You’d think Boeing’s never-ending PR tailspin would engender more than just schadenfreude for Airbus, the only other major global manufacturer of commercial aircraft. Sadly for Airbus, you’d be wrong. 

The European aerospace giant hasn’t been able to capitalize much on its rival’s misfortunes, Airbus CEO Christian Scherer told The Wall Street Journal, thanks to its own workforce and supply chain issues.

Good Luck, We’re All Counting On You

When it comes to building large commercial aircraft, Airbus and Boeing hold what’s effectively a global duopoly. So when Scherer took on the role of Airbus CEO in January and then a Boeing plane obligingly lost one of its doors midflight, he expected a smoother-than-usual journey. 

But, as Scherer told The WSJ, broader industry issues have stopped it from exploiting Boeing’s weakness:

• Scherer said that post-COVID, the industry suffered an exodus of experienced workers who have not yet been replaced because new recruits simply haven’t had the time to accumulate that experience.
• Now both Boeing and Airbus are struggling to fulfill orders to their airline clients; Scherer partially laid the blame on airlines for not anticipating increased travel demand post-lockdown.

Sindy Foster, an aviation analyst at Avaero Capital Partners, told The Daily Upside that Airbus also cut jobs at the onset of the pandemic. “There was a double whammy of forced staff reductions, early retirement, and people ‘taking a view,’ with a reduction on training and experience being gathered by the next generation,” said Foster.

Foster also said that some airports reduced capacity because they thought demand would take longer to rebound. “Not only have airlines been seeking aircraft, an increasing number of lessors also joined the competition for aircraft,” she said. On the supply chain side, Foster said that raw materials are in short supply, and stressed that plane manufacturers have extremely complex webs of suppliers. “In the case of an Airbus 380, there were apparently 4 million individual parts, and the parts are produced by 1500 companies from 30 countries around the world,” she said, adding that “aircraft manufacturing is a huge feat of logistics supply and engineering — any supply disruption causes mega issues.”

Engine Engine (Repair) No. Nine: There is apparently one bright spot in the plane-making business, although it won’t inspire confidence for frequent fliers. The WSJ reported in July that jet-engine makers such as Rolls-Royce and GE Aerospace have been making a tidy sum recently due to the fact that when their engines malfunction, they’re the ones who get paid to fix them. Flying is safe, we know, but it doesn’t always feel that way lately. 

Unlike “The Brady Bunch,” one of Paramount Global’s iconic sitcoms, the company just couldn’t make its combined families work. Now it’s deep in cost-cutting mode.

As the entertainment giant prepares to move under the control of David Ellison’s Skydance Media, current leadership is undergoing an aggressive campaign to realize half a billion in savings. On Tuesday, the effort brought about two victims: some 2,000 employees, or around 15% of total staff, as well as the shuttering of Paramount Television Studios.

Peaks and Valleys

Paramount has long owned and operated CBS Studios, creating homegrown hits like “Star Trek,” “Survivor,” and “NCIS.” But, in 2013, company leaders saw an industrywide production boom on the horizon, and decided to launch a second studio — Paramount Television — to best position itself for the content explosion. And for most of the past 11 years, it’s proven a decent bet, with the studio producing hits for Paramount’s own properties and serving as a dealer to competitors. Some sales to rival companies include “13 Reasons Why” to Netflix, “Station Eleven” to Max, and “Reacher” to Amazon Prime Video. 

But Peak TV is now firmly in the rearview mirror, forcing the bulked-up company to start shedding layers on the tumble down:

• There is an industrywide expectation that there will be “less volume of content over the next couple of years versus the peak golden age of streaming,” Jamie Lumley, sector analyst at Third Bridge, told The Daily Upside, adding that third-party and competitor “demand for [high-budget series] might be at lower levels than previously anticipated.”
• For Paramount, that means going from two TV studios to just one. The company said Tuesday that CBS Studios will take over all of Paramount Teleision’s current shows. Skydance, which is expected to close its takeover of Paramount sometime next year, already has its own TV unit as well.

Write Down To It: Tuesday’s news shouldn’t be shocking. Last week, Paramount’s second-quarter earnings report brought both good news and bad news. The good news? Its streaming unit, just like Disney’s this past quarter, finally crossed into profitability. The bad news? Its linear TV business, which has anchored the company despite being long in decline, is seeing its bottom fall out. The company took a nearly $6 billion write-down on its cable assets as revenues plummeted at lower-tier assets like VH1 and MTV 2. Across town, Warner Bros. Discovery took a write-down on its own cable TV assets. Ellison sure has his work cut out for him.

For Laxman Narasimhan, the daily grind is over. The Starbucks chief unexpectedly stepped down Tuesday.

The embattled coffee chain named Chipotle CEO Brian Niccol his successor. Markets signaled they think the burrito boss, who starts Sept. 9, can get things wrapped and under control.

A Tall Order

The bottom line is that Starbucks’ performance as of latte has been depresso, with grande problems turning into trenta ones. In April, the world’s largest coffee chain cut its full-year revenue growth forecast to low single digits; previously, it had been estimated at 7% to 10%. Sputtering sales are to blame, especially in the Chinese market, where same-store sales dropped a whopping 14% in the quarter that ended June 30. US same-store sales fell 2%.

Narasimhan said budget-conscious customers are spending less. It should also be noted they’re being asked to pay more after price hikes that executives have blamed on inflation and unionization. From the time Narasimhan started in March 2023 to Monday’s close, Starbucks shares fell 21%. But markets seem sold on Niccol (Starbucks surged over 20% following the announcement, while Chipotle fell 7%), and with good reason:

• As other restaurants have reported atrophying sales, Niccol’s Chipotle has served up increased sales and traffic: Second-quarter income, reported last month, rose to $456 million this year from $342 million in 2023. Even with the dip after Niccol’s departure was announced, Chipotle shares are up 15% this year, and last year’s $10 billion in sales were more than double when he started.
• Niccol ably steered Chipotle through adversity, restoring credibility after he took over in 2018 in the wake of a tainted-food scandal. He was also an early adopter of to-go and delivery operations, which made the firm one of the strongest pandemic performers.

Backseat Baristas: Narasimhan was the handpicked successor of three-time Starbucks CEO Howard Schultz, who roasted the company’s performance in a LinkedIn post earlier this year. Schultz endorsed Niccol Tuesday. He’s not the only power player the new chief will have to keep happy: Activist investors Elliott Management and Starboard Value both have stakes and, as of last week, Elliott was in negotiations for a board seat.