Min Thant

Recent news regarding European budget airlines are full of despair, with the collapse of the several airlines such as AirBerlin, Alitalia, and Monarch. In addition to this, Ryanair was forced to cancel 20,000 of its flights in recent months due to mismanagement with pilot rosters, calling this event ‘perfect storm’ by Ryanair. As expected, this led to bad publicity among the press and a mob of furious customers, with Ryanair shares dipping from €19 in August to under €16 by the end of October. Nevertheless, in spite of this chaos, Ryanair has forecasted to make a record high annual profit this year.

For Ryanair, getting a bad press over its practice is becoming a regular occurrence now. But the latest event could be one of the most impactful one, sending shockwaves to the entire organisation with news media headlines calling for CEO Michael O’Leary to quit. In September, Ryanair was forced to cancel around 20,000 flights effecting 700,000 passengers due to staff shortages and error among pilots’ annual leave. To a certain extent, this affirms the rumour of pilots leaving Ryanair for its competitors such as Norwegian and Easyjet, and highlights one of the internal challenges of Ryanair regarding its labour. After all, Ryanair is not known to have best pay and working condition in the industry. This is worrying for Ryanair, because if the labour problem continues into long run, events would ensue similar to September and it could prove to be one too many ‘perfect storm’ as the customers would turn away from them in the future. In order to tackle this, Ryanair has decided to increase their pilots’ salary.

There are also major financial implications associated with this episode, as Ryanair decided to increase their pilots’ salary by 20% above its competitors pay package. As a result, this could cost up to €100m, driving up its operating cost which could have an impact on its cost advantage competitiveness. Furthermore, under EU regulations, cancellations cost them €25m in addition to €40 and €80 vouchers given to 700,000 customers, which could cost them up to €50m in total. Consequently, Ryanair’s H2 performance is likely to suffer, as traffic is expected to drop by up to 4% with their rivals — Easyjet and Norwegian are experiencing a 10% and 14% surge respectively in their passengers in October .

However, not everything is doom and gloom for Ryanair. Its H1 performance showed the strong performance and the company is still forecasted to make a record high annual profit. Ryanair’s profit went up by 11% to €1.29bn from €1.17bn in 2016. It’s traffic also increased by 11% to 72.1m passengers. This is due to a strong Easter performance, the collapse of competitors such as Monarch, and reduction in fares by 5%, saving customers €160m. This proves that Ryanair’s robust low-cost business model is working and is profitable within the competitive environment. Still, the H1 performance’s limited impact on current cancellations should be considered. Nevertheless, Ryanair still experiences a rise in passenger numbers in October to 11.8m from 10.9m last year. It has increased by 8% year on year considering cancellations. This displays that even with bad press and reports of furious customers, passengers still return to Ryanair and ‘perfect storm’ seems to have no impact on its performance as the company is still forecasted to make record high full year profit of at least €1.4bn. Consequently, Ryanair’s shares climbed back again above €17 after the release of its financial performance.

Regarding labour shortage problems and rumours, Ryanair replied that it has employed around 1,000 pilots this year and its CFO, Neil Sorahan, said he is ‘absolutely confident’ that there would be enough pilots. With the decision to pay higher salaries than its competitors by 20%, Ryanair might able to attract more pilots and persuade the current ones to stay. More importantly, with the collapse of Monarch, Air Berlin and Alitalia there’s a surplus of pilots in the labour market.

Bearing in mind the paradoxes of Ryanair, its future seems uncertain. Even though the higher salary might attract pilots for the short term, in the long run, if the relationship between management and staff is not improved, it might lead to incidents like ‘perfect storm’ to unfold again. Nonetheless, passengers return to Ryanair due to the competitive nature of the industry, and H1 performance shows that Ryanair’s business model is performing well — whilst the rival firms are failing. More importantly, we have seen yet another Michael O’Leary’s wizardry and Ryanair has yet to grow more.

Trust? Infinite for the sake of convenience! Amazon in your home.

Charles Lord

From the 8th of November, strangers will begin freely entering citizen’s homes across 37 cities in the United States. No, this is not fake news, it is the newest innovation from amazon: Amazon Key. Amazon Key will ensure the time between placing an order and the delivery is minimised, even further, the new delivery option ensures customers will never miss a delivery slot again. This new method allows couriers to let themselves in to registered customer’s homes in order to deliver parcels, rather than taking the risk of leaving them with neighbours or in a designate, outdoor, safe space. In order to join the scheme, customer’s will need to spend between $120 and $250 on equipment, but early interest appears strong.

Globally, Amazon’s prime network has approximately 65-80 million subscribers and industry analysts see this as the next logical step following the widespread success of Amazon lockers, an earlier scheme that enabled customers to have the items delivered locally, for their collection, at a time that suited them. This itself was an extension of the Prime scheme, which began with 2-3-day delivery and has incrementally improved ever since.

This new approach follows Amazon’s recent acquisition of Whole Foods, which was seen by some as Amazon’s entrance into the elusive home grocery market. At that time, industry experts were cautious due to the highly competitive nature of the market, slim potential profit margins, and resistance by many consumers to trust another person or machine to select fresh produce for them. There was also the history of past failures to consider, with both and Webvan being unable to develop the idea of shipping fresh produce around the time of the dotcom bubble.

Many believe that amazon’s utilisation of its customer buying patterns and large network may allow Bezos and Co. to gain a comparative advantage in the market, due to the vast amount of intelligence they have on their target market and the incredible scale of their current delivery options.

Overall, Amazon’s stock price increased on the news and has remained high. Conversely, the stocks of both UPS and FedEx, two of America’s largest couriers has fallen.



Bright Lights in the SolarCity

Benjamin Foster

Thursday saw the confirmation of an all-stock transition of $2.6 billion merging Tesla and SolarCity after more than 85% of the voting shareholders voted in favour of the deal.  Musk sees over $150 million of cost efficiencies in the first year alone and the opportunity for Tesla to offer integrated solar roof panels alongside energy storage products, such as the Powerwall 2.0. The key area of compatibility is in the production of solar roof panels, beginning next summer which Elon Musk interestingly pitched the price of this for consumer at, or below, the cost of a regular roof, even when labour is included, stating that, “the electricity is just a bonus.”

Whilst there have certainly been concerns over the economic strengths of both companies, after Musk’s first announcement of the merger has shaved over $5 billion in market capitalisation off both Tesla and Solar City, SolarCity’s Q3 recently released financials noted promising results for the company: surpassing 300,000 installed solar customers, a 76% year-over-year growth in revenue, gross profit up 91% versus 2015 and falling wattage costs.

The integration of SolarCity’s products, services and instillation capacity with the development and manufacturing capacity of Tesla offers the opportunity for a next generation energy company that is markedly distinct from traditional players within the over $1 trillion global marketplace. Allowing the creation of the first and only integrated sustainable energy company and, potentially, paving the way for the future of the energy industry as the scarcity of fossil fuels grows. An integrated approach also allows for a customer convenience not currently available, as well as both the potential to expand sales of related products (Tesla’s Model 3 working in harmony with SolarCity’s residential systems) and, arguably more importantly, the possibility of stabilising the renewable energy gird.

The instability of the renewable energy grid is one of solar’s key limitations at present and seemingly a key reason behind this merger. A fundamental issue with solar energy is the ‘duck curve’ of an dovetailing of electrical supply and demand, with over-generation in the afternoon and an increased need for ramping as solar drops off in the late afternoon. The synergy, the $2.6 billion word in this deal, between the generating capacity of SolarCity’s roof tiles and Tesla’s Powerwall 2.0 battery needs little explaining in solving this issue with grid stability meaning that sustainable energy could soon become truly sustainable for consumers.

Whilst Tesla shareholders are evidently supportive of the merger, wider market criticism has been dramatic. Criticisms over the ‘sense’ of the merger, especially by veteran investor Jim Chanos, is commonplace, with others arguing that the merger is little more than a bailout of SolarCity (where Musk is Chairman and owns 22% of SolarCity stock). Some Telsa shareholders are also far from supportive with seven filing lawsuits against Musk in October for the proposed acquisition of SolarCity. The predictions of establishment critics have, however, been categorically wrong so far, with both Credit Suisse and UBS previously predicting a clear rejection of the merger.

There are clear, company-specific concerns, however, which must be taken into consideration. SolarCity’s delays in its New York manufacturing facility, Tesla’s already full schedule with the progression of its Model 3 development, possible regulatory risks for SolarCity and the simple fact that there are far cheaper options for Tesla, options that would lessen the dramatic cash burn of the company, all add up to present a less than rosy image of the deal. Further challenges are presented when one considers the possible headwind for the solar industry. Not only has GTM forecast a 7% contraction in the solar market next year alone, but continued oil price volatility, clashes between American states and solar companies over competition law, as well as President-elect Trump’s less than sunny disposition towards the sector, all highlight that challenging times are facing Musk’s newly integrated enterprise.

The questions remain then. Have investors been blinded by the bright lights of Musk’s vision and failed to truly examine the fundamentals of the deal? Will Tesla be able to capitalise on the integration and supposed synergies of the deal? Is this merger the first step in Tesla’s collapse, or will it pave the way to the solar cities of the future?


Can the Air Canada deal be the beginning of Bombadier’s comeback?

By Gediminas Velutis

Bombardier, the Canadian multinational aerospace and transportation company has received its first order in the last 16 months for its CSeries jets from Air Canada. The airline company has ordered 45 jets with an option for 30 more CSeries aircraft for $3.8 billion. The announcement sent Bombardier’s share price up by 30 percent which closed the day at C$1.09 – 21 percent up from the previous close. Bombardier now has a total of 678 orders of its CSeries jets, a 110-130 seat model that competes with 150-160 seat models Boeing’s 737, Aurbus’s A320 and a 106-seater Embraer 195.

However, after the deal was reached, Bombardier announced that it is going to continue with its restructuring and will cut its workforce by 7,000 employees over the next two years. Nearly half of the cuts will come from the firm’s rail arm. Bombardier is estimating the 2016 revenue to be between $16.5 billion and $17.5 billion which is below the analysts’ consensus forecast of $18.07 billion, according to Reuters. Quarterly revenue was reported at $5.02 billion, well below $5.48 billion that analysts estimated. The company also confirmed that it is going to do a reverse stock split in order to make its share price rise which had been below C$1 since late January, lowest in 25 years.

Bombardier can be slightly relieved after landing the first CSeries order in 16 months and the first from a top flag airline since 2011. Once finalized the company will be 12 planes short of its 300 orders target by the time CSeries enters service in the second quarter. This goal appeared unrealistic as Bombardier faced technical issues and delays. However, after the Air Canada deal announcement, Bombardier claims it is still in talks with more potential buyers including United Airlines and other major U.S. carriers, company’s chief of sales Colin Bole said. He added that the goal is to land another deal before the Farnborough Airshow in July and the firm is currently close to finalization on a number of transactions.

On the other hand, some analysts made suggestions that the Air Canada deal had hidden support from the Canadian government. Colin Bole from Bombardier denied these claims adding that it is a perfectly normal commercial deal that has no government subsidy funding and assured that “Air Canada is no slam-dunk customer.” The Canadian government also said it had nothing to do with the Air Canada deal, however it also confirmed that it is in talks with Bombardier on its request for aid. Not long ago Bombardier received cash infusions from the CDPQ pension fund and a $1 billion lifeline from Quebec government last October.

The CSeries order due to be delivered in 2019 will replace Air Canada’s older Embraer jets, which together with Airbus, Boeing and Bombardier are all in Air Canada’s portfolio. Even though the order made Bombardier the Singapore Airshow winner, analysts said it would not solve company’s struggles of breaking into the main jet market dominated by bigger players. Critics believe that the CSeries jet is undersized, however, Bombardier is confident it is addressing a gap in the market. Colin Bole believes that “Airbus and Boeing have been brainwashing airlines to think they need larger aircraft” while adding that Bombardier could benefit from any downturn as it would encourage airlines to buy smaller, less risky models. On the contrary, both Airbus and Boeing claim market has voted favorably on their upgraded narrowbody models that are selling in thousands.

Arcelor Mittal – melting away?

By Julian Flüß

ArcelorMittal, the Luxembourg based, world largest steel manufacturer struggles to satisfy markets’ and investors’ needs. With a lacklustre performance of an astonishing 69 per cent one-year drop and a record annual net loss of more than 7 billion Dollars, the company fell short of analysts’, as well as its shareholders, expectations.

The company, which is ranked among the Forbes 100 largest corporations in the world, emerged in 2006 after a hostile takeover of the western-European Arcelor by Indian conglomerate “Mittal Steel”. With 232,000 employees in around 60 countries and an output capacity of more than 98 billion tonnes of steel every year, which is 10 per cent of the overall world’s steel, it is the biggest steel producer in the world.

As the world economy cools down and prospects are clouding, many raw material producing companies have demonstrated poor performances. However, the performance of ArcelorMittal suffered extraordinarily. Since end of March 2015 the stock of Arcelor, has known but one direction: down.

The reasons are obvious. Steel as raw material suffered a huge demand decline in 2015, hitting steel manufacturer harder as expected. Arcelor sales went down by more than 15 billion dollars from 793 billion USD in 2014 to 63.6 billion in 2015, which partly could be explained by the lower steel prices.

However, this was not the only trigger for the disastrous results reported. The 7 billion net loss were mainly due to impairments, primarily mining impairments related to asset write-downs, which accounted for more than 4.8 billion dollars in the fourth quarter 2015.

These impairments were connected to the rapid decline of international steel prices. As raw materials prices fall, the company must revalue its inventories by comparing production costs with estimated actual selling prices of its finished products in the markets. In other words, falling market prices for iron ore means also falling market prices for finished products using it as a basis while production cost stayed constant. Thus, write downs of Arcelor took on huge proportions as the price for iron ore dramatically declined from more than 70 USD per metric ton at the beginning of 2015 to around 40 USD today.

To oppose these developments, the management of Arcelor tries to bolster the company’s balance sheet. It announced the rights issue of around 3 billion USD and the sale of its 35 percent minority stake in Gestamp, a European engineering company, worth around 1 billion USD. In this way, the management plans to reduce the net debt of the company, actually amounting to almost 16 billion USD, by almost 25 per cent.

An additional measure in the upcoming year, aimed to bring the company back on track, is the planned reduction of cash requirements. This comprises a reduction of investments and interest expenses but also no dividend payments regarding the year 2015. All this comes with the advantages of lower cash taxes and is directed to provide the company with some breathing space.

However, as the difficult times in world economy can be blamed for poor performances of steel and mining companies in the past year, this is not an excuse for Arcelor. Competitors like the Germany based Salzgitter AG as well as the Austrian Voestalpine AG have suffered too, but not to the extent Acelor did. Furthermore, these companies already show signs of recovery and rising stock prices. It is now up to the management of Arcelor to turn back the tide and regain the trust of investors and markets.

Can Toyota and Daihatsu Alliance be the key to gaining market share in India?

By Gediminas Vilutis

Toyota, the world’s largest automaker, has recently reached an agreement with its subsidiary Daihatsu to fully acquire it in a USD 3.2 billion deal in share exchange. Toyota has owned a majority 51% share in Daihatsu since 1998 and wants it to become a wholly-owned subsidiary in order to develop better cars for the small car segment and speed up the company’s decision making. The acquisition is expected to be completed in August 2016 and Toyota expects to offer 0.26 of its own share for each share of Daihatsu which represents a 0.6 percent premium on the closing share prices of both companies on the day of announcement.

Daihatsu will stop trading and be de-listed in the end of July according to companies which both rose after the announcement by more than 3.5%. Toyota’s President Akio Toyoda commented that the firm is aiming to make Daihatsu what Mini is for BMW. He added that it is an opportunity to take advantage of companies’ respective strengths and focus on core competencies.

Toyota Motor Corp. is also considering building and selling small cars in India, a market where so far it has struggled to gain significant market share. The company aims to double its market share to 10% by 2025 in India and the key to achieving this will be Daihatsu’s small cars. A move to introduce its Daihatsu small-car brand in India could threaten Suzuki Motor Co. which currently is the market leader in the country. Naomi Ishii, managing director at Toyota’s India unit claims that if Toyota brings Daihatsu to India, it would need all-new models and smaller cars at competitive prices.

Suzuki recognizes Toyota’s move as a threat to its leading position in India and other markets. Toshiro Suzuki, Suzuki Motor Corp’s President, told reporters that profit generation will become more challenging as more competitors seek to enter into the Indian market. Though he also emphasized the threat comes not only from the Toyota’s and Daihatsu alliance but also from other international car manufacturers that make competition tougher. Suzuki plans to launch globally 20 new models by 2020 of which 15 will be introduced in India. Maruti Suzuki India, Suzuki’s Indian business, last year accounted for 41 percent of group sales and sold 1.2 million passenger vehicles which shows the market importance for Suzuki Motor Corp. Maruti has a leading position in India among all vehicle-makers with nearly 50 percent of all passenger cars sold in the country, however, the competition is growing from firms such as Hyundai or Honda. According to IHS Automotive, India is on track of overpassing Germany and Japan by 2019 and become the world’s third largest buyer of new vehicles, being behind only China and the U.S.

2015 has been a tough year for Daihatsu as its worldwide sales fell by 13 percent to 794,000 cars. Even though the firm is the leader in Japan’s minicar segment, due to a price war with Suzuki, Daihatsu saw a 14 percent decline in domestic sales. The alliance with Toyota and entering the India’s small car market could be the breakthrough that Daihatsu needs and help Toyota increase its market share in the entry-level, no-frills car sector in India, which accounts for two-thirds of total vehicle sales in the country.

The world’s largest car manufacturer admits that over more than two decades it has failed to win over India’s car buyers who are cost-conscious. The company claims it cannot fight the small car market by itself and will need support from Daihatsu. However, the firm could be facing challenges such as Indian government’s policy on safety and environmental issues or the low awareness of Daihatsu brand in India. Rather than setting up Daihatsu’s own facility, Toyota will propose to use part of its plant in southern India where Toyota has spare manufacturing capacity of 100,000 units a year. Additionally the company has thoughts of selling Daihatsu vehicles under the Toyota brand in order to save spending on creating brand awareness and development of a new sales network.

As automakers are facing growing costs of meeting tougher environmental standards and the slowing global sales growth, Toyota is considering closer ties with other Japanese automobile companies. The company has previously announced that it would deepen collaboration with Mazda Motor Corp. and the Japanese newspaper Nikkei recently reported that Toyota is studying a potential partnership with Suzuki, even though both companies denied being in talks to form an alliance. Finally, although Toyota and Daihatsu will engage in a friendly competition and operate under separate management styles, bringing them together can help overcome future obstacles such as the development of next-generation technologies or entry into growth business areas.

Ryanair – Pulling Up?

By Julian Fluß

Ryanair, the Dublin based, famous budget airline and sixth biggest airline in terms of passengers carried, exceeds all investors’ expectations.

With January traffic growing 25 percent up to 7.5 million passengers compared to 2015, as well as third quarter profits up impressive 110 percent compared to the same period in 2014, it signals that it is back in business. This comes after its profit warnings from 2013, and some people already declaring that the business model has failed.

However, announcing plans to buyback shares worth around 800 million euros, thus returning money to its investors, the airline seems to be equipped with new confidence. This is especially interesting as these kinds of rewards are not common sense in airlines business models due to its cyclical and capital intense business. But as always and in every respect, Ryanair does not stick to the rules.

Regarding the trigger for this performance, this good news was partly a result of Ryanair’s strategy shift towards more customer care and satisfaction, which included cost-cutting for baggage fees and expanding its flight connection to more important European hubs in order to target business travellers.

However, the extraordinary performance is not only due to its change in strategy but also due to the favourable overall circumstances for the airline business in general. Lower fuel prices combined with an expected above-average capacity growth in the upcoming year seem to play into the hands of airline companies. Consequently, Ryanair plans to grow further, announcing to carry 80 percent more passengers up to 2024 and placing an enormous order of 175 short-haul passenger carriers in 2013, worth more than 16 billion U.S. dollars.

This positive development is mirrored in the share performance of Ryanair, with an increase from around 10 Euro in February 2015 to more than 13,50 euros a year later. In other words, this equals an incredible return of more than 30 percent.

The market honoured this development with positive reactions. Leading analysts changed their recommendation to “outperform” and “buy”. Forecasts show a steady increase in net income per seat as well as in free cash flows yields. Consequently, price targets have been risen and now ranging from 16 euros (Goldman Sachs) up to 20 euros (Barclays).

However some concerns still remain. The company announced a warning that fourth quarter earnings could fail analysts’ expectations as average fares could suffer after the Italian government announced a 40 percent tax increase in passenger departure tax. This was followed by a beat back by Ryanair, which announced the drop of 16 Italian routes and a layoff of around 600 employees.

Another unfavourable factor is related to its mentioned strategy shift to focus more on business travellers, expanding their destinations to major European cities and more popular airports. As this comes with higher landing fees, passenger charges and taxes, significantly higher costs will hit Ryanair in the coming years.

What is more, competition never sleeps. Global players like Lufthansa and Air-France-KLM have been performing very well too and thus announced record profits, despite several strikes within the companies. This is going to make the competition even fiercer in an already highly competitive market.

However the airline seems to get things right while satisfying investor needs. Analysts start to call it “cash machine” and “revenue revolution”, expressing strong belief in the airline’s great future performance, which also raises the question if it could be a blueprint for other budget airlines.

Automobiles – Doom, Gloom, and Intrigue

By William Newby

Recent months have been a period of doom and gloom for the car industry, Volkswagen the biggest headline of them all. US sales, the world’s second largest market for automobiles behind China, fell almost 25% in November, and recently, Standard and Poor again reduced VW’s credit rating from the A to BBB+. Brand perception and reputation are negatively impacting market competitiveness, tarnished by the recent emissions scandal. Italian police stormed not only Volkswagen’s offices in Verona, but also parent company Porsches’ headquarters in Padua, which controls over 50% of shareholder votes in VW, and offices of Lamborghini, also in the VW group only this week. Police placed six Italian based executives in the group under investigations. Nevertheless, the recent updates haven’t deterred lenders, with VW reportedly securing bridge loans of up to €20bn (£14bn) to pay fines, legal fees, and to refit cars. VW have have stipulated that they will sell assets to pay off the one-year loan.

Further bad news for the international automobile industry has been brought to the spotlight as relations deteriorate within the Renault Nissan Alliance. In April, the French Economy Minister, Emmanuel Macron raised the government stake in Renault from 15% to 19.7%, gaining double voting rights within the alliance between the two firms. The increase triggered tensions from Nissan with regard to French control. So far, the Renault Nissan Alliance, created in 1999 to consolidate both companies within the industry, has been a large success. 8,264,821 units were sold in 2013, representing a 1/10 of sales in the international market. Calendar year sales have been increasing by over 2.1% since 2012.

However, the recent events have shown that the light is beginning to fade. Nissan have far outstretched Renault, who have a 43.4% stake in the company, in terms of success. There is now much pressure from the Nissan side of the table to limit the French car maker’s political power within the company. Ending benefits such as the right to select Nissan’s 3 senior executives, granted by an agreement signed in 2002. Nissan is now seeking written guarantees against Renault intervention. If breeched, it would allow Nissan to buy shares in Renault, neutralizing their power in the alliance. It is reported Nissan threatens to raise stake in Renault from 15% to 25% to activate voting rights. Even worse, Nissan could cancel the alliance. The intrigue is set to come to a head on December the 11th when Renault’s board is due to decide a response to the increment of French governmental power.

And yet, there is some positive news for the industry, under the banner of Volvo. Despite diesel engines earning a bad rep with the recent VW emissions scandal, the Chinese owned company has seen total sales up by 5% so far this year. They expect year end sales of around 500,000, a new record for the firm. Success has largely been due to the high demand of the recently launched new flagship model, the XC90. The 4×4 engendered high expectations for the next release, the S90 saloon which looks set to tell the same story. Total US sales have increased by 18% this year, earning a foot in the door against rivals, BMW and Audi. It would seem then, at least Volvo are getting it right.

Airbus – full speed ahead

By Julian Flüß

Airbus, Europe’s biggest aircraft manufacturer and second largest defence company, is experiencing bright times.

The company, formerly known as EADS (European Aeronautic Defence and Space Company) and a global key player in aerospace and defence, has been demonstrating an outstanding performance in its latest financial year. This has been reflected in the company’s stock movement with Airbus’s stock hitting a record high at around 68 euros. The aircraft manufacturer has never experienced such a valuation since its establishment out of a consolidation of several European defence and aerospace companies in 2000.

Reasons for this impressive performance are various. The main driver was the extraordinarily positive third quarter earnings report. Airbus announced a huge order backlog, which was mainly driven by its main passenger airliner business, accounting for 89% of the new intakes in 2015. The orders comprise products like the tradition-steeped A320 family, which is still the best selling new single-aisle aircraft family on the market. This includes the new A320neo, which said to be the green version of the A320, saving up to 20 percent fuel as well as showing impressive savings regarding CO2 emission. Most of the orders came from the Asian-Pacific region, followed by Europe and North America. The overall net value of order intakes totalled 112 billion euros outperforming last year’s numbers by more than 40 per cent.

Another main driving factor for the stock’s rally was the one billion share buyback announced this April, covering up to 10 percent of the company’s capital. Airbus, which traditionally has a huge proportion of share in free float, around 74 percent, aims to gain more flexibility in distributing parts of its gains from divestments. The bought back shares will be cancelled completely, as the company does not plan to hold such a large proportion in own share.

Additional positive influence comes from Airbus’s M&A activity. The company confirmed plans to sell its defence electronic unit in the coming financial year, brining estimated 2 billion USD into Airbus coffers, which could boost the already positive results even more, provided a buyer can be found before end of the year. The sale is another step in the restructuring the company’s defence division to focus merely on warplanes, missiles launchers as well as satellites. Reason for this is the struggling European defence sector, as cash-strapped governments cut defence and military spending radically.

Nine-month revenues, amounting to 43 billion euros, are up more than 7 percent while its nine-month reported EBIT, that accounts for 2,95 billion euros, is up even 14 percent compared to the same period in the year before. Continuing the success from 2014 Airbus outperformed last year’s third quarter results by 36%, reporting a net income of 1,9 billion euros.

This marvellous performance was well rewarded by leading banks like Deutsche Bank and JP Morgan, setting price targets between 70 and 80 euros. As the results this year so far are great, final results in 2015 can be expected to be more than satisfying. Thanks to the emerging markets, especially in the Asian-Pacific area and huge replacements in North American aircraft fleets, Airbus can enter the coming year with confidence.