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Airlines in China banned from European carbon scheme

Monday, February 6th, 2012

The European Union and China are heading for a tussle over the Emissions Trading Scheme as China bans all of its airlines from taking part. Carriers will also not be allowed to add any new charges in relation to the carbon competing scheme or bump up fares.

The scheme came into play at the beginning of January. At the time the China Air Transport Authority said that its members did not support the initiative. China is worried that having to pay the tax in Europe will mean its airlines having to come up with an extra 95 million euros per year.

The ETS has been widely criticised by countries around the planet including Russia, India, the US and Canada. The scheme applies to every airline which flies in or out of Europe, and some are complaining that the charges are contrary to international trade agreements. The EU has told those airlines that do not comply that they face fines or a ban from European airspace.

If Europe does try to prevent Chinese carriers from landing at European airports there could be some serious reprisals. At a time when airlines are already being hammered by the high cost of jet fuel, a tenuous travel industry and a weak economy, most carriers are unlikely to leap at the chance of hurting their profits further.

Some analysts predict that the situation with ETS will end up with an international body such as the World Trade Organisation.

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Unnamed buyer found for bmibaby

Friday, February 3rd, 2012

A deal has reportedly been struck between Lufthansa and an unidentified company based in the UK for bmibaby, the budget offshoot of BMI. The Castle Donington based airline has not revealed any financial details, but has said that the transaction could be finalised before the end of the quarter. However, the deal is not exclusive which means that other parties could still become involved in the auction.

BMI said that the sale of bmibaby would involve 100 per cent of the airline. The carrier added that the buyer has said that it intends to keep staff on at Belfast City, Birmingham and East Midlands airports and wants to develop the company to provide low cost fares across Europe.

BMI said that bmibaby would continue operating under the banner for the time being and that it was pleasing that the business will continue as an independent carrier. Bmibaby currently operates two Boeing 737-500s and 12 Boeing 737-300s. Figures published by Credit Suisse show that the airline made a 120 million euro loss last year.

Last month, Germany’s Intro Aviation said that it might be interested in making an offer for bmibaby. Although it is not the company currently involved in the deal with Lufthansa and BMI, a spokeswoman for the firm said that she could not comment on whether it was still interested or not.

Last December, Lufthansa agreed to sell BMI to British Airways owner International Airlines Group in a deal worth £172.5 million.

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Price of hotel rooms rises for Olympics

Thursday, February 2nd, 2012

The cost of securing a hotel room in London for the Olympics is continuing to rise at the risk of putting visitors to the capital off over the summer months. Many hotels seem to be waiting until the last minute to give rooms to tour operators in the hope that they make more money out of later bookings, said VisitBritain’s Sandie Dawe.

However, the situation changed recently after the Olympic organising committee gave back 120,000 bed nights it had originally booked but now no longer needs. VisitBritain said that it expected around the same number of visitors who came to the capital from abroad as last year, although the tourism body did admit that some may be put off by the Games.

When Sydney and Athens hosted the Olympics in 2000 and 2004, many visitors stayed away from the cities. Tourism minister John Penrose said that visitors from at home and abroad who are not particularly interested in sport tended to avoid any country which is hosting an Olympic tournament.

The apparent rise of costs in London is also deterring potential visitors according to the European Tour Operators’ Association. Chief executive Tom Jenkins said that there could potentially be damage to the economy in London if travellers are scared off by the high price of hotel rooms.

David Leslie from VisitBritain admitted that some establishments appear to have hiked their prices, but that most were charging what they usually would at peak times.

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Sir Stelios attacks easyJet bonuses

Wednesday, February 1st, 2012

The founder of the low cost airline easyJet has slammed the company’s top executives for the size of their bonus. Sir Stelios Haji-Ioannou has proposed that a pay deal is stopped at next month’s AGM. However, if shareholders agree to the idea then there is the possibility that the carrier’s board will walk out en masse.

Sir Stelios said that he was more than happy to accept the board’s resignation adding that he was sure that it would not be difficult to find a group of more capable and less expensive people to replace them.

The easyJet directors stand to share around £8 million if targets are met over the next three years. Sir Stelios said that something had to be done about the people at the top who were using the firm as a piggy bank which they felt they could dip into at any point. He added that a decade which saw £180 million worth of shares issued for free now had to come to an end.

Sir Stelios and his family currently own 38 per cent of the airline. He founded the company in 1995, but stepped down from the board of directors in 2010 after a disagreement over strategy. He is currently at odds with the airline over its spending strategy and a decision to order more aircraft from European planemaker Airbus.

In her first full year as chief executive of easyJet, Carolyn McCall took home £1.5 million. £840,000 of this was in the form of bonuses.

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Thomas Cook holiday bookings down

Tuesday, January 24th, 2012

Troubled travel company Thomas Cook has confirmed that bookings for summer holidays in the first two weeks of January have dropped by 33 per cent. Although this is seen as an important time for tour operators, the firm is denying that the fall is solely to do with dented consumer confidence following last years refinancing.

Thomas Cook claims that the drop in bookings is because it is attempting to cut costs by reducing capacity. Rival operator TUI, which owns Thomson Holidays, has reportedly seen an 11 per cent fall over the same two weeks.

In a statement issued by Thomas Cook, the company said the last time it reported on booking figures in the UK was in December, adding that the results suggested that going into January the operator’s order book was ahead of the market. However, because of weaker consumer sentiment, the company also announced that it would be slimming capacity by 8 per cent.

This apparently meant that a drop in the number of holidays being booked was to be expected as margins were to become the focus, not volume. Thomas Cook pointed out that the latest UK figures did not reflect performance in overseas sales or its specialist arms.

Shares in the company lost around 75 per cent of their value in November 2011 after it was announced that extra financing needed to be secured from the banks. Thomas Cook said that it had faced a number of problems including the flooding of large areas of Thailand and unrest in North Africa.

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MPs call for ban on car accident referral fees

Thursday, January 12th, 2012

Parliament is asking for tighter controls on personal injury claims as a way to keep the price of car insurance down. According to the Transport Select Committee, insurers should be prohibited from selling third parties any information on claimants, and those who say that they have suffered a whiplash injury during an accident should be made to prove it.

According to chair of the Committee, Louise Ellman, solicitors, claims management firms and insurers are responsible for pushing the price of insurance up because they encourage those who have been involved in an accident on the roads to claim for legal costs related to car rental and personal injury.

She has called for measures to be introduced that will prohibit practices which increase premiums such as handing over drivers’ data to others, and receiving fees for referrals from garages, vehicle rental firms and solicitors.

In the last six years, casualties from accidents on the roads have dropped by almost a quarter, according to the Committee, but motor insurance claims have risen by around 70 per cent. Of these, the vast majority are to do with whiplash, a problem which is subjective.

Ellman has asked for claims of this kind to become more objective. Before any compensation is paid out, she would like to see proof that an accident has actually had a significant effect on the life of the claimant. The Association of British Insurers supports the argument, and said there should be a blanket ban on all referral fees.

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Flybe share value drops on weak sales

Wednesday, January 11th, 2012

A warning that it is unlikely to achieve revenue targets this year has sent shares in Flybe plummeting by 20 per cent. The Exeter-based airline has blamed a slump in demand from passengers in the UK. The carrier said that sales in December had been particularly slow and that the last three months of 2011 had seen sales drop by around eight per cent on the same three months in 2010.

The company said that revenues were unlikely to improve in the short-term as the domestic market in the UK continues to deteriorate. The airline’s boss, Jim French, said it was important for Flybe to concentrate on growing its share of the market and maintaining passenger volumes before attempting to increase yields.

The airline believes that it is in a good position to take advantage of the predicted rationalisation of the short-haul business in Europe. The slowdown in ticket sales saw Flybe announce a second profit warning in October last year. Since January 2011, the company has seen around 80 per cent wiped from the value of its stock.

Analysts believe that Flybe is likely to continue to suffer from a downturn in sales as consumers struggle with the current economic problems affecting the UK and much of Europe.

Douglas McNeill, Charles Stanley’s airline analyst, said that although the company was working well, and managing to keep costs to a minimum, it is suffering because passengers are shying away from airline travel or looking for cheaper tickets. He added that a swift recovery was unlikely.

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Job losses in Dover as SeaFrance liquidated

Tuesday, January 10th, 2012

Following the suspension of services last November, SeaFrance has now been told by a French court that it is to be liquidated. The decision by the Tribunal de Commerce is likely to result in hundreds of French workers losing their jobs and will mean the loss of 127 positions in Dover.

The cessation of activity comes after the European Union declared that an offer of a bailout by the French authorities would be contrary to current legislation. The court has also denied a request by workers that a cooperative take over the running of the firm.

Eurotunnel has said that it is considering putting in a future bid for SeaFrance, but Dover and Deal MP Charlie Elphicke has said that he is worried that an offer to buy the company will be made so that Eurotunnel can scrap the ferries in order to cut capacity across the English Channel.

Eurotunnel said that it would be looking closely at the value of SeaFrance’s assets before deciding on whether to make an offer. A spokesperson for the French firm said that every effort had been made to find a financially viable solution to the problem. She added that it was a sad day, and that everybody who already had a booking for travel would be able to claim back a refund.

SeaFrance operated three ferries to Calais from Dover and was responsible for transporting some 3.5 million passengers annually.

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2011 record year for Rolls Royce sales

Monday, January 9th, 2012

Rolls-Royce has said that 2011 was a record year for sales reporting that it managed to sell 3,538 units, an increase of 31 per cent. The figures, which build on last year’s 150 per cent increase, are mainly due to the success of the Ghost model. The car is cheaper than the more ostentations Phantom models which retail at around £235,000. The Ghost costs £165,000 and has been particularly popular with wealthy younger professionals and women.

Bentley also had a good year in 2011, selling 7,003 cars. This is a 37 per cent increase and means that the Volkswagen marque has returned to sales levels not seen since before the global downturn.

Rolls-Royce said that last years figures beat the company’s previous record which was set in 1978 when 3,347 cars were sold. At this time Rolls-Royce and Bentley were being built by the same firm but split a decade ago after Volkswagen took control. Rolls-Royce is now managed by BMW.

According to Torsten Muller-Otvos, chief executive of Rolls-Royce, the company’s success is down to its ability to deliver more subtlety in its design at a time when consumers are looking to appear less ostentatious. Mr Muller-Otvos said the firm was increasingly moving towards more substance and less bling.

Rolls-Royce said that China and the US remained its most important markets, although it is still to release sales figures for the regions. In The Middle East sales rose by 23 per cent, in the Asia Pacific the figure was up by 47 per cent. In the UK, sales increased by 30 per cent.

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Thomas Cook announces board departures

Friday, January 6th, 2012

Thomas Cook’s boardroom is to be radically revamped as three of its non-executive directors announce their departures. Stena Line’s former chief executive Bo Lerenius is due to announce his retirement when the company meets for its annual general meeting next month. Mr Lerenius last year stepped down as chairman of Mouchel after the firm issued profit warnings.

Joining Mr Lerenius will be Peter Middleton, who is a former CEO of Thomas Cook, and David Allvey. In a statement, Frank Meysman, the travel group’s chairman, said the move would allow him to push forward with redevelopment plans and give him more flexibility in the boardroom.

He added that he wished those who were departing luck for the future and thanked them for all they had done during an extremely difficult period. Interim chief executive Sam Weihagen is looking at selling off some parts of the business as part of a far reaching strategic review. He took over from former CEO Manny Fontenla-Novoa in August who left the group after several profit warnings had been issued.

Thomas Cook is looking to wipe £500 million from its debt of £891 million. At the end of last year, the company announced plans to close 200 of its outlets and cut as many as 1,000 jobs in the UK. The firm said it wants to make savings of around £110 every year and also said it will be reducing its fleet of planes from 41 to 35.

In the last financial year Thomas Cook was forced to publish losses of £398 million, and announce a cash shortfall of £100 million.

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