Airbus to Cut Up to 2,500 Jobs in Defence and Space Division by 2026

Published

3 months ago

October 16, 2024

RTX

Airbus has announced plans to reduce its workforce by up to 2,500 jobs within its Defence and Space division by mid-2026, as part of a restructuring effort aimed at boosting competitiveness. The move, confirmed in a statement on Wednesday, is part of a broader strategy to create a more efficient organisational structure, though detailed specifics of the plan have yet to be released.

Mike Schoellhorn, CEO of Airbus Defence and Space, highlighted the challenges faced by the sector, including disrupted supply chains, rapidly evolving warfare technologies, and mounting cost pressures driven by budgetary constraints. “In recent years, the defence and space sector and, thus, our Division have been impacted by a fast-changing and very challenging business context,” Schoellhorn said. He noted that while transformation efforts initiated in 2023 have improved operational performance and risk management, the company now needs to take further steps to adapt to the increasingly difficult market conditions.

Schoellhorn stressed the need for Airbus Defence and Space to become “faster, leaner, and more competitive” in order to remain a leading player in the evolving industry. He pointed specifically to the space market as a growing challenge, necessitating these changes to ensure the company’s long-term competitiveness and sustainability.

The job cuts follow Airbus’ recent financial struggles. In its second-quarter earnings report released at the end of July, the company reported a drop in profits, further underscoring the need for cost-cutting measures. Earlier this year, Airbus had revised its full-year earnings expectations, predicting adjusted earnings before interest and tax (EBIT) to reach approximately €5.5 billion, down from its initial estimate of €6.5 billion to €7 billion.

Airbus has pledged to handle the upcoming job cuts responsibly, assuring its employees that it will implement all available social measures to mitigate the impact on staff. In the statement, the company underscored its commitment to act as “a responsible employer” while acknowledging the necessity of these workforce reductions to enhance its future competitiveness.

The world’s largest aircraft manufacturer hopes that these restructuring efforts will strengthen its position in the global defence and space sector. The move comes at a time when companies in the defence industry are facing heightened competition and pressures to adapt to rapidly advancing technologies and changing geopolitical dynamics.

Business

European Defence Stocks Surge as Trump Reaffirms NATO Spending Demands and Discusses Greenland’s Strategic Importance

Published

1 hour ago

January 8, 2025

RTX

European defence stocks saw significant gains on Wednesday following comments made by US President-elect Donald Trump, in which he reiterated his calls for higher NATO spending and emphasized Greenland’s strategic importance. The rally came after Trump’s remarks during a press conference at his Mar-a-Lago residence on Tuesday, sparking speculation that his stance could pressure European nations to significantly increase their defence budgets.

Shares of key European defence companies surged during midday trading. Leonardo SpA rose by 4.8%, Rheinmetall AG jumped 6.1%, SAAB AB gained 3.8%, and Kongsberg Gruppen ASA climbed 2.9%. Investors responded positively to Trump’s comments, which were seen as a renewed push for Europe to shoulder a larger portion of NATO’s financial burden.

Trump Calls for Increased NATO Spending

In his press conference, Trump doubled down on his long-standing criticism of NATO allies for not contributing enough to the alliance’s financial needs. He reiterated that NATO’s current spending target of 2% of GDP was insufficient, suggesting that the benchmark should be raised to 5% to ensure better military readiness and fairer financial contributions among member states. “At that point, it was 2%, it should be 5%… not 2%,” Trump said, underscoring the need for a higher investment in military readiness across the alliance.

Trump also reflected on his previous efforts to secure increased NATO funding, claiming credit for raising over $680 billion by threatening to withhold protection unless NATO members met their financial obligations. “As soon as I said that, the money came pouring in,” he stated.

NATO Members Meet Defence Spending Goals

According to NATO’s latest report, 2024 marked a record year for military spending compliance, with 23 out of 31 NATO members meeting the 2% GDP target. Poland led the European bloc with military expenditures at 4.1% of GDP, followed by Estonia at 3.4% and Latvia at 3.1%. However, some countries, including Italy, Portugal, Spain, and Belgium, remain below the target.

Despite the progress, only Belgium failed to meet NATO’s equipment spending guideline, which requires members to allocate at least 20% of their defence budgets toward equipment.

Greenland’s Strategic Importance

In his remarks, Trump also drew attention to Greenland’s significance for US national security, citing rising Russian and Chinese military activity in the Arctic. “We need Greenland for national security purposes,” he declared, suggesting that Denmark should relinquish its sovereignty over the territory if negotiations over its status stalled. While Trump did not present specific proposals, he hinted at the possibility of imposing tariffs on Denmark if the issue remained unresolved. In response, Denmark reaffirmed its sovereignty over Greenland, with King Frederik updating the royal coat of arms to prominently feature the territory.

Trump’s Criticism of the Russia-Ukraine Conflict

Trump also commented on the ongoing Russia-Ukraine war, blaming its escalation on the Biden administration’s handling of the situation. “Russia would have never, ever gone in,” he said, calling the conflict “a disaster” and expressing concern over the immense human toll. He also criticized Europe’s financial contribution to Ukraine, asserting that the United States had provided a far larger share of the funding.

As the war continues, Trump’s remarks signal his intention to push for a reassessment of Europe’s role in global defence and security alliances, particularly in terms of financial contributions.

Business

Eurozone Inflation Rises to 2.4% in December, Markets Still Expect ECB Rate Cuts in 2025

Published

1 day ago

January 7, 2025

RTX

Inflation in the eurozone rose to 2.4% year-on-year in December, up from 2.2% in November, according to preliminary data from Eurostat. While the increase matched economists’ forecasts, it highlighted ongoing inflationary pressures in the region, complicating efforts by the European Central Bank (ECB) to meet its 2% target.

On a monthly basis, consumer prices rose by 0.4%, reversing the 0.3% decline seen in November. Core inflation, which excludes volatile items like food and energy, remained steady at 2.7%, in line with expectations. Despite the stable core inflation, the persistent inflationary challenges are expected to keep the ECB focused on further action.

Among the key contributors to inflation, services remained the leading category, with an annual rate of 4%, slightly up from 3.9% in November. Food, alcohol, and tobacco prices stayed steady at 2.7%, while non-energy industrial goods saw a slight decrease in inflation, easing to 0.5% from 0.6%. Energy prices rebounded significantly, rising 0.1% year-on-year after a -2% drop in November, reflecting higher fuel costs in some eurozone countries.

Kyle Chapman, an analyst at Ballinger Group, suggested that the inflation rise was unlikely to alter the ECB’s course. “This figure does close to nothing in terms of altering the path for the ECB,” Chapman said. He noted that Frankfurt had been anticipating a temporary rise in inflation and is likely to overlook it for now.

Regional Variations in Inflation

Inflation rates varied widely across eurozone countries. Croatia led with the highest annual rate at 4.5%, followed by Belgium at 4.4%. Other significant readings included Germany at 2.8%, Greece at 2.9%, and Spain at 2.8%. In Belgium and Germany, monthly inflation rose by 0.7%, the second-highest across member states.

Ireland recorded the lowest annual inflation rate at 1%, but saw a notable monthly spike of 0.9%. In contrast, Italy, with one of the lowest annual rates at 1.4%, had only a 0.1% monthly rise. France’s inflation increased to 1.8%, the highest since August, while Spain saw a 2.8% inflation rate, the highest since July 2024.

Market Reactions

Despite the inflation data aligning with expectations, financial markets reacted mildly. Shorter-dated eurozone bond yields, which had spiked following Germany’s surprise inflation report on Monday, edged lower. The two-year Schatz yield fell 3 basis points to 2.18%, while the benchmark 10-year Bund yield held steady at 2.45%.

The euro continued its upward trend, rising 0.4% to $1.0430, as market expectations remain focused on future ECB rate cuts. Traders are anticipating a 25 basis-point cut at the ECB’s meeting on January 30, with over 100 basis points of cumulative cuts expected throughout 2025.

European equity indices traded slightly higher, with the Euro STOXX 50 and STOXX 600 up 0.2%. Germany’s DAX also gained 0.2%, while France’s CAC 40 outperformed, rising 0.4%. Italy’s FTSE MIB lagged, slipping 0.1%.

Sector-wise, luxury and consumer goods stocks outperformed, with Adidas rising 2.2%, while banks underperformed, with the Euro STOXX Banks Index down 1.1%. Notable declines were seen in Deutsche Bank, which fell 1.6%, and Ireland’s AIB Group, which dropped 1.8%.

Business

Italy in Talks for €1.5bn Deal with SpaceX Amid Local Opposition

Published

2 days ago

January 6, 2025

RTX

The Italian government is advancing negotiations for a €1.5 billion telecommunications security services contract with SpaceX, according to reports. The proposed deal, which includes encryption services for telephone and internet communications for Italy’s government and military, has been under review since mid-2023 but has faced opposition from local telecommunications providers.

The potential five-year agreement follows a visit by Italian Prime Minister Giorgia Meloni to President-elect Donald Trump in Florida, sparking speculation that Musk’s support for Trump may help expedite the deal. The Italian Intelligence Services and Defence Ministry are reported to have approved the project, which would enhance the security of critical communications across the country.

SpaceX’s services could include encrypted communication solutions for the Italian government and military, designed to enhance national security. However, the deal has faced significant resistance from local telecommunication operators, who argue that SpaceX’s business model could undermine the domestic market.

In November 2023, the lobbying group Assetel called for a review of regulations governing low-orbit satellite broadband services, particularly in regard to SpaceX’s Starlink network. The group raised concerns that SpaceX’s direct-to-consumer sales approach bypasses existing regulations, potentially circumventing rules on data storage and creating unfair competition with local telecom companies.

Italian telecom operators have been struggling with mounting debts and intense price competition. Telecom Italia reported €8 billion in net debt for the third quarter of 2023, despite selling its network to US private equity firm KKR in a €22 billion government-backed deal. Meanwhile, Swisscom’s acquisition of Vodafone Italia in December, for €8 billion, was another sign of financial strain in the Italian telecom sector.

Italy is also facing pressure to meet its broadband network expansion targets under the EU-funded Recovery and Resilience Facility (RRF). Despite receiving €113.5 billion in recovery funds, Italy is behind schedule in rolling out high-speed internet, a key part of its economic revitalization plan. Only a third of the 3.4 million buildings targeted by the €3.4 billion plan have been connected to broadband, leading the government to consider using Starlink to make up for delays.

SpaceX, which has expanded its global footprint significantly, has launched over 6,700 active satellites, serving more than four million customers across 100 countries. Starlink’s services have reached approximately 55,000 customers in Italy, and with new satellites launched in December 2024, SpaceX aims to broaden its global coverage even further.

The negotiations between SpaceX and Italy continue amid local opposition and challenges in Italy’s broadband expansion efforts, with the final decision expected to have far-reaching implications for both domestic telecommunications and international relations.