Volkswagen and Air France show Covid roller coaster still in effect – fr

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Volkswagen and Air France show Covid roller coaster still in effect – fr



Volkswagen raised its earnings outlook after a good start to the year, while warning that the semiconductor shortage in the auto industry will become more pronounced in the second quarter.

“We started the year with great momentum and we are on a solid operational trajectory,” said Managing Director Herbert Diess.

As demand has rebounded in the industry, manufacturers are now grappling with a severe shortage of chips forcing them to shut down production lines and prioritize certain vehicles.

Mr Diess said the company would feel more pain in the second quarter, and some lines would shut down “for a few days, a few weeks,” although the fallout won’t be as pronounced as with some rivals.

“We are fighting day after day. We are doing everything to keep production running, ”said Mr. Diess.

Stellantis warned this week that the global semiconductor shortage would deteriorate further from the first three months of the year, while Ford forecast a $ 2.5 billion impact on profits from chip scarcity.

VW is at a pivotal point in getting its electric car off the ground and closing the gap with Tesla.

Mr Diess said electric vehicles are actually less affected by the chip shortage, supporting the company’s efforts to tilt production further into this space.

Two months after planning to build six battery factories in Europe, VW is still in talks with potential partners and governments about possible partnerships to fund the projects. Decisions could be made “in the next few months” to include IPOs of “some of the business,” Diess said.

Supporting Germany’s favorable outlook, factories across the country saw demand rise for a third month in March, underscoring the resilience of the manufacturing sector in the face of prolonged coronavirus lockdowns.

Orders rose 3%, twice the expected rate. Demand for machinery, data processing equipment, electrical and optical products as well as automotive construction has been particularly strong, the German government said.

However, some big names are still feeling the pressure of the Covid crisis. Air France-KLM plans to raise more capital to repair its ailing balance sheet as the ailing carrier relies on a resumption of air travel in summer to stem losses.

Equity and quasi-equity financial instruments are under consideration, the airline said, reporting a larger first-quarter operating loss of 1.2 billion euros.

Shareholders will be asked later this month to approve proposals that could raise billions of euros.

The move could help reduce long-term debt, which stood at 14.2 billion euros at the end of the first quarter, levels that CEO Ben Smith said “were holding back our balance sheet.”

He signaled last month that a further recapitalization may be needed after the latest rescue of the air group by the French government.

In the coming months, Air France-KLM is counting on global vaccination campaigns to boost consumer demand for travel. He made plans to increase capacity this quarter and next, an approach that analysts say carries risks. In a sign that airlines remain uncertain about how quickly demand will pick up, its Swiss rival has said it will cut its fleet and cut more jobs.

“Air France-KLM continues to plan for a faster return to capacity than its peers,” Bernstein analyst Daniel Roeska wrote in a note, saying this would risk diluting fares and incurring unnecessary expense. “While cash resources are currently high, they are running out quickly.”

Elsewhere, online sales of Adidas and Nike have plunged in China after a boycott of international brands that took a stand against the treatment of Muslim Uyghurs in the Xinjiang region, reflecting the blow to businesses that cross the political lines of Beijing.

Sales of the Adidas store on Alibaba’s Tmall – China’s largest business-to-consumer e-commerce platform – fell 78% in April from a year ago, while those of Nike fell by 59%.

Mainland consumers have instead turned to Chinese competitors in sportswear.

-Bloomberg

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