JD Sports Fashion plc: Cost cutting will be key in a no-growthenvironment; private label is a key opportunity for margin expansion. Impact of the Iran conflict on European airlines/IAG: A lack of alternative fuel supply outside the Middle East means shortages could emerge during the peak summer travel season; IAG may perform better than peers

After interviewing a number of executives in the footwear and apparel space, Yanmei Tang, AVP at Third Bridge made a series of remarks regarding JD Sports, informed by insights from industry experts:

JD Sports is heading into FY27 with little growth expected, as external pressures continue to weigh on the business. Our experts say factors like US tariffs, geopolitical tensions and weak consumer confidence are all outside JD’s control but are hitting demand. At the same time, Nike’s struggles are a key risk, given JD’s reliance on the brand.

Our experts say that in a no growth environment, JD’s focus will be on costs and efficiency. This includes using more automation and tightening operations to protect margins.

There are still some upside levers. Our experts say private label is a key opportunity, as JD controls pricing and product and can earn higher margins, especially in the mid market where it understands its customers well.

Our experts also say the shift into apparel is worth watching. The category typically has higher margins than footwear, and if executed well, could support profitability even as overall growth remains weak.



In the aerospace space, Louis Knight, AVP at Third Bridge made a series of remarks regarding the Impact of the Iran Conflict on European Airlines and IAG.

Third Bridge experts question whether a reopening of the Strait of Hormuz would immediately return jet fuel prices to prior levels, given ongoing structural supply chain disruptions. With kerosene prices now spiking by more than 100%, airlines around the world are implementing urgent and severe mitigation measures to adapt to the crisis.

Historically, Europe has relied on the Middle East for around 75% of its jet fuel imports, according to the IEA. European countries are now scrambling to replace Gulf supplies with imports from elsewhere, particularly the US and Nigeria. The IEA has reported a rapid acceleration in US jet fuel exports in recent weeks. However, our experts note that even if all of these shipments were destined for Europe, they would still not fully replace the scale of lost supply. They warn that if Gulf supplies do not resume in the near future, shortages could emerge during the peak summer travel season, when airlines generate the majority of their profits.

Our experts are now anticipating potential downward guidance revisions, with full-year operating profit margins for some airlines potentially halving if the conflict continues without a meaningful ceasefire. Capacity cuts may remain in the low single digits on average, as airlines fundamentally seek scale to cover fixed costs. However, depending on how demand holds up in the face of higher ticket and baggage prices, airlines will likely be forced to absorb part of these additional costs into their margins.

According to Third Bridge experts, IAG is expected to perform better than many of its peers. As a full-service carrier, fuel represents a relatively smaller proportion of costs compared to low-cost carriers such as EasyJet and Ryanair, while its customer base of leisure and business travellers tends to be less price-sensitive. Additionally, with 60% of its fuel hedged for the remainder of the year, IAG is partially protected from the kerosene price spike. Given that the crown jewel of its network is British Airways’ strong position on transatlantic routes, the key questions will be whether demand between London and US hubs such as New York remains resilient, and whether premium passengers will continue to absorb higher ticket prices over the summer. Any indications will be closely monitored in management commentary during tomorrow’s results.”

Third Bridge experts downplay the impact of airspace closures. From the operational reality of a European airline, the marginal impact of closing another section of Middle Eastern airspace (i.e. Iraq or Iran) is relatively minor compared to the massive structural shift that occurred when Russia closed its airspace in 2022. Additionally, our experts expect Gulf carriers to resume services quickly once conditions allow, meaning the disruption may prove temporary. However, questions remain over the long term regarding the extent to which consumers will continue to travel and work in the Middle East, given the evolving risks of escalation.