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| Here’s your daily business briefing. - ✈️ Airlines slash fares to fill off-season seats
- 🚬 Deep Dive: Big Tobacco loses pricing power
- 🎯 Airbus defies supply chain woes to hit targets
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram
p/Shriram | |
| 1 | | Airlines are contending with the task of filling a record 260 million seats in Q4, prompting fare reductions for off-peak travel. Carriers like Southwest Airlines, JetBlue, Spirit, and Frontier have slashed average fares, with JetBlue noting a more than 12% drop in Q3 to $201.73, Spirit experiencing a nearly 28% decrease to $48.73, and Frontier reporting fares averaging a little over $39, down 32% from a year ago. More: - According to September's U.S. inflation data, airfare decreased by almost 13% YoY.
- With an emphasis on capacity deployment, Southwest intends to reduce its growth in response to shifting demand patterns.
- Airlines anticipate high demand for the holiday season despite off-peak pricing decreases; American, United, and Delta expect large passenger numbers.
- Due to growing expenses, carriers are now reviewing their 2024 itineraries; rates are predicted to stabilize in 2019.
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What the numbers say: With a national average pack price of $8.77, Marlboro is 43% more expensive than its low-price competitors, up from 31% five years prior. The 52-week volume of the least expensive cigarettes increased by 15%, while the most expensive cigarettes showed an 11% decrease. Altria, the maker of Marlboro, faced declining cigarette profits in the latest quarter, with industry-wide sales dropping by 8% year-over-year. The illegal disposable vape market grew by 20% this year, posing a potential threat to cigarette volumes. Relevance: The manufacturer of Marlboro, Altria, reported a drop in cigarette profits in the most recent quarter despite an 8% year-over-year reduction in cigarette sales across the sector. This year has witnessed a 20% rise in the illicit disposable vape sector, which could affect the number of cigarettes sold. More data: U.S. smokers are expected to be 50% aged 50 or older by 2030, up from 20% two decades ago. Tobacco giants, including Imperial Brands, BAT, and Altria, are adjusting strategies with measures like price changes and promotions to adapt to evolving preferences and explore smokeless alternatives. | | | |
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| 3 | | Airbus reported Q3 revenue of $15.94B, a 12% YoY increase, with net profit up 21% to $862M and adjusted EBIT growing by 21% to $1.08B. The aerospace company reaffirmed its annual delivery target of 720 commercial planes and, as of October, had already delivered 559 aircraft, intending to dispatch an additional 161 planes in November and December to meet the goal. More: - Airbus is increasingly manufacturing its A350 wide-body aircraft despite persistent supply-chain issues in the aviation sector.
- Commercial aircraft are in high demand, particularly in the wide-body segment, where demand is still growing.
- According to the France-based firm, the supply chain will continue to be complicated as production ramps up.
- In 2026, the business plans to produce 75 narrow-body A320 aircraft per month, four wide-body A330 aircraft per month in 2024, and ten wide-body A350 aircraft per month in 2026.
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| 4 | | Diageo witnessed its most significant one-day stock decline since 1987, with shares dropping to 16% on Friday. The decrease is linked to the spirits company anticipating a decline in first-half operating profit growth, primarily due to a "materially weaker performance" in Latin America and the Caribbean. More: - Diageo's sales in the Latin American and Caribbean region, which comprise approximately 11% of its overall sales, are predicted to drop by more than 20% in the six months ending in December.
- The region is grappling with macroeconomic pressures, resulting in decreased consumption and consumer downtrading, which, in turn, has led to a slowdown in achieving optimal channel inventory levels for the prevailing economic conditions.
- Diageo's reputation as a historically reliable brand with an excellent record of paying dividends raises worries about the possible effects on broader markets.
- While Diageo reports robust growth in Europe, geopolitical tensions in the Middle East have impacted the growth rate compared to the second half of the previous fiscal year.
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| 6 | | Heirloom Carbon Technologies inaugurated the first commercial direct air capture (DAC) facility in the U.S., capable of annually removing and storing up to 1,000 tons of carbon dioxide, marking a significant development in the growing carbon removal sector. Support for DAC technology is coming from the Biden administration, and Heirloom is part of a project that will put the technology into use at a significant hub in Louisiana. More: - Companies such as JPMorgan Chase & Co. and Google's parent Alphabet Inc. have committed substantial funds to support carbon removal services.
- By 2030, Heirloom wants to run for $100 for every tonne of carbon removed.
- DAC extracts CO2 from the environment and stores it in various ways, utilizing devices that resemble vacuums.
- Heirloom's method entails turning crushed limestone into a calcium-based paste for carbon absorption using an electric-powered kiln.
- Additionally, the plant collaborates with CarbonCure to indefinitely store captured CO2 in building materials.
Zoom Out: - Climeworks, a Swiss startup, operates the world's largest DAC facility, capturing 4,000 tons of CO2 yearly, less than the annual carbon footprint of 270 average Americans.
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| 7 | | Quick Hits: - Elevate your Kubernetes skills with this must-read resource for building cloud-native applications. Get your Kubernetes Cookbook today.*
- Pfizer targets the growing weight loss drug market, anticipating $90B, with its danuglipron pill, but the outcome depends on upcoming data and competition with Eli Lilly and Novo Nordisk.
- WWE founder Vince McMahon plans to sell a substantial stake in TKO, its parent company, and following the announcement, TKO's stock dropped over 6%, closing around $79.
- Amazon.com has cut approximately 180 jobs in its games division, marking the second round of layoffs in less than a week as part of the company's broader restructuring efforts, as reported by Reuters.
- Walgreens Boots Alliance has sold about $674M worth of shares in Cencora (formerly AmerisourceBergen Corp), further lowering its stake, as stated by the U.S. drugstore chain on Thursday.
*This is a sponsored listing. | | | |
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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