EU TRANSPORTATION: easyJet | 1H25 results
May-22 16:16
(Baa2 Stable/BBB Pos)
Common themes is the limited capacity growth over summer (easyJet heading in +1%, sees market +2-3% higher) and as a consequence firm booking trends and in Ryanair's case attesting to strong yields. Despite US skewed exposure, asset light hotel franchisor IHG still screens RV value to us over easyJet 31s.
6m to March:
- Capacity +12% vs. unit revenues -6% to leave group airline revenue +7% at £3.1b
- Unit costs ex. fuel -4% and fuel -8% leaving total unit costs falling similar -5%. Nominal costs (net of capacity increases) +7%.
- Its holiday business continues to grow into a steady profit contributor: customers +27%, revenue +29% at £400m with costs matching the gain to net out £44m in EBIT (vs. £31m LY)
- £3.6b in cash vs. £3.3b in gross debt to leave net cash of £0.3b. Reminder capex will increase in the years ahead to slowly reverse this. Has prefunded the €500m June-25s.
- On the capex/fleet expansion, plans largely unch -> FY25-28: £1.2, £1.7, £2.3, £3.3b in gross capex. Currently has 355 in the fleet, 197 unencumbered with £4.6b in PPE.
Current trading:
- Q3 (to June) 80% booked (+0.5ppt y/y)
- Q4 (to Sept) 42% booked (+2.2ppt)
FY (to Sept) guidance:
- capacity +8% (H2 +6%)
- Unit costs ex. fuel to be flat, fuel -8% to leave total costs down low-single digits
- Fuel hedged 83% to Sept, and 59% in 6m to March '26 (at 750 and 717 respectively). Spot is -18%y/y at $663
- 2H holidays 77% sold, expecting FY customer growth of +25%
- Net expects to meet consensus expectations (consensus adj. EBIT £720m, +20% y/y)
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FOREX: Equity Recovery Helps USDJPY Stabilise, Boosted Further by Bessent
Apr-22 16:13
- Tuesday’s solid recovery for major benchmarks in the US has helped USDJPY stabilise after printing a fresh seven-month low overnight. While the psychological 140.00 mark was pierced, the pair’s selloff did fall short of the September lows, located at 139.58. These two spot references appear to have assisted the short-term recovery, with spot consolidating around the 140.70 mark, and then catching an additional bid on the latest Bessent/China headlines.
- Low liquidity moves on Monday may have exacerbated the price action for the dollar, and the powerful turnaround for risk sentiment on Tuesday might suggest that a lot of bad news was priced into the market, leaving the greenback susceptible to a short-term correction.
- For USDJPY specifically, resistance remains much further out at 143.28 initially, the April 16 high. Above here, the 20-day exponential moving average comes in just below the 145 handle.
- The Bank of Japan is expected next week to delay its forecast for when underlying inflation will reach the 2% price stability target by about half a year to fiscal 2026, while also lowering its growth outlook for FY2025, further reducing the likelihood of rate hikes, MNI understands.
US TSYS: Brief Unwind on US/China Tariff Standoff
Apr-22 16:11
- Treasuries retreated from recent highs after headlines that Tsy Sec Bessent (speaking at a JP Morgan event in DC - closed to public and media) sees the China tariff standoff as unsustainable and expects a de-escalation to occur.
- Jun'25 10Y futures had climbed to 110-30 high then retreated to 110-23.5 before bouncing back to 110-27.5 last (+1.5).
- Stocks like the possibility of de-escalation, the DJIA, SPX eminis and Nasdaq all rising to highs for the week:
- DJIA up 995.81 points (2.61%) at 39165.74
- S&P E-Mini Future up 134.5 points (2.59%) at 5319.5
- Nasdaq up 459.1 points (2.9%) at 16329.69
GERMANY: Incoming Gov't Considering Russian Asset Seizure - Swiss Media
Apr-22 16:10
The future governing coalition in Germany is " preparing a policy shift" on €210 billion in Russian foreign currency reserves in the EU, Swiss newspaper Finanz und Wirtschaft reports. While passing of the potential plans remains uncertain, they could be seen as a signal of incoming tightening of the German stance re Russia.
- "In response to an inquiry from «Finanz und Wirtschaft,» it appears the coalition plans go far beyond the current use of the frozen funds. When asked whether the new government might consider confiscation of Russian state assets permissible, a CDU spokesperson said: 'The question of handling Russian state assets belongs at the EU level. The new federal government will engage there and, together with our partners, explore possibilities more openly and actively than before to use these financial resources to strengthen Ukraine.'"
- This would be a more aggressive approach than previous headlines filtering through from France suggested: "At the end of March, French President Emmanuel Macron said that the frozen assets belong to Russia and could be part of a reconstruction fund. They should be used as part of a peace agreement – thus with the Kremlin’s consent. The funds could then serve as security, for example, if Russia violates the agreement and fails to fully pay compensation for war damages"
- Link to the article here.
