Olaf's Feed
May 29, 2015
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German job miracle keeps defying gloom-mongers

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The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Germany’s labour market is defying orthodox economic wisdom. For years, most mainstream economists warned that a proposed minimum wage of 8.50 euros per hour would price up to a million workers out of their jobs. But so far the wage floor, which came into force in January, has not stopped Europe’s largest economy from churning out additional jobs.

Mar 27, 2015
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Germanwings tragedy requires industry response

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The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The crash of Germanwings flight 4U 9525 in the French Alps may mark a turning point in aviation history. French prosecutors say the co-pilot set the aircraft on its tragic descent while his pilot was locked out of the cockpit. It will be some time before investigations are completed. But the disaster has quickly drawn attention to a less evident aspect of flight safety – the possible risks posed by crew rather than passengers. That raises questions about procedures both across the industry, as well as at the parent Lufthansa.

Mar 27, 2015
via Breakingviews

Germanwings tragedy requires industry response

Photo

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The crash of Germanwings flight 4U 9525 in the French Alps may mark a turning point in aviation history. French prosecutors say the co-pilot set the aircraft on its tragic descent while his pilot was locked out of the cockpit. It will be some time before investigations are completed. But the disaster has quickly drawn attention to a less evident aspect of flight safety – the possible risks posed by crew rather than passengers. That raises questions about procedures both across the industry, as well as at the parent Lufthansa.

Feb 24, 2015
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Lavish German pay hike helps entire euro zone

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The change in Germany’s growth model has been ratified by 3.7 million people. All of Europe can rejoice.

Jan 26, 2015

Breakingviews: BA owner’s new pitch to Aer Lingus is nearly there

By Olaf Storbeck

LONDON (Reuters Breakingviews) – Cabin crew, prepare for
landing. The third overture by British Airways owner
International Consolidated Airlines Group (IAG) to Aer
Lingus is still not overly generous, with IAG Chief
Executive Willie Walsh moving just 11 percent from his original
position. But given the conditions Ireland is likely to impose,
this 1.36 billion euro proposal might be enough for the Irish
carrier’s board to start serious talks.

The new pitch is 2.55 euros per share, including a dividend.
On first blush, that doesn’t look too helpful. It’s some way
below the 3.10 euros Citigroup analysts reckon IAG could afford
to pay, or the 2.80 euros HSBC’s team has as its price target.
The total equity value is only 300 million euros more than the
book value of Aer Lingus’ fleet and its 400 million euros of net
cash. The combined group could also benefit from increased sales
and lower costs: Citi thinks synergies could hit 50 to 100
million euros a year.

Jan 19, 2015
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Cheap oil comes with hidden risks for airlines

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The falling oil price is a short-term blessing for airlines. In Europe, it might turn into a long-term curse. The real test for the industry is not whether profits increase in 2015, but whether it can limit the negative side effects of cheap fuel.

Jan 8, 2015
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Merkel subjects Greece to risky tough love

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

There should be no doubt that Angela Merkel wants to keep the euro zone intact. Her played-up indifference to the possibility that Greece might leave if it doesn’t find a deal with its creditor partners is part of that long game. The German chancellor just wants to send an advance warning to Alexis Tsipras, the leader of the left-wing Syriza party who may emerge as the winner of the Greek parliamentary election on Jan. 25. Investors should see through the bargaining hubbub. The next Greek crisis will have its cliffhangers – but Berlin will ensure it ends in compromise.

Dec 30, 2014
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UK faces risk of cold-weather blackouts

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Britain is dicing with darkness. The electricity system is ageing and the mix of generating technology – including renewable sources like wind power – is changing. Both factors increase the danger of power cuts at peak times. New capacity can’t come soon enough.

Dec 18, 2014

Breakingviews: Aer Lingus attractive yet tricky target for IAG

By Olaf Storbeck

LONDON (Reuters Breakingviews) – Aer Lingus is an
attractive but tricky target for British Airways-owner
International Consolidated Airlines Group (IAG). The
Dublin-based airline is operationally strong, holds coveted
usage rights at BA’s Heathrow base and is growing on lucrative
routes in between the British Isles and North America. Nailing a
deal will mean overcoming an unwieldy shareholder structure and
multiple anti-trust concerns.

IAG Chief Executive Willie Walsh knows what he would be
getting. He used to be chief executive of Ireland’s
flag-carrier. Aer Lingus has made an operating profit since
2010. At 8.4 percent, its margin was twice that of Germany’s
Lufthansa in the first nine months of 2014. Long-haul
passengers on routes between Europe and North America rose by a
quarter in the same period. It has 572 million euros of net
cash. This does not look a risky deal.

Dec 11, 2014
via Breakingviews

More Porsche than Prada: Why Ferrari’s worth $7bln

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By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Ferrari is more Porsche than Prada. Fiat Chrysler Chief Executive Sergio Marchionne aims to spin-off the Italian sports carmaker in 2015, and wants it to be valued like a luxury goods company, with an enterprise value of up to 10 billion euros ($12.4 billion). Fast cars, however, are harder to craft than handbags or high heels. A more reasonable price tag would not be much more than half that.

    • About Olaf

      "Olaf is a London-based columnist covering Germany, the euro zone and economics. He joined in November 2012 from Handelsblatt, Germany's business and financial daily. Olaf co-authored the award-winning book "Economics 2.0 – What the Best Minds in Economics Can Teach You About Business and Life" and wrote the book "Die Jahrhundertkrise". In 2012, he received the Friedwart Bruckhaus Award of Germany's Hanns Martin Schleyer-Foundation. Follow Olaf on Twitter: @OlafStorbeck"
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