Lufthansa Jumps Back to Profit as Travel Restrictions Ease | Investing News


BERLIN (Reuters) – Germany’s Lufthansa posted a return to operating profit in the third quarter on Thursday for the first time since the beginning of the pandemic, boosted by the easing of COVID-19 travel restrictions and strong demand in the summer season.

The group reported adjusted earnings before interest and tax of 17 million euros ($19.69 million) in the quarter, compared to a loss of 1.262 billion euros a year ago.

Analysts in a company-provided poll had expected an adjusted EBIT loss of 33 million euros.

Third-quarter revenue almost doubled to 5.2 billion euros, compared to an average analyst forecast for 5.5 billion.

(Reporting by Riham Alkousaa, editing by Emma Thomasson)

Copyright 2021 Thomson Reuters.



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Air Canada Posts Smaller Quarterly Loss as Travel Demand Improves | Investing News


(Reuters) -Air Canada reported a smaller quarterly loss on Tuesday, as Canada’s decision to open its borders to fully-vaccinated travelers and improving COVID-19 inoculation rates drove bookings at the country’s largest carrier.

North American airlines have reported upbeat results this quarter as vaccinated travelers, who have not seen friends and family for over a year, take to the skies.

Canada’s decision to open its borders also benefited Air Canada, which generated net cash of C$153 million ($123.34 million) in the third quarter, compared with its earlier expectation of a net cash burn between C$280 million and C$460 million.

“We are encouraged by the favourable revenue and traffic trends in the third quarter” Chief Executive Officer Michael Rousseau said in a statement.

Air Canada reported a loss of C$640 million, or C$1.79 per share in the quarter, compared with a loss of C$685 million, or C$2.31 per share, a year earlier.

Operating Revenue rose to C$2.1 billion, from C$757 million, a year ago.

($1 = 1.2405 Canadian dollars)

(Reporting by Nathan Gomes in Bengaluru; Editing by Shailesh Kuber)

Copyright 2021 Thomson Reuters.



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Asia Reopening Boosts Travel, Fashion Brands; Pandemic Winners Take Backseat | Investing News


By Sayantani Ghosh and Byron Kaye

SINGAPORE/SYDNEY (Reuters) – Fashion brands and airlines are creeping back into investors’ good graces in Asia as lockdowns ease and vaccination rises, boosting travel and leisure activities, taking some shine off pandemic stalwarts such as supermarkets and gadget makers.

Earnings report cards show that people are spending less time watching TV or shopping online for groceries as they resume dining out or plan vacations after emerging from coronavirus curbs. Luxury purchases from China’s big spenders, still unable to travel abroad, are also rebounding.

Asia-Pacific airlines are offering more flights as some countries resume domestic travel, and some like Singapore allow quarantine-free travel for select vaccinated visitors. Australia’s planned reopening of state and international borders has led to a surge in bookings.

“There is massive demand for loved ones wanting to get together for Christmas,” Alan Joyce, CEO of Australia’s Qantas Airways said last week. “There is demand for people wanting to take that holiday that they have been looking forward to for nearly two years.”

To be sure, a recovery in the tourism sector in Asia is months away and China’s huge domestic travel market remains in flux. As well, businesses including McDonald’s are still struggling with frequent and temporary curbs that countries impose to control outbreaks.

But airline stocks in the Asia Pacific region climbed nearly 5% over the last three months while global airlines slipped 6% due to a slower-than-expected return of corporate travel.

The broader MSCI All Country Asia Pacific Price Index rose roughly 2% in the same period.

European fashion houses like LVMH and Kering posted stellar results in China as appetite for luxury items remained undimmed, despite power shortages and a property sector crisis hurting the economy.

“China’s population and its middle classes are increasing and their appetite for beauty is not satisfied,” L’Oreal CEO Nicolas Hieronimus said last week.

Hieronimus expects a recent shift in Chinese government policy to narrow the gap between rich and poor to boost the middle class, a sentiment echoed by LVMH.

Japan’s Fast Retailing reported record profits in China last quarter, where it will open its first flagship store next month. Japanese cosmetics giant Shiseido Co believes next summer will be a “turning point” as inbound tourists from China return.

Companies globally are struggling with severe labour shortages, supply bottlenecks and marine logjams as economies bounce back from pandemic lows, resulting in a steep rise in costs https://www.reuters.com/business/only-way-is-up-corporate-chiefs-warn-prices-2021-10-21/#:~:text=Inflation%20watch:%20Corporate%20chiefs%20see%20prices%20moving%20in%20only%20one%20direction,-By%20Siddharth%20Cavale&text=Oct%2021%20(Reuters)%20-%20For,prices%20are%20only%20going%20higher. A long-running chip shortage has disrupted the auto industry.

For supermarkets, among the early winners of the pandemic when people scrambled to stockpile food and toilet paper, the rising inflation is likely to offset some of the post-pandemic slowdown.

Australian grocer Woolworths said on Wednesday that food sales started to slow in October. Its shares have fallen 10% since mid-August when the pace of vaccinations started picking up. The stock rose nearly 40% during the 17 months prior, when coronavirus restrictions were in place.

“The big question now is how many people will return to the offices, how will that play out in terms of at-home consumption?”, said Morningstar retail analyst Johannes Faul.

Pandemic winners are unlikely to turn losers overnight, though, said Jason Teh, chief investment officer at Vertium Asset Management in Sydney. But work-from-home trends that benefitted companies like Australian electronics retailer JB Hi-Fi were waning as vaccination surged, he said.

China’s smartphone sales in the third quarter fell 9% from a year earlier, according to Counterpoint Research.

While pent up demand from supply bottlenecks is likely to support a seasonally strong holiday quarter, sales are starting to slow at chipmakers and component suppliers such as South Korea’s Samsung Electronics and LG Display.

“LCD panels for televisions are expected to see further drops in the fourth quarter as vaccinated people have begun to spend less time in front of screens,” said Park Sung-soon, Seoul-based analyst at Cape Investment & Securities.

(Reporting by Sayantani Ghosh in Singapore and Byron Kaye in Sydney; Additional reporting by Tom Westbrook in Singapore, Jamie Freed in Sydney, Heekyong Yang and Joyce Lee in Seoul, Rocky Swift in Tokyo; Editing by Ana Nicolaci da Costa)

Copyright 2021 Thomson Reuters.



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Nivea Maker Beiersdorf Forecasts Travel Boost | Investing News


BERLIN (Reuters) -Beiersdorf expects a recovery in travel retail and demand for sun care products to boost sales in 2022, when the Nivea maker also hopes for a rebound in sales of adhesives to the automotive industry.

The German company plans to offset rising costs of raw materials by increasing prices and cutting costs, targeting a small increase in its operating margin in 2022, finance chief Astrid Hermann told analysts on Thursday.

Beiersdorf made the forecasts after reporting third-quarter sales rose an underlying 4.3% to 1.9 billion euros ($2.2 billion), shy of some analysts’ forecasts.

Beauty specialist L’Oreal last week posted third-quarter organic revenue growth of 13.1%, fuelled by demand for its luxury lines and growth in China. [nL1N2RH1TG[

Beiersdorf shares, about to re-enter Germany’s blue-chip index, opened down 1.5%.

Its consumer business saw third-quarter organic sales rise 4.1%, driven by a strong performance of Eucerin and Aquaphor creams, as well as premium brand La Prairie, which had been hit by the halt to global travel due to the coronavirus pandemic.

As people returned to beaches, the Nivea brand saw a strong recovery of sun creams as well as shower gels and deodorants. Beiersdorf said it planned to launch its Eucerin Sun line in the United States at the start of 2022.

Chief Executive Vincent Warnery told analysts that Eucerin was benefiting from the expertise of the U.S. sun care brand Coppertone it bought in 2019, adding retailers were already showing strong interest in the new line.

The Tesa adhesives unit, which accounts for about a fifth of sales, reported third-quarter organic sales growth of 4.6%, helped by growth in the Chinese electronics business.

Beiersdorf increased its 2021 outlook for Tesa’s organic sales growth to 11-13% from a previous “high single digit range” and said it expected the automotive business – that has been hit by shortages of computer chips – to recover in 2022.

(Reporting by Emma ThomassonEditing by Riham Alkousaa and Mark Potter)

Copyright 2021 Thomson Reuters.



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Duty Free Retailer Dufry Ups 2021 Targets on Travel Pickup | Investing News


(Reuters) – Swiss duty free retailer Dufry raised its 2021 savings target and free cash flow guidance for the second time this year, citing a recovery in travel from the pandemic-related slump, primarily in the Western hemisphere.

The retailer, which operates more than 2,300 shops at airports, on cruise liners, in seaports, and other tourist locations, is seeing signs of recovery after being severely hit over the last year and a half by the travel restrictions imposed to tackle the coronavirus pandemic.

The group’s recovery has been specially driven by its main sector, The Americas, which made for 499 million Swiss francs ($543.16 million) of its 1.3 billion Swiss franc third quarter turnover.

“We have seen continued progress in the US and Central America including the Caribbean Islands,” Chief Executive Julian Diaz said in a statement.

The group now expects to achieve up to 1.87 billion Swiss francs ($2.04 billion) in savings in personnel and other expenses compared to pre-pandemic levels, up from 1.2 billion Swiss francs forecast in August, and above the 1.3 billion Swiss francs in savings recorded in 2020.

The Basel-based company also notched up its free cash flow targets for 2021, now expecting a monthly cash inflow of 13 million Swiss francs, while assuming turnover 40% below pre-pandemic levels in 2019, or a 13 million Swiss franc cash burn with turnover %55 below 2019 levels. It earlier had predicted to break even with turnover %40 down from 2019 and a cash burn of 30 million Swiss francs with turnover 55% below 2019 levels.

($1 = 0.9187 Swiss francs)

(Reporting by Aida Pelaez-Fernandez; Editing by Tomasz Janowski)

Copyright 2021 Thomson Reuters.



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Lufthansa CEO Sees Business Travel Recovering Faster Than Thought | Investing News


VIENNA (Reuters) – Business air travel is recovering faster than expected and should remain solid through the winter, the chief executive of Germany’s Lufthansa said in remarks published on Monday.

Meanwhile private travel is seeing an “extension of the summer season” as people catch up on flights they were not able to take immediately after the onset of the pandemic, Lufthansa CEO Carsten Spohr told Austrian newspaper Kleine Zeitung.

“In addition, we are seeing a positive trend in business travel, which was still at a low level in the third quarter and is now picking up strongly,” Spohr said in an interview.

Global air travel was brought to a standstill by the coronavirus pandemic, forcing Lufthansa into a multi-billion dollar bailout by the German government.

Lufthansa expects the level of business travel in the medium term to be around 90% or more of what it was before COVID-19.

“There will … be no sudden drop in demand in winter this year,” he said of the outlook for business travel as demand tends to fade less in that segment in winter and the “good development” in bookings is expected to last until December.

“Business travel has returned faster and more strongly than expected,” Spohr said, adding that it was being felt in particular in the German, Swiss, Austrian, Belgian and northern Italian markets, where more flights have been added.

(Reporting by Francois Murphy; Additional reporting by Riham Alkousaa in Berlin and Ilona Wissenbach in Frankfurt; Editing by Alexander Smith)

Copyright 2021 Thomson Reuters.



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Standardization of Travel Rules Key for Latin America Airlines’ Recovery | Investing News


By Nelson Bocanegra and Carlos Vargas

BOGOTA (Reuters) – Getting standardized rules for international travelers amid the coronavirus pandemic is the biggest hurdle for Latin American airlines, with their recovery threatened by a lack of consensus among health authorities, industry leaders said on Sunday.

Passengers suffer constant delays and restrictions as they travel between countries due to differing entry requirements established to curb the spread of different strains of the coronavirus, aviation industry directors said at a conference in Bogota, Colombia.

“Standardization is vitally necessary to build confidence so people return to flying,” said the Latin American and Caribbean Air Transport Association’s (ALTA) chief executive, Jose Ricardo Botelho.

The lack of accord between different countries, with frequent changes to air travel rules, leads to uncertainty for passengers, airlines, and airline staff, said Copa Airlines Chief Executive Officer Pedro Heilbron.

“When you carry passengers and there are thousands of requirements, it’s almost impossible that at least some passengers don’t have the right paperwork,” he told journalists in opening remarks at the ALTA annual conference.

Some countries even fine airlines for passengers’ non-compliance with the rules, Heilbron added, though did not say which ones.

Almost a year and a half of restricted travel has put airlines and airports across the globe under severe financial strain, necessitating a more complete re-opening of travel so that the industry can recover, saving millions of jobs.

“Generally speaking there are quite a few agreements and there is relative standardization, but the big differences come from health authorities,” said Lucas Rodriguez, the head Colombia’s civil aviation authority’s air transport office.

The need to meet new travel requirements has dented airlines’ balance sheets.

The International Air Transport Association (IATA), the industry’s main trade body, this month revised its estimate for airlines’ net losses this year to $51.8 billion, from a previous forecast of $47.7 billion.

IATA expects airlines to lose $11.6 billion in 2022 in revenue.

(Reporting by Nelson Bocanegra and Carlos Vargas; Writing by Oliver Griffin; editing by Diane Craft)

Copyright 2021 Thomson Reuters.



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Asia’s Airlines Ramp up Flights, Offers as Tough COVID Travel Curbs Ease | Investing News


By Jamie Freed and Aradhana Aravindan

SYDNEY/SINGAPORE (Reuters) – Asia-Pacific airlines have lost billions of dollars this year, with jets grounded in COVID-19 transportation freezes. Now, as some of the world’s strictest pandemic-related travel rules begin to ease, they’re ramping up flights and ticket offers.

Asian travel agencies and carriers told Reuters they’re seeing a surge in bookings and travel enquiries as countries like Malaysia and Vietnam allow domestic flights to resume from this week after months of strict lockdowns.

India is lifting a domestic capacity cap, while Singapore, Thailand and Fiji are opening without quarantine to vaccinated international travellers from select countries.

While airline industry group IATA does not expect a significant improvement in Asia-Pacific international travel until “later in 2022 https://www.reuters.com/business/aerospace-defense/iata-sees-sharp-fall-airline-losses-2022-2021-10-04/#:~:text=The%20losses%20for%202021%20were,from%20%24126.4%20billion%20estimated%20earlier.&text=%22We%20are%20past%20the%20deepest,told%20the%20group’s%20annual%20meeting” – predicting cumulative losses of $11.2 billion this year, narrowing to $2.4 billion next year – carriers from AirAsia Group to VietJet Aviation, Singapore Airlines, Fiji Airways and Qantas are already increasing capacity.

“The most important thing is practically all governments in the Asia-Pacific region with maybe one or two exceptions are abandoning their COVID-zero strategies and moving to a sort of COVID-normal framework,” said Association of Asia Pacific Airlines Director General Subhas Menon.

“Vaccination rates are also beginning to ramp up.”

While curbs are easing, a full return to normal operations is a long way off. IATA estimates global aviation industry losses from the pandemic will be a towering $200 billion for 2020-2022, and losses in Asia alone were close to $50 billion in 2020. International travel in the Asia-Pacific region was at around 4% of 2019 levels in August.

And though the relaxation of restrictions will open the way for some tourism, initially it will mean a comparative trickle: Thailand expects only around 100,000 foreign visitors this year, down from nearly 40 million in 2019.

Still, there’s pent-up demand from those who have longed to be able to take a break overseas.

Dickson Ng, a 24-year-old consultant based in Singapore, said he plans to travel to Europe in January.

“We don’t know if these VTLs (vaccinated travel lanes) could be rescinded, right now there’s opportunity and there’s COVID fatigue, so I think getting out of the country will be a good thing,” he said.

Meanwhile Fiji Airways has had thousands of bookings since the country on Sunday announced it would open borders to vaccinated travellers from some destinations on Dec. 1, the vast majority from Australians, an airline spokesperson said.

Some carriers are already promoting bargain fares.

Vietnamese low-cost carrier VietJet is offering some free domestic one-way tickets, excluding taxes and fees, while Malaysia’s AirAsia has fares as low as 12 ringgit ($2.88) as it ramps up flights.

AirAsia said traffic to its mobile app had surged by more than 140% since the government relaxed domestic travel rules.

But Singapore has capped the number of arrivals under its VTL programme at 3,000 a day in total, a tiny fraction of pre-pandemic traffic – a move that has kept ticket prices higher.

Singapore tour agency Chan Brothers Travel said enquiries had increased 50-fold in the last week since VTLs were added to more countries including South Korea, the United States and Britain.

Return economy-class fares from Singapore to South Korea have nearly doubled to around S$1500 ($1,107.50) from S$800 previously, a spokesperson at Singapore’s Dynasty Travel said.

“Some travellers may wait for the initial price surge for flights to pass, but we can expect quite a number of travellers taking to the skies by the first half of 2022,” she said.

($1 = 1.3544 Singapore dollars)

(Reporting by Jamie Freed and Aradhana Aravindan; Additional reporting by Liz Lee in Kuala Lumpur and Chen Lin in Singapore; Editing by Kenneth Maxwell)

Copyright 2021 Thomson Reuters.



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Thai Hospitality and Travel Shares Soar on Reopening Plans | Investing News


BANGKOK (Reuters) – Shares in Thailand’s hotels and airlines jumped in Tuesday morning’s trading, lifted by an announcement by its prime minister that more vaccinated tourists would be allowed to visit the country from November.

Prayuth Chan-ocha late on Monday said more than 18 months of mandatory quarantine would end https://www.reuters.com/world/asia-pacific/thailand-end-quarantine-some-vaccinated-visitors-nov-pm-2021-10-11 next month for vaccinated arrivals from countries considered “low risk”, including the United States, Britain and China.

The stock exchange’s tourism and leisure index jumped as much as 4.42% when markets opened on Tuesday, compared to a benchmark increase of 0.82%.

Gains were driven by a 4% rise in Airports of Thailand Pcl, Asia Aviation Pcl and Bangkok Airlines Pcl, which rose 5.59% and 3.42%, respectively.

Hotelier, Erawan Group Pcl increased nearly 7% and rival Asset World Corp climbed over 4%.

Thailand’s strict entry requirements had kept COVID-19 infection numbers low until this year, but at a huge loss to jobs and revenues in its vital tourism sector.

Since July, it has operated pilot projects on Samui and Phuket islands allowing for vaccinated visitors and this month reduced quarantine periods elsewhere.

But arrivals have plummeted to a fraction of the nearly 40 million visitors in 2019, with tourism losing $50 billion in annual revenue, an 82% plunge.

Despite its stringent measures to keep the virus out, Thailand has recorded 1.7 million infections and 17,835 COVID-19 deaths, with 98% of its caseload since April.

A third of its 72 million residents are vaccinated.

The announcement follows Britain’s removal of Thailand from its travel red list https://www.reuters.com/world/uk/uk-eases-travel-rules-countries-including-india-2021-10-07 last week.

Analysts said that although foreign arrivals may not increase quickly, domestic activity would be boosted.

“A reopening would mean that full mobility is restored … we are much optimistic on the domestic travel and consumption,” said Maria Lapiz, head of institutional research at Maybank Kim Eng.

(Reporting by Chayut Setboonsarng; Editing by Martin Petty)

Copyright 2021 Thomson Reuters.



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Analysis-Corporate Business Travel ‘Carbon Budgets’ Loom for Airlines | Investing News


By Jamie Freed and Rajesh Kumar Singh

SYDNEY/BOSTON (Reuters) – As major companies look at drastic ways to cut carbon emissions from corporate travel, airlines are bracing for a major hit to business-class travel, a key revenue driver, industry executives and experts say.

Several companies, such as HSBC, Zurich Insurance, Bain & Company and S&P Global, have already announced plans to quickly cut business travel emissions by as much as 70%.

Some are considering a “carbon budget” as they come under growing pressure from environmental advocates and investors to reduce indirect emissions that contribute to climate change.

Flights account for about 90% of business travel emissions. That makes it the lowest-hanging fruit for companies setting reductions targets.

The airline industry last week committed to reach “net zero” emissions by 2050 https://www.reuters.com/business/aerospace-defense/airlines-accelerate-climate-pledge-industry-talks-2021-10-04 at a meeting in Boston, decades beyond the corporate travel emissions cut targets. “It’s going to be hard on airlines and they’re going to need to adapt,” Kit Brennan, co-founder of London-based Thrust Carbon, which is advising S&P and other clients on setting up carbon budgets.

“I think what we’re going to see, funnily enough, is more of an unbundling of business class where you might get all perks of business class without the seat,” he said, referring to airport lounges and nicer meals. “Because ultimately it all comes down to the area on the aircraft and it takes up.”

Flying business class emits about three times as much carbon as economy class because the seats take up more room and more of them are empty, according to a World Bank study.

Pre-pandemic, about 5% of international passengers globally flew in premium classes, accounting for 30% of international revenue, according to airline group IATA.

The pandemic-related drop in travel and a switch to more virtual meetings have led many companies to save money by resetting travel policies.

Sam Israelit, chief sustainability officer at consulting firm Bain, said his company was evaluating carbon budgets for offices or practice areas to help cut travel emissions per employee by 35% over the next five years.

“I think more broadly, it’s something that companies really will need to start to do if they’re going to be successful in meeting the aggressive targets that everyone’s putting out,” he said.

Companies and corporate travel agencies are also investing heavily in tools to measure flight emissions based on factors such as the type of plane, the routing and the class of service.

“We’re not seeing a lot of companies take a very draconian approach like simply cut travel because that impacts their bottom line,” said Nora Lovell Marchant, vice president of sustainability at American Express Global Business Travel. “But we are seeing an increased ask for transparency so those travellers can make decisions.”

Global ratings agency S&P, which plans to reduce travel emissions by 25% by 2025, found that 42% of its business class use was for internal meetings, its global corporate travel leader, Ann Dery, said at a CAPA Centre for Aviation event last month.

U.S. carrier JetBlue plans for about 30% of its jet fuel for flights in and out of New York to be sustainable within two to three years https://www.reuters.com/business/aerospace-defense/jetblue-buy-sustainable-jet-fuel-over-1-bln-use-new-york-airports-2021-09-29. “Businesses, of course, are going to want to address this climate change issue aggressively,” JetBlue Chief Executive Robin Hayes said on the sidelines of the Boston meeting. “But we think they’re going to be able to do it in a way that still enables business travel to take place.”

The emissions target airlines set last week relies on boosting use of sustainable aviation fuel from less than 0.1% today to 65% by 2050 as well as new engine technologies.

“If we are getting to net zero carbon emissions by 2050 everybody has got to play their part here,” said Air New Zealand Chief Executive Greg Foran. “It is not just the airlines. It is going to be fuel providers, it is going to be governments. And ultimately customers are going to have to buy into this as well.”

(Reporting by Jamie Freed in Sydney and Rajesh Kumar Singh in Boston; Editing by Miyoung Kim and Gerry Doyle)

Copyright 2021 Thomson Reuters.



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