EU TRANSPORTATION: Finnair | Strikes Continue; 6-Month Drag Now
(FOY; NR/BB+ S)
More cancellations tied to ongoing industrial action.
Q1 saw a sizeable €22m EBIT impact.
April alone was flagged for a €10m EBIT hit - indicative of a worsening drag.
Keep in mind co's scale: guided FY earnings ex. strikes of €100-200m.
We warned of this back in Feb noting a €5m impact quoted for Jan itself. Strikes began in late Nov, but 2024 impact was limited to €5m. Partial deals have been struck with some worker groups but it seems to be only getting worse in size on the financial impact.
• It is sad to see because co otherwise has good governance and has had a tough time in recent years on the Russian airspace closure (remains heavier 38% exposed to Asia).
• It is continuing to incrementally reduce (gross) debt and buffering the weakening earnings, cash flows were strong over Q1.
• We will circle back on if that will be enough to hold off any rating pressure (standalone BB- rated).
• on RV markets has never really respected the full +2 uplift for Finnish gov. ownership (55.7%; Aa1/AA+).
https://company.finnair.com/en/media-centre/all-releases/news?id=2E004DDA099755D5
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US OUTLOOK/OPINION: Regional Feds Suggest Manufacturing Retreated In March(2/2)
Second, manufacturing activity likely pulled back in March. Regional Fed surveys showed a pullback in headline activity indices across 4 of 5 regional Feds (Kansas City was the exception), with NY's Empire standing out with a drop to a 2+ year low.
- The 5 regional Fed survey average of -6.0 was a 6-month low and down more than 9 points vs February.
- That's consistent with a headline ISM Manufacturing reading in the 47-49 area, vs 50.3 in February (as are the combined Empire-Philly surveys' ISM-equivalent underlying measures, which were 48.7 in NY and 50.5 in Philly).
- Current consensus for Tuesday's ISM headline release is 49.5.
- Note the S&P Global Manufacturing PMI also pulled back to sub-50.0 in March in the flash reading (49.8, down 2.9 points from Feb for a 3-month low); MNI Chicago PMI remained contractionary in March at 47.6.
US OUTLOOK/OPINION: Regional Feds Point To Another Jump In ISM Prices Paid (1/2)
With March's regional Feds having published their manufacturing survey results for March, there are two clear conclusions for the upcoming ISM Manufacturing report (Tuesday 1000ET).
- First, manufacturing prices paid continued to pick up sharply in March, with tariffs an obvious area of concern.
- A simple average of NY/Dallas/Philadelphia/KC Fed prices paid came into the year below 20, but is now up to 43.2 (up 5 points from Feb and almost 20 from January). That is the highest since August 2022, which was a time when ISM Manufacturing Prices Paid was starting to print in the 50s-60s, on the downslope from readings in the 70s and 80s.
- In December 2020, the prior time the regional Fed average was at a comparable level and rising, the ISM equivalent was entering the high 70s-low 80s.
- Current consensus is for March ISM Prices Paid to tick up 2.3 points to 64.7.
MNI: USDA: CORN STOCKS 8,151M BSL ON MAR 1
- USDA: CORN STOCKS 8,151M BSL ON MAR 1
- USDA: ALL WHEAT STOCKS 1,237M BSL ON MAR 1
- USDA: SOYBEAN STOCKS 1,910M BSL ON MAR 1
