Transport Archives - GrowthRater

Category Archives for "Transport"

Airlines – back to the old ‘normal’

Manipulating monetary conditions leads to bad investment decisions as we have seen with the airline industry. 18 months ago its principal trade body IATA was waxing lyrical about the industry, as were financial pundits. Unfortunately, they underestimated the impact that low funding costs would also have on margins and profits in a capital intensive industry […]

Airlines – what happens when ROIC looks too good

So much for IATA’s prediction last year of “Normal profits are becoming normal for airlines”, or the thesis that airlines would again be able to pass on higher fuel prices to customers by charging higher fares. Someone must have forgotten to tell Ryanair, as they cut a further 10 percentage points from their current year earnings […]

Ryanair plays union hardball

Ryanair’s Michael O’Leary might sound pro-EU when it comes to Brexit, but his commercial approach is about as Anglo-Saxon as one can get. For the soon to be disenfranchised UK investors after Brexit, it must therefore come with a certain sense irony to see the group playing hardball with its Continental unions. While shareholders may […]

Fake news volcano scare – an opportunity!

Don’t let the truth get in the way of a good story. According to the Sunday Times yesterday (23rd September 2018), a volcano in Iceland (indeed an “Icelandic giant” called Katla no less) is “about to erupt”. “The ash plume that brought European air travel to a standstill in 2010 could be dwarfed by an […]

Copa – a falling facon along with the ARG

Chasing rainbows for capital intensive businesses can be tricky, particularly if you’ve sunk a lot of capital only to find no crock of gold. This must be how Copa Holding must feel now, having thrown capital into building capacity in Argentina ahead of some particularly aggressive traffic growth forecasts. While traffic volumes has so far […]

“Normal profits are becoming normal for airlines” – be afraid!

Recency bias is alive and well. “At long last, normal profits are becoming normal for airlines”, so says the IATA in its June 2018 industry update titled “Solid Profits Despite Rising Costs”. After a couple of years of improving margins and ROIC, is this a paradigm shift for investors to jump aboard? Unfortunately, it feels […]

Ryanair – when the music stops

Many companies resemble sharks. Not just for their need to keep eating new prey to grow, but to keep growing to stay afloat. The capital intensive airlines are perhaps the most glaring example of this in action, particularly given the additional scale advantage that can be secured. The problem for investors however, is being able […]

Wazzup – 20th Sept 2017

Slow start to the new fiscal year for FEDEX (fdx) and DIAGEO (dge_l). Fedex Q1 disappoints on cyber-attacks and hurricane headwinds, while Diageo blames a late Chinese New year and US spirits investment for a weak start to its FY18. Management innocent on all counts, of course ;-) Fedex – Q1 FY18: […]

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