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European economy 31st January 2024

IAG: air freight cushions risks around airline pricing power 2024

Morgan Stanley | Capacity growth in long-haul travel poses risks around 2024 pricing power for flag carriers, especially those with exposure to the North Atlantic. However, Conor Dwyer (analyst), notes that rising air freight yields (+25% in December to 1.9x 2019 levels), as a result of disruptions in container shipping, should limit the impact. This dynamic is more favourable for Air France and Lufthansa, more exposed to air freight than…

European economy 29th January 2024

Eurozone money supply unexpectedly rises by 0.1% in December

BancaMarch: In the euro zone, money supply unexpectedly rebounded in December: M3 growth accelerated and returned to positive territory by 0.1% year-on-year versus a fall of 0.9% in the previous month. On the lending side, there was a mixed performance. Lending to households slowed down again by 0.3% year-on-year versus 0.5% previously, while lending to non-financial corporations returned to positive territory by +0.4% versus 0.0% previously.

European economy 27th January 2024

IAG: EC’s detailed review of Air Europa acquisition neither prejudges outcome nor changes forecast of final decision by 4Q24

Banco Sabadell: The EC said yesterday it is launching a detailed (phase II) investigation into Iberia’s proposed takeover of Air Europa as it wants “the transaction not to adversely affect prices or quality of services”, according to Vestager. The EC now has 90 working days (until 7 June 2024) to take a final decision, provided it does not request additional information from the parties involved, in which case the clock…

European economy 26th January 2024

French motorway tax could affect Abertis dividend, around €300m for ACS

Banc Sabadell| The new motorway tax in France, whose impact would be ~-€85m on Abertis (~2% of its EBITDA 2023e; ACS’ 45% stake in Abertis net of minority interests), could have an impact on a future review of Abertis’ rating unless corrective measures such as a dividend cut are taken, following comments by S&P in a recent report, according to press reports. In this regard, Abertis plans to pay out…

European economy 25th January 2024

ECB: deposit rate therefore remains at 4%

Peter Goves (MFS Investment) | As widely expected, the ECB kept all three of its policy rates on hold at the January meeting. The deposit rate therefore remains at 4% and it has been held at this rate since September 2023. We would agree that the longer rates are held at such restrictive levels, domestic demand will remain subdued and (core) inflation will continue to fall. Today’s meeting affirms our…

European economy 23rd January 2024

Spain has fourth worst debt figure in Europe, 110% of GDP, and public deficit at 4.3%

Eurostat has released data on public debt and deficit at the end of the third quarter of the previous year for the euro area and the EU-27. And in both statistics, the Spanish economy has not fared very well in relation to its European neighbours: Spain ranks fourth among European countries with the highest debt-to-GDP ratio (at the end of the third quarter of last year). This is part of…

European economy 22nd January 2024

Eurozone government debt falls to 89.9% of GDP, deficit moderates to 2.8%

CdM| Eurozone government debt has fallen to 89.9% of GDP in the third quarter of 2023. According to data from Eurostat, the EU’s statistical office, this figure reflects a fall of four tenths of a percentage point from the figure for the second quarter of last year (90.3%), while the public deficit fell to 2.8% from 3% in the previous quarter. In the European Union, government debt also declined from…

European economy 19th January 2024

Heathrow shareholders exercise right of first refusal and complicate sale of Ferrovial’s 25% stake in Heathrow

Bankinter| Some Heathrow shareholders have exercised their right of first refusal. The sale of the 25% stake held by Ferrovial has run into difficulties. Some Heathrow shareholders have exercised their right of first refusal on 35% of the capital. They are Caisse de Dépôt et Placement du Québec (12.62%), the Singapore sovereign wealth fund GIC (11.2%) and Australian Retirement Trust (11.18%). Although the agreement to sell the 25% stake held…

European economy 17th January 2024

Some ECB Council members indicate inflation projections could be revised downwards

BancaMarch: Members of the ECB Council expect the new inflation projections published next March to be revised downwards. The current December forecasts foresee 2.7% in 2024 and 2.1% in 2025, without breaching the 2% red line until 2026 with expected inflation of 1.9%. However, the ECB indicates that these data could be more favourable, reaching the target level as early as 2025. While this is good news, the monetary authority…

European economy 16th January 2024

Germany falls by 0.3% in 2023, after +1.8% in 2022, confirming entry into recession and Eurozone weakness

Banca March: Yesterday confirmed the entry into recession of the German economy in 2023. Germany’s GDP fell by 0.3% for the year as a whole, after +1.8% in 2022, hurt by high inflation, rising interest rates and high energy costs. We highlight the negative performance of industry, down 2%, despite the positive contribution of the automotive sector and the manufacture of other transport equipment. There was also minimal growth in…

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