Boeing’s Unlikely White Knight

Plus: Retail's renaissance has spelled the death of pandemic-era rent discounts. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

January 30, 2024

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Good morning. As they say, business happens on the golf course. But in this case, the golf course is the business.  On Monday, a group of investors including New York Mets owner Steve Cohen and former Milwaukee Bucks owner Marc Lasry announced a $3 billion initial investment in the PGA Tour — valuing the pro golf tour's commercial operation at $12 billion. Curiously, sources told Bloomberg that the deal may not include, at least initially, the Saudi-backed LIV Tour, which agreed to a still-yet-to-be-completed merger with the PGA last summer after a much-publicized battle over the soul of pro golf. How and when all three parties come to an agreement remains to be seen, but we're guessing the "where" will be somewhere between holes 8 and 14.

INDUSTRIALS Ryanair Rides to Boeing's Defense With Potential Plane Order Boeing has an unlikely white knight riding to its rescue.  Ryanair, European aviation's answer to the dollar store, has said it will stand by Boeing even if other airlines decide to ostracize its jets. Although the FAA cleared Boeing Max 9 737 jets to fly again, United CEO Scott Kirby said last week that the company was contemplating whether to cancel an order for a new plane from Boeing, the Max 10.  Golden Ticket But now, Ryanair is swooping in. On an earnings call Monday, the Irish airline famous for €10 ($10.80) flights said that it would be happy to take any Max 10 aircraft that United might end up not buying. It's a slightly strange move from an airline that had an otherwise disappointing earnings call: Ryanair lowered its profit outlook for the fiscal year by about 5% on Monday's call, and partly blamed this on a recent spat with online travel agents including Booking.com, Lastminute, and Kayak.  These "pirate sites," as Ryanair has dubbed them, removed Ryanair from their services late last year without any official explanation, although the move appeared to be in response to an Irish high court ruling that banned Flightbox, a flight comparison site, from scraping Ryanair's site for flight times and prices. Disappearing from travel agent sites resulted in a 1% drop in the number of Ryanair fliers in seats, and other airlines made their tickets cheaper to entice more customers. Sindy Foster, an aviation analyst, said the profit drop isn't an existential threat for Ryanair, and buying up Boeing Max 10s at a moment when they're unpopular could prove beneficial in the long run. "A drop in orders for Boeing 737 MAX 10 due to what Ryanair clearly believes is probably a temporary glitch could be used to obtain a cost advantage," said Foster, adding: "Ryanair has stated it would buy them 'at the right price,' that could mean significant costs saved on already budgeted fleet replacement cost in the future." It's very on-brand for Ryanair to be on the lookout for a bargain. Bolt From the Blue: Sources told The Wall Street Journal that the investigation into exactly why the ill-fated Alaska Airlines flight lost its door is reaching a tentative conclusion, namely that some bolts were missing when the door left Boeing's factory. The same sources also said there had been some gaps in the appropriate paperwork and processes before the door went out into the world. No kidding. Written by Isobel Asher Hamilton

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REAL ESTATE US Retail Rebound Sees Commercial Landlords Coming to Collect Photo by Viktor Bystrov via Unsplash Mo' money, mo' rent. Retailers that survived the pandemic are now benefiting from splurging customers and a growing economy. Commercial landlords have noticed, and they're done with Covid-era concessions like discounted rents, The Wall Street Journal reported.   First and Last Month's Even before the pandemic, brick-and-mortar stores were losing ground to online shops; government-mandated shutdowns, social distancing, and global supply chain issues that persist to this day didn't help. To avoid losing tenants amid Covid, commercial landlords offered cheaper leases, months of free rent, or even cash gifts. One popular system was percentage-of-sales agreements, where rents were determined by a store's financial performance each month.  Only a few years later, retailers and restaurants are having a bit of a renaissance. Despite more than $1 trillion in combined credit card debt and fears of not being able to pay for essentials like food and utilities, consumers have continued to fuel the economy and support shops. This past holiday season, sales at stores, car lots, and online retailers rose 5.6% year-over-year. For retailers, this probably feels like an extremely pleasurable whiplash.  But that means landlords are done handing out favors: Ed Coury of retail-brokerage firm RCS Real Estate Advisors told the WSJ that because retailers have bounced back, commercial landlords are no longer struggling to fill space so rent discounts are history. "They'll just say, 'Covid's over; those days are done,'" he said.  In last year's Q4, vacancies at US shopping centers fell to 5.3%, and average asking rents rose to $23.70 per square foot — roughly 17% above 2019 levels — according to Cushman & Wakefield data, reported by the WSJ. Not All Commercial Real Estate: Americans may want to go back to the mall, but they're not as keen on the office. Because some employers prefer remote work or because they're conceding to the demands of workers, once-bustling office buildings are fairly quiet and less valuable compared to how they were pre-pandemic. Howard Lutnick, CEO of investment bank Cantor Fitzgerald, recently told Fox Business he predicts between $700 billion and $1 trillion of defaults over the next two years unless interest rates fall soon. Maybe retailers should start renting space in skyscrapers. Written by Griffin Kelly

M&A Amazon Backs Out of iRobot Acquisition This deal just sucked the air out of the room.  On Monday, Amazon announced that it's calling off its $1.4 billion plan to acquire autonomous vacuum maker iRobot, citing "no path to regulatory approval for the deal" in light of steep antitrust scrutiny.  The Roomba Where it Happens The antitrust case against Amazon's acquisition is pretty simple: Should the tech giant scoop up the Roomba-maker, it could then turn around and unfairly promote its products over competitors on its e-commerce marketplace — a maneuver the company has been accused of many times over the years. Concerns have also been raised that a potential pairing of iRobot and Amazon's Alexa devices could lead to too much consolidation in the home smart devices industry.  Earlier this month, The Wall Street Journal reported that the concerns were grave enough for the European Commission to block the deal. And on Monday, Bloomberg reported that the FTC told Amazon representatives in a meeting last week that they were recommending a lawsuit over the deal. Amazon took the hint — leaving iRobot, like one of its confused vacuums, stuck in a corner: Upon news of the squashed deal, iRobot CEO Colin Angle announced he would resign effective immediately, as the company moves toward a restructuring plan that includes laying off 350 workers, or about 31% of its workforce. The company, which went public in 2005, had been profitable for years before a pandemic-era glow-up-and-comedown. Losses have totaled $500 million since 2021's second quarter, and last year the company reported an adjusted operating loss of around $200 million. Busted: Major deals are struggling in this new era of antitrust scrutiny. Earlier this month, JetBlue and Spirit announced their planned merger would not achieve lift-off — sending Spirit into a similar pattern of layoffs and restructuring seen by iRobot. In December, Adobe walked away from its $20 billion acquisition of Photoshop competitor Figma. But next may be the real trust-busting blockbuster: The FTC opened a probe late last week into the cozy relationship between tech giants and ascendent artificial intelligence firms, sending out letters of inquiry to Alphabet, Amazon, Microsoft, Anthropic, and OpenAI. It appears the agency has its eyes on Big Tech's AI ambitions — be it chatbots or vacuum cleaners. Written by Brian Boyle

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Just for Fun Bon voyage. Horse power.

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