It is fair to say that the losers currently outnumber the likely winners with Norwegian, South African and Virgin looking especially vulnerable. However news that Lufthansa is close to clinching a EUR 10 Billion lifeline in exchange for 21.5% of their equity shows that if a government wishes to support its national airline, it can be done. Given Lufthansa’s portfolio it is likely that Switzerland and Austria will join the German government in saving Lufthansa. Meanwhile Berkshire Hathaway has made the news with Warren Buffet saying that his fund has sold all of its holdings(USD6.5Billion) in 4 US airlines: Delta, United, Southwest and American saying that the aviation market has changed-permanently.
In the 1980’s you would have been fully familiar with the topographical economic terms of European wine and milk lakes as well as butter and beef mountains. Get ready to become reacquainted with them as demand from the restaurant and mass catering sectors has all but vanished. Hands up those who have heard of Belgaprom which is, it transpires, a (very important judging by the title of its supremo) trade association led by their Secretary General, Romain Cools. M’sieur Cools last week came out with the following pronouncement: “The chip is an intangible cultural heritage.” In case you did not know, Belgium is the world’s largest exporter of French Fries and rather like the oil market, storage for frozen chips is all but exhausted! So we are all being called on to support the ubiquitous chip….
In these murky times, the old story of how to define an economist is worth trotting out: Three people are attempting to navigate their balloon through thick fog; spotting someone on the ground, they ask ”Where are we?” The answer came back” In a balloon.” To which the response was: ”Clearly you are an economist: the answer is 100% correct but of no practical help whatsoever.”
Ok one more -if you insist:
An economist is someone who found accountancy too exciting.
May the 4th be with you……
Discussion and Analysis by Humphrey Percy, Chairman and Founder