Read this Wednesday’s edition of the FolhaMercado newsletter (10) – 05/10/2023 – Market

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LinkedIn fires and leaves China

LinkedIn said on Monday (8) that it will cut 716 jobs globally and shut down its platform aimed at Chinese users.

Company CEO Ryan Roslansky said the layoffs are to streamline the company’s operations and remove layers to help make decisions faster. He also stated that the changes will create 250 jobs.

The 20,000-employee company owned by Microsoft is the latest to join the wave of layoffs at major technology companies that began last year.

• In the past six months, more than 270 thousand jobs in the sector across the world have been cut, according to Layoffs.fyi.

Departure from China: citing a challenging environment, the company decided to limit its operation in the country in 2021, leaving InCareer, a platform with fewer resources in relation to LinkedIn, in the local market.

• That alternative will now be discontinued through Aug. 9 amid “heavy competition and a challenging macroeconomic climate,” CEO Roslansky said.

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Europe’s biggest airline makes peace with Boeing

Ryanair, Europe’s biggest airline by number of passengers, and American manufacturer Boeing ended a long fight by announcing on Tuesday a contract to supply up to 300 aircraft.

The deal for the 737 Max 10 passenger jets, scheduled for delivery between 2027 and 2033, was valued at more than $40 billion at list prices, but manufacturers often give significant discounts on large orders.

Understand the fight: Ryanair CEO Michael O’Leary has spent much of the last 18 months criticizing Boeing for its pricing and production issues that have led to delays and setbacks in aircraft deliveries.

• “It’s like a wedding,” O’Leary said Tuesday. “We have occasional fights and breakups and then we kiss and make up.”

Ryanair claims the new order will allow it to increase its traffic by 80% over the next decade. He also said that the 737 Max 10s carry more passengers, use less fuel and are quieter than the 737s that will be replaced.

Airbus x Boeing

The news of the order is positive for the American manufacturer, which sees its biggest rival, the French Airbus, surpassing it in the number of aircraft deliveries this year.

Boeing ran into trouble in April when it delivered less than half of the previous month’s planes because of a manufacturing defect that forced it to stop some shipments of its best-selling jet, the 737 MAX.

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Madero in Congonhas

After the bad years 2020 and 2021 for business, Madero decided to slow down the pace of new store openings to curb spending and focus on reducing its debt.

This movement, however, will be interrupted to open the first unit of the network at Congonhas airport, a location coveted by major brands in the country.

• With 155 square meters and 40 seats, the restaurant is located in the departures area of ​​the terminal and should open its doors on May 11th.

• For Junior Durski, the difference will be the price. He promises that the chain will practice the same values ​​as other stores at the airport.

Remember the Madero crisis: affected by the circulation restrictions caused by the pandemic, which were criticized at the time by Durski, the chain ended up seeing its debt skyrocket.

• Before the health crisis, the company even predicted an IPO in New York for May 2020, but had to postpone its plans.

After registering loss BRL 249 million in 2020 and even question the continuity of the business, Madero received in 2021 a contribution of BRL 300 million of the Carlyle group, which currently owns 34.4% of the chain’s shares.

• In 2022, investment in new restaurants decreased by 43.3% compared to the previous year, to R$ 105.8 million.

• Net debt over Ebitda (cash generation indicator), a ratio used to measure the ability to pay debt, rose from 3.55 in 2021 and improved to 2.53 – the target was 3.

The IPO that did not come out in 2020 or 2021 is still in the plans, but, for Durski, it does not play a central role in the decisions he makes.

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Public credit grows with high interest rates

For the first time since 2016, the credit portfolio of public banks rose more than that of private banks in a one-year period, according to data released by the Central Bank.

In numbers: in the 12 months ended in March, the expansion of public bank credit was 13.78%above 10.89% from privately owned nationally (excludes institutions of a foreign nature, such as Santander).

Although the current government has an agenda to encourage credit from state institutions, the result is not justifiable for that reason alone, because most of the 12-month period still considers the previous administration.

Which explains the inversion:

Earmarked credit became more sought after at the current Selic level.

• This type of loan has special conditions, such as lines for agribusiness and housing, specialties of BB (Banco do Brasil) and Caixa, respectively.

On the other hand, demand for free credit ends up curbed by high interest rates.

• Banks also hold back part of the offer because of the risk of increased default – a scenario that was aggravated by the crises of large companies.

Why it matters: while the Central Bank leaves interest rates at a high level to cool down the economy – and inflation –, measures that stimulate public bank credit end up going against this effort and demanding even more monetary tightening.

• The monetary authority has already said in minutes that the use of quasi-fiscal policies to stimulate the economy could end up reducing the effect of monetary policy.