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Commercial Airlines Facing Staggering Losses; Total Profit Loss to Hit $51.8B in 2021

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After devastating 2020 and colossal revenue losses caused by the first and second wave of the pandemic, the COVID-19 continues paralyzing the aviation industry. The growing number of COVID-19 cases, fears of travel restrictions due to Delta variant and concerns about the economic recovery caused a new hit to the world’s largest airlines, hoping for a steady upturn in the aftermath of the pandemic.

According to data presented by StockApps.com, commercial airlines are expected to end this year with a profit loss of nearly $52bn and revenues 43% lower than before the COVID-19 hit.

European Airlines the Worst Hit, with $21 Billion in Profit Losses

During the last decade, the aviation industry witnessed stable growth, with revenues rising at a CARG of around 5.3% between 2009 and 2019 and reaching $838bn that year.

However, after the pandemic hit, revenue streams dropped to historically low levels, with most of the world’s biggest airlines not even covering their operating costs. Although government aids across the globe brought hopes for the steady recovery of the global aviation industry, this scenario might not happen for years. Along with remaining one of the worst-hit sectors during the pandemic, the entire market faces increased costs, including labor and fuel.

The International Air Transport Association (IATA) survey showed that commercial airlines generated only $373bn in revenue in 2020 or 57% less than pre-pandemic projections. Although this figure is expected to jump by 25% YoY to $472bn in 2021, that is $100bn less than revenues from 2008.

Statistics show the global commercial aviation profit loss is expected to reach $51.8bn this year, after the industry already lost almost $138bn in 2020.

In regional comparison, most of that loss, or nearly $21bn, will be generated by the European airlines. The IATA predicts Asian Pacific to witness the second-largest profit loss this year of $11.2bn.

Middle Eastern and African carriers reported combined losses even before the COVID-19 shock. However, according to the IATA survey, the airlines from the two regions are expected to lose around $8.7bn in 2021. Latin America and North America follow, with a $5.6bn and $5.5bn profit loss, respectively.

However, North America is the only region expected to witness significant recovery next year, with airlines reaching $9.9bn in profit gains.

Almost 85% of People Changed their Travel Habits; Catching the Virus Abroad the Biggest Concern

Besides increased costs and plunging profits, the entire airline industry is facing massive changes in travel habits caused by the COVID-19 pandemic.

According to Passenger Confidence Tracker 2021, commissioned by Inmarsat, 84% of respondents claim their travel habits are likely to change post-COVID-19. Around 35% of people have decided to travel less frequently by any means after the pandemic ends, while almost 30% would travel less frequently by air.

Catching the virus is the biggest concern preventing people from traveling abroad, with a 52% share among respondents. However, the five other concerns with high shares of responses were also all related to the pandemic.

The survey also showed that India, South Korea, and China had the largest number of people who decided to travel less frequently by any means, while people from the United Kingdom, Greece, and Germany are the least likely to change their post-COVID-19 travel habits.

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MicroStrategy Rally Crushes Short Sellers, Wiping Out $1.92 Billion

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MicroStrategy- Investors King

Short sellers betting against MicroStrategy found themselves facing significant losses as the company’s rally wiped out $1.92 billion since March.

This development comes amidst a rally that has seen MicroStrategy’s stock outperform bitcoin, causing a considerable hit to those who had taken a bearish stance on the tech firm.

According to data from S3 Partners, short sellers have been on the losing end since March, as MicroStrategy’s stock surged, highlighting the impact of the rally on those betting against the company’s success.

This loss underscores the challenges faced by short sellers in a market where certain stocks experience rapid and unexpected price increases.

The rally in MicroStrategy’s stock is attributed to several factors, including the approval of several spot bitcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) earlier in the year.

This move by the SEC brought bitcoin, a once-nascent asset class, closer to the mainstream and fueled investor interest in companies like MicroStrategy, known for their significant holdings of the cryptocurrency.

MicroStrategy, which held nearly 190,000 bitcoin on its balance sheet as of the end of 2023, has indicated its intention to continue increasing its exposure to the digital currency.

The company’s decision to sell convertible debt to raise money for additional bitcoin purchases further bolstered investor confidence and contributed to the stock’s rally.

Analysts at BTIG noted that the premium for MicroStrategy’s stock reflects investors’ desire to gain exposure to bitcoin indirectly, especially those who may not have the means to invest directly in the cryptocurrency or ETFs.

The company’s ability to raise capital for bitcoin purchases is seen as a positive sign for shareholders, adding to the optimism surrounding its stock.

However, despite the recent rally and optimism surrounding MicroStrategy, the crypto industry as a whole continues to be heavily shorted.

Short interest in nine of the most-watched companies in the crypto space remains high, standing at 16.73% of the total number of outstanding shares, more than three times the average in the United States.

Moreover, concerns persist regarding the SEC’s stance on cryptocurrencies, with some experts suggesting that the approval of spot bitcoin ETFs may not necessarily indicate a broader acceptance of other similar products, such as spot ethereum ETFs.

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Geregu Power Plc Announces N14.46bn Profit in Q1 2024

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Geregu Power Plc

Geregu Power Plc has announced a profit of N14.46 billion for the first quarter (Q1) of 2024.

This represents a 307% increase when compared to the same period last year.

The power-generating company, known for its pivotal role in Nigeria’s energy sector, disclosed its outstanding financial results in its interim financial statement filed with the Nigerian Exchange Limited on Tuesday.

This disclosure comes shortly after the firm’s Deputy Chief Executive, Julius Omodayo-Owotuga, hinted at the promising financial outlook during the company’s recent annual general meeting held in Lagos.

According to the interim report, Geregu Power Plc’s revenue surged to N50.42 billion in the first quarter of 2024, representing an increase of 254.37% year-on-year appreciation.

The company’s net finance income transitioned from a negative position to N133.61 million. This positive momentum was supported by a moderation in finance costs, which decreased from N3.141 billion to N2.29 billion as of March 2024.

Speaking to stakeholders at the recent annual general meeting, Femi Otedola, Chairman of Geregu Power, expressed satisfaction with the company’s exceptional financial performance in 2023.

Otedola highlighted the board’s decision to propose a dividend distribution of N8 per share for the 2023 financial year as a testament to their commitment to rewarding shareholders and confidence in the company’s future prospects.

The robust financial results for the first quarter of 2024 further solidify Geregu Power’s position as a leading player in Nigeria’s energy landscape.

The company’s commitment to operational excellence, strategic investments, and adherence to international standards, such as obtaining ISO 9001 and 14001 certifications from the Standard Organisation of Nigeria, underscores its dedication to driving sustainable growth and value creation.

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Guaranty Trust Holding Company Plc Records N609.3bn Profit Before Tax in 2023

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GTCO Commemorates Listing on Nigerian Exchange - Investors King

Guaranty Trust Holding Company Plc (GTCO) has announced a strong profit before tax (PBT) of N609.3 billion for the 2023 financial year.

This represents an increase of 184.5 percent when compared to the previous year.

The audited consolidated and separate financial statements filed with the Nigerian Exchange Group and London Stock Exchange on Monday revealed market capitalization exceeded N1 trillion on the NGX to further solidify GTCO’s position as one of the top financial holding companies in Nigeria.

During the period under review, the group’s post-tax profit rose by 218.99 percent to N539.65 billion from N169.17 billion in 2022.

Key indicators such as loans and advances increased by 31.5 percent to N2.48 trillion, while deposits grew by 63.7 percent to N7.55 trillion.

The group’s total assets and shareholders’ funds closed at N9.7 trillion and N1.5 trillion, respectively.

Despite the challenging economic environment, GTCO maintained a strong capital adequacy ratio of 21.9 percent.

Also, the group sustained asset quality, with IFRS 9 Stage 3 loans improving to 4.2 percent in December 2023 from 5.2 percent in the same period of the prior year.

However, the cost of risk experienced an uptick, rising to 4.5 percent from 0.6 percent in December 2022, largely due to worsening macroeconomic factors.

Despite these challenges, GTCO’s pre-tax return on equity stood at 50.6 percent, while pre-tax return on assets was 7.6 percent. The cost-to-income ratio remained favorable at 29.1 percent.

Commenting on the financial results, Mr. Segun Agbaje, the Group Chief Executive Officer of GTCO, expressed satisfaction with the company’s performance amidst a challenging operating environment.

He attributed the strong performance to the successful implementation of the group’s business model across banking and non-banking business verticals.

“Also important to our success is our relentless obsession with innovation and offering great customer experiences as demonstrated by the successful redesign and upgrade of our mobile banking application, GTWorld,” he stated.

“In a landscape characterised by evolving regulatory reforms, global uncertainties, and heightened competition, we have continued to leverage our inherent strengths and capabilities to unlock significant value, creating more opportunities for the businesses and individuals we serve.

In line with its commitment to shareholders, GTCO announced a final dividend of N2.70k, bringing the total dividend for 2023 to N3.20k.

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