Archive for the ‘Finance and Business’ Category
Thursday, December 23rd, 2010
One of the world’s largest car makers has been fined in the US because of the way it has handled the recall of faulty vehicles. Toyota was earlier this week told it must pay a $32.4 million fine to the US authorities for two cases in which it did not adhere to US regulations. The announcement was made by the US transportation secretary, Roy LaHood, on Monday and the carmaker has since agreed.
One of the fines has been imposed because the manufacturer was forced to recall close to 5 million cars due to a problem with accelerator pedals jamming against floor mats. The result of which was a slew of complaints from drivers that their vehicles were unexpectedly accelerating.
In 2007, Toyota recalled around 55,000 vehicles to replace the floor mats. However, two years later, one of its Lexus models was involved in a fatal crash due to a faulty mat.
This led to the mass recall and further investigations by the National Highway Transportation Safety Authority. It found that simply removing the mat was insufficient and the accelerator needed to be redesigned. The NHTSA said Toyota had held back on reporting a safety defect it knew could cause a serious problem.
Toyota was further embarrassed when it claimed a defect with steering in some of its vehicles only applied to those being sold in Japan. The company later admitted that a number of models in the US could also suffer from the problem. The admission resulted in the recall of just under a million vehicles.
Tags: car makers, drivers, japan, Lexus, NHTSA, Toyota
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Thursday, December 2nd, 2010
The US Justice Department is to collect US$48 million in fines from the cargo arm of Singapore Airlines after the carrier agreed to a plea offer. Singapore Airlines Cargo is the latest in a long list of worldwide carriers to be charged with involvement in illegal price fixing.
The fact that Singapore has announced that it will be paying the fine in the US could have ramifications on the other side of the Atlantic where it is appealing against a €74.8 million fine for the same offence. If European regulators take the airline’s plea deal as an admission of guilt, it is unlikely they will uphold the appeal.
Singapore Airlines said in a statement that it was cooperating fully with the authorities in the US and their ongoing investigations into a global price fixing cartel. The national carrier added that it had settled on paying the fine after looking at a number of options and after talks with lawyers.
Joining Singapore under the scrutiny of European investigators are airlines including Air France-KLM, Cathay Pacific and SAS Cargo. Analysts have reported that the US fine will not damage Singapore’s bottom line significantly and the airline has set aside money from the current financial year to deal with the issue.
So far, investigations into price fixing in the US have netted a total of US$1.7 billion in fines. Korean Air and British Airways apparently agreed criminal fines of US$300 million each in 2007. Air France-KLM has agreed to pay civil penalties of US$87 million and China Airlines has settled for US$40 million.
Tags: Air France-KLM, British Airways, cathay pacific, China Airlines, Korean Air, price fixing, SAS Cargo, Singapore Airlines
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Thursday, November 25th, 2010
Chief Executive Willie Walsh of British Airways announced plans to raise the number of flights to five round-trips a week between Tokyo’s Haneda airport and London when the new route is launched next February. Talking to Kyodo News, Walsh confirmed daily services between London and Haneda will be established in due time. In October, Haneda resumed full-fledged international operations.
Customers will therefore be able to choose their airport of convenience, as British Airways is to keep its services to Tokyo’s Narita airport, located about 60 kilometres of the city centre.
At the same time, Japan Airlines, also a member of the oneworld aviation alliance will be supported by British Airways as it rebuilds itself. However, British Airways will not play a role in the Japanese carrier’s bid to raise capital with contributions from private institutions.
The ailing airline has already secured a 350 billion yen investment from the government-backed Enterprise Turnaround Initiative Corp. of Japan. They are looking for an additional 50 billion yen from private institutions.
There is also a plan by Japanese air carrier Skymark Airlines to begin low-cost international services between Tokyo and London in fiscal 2014, but it has been met with scepticism. However Walsh has stated that British Airways welcomes the airline’s efforts and isn’t afraid of competition.
Tags: British Airways, Haneda, Japan Airlines, Narita, oneworld aviation alliance, Skymark Airlines, willie walsh
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Thursday, November 18th, 2010
European airline giant Air France-KLM has declared its second straight quarter of profit. For the three months ending 30 September, the carrier published a €290 million net profit. This figure exceeds analyst’s expectations of a €248 million announcement. Paul Butler, an analyst at Macquarie Research, London, said the results were excellent and has rated the airline to outperform.
Air France-KLM chief executive, Pierre-Henri Gourgeon, said the airline was planning to add up to five new routes to Asia, specifically concentrating on the expanding Chinese market. He also promised a similar amount of new routes to the Middle East and Africa. The airline is also looking to expand in the Americas and would like to find partners for the SkyTeam alliance in Brazil and India.
In an interview the chief executive said by next summer the airline’s capacity would grow by around seven per cent. This growth will be helped by the addition of more A380 superjumbos to the fleet. He added that additional seats would help the airline return to the capacity it was offering before the economic downturn.
Rival European airlines have also announced a return to form. British Airways has managed to turn around two years of loss and Deutsche Lufthansa says it has tripled its net income for the last quarter. Air France-KLM’s US partner in the SkyTeam alliance, Delta, is also back into profit.
However, the International Air Transport Association is warning that although earnings for airlines will hit $8.9 billion this year, there will be a drop to $5.3 billion next year.
Tags: A380, Air France-KLM, airline, British Airways, Delta, Lufthansa, SkyTeam, superjumbo
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Wednesday, November 17th, 2010
Loss-making Spanish airline Spanair has confirmed that it is seeking investment from one or more of its partners in the Star Alliance in return for a stake in the Barcelona based carrier. The airline recently angered other European budget competitors after it received investment from the regional government of Catalonia.
Last month, Spanair received €10 million from a company controlled by the Catalonian government. This month, the airline received a similar injection of €20 million from another company also run by the government. According to the European Low Fares Airline Association such payments are a breach of competition regulations as well as the rules surrounding the donation of government aid.
The association has asked the European Commission to launch an investigation into the subsidies. Spanair is expected to announce a loss of €10 million for the second half of this year. For the same period a year earlier it announced losses of €60 million. So far, the airline and the Catalonian government have not commented on the illegal investment allegations.
Last Year, Scandinavian giant SAS sold Spanair to Catalan investment groups for €1. The regional government holds a 28 per cent stake and SAS retained 11.9 per cent of the carrier. According to a spokesman for Spanair, the airline is unlikely to declare a profit before 2012. Among the Star Alliance members being approached for investment are US carrier Continental Airlines, Singapore Airlines, Turkish Airlines, German giant Deutsche Lufthansa and Columbian based Avianca.
Spanair currently flies to 18 domestic destinations and 59 international airports.
Tags: airline, Avianca., Continental Airlines, Deutsche Lufthansa, Singapore Airlines, Spanair, Star Alliance, Turkish Airlines
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Tuesday, November 2nd, 2010
Tour operator Thomas Cook has come under fire from representatives of European hotels for announcing it will be reducing invoices for August and September by five per cent. The group claims it is necessary to make a reduction on payments because it has been a difficult year for the industry in the UK.
The Spanish Confederation of Hotels and Tourism said it has complained to the competition authorities and is looking into the possibility of legal action. It added that it will concentrate on getting the money back and pointed out that if Thomas Cook was allowed to break its contracts a dangerous precedent would be set
European trade body Hotrec has also condemned Thomas Cook for breach of contract with its hotel partners. As well as being unfair, Hotrec has accused the travel agent of bullying hoteliers into reducing their invoices by threatening to remove future business.
Thomas Cook is saying that even though business in the UK has been affected by factors such as the World Cup, the volcanic ash cloud, a general election and spending cuts; it has still been able to deliver good capacity to popular resorts in countries such as Spain and Portugal. It added that to do this it need to reduce package prices and that it was now looking for support for those reduced prices through a small reduction in invoices.
Thomas Cook went on to point out that many of the hoteliers it had already been in contact with had been extremely cooperative.
Tags: ash cloud, hoteliers, hotels, hotrec, legal action, thomas cook, World Cup
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Monday, November 1st, 2010
British Airways is back in profit for the first time in two years. The announcement comes as the final preparations for a merger with Spanish carrier Iberia are put into place. The deal is expected to be finalised on 21 January. According to an official release by BA, the British flag carrier exceeded analyst’s expectations by making a six month profit of £158 million.
Revenue was also up to £4.4 billion over the period. An increase in cargo of 39 per cent helped an overall revenue increase of 8.4 per cent. It was during the second half of the period when performance was particularly strong. BA has been having continued trouble with its cabin crew who have walked out for a total of 15 days of strikes this year. In April, revenue was also damaged when the Icelandic ash cloud grounded aircraft across Europe.
In the three months ending in September, BA reportedly made £322 in pre-tax profit. This is an exceptional turnaround for an airline which only a year earlier had to declare a £292 million half-year loss.
Willie Walsh, BA’s chief executive, has also made an attack on Air Passenger Duty. The tax change will come into affect next week and has been drawing flack from all sides. The government claims it will be an environmental tax. BA pointed out it already meets its carbon costs and Virgin Atlantic said the new tax was likely to mean many families will find it hard to afford a holiday.
EasyJet said there was no relationship between carbon emissions and the level of Air Passenger Duty.
Tags: air passenger duty, BA, British Airways, easyjet, holiday, IAG, Iberia, profit, Virgin, willie walsh
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Friday, October 22nd, 2010
The world’s largest manufacturer of cars, Toyota, has issued a recall for vehicles it suspects may have problems with brakes and starter motors. In the last year, Toyota has had to recall around 10 million vehicles around the globe because of a variety of problems.
In the UK the Department for Transport is helping to locate the owners of 17,500 faulty Lexus vehicles, and will be giving advice to owners on how to fix the problem.
One of the problems is a fault in the fuel pump. This could cause the vehicles’ engine to stop suddenly. The other fault is in the braking system. Toyota claims it is extremely unlikely that a leakage of brake fluid would occur, but if it does, it could result in a loss of braking power. The manufacturer said that in the event a warning light would illuminate and the driver would still have 200 miles worth of safe driving.
Toyota is not a stranger to recall issues. In 2008 it was hit with a class action claiming faulty accelerators were the cause of around 100 road deaths in the US. An independent study found that rather than sticky peddles, human error may have been to blame.
IHS Global Insight automotive analyst, Paul Newton, points out that recalls are not exactly rare in the car industry. He said that Toyota was suffering bad press because it did not treat initial complaints seriously enough. Now, every recall Toyota announces grabs the publics’ attention, even though other car makers are probably issuing similar recalls, he added.
Tags: brake, Department for Transport, engine, Lexus, recall, Toyota
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Wednesday, October 13th, 2010
Emirates, the Dubai based airline giant, is continuing to put pressure on European rivals as it announces the only restriction on the amount of Airbus A380 super jumbos it can order, is the limited space in which to park them. The airline upped its order for the Airbus goliath in June to 90 aircraft.
Tim Clarke, Emirates’ president said he was keen to order more A380’s, but was aware that available space was limited. Talking from his office in the airline’s hub, Clarke added that the initial plan was to buy 120 aircraft, but space issues meant a compromise of 90 was agreed. He was quick to add that when additional space becomes available at Dubai, he would be ordering more.
Despite recent financial problems experienced by some of Dubai’s government run operations, Emirates has continued to grow at an astonishing rate. According to Clarke, the airline adds 20 per cent to the number of passengers it serves every year. He added that he forecast this would continue for at least the next half-decade.
If Clarke goes through with his plans to order an additional 30 planes, Emirates will have by far the largest fleet of A320’s in the world and would be Airbus’ biggest customer. Analysts say this would give Emirates a significant position in Europe where the manufacturer is based.
The rapid expansion of Middle Eastern airlines is worrying European and US carriers who believe traffic could start to be drawn away from them. European airlines have accused Emirates of having its fuel bills subsidised. Clarke consistently denies this saying if the accusation is proven, he will pack up his desk.
Tags: A380, airline. Airbus, boeing, Dubai, Emirates, subsidies
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Wednesday, September 15th, 2010
Increasing levels of corporate and leisure travel means that hotel room rates around the world are beginning to climb again after dropping to all-time lows during the global recession. Hotels.com, a website based in Dallas, has issued a report showing the first year-on-year gain since the end of 2007.
Big names in the hotel business including Marriott International and Starwood Hotels & Resorts are reporting an increase in demand and higher earnings, especially at properties in the cities.
According to Hotels.com the price of a room in Reno, Nevada has risen by around 16 percent. The second sharpest rise is in New York where prices are up by 14 per cent this quarter; an average room now costs $224, according to the website.
Vice president of marketing for Hotels.com in North America, Victor Owens, said the biggest surprise was just how quickly bookings and group meetings were increasing. He added that he hoped pricing had finally bottomed out and went on to say that in cities like New Orleans, Las Vegas and New York meeting planners were coming back, which is a good sign.
When the global economic recession hit, the worst affected places in the US, in terms of declining demand for lodging, were Ohio, Toledo, Virginia and Norfolk where rates dropped as much as 17 per cent. According to Hotels.com rates in Europe are also on the rise. Both Oslo and London are up by around 14 per cent and hotels on the island of Capri, off Italy, are now the most expensive in the region. An average room costs $267, according to the report.
Tags: Capri, hotels, Hotels.com, Marriott, meetings, recession, room rates, Starwood Hotels
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