Eurowings expansion holds back Lufthansa first-quarter profit

Lufthansa on Thursday reported a slight rise in adjusted earnings before interest and tax to €26 million, far short of the €81.3 million forecast by analysts. (Reuters)
Updated 26 April 2018
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Eurowings expansion holds back Lufthansa first-quarter profit

BERLIN: German airline Lufthansa said costs to expand its Eurowings budget carrier held back profit growth in the first quarter of the year, and it lowered its forecast for 2018 capacity growth.
Lufthansa on Thursday reported a slight rise in adjusted earnings before interest and tax (EBIT) to €26 million, far short of the €81.3 million forecast by analysts in a Reuters poll.
Lufthansa is rapidly growing its Eurowings brand to fill the gap left by the collapse of Air Berlin.
Lufthansa said one-off costs from integrating parts of Air Berlin pushed Eurowings to an adjusted loss of €203 million in the first-quarter and said one-off expenses will continue to weigh in coming months.
It also lowered its guidance for total capacity growth to 8.5 percent from its previous forecast of 9.5 percent.


Stronger US dollar unlikely to derail bullish view on commodities — Goldman Sachs

Updated 21 September 2018
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Stronger US dollar unlikely to derail bullish view on commodities — Goldman Sachs

  • The dollar has been lifted by a stronger-than-expected US economy, the world’s largest
  • A stronger greenback makes the purchase of dollar-denominated international commodities more expensive for holders of other currencies

BENGALURU: Goldman Sachs said a stronger dollar is unlikely to derail its bullish view on commodities, which are likely to find support from physical shortages.
The dollar has been lifted by a stronger-than-expected US economy, the world’s largest, and that’s a positive sign for global growth, the US investment bank said.
The US dollar index has lost more than 1 percent this week, but this follows months of strong demand over US-China trade-related tensions, as investors bet the greenback would gain at the expense of riskier currencies.
“The risk aversion this summer created significant emerging market destocking, particularly in China, as consumers attempted to avoid a strong dollar and tariffs by liquidating inventories,” Goldman said in a note dated on Thursday.
A stronger greenback makes the purchase of dollar-denominated international commodities more expensive for holders of other currencies, making buyers and users more likely to draw on any stored materials in preference to imports.
“This liquidation, however, has a physical limit with Chinese destocking having already created significant increases in physical (premiums) for oil and metals – a sign of physical shortages.”
Going forward, oil had a strong fundamental outlook helped by US demand growth, supply losses and disruptions, and still constrained US shale output, Goldman said.
The bank said its near-term Brent crude oil price target remained at $80 a barrel.
The bank said it was moderating its bullish view for gold due to a sell-off in emerging markets, and it lowered its 12-month price forecast for the metal to $1,325 per ounce, down from $1,450 an ounce earlier.