A deal between British Airways and its striking pilots “is there to be done”, Willie Walsh, chief executive of International Consolidated Airlines Group SA (CDI) (IAG), has claimed as he failed to back the airline’s boss over his handling of the dispute. Negotiations with the main union for BA pilots are being led by Alex Cruz, 53, the embattled chief executive of the airline, rather than Mr Walsh, boss of the parent company. Mr Walsh conceded yesterday that there had been failings on both sides in the talks and that he had sympathy with some of the issues raised by pilots. Asked if Mr Cruz, an engineer by training, still had his backing, Mr Walsh said: “Alex is the chief executive. He is the boss. He has the responsibility to manage these issues.”
Regulators must ensure that Heathrow passengers do not end up paying for a third runway that is “unlikely to ever actually be built”, Willie Walsh, chief executive of International Consolidated Airlines Group SA (CDI) (IAG), has said. Mr Walsh says the Civil Aviation Authority needs to be much tougher with Heathrow, which he fears will try to pass on the cost of drawing up plans and building the runway through higher landing charges. Heathrow has insisted that this will not be the case.
Hargreaves Lansdown (HL.), Britain’s biggest investment platform, has shrugged off the furore caused by the Woodford affair and warned that Brexit and the trade war between America and China are knocking investor confidence. They made no mention of the Woodford controversy in a trading update yesterday, which showed the business attracted a net 35,000 new clients between the start of July and the end of September, taking its total to 1.26 million active customers. While Hargreaves faced questions from investors about the debacle at the group’s annual shareholder meeting in Bristol yesterday, City analysts were more concerned by signs that the investment platform’s growth was faltering, a slowdown the company blamed on Brexit and global trade tensions.
Sensyne Health (SENS) is facing renewed questions over undisclosed executive bonuses worth £1 million after it emerged that they were proposed by the company’s chairman, who is not independent. The company has come under scrutiny after it revealed a week ago that it had paid post-flotation bonuses of £850,000 to Lord Drayson, 59, the founder and chief executive, and £200,000 to Lorrie Headley, the chief financial officer, in December without informing Peel Hunt, its nominated adviser, and its investors. Sensyne paid the bonuses despite Peel Hunt having warned that shareholders were unlikely to react favourably to the payments. Peel Hunt discovered the bonuses had been paid as part of preparations for Sensyne’s annual report and advised that they should have been disclosed ten months previously.
Ministers have been accused of failing to “properly defend” Britain’s economic interests as Scotch whisky producers brace for crippling American tariffs in a week’s time. Industry leaders claim that Boris Johnson’s government is “clearly preoccupied with Brexit” while dozens of distilleries face “a very real threat to growth, investment and jobs”. The Scotch Whisky Association said a duty of 25% on single-malt whisky could be an “existential” threat to its members. The World Trade Organisation permitted the United States to impose levies on goods from the European Union worth up to $7.5 billion as a result of the bloc’s illegal support for Airbus, in the long-running battle over subsidies between the aviation company and Boeing, its American rival. The Trump administration will impose tariffs on European products including Scotch, olives, cheese, wine and sweaters next Friday.
Dunelm Group (DNLM), Britain’s biggest homeware and soft furnishings retailer, has warned that a weakening pound will weigh on its profit margins as material costs rise. They reported a 7.5% year-on-year rise in sales to £262.6 million for the three months to the end of last month, but said trading had been mixed due to a “softer homeware market”. Traders and analysts noted that Dunelm is particularly exposed to falls in sterling because this drives up the cost of raw material imports. The pound has fallen about 17% since the Brexit referendum in 2016, touching a three-year low last month.
Brown (N.) Group (BWNG), the online fashion retailer behind Jacamo and Simply Be reported a return to profit in the first half of the year as it shut all of its shops to focus on online sales. The group posted a 169% jump in profit to £31.8 million for the six months to the end of August, compared with a loss of £27.1 million the year before. Sales dropped 5.4% to £432.9 million but N Brown said online revenue now accounts for 84% of its business, up from 80% in the previous financial year. Analysts at Peel Hunt advised investors to buy the shares, adding: “The group is market leader in its space, benefiting from a strong niche and largely digital business model.” Jefferies said: “The sales drag should continue, but there are some encouraging signs to watch.”
The former chief executive of Thomas Cook Group (TCG) and some of his boardroom colleagues will appear before a committee of MPs next week to face a grilling on the collapse of the 178-year-old travel group under the weight of its debts. Peter Fankhauser, along with the chairman, Frank Meysman, and the heads of the audit and remuneration committees, will be questioned by the business, energy and industrial strategy committee on why the £1.1 billion rescue plan failed. At future sessions, PWC and EY, Thomas Cook’s auditors, will give evidence and the former chief executives Harriet Green and Manny Fontenla-Novoa have also been called. Assuming they appear, the latter are expected to face questions over whether their actions weakened the company.
Falling prices and rising costs helped to reduce profits at Mondi (MNDI) by 18% in the third quarter, the company said in a trading statement. The company recorded earnings before interest, tax, depreciation and amortisation of €383 million, down from €466 million in the same period last year. Mondi estimates that planned mill closures during the three months from June 30 to September 30 hit underlying profits by about €40 million, up €10 million on the year. The group maintained its estimate that mill maintenance shutdowns would affect underlying profits by about €150 million over the full year. The company put the fall in underlying profits down to weaker demand and lower prices for important paper grades compared with the first half.
Low & Bonar (LWB) has warned that there is a “significant risk” it will be unable to meet its financial agreements if they are tested in May as the troubled materials producer battles tough trading conditions. The company said it is talking to lenders as it attempts to move forward with plans for a £107 million takeover by FV Beteiligungs-GmbH, a German business. Lenders have agreed to waive financial deals due next month to help Low & Bonar overcome challenging trading, a deteriorating market outlook and less flexibility in managing supplier credit terms. It will have to endure a covenant test on May 31, 2020, if the German deal falls through. “There is a significant risk that should the financial covenants be tested, the company would not be able to comply,” it said in a statement.
Aston Martin Holdings (AML) shares fell to a fresh low of 422¾p as JP Morgan Cazenove, the house broker and one of the banks that helped to bring it to market, flagged further liquidity concerns. Analysts think bosses will be forced to raise more money as the company burns through cash in its attempts to build a new supercar every year up until 2023. “We forecast negative free cashflow to equity between the second half of 2019 and 2021 and continued cash burn could raise the need for additional capital,” JP Morgan Cazenove said. Piling more pressure on finances was the “weak demand outlook”, the analysts said, with Aston Martin having recently cut forecasts for how many cars it expects to sell this year. Bosses now reckon the firm will shift between 6,300 and 6,500 vehicles this year, but JP Morgan has pencilled in sales of about 6,000. They urge the board to “revise the business plan” and host a capital markets day to “re-engage equity investors” who have seen the value of their investment plunge by three quarters since last October’s float.
Inchcape (INCH), was among the mid-cap risers, up 8p to 614p after agreeing to sell its fleet business to Toyota for £100 million. The division leased fleets of Toyotas to UK companies, but bosses are focused on the distribution arm instead, which imports and sells cars into markets that the manufacturers see no economic reason for being in and accounts for 90 per cent of trading profits.
Tempus – Wizz Air Holdings (WIZZ): Hold. Rapidly growing, efficient on costs, but shares not a bargain in the uncertain market environment
Tempus – Hargreaves Lansdown (HL.): Buy. Dominant market position, customer-friendly
