The week ahead: Airlines to come through the storm, but banks need a boost

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The Independent Online

After the recent bombings in London, investors in airline stocks will get their first update on trading conditions this week, with British Airways and Ryanair releasing results and easyJet reporting on traffic data.

Investors will be on the lookout for any comments from management that forward bookings have fallen as tourists shy away from the UK.

Airlines suffered huge losses after the 9/11 attacks on New York, but the effect of the London bombings appears to have been more muted. Share prices have quickly recovered after dropping steeply on the day of the 7 July bombings.

BA, the largest UK carrier, will release its first-quarter results on Friday in what will be one of chief executive Rod Eddington's last official duties.

Mr Eddington, who is leaving the airline on 30 September, has overseen a transformation in its fortunes through an aggressive cost-cutting programme in which more than 13,000 jobs have been axed over the past four years.

While analysts are now looking for an update on further rounds of cuts, one area where costs are bound to rise is fuel. BA has already warned that the rising oil price will increase its fuel bill by £450m this financial year. It has tried to partly offset this by a recent rise in its fuel surcharge.

At the budget end of the market, easyJet will update the market on its monthly traffic statistics for July. There is some concern that the bombings could have an impact on bookings, although analysts expect underlying conditions to remain strong. Its Dublin-based rival Ryanair, will release quarterly results on Tuesday, with analysts expecting profits to rise by around 14 per cent.

Away from the airline sector, much attention will be on the Bank of England, as it announces its latest interest rate decision on Thursday. Last month, the Bank's Monetary Policy Committee voted five-to-four to keep rates on hold, although most economists now expect a cut of 0.25 per cent. If this happens, it is likely to be due to concerns over retail spending and the weak performance of the manufacturing sector.

The banking sector will be watching the decision by the MPC with some interest as a reduction in rates could lessen the impact of bad debts held by individual customers. HSBC will release its first-half results on Monday. In late May, it said its first-quarter earnings were in line with expectations but warned of worsening consumer credit quality in the UK. Invest- ors will be looking for any sign that conditions have got worse.

Barclays will announce its interim results on Friday and analysts expect the strength of its Barclays Capital business to be offset by the weaker performance of its retail arm.

Alliance & Leicester reports on Tuesday, with the market concerned by its lack of earnings growth, and HBOS steps up the following day. Its outlook is likely to be brightened by any cut in rates, as it is the UK's largest mortgage bank.

Royal Bank of Scotland (RBS) will announce its interims on Thursday and investors fear a warning that bad debts have deteriorated. But analysts expect the group's results to receive a boost from business banking in the UK and US.

Down in the ground but with sights set high, Rio Tinto's inter- ims on Wednesday are expected to reveal strong performances from its aluminium and copper divisions. And on Thursday, the interims of mining giant Anglo American should get a boost from copper, nickel and zinc.

Another company whose prospects are expected to be bright is BSkyB, which releases its fourth-quarter results on Wednesday. Margins and revenues at the broadcaster should improve, with the City interested in how many subscribers it added over the last quarter. There was concern earlier this year following a rise in the amount of customers leaving the satellite service.

The stakes, however, are much higher at Marconi, whose first-quarter results are due the same day. After missing out on any work in BT's £10bn 21st Century Network project, the telecoms supplier's future has been in grave doubt. The market will be looking for any signals that its Chinese partner, Huawei, may deepen its ties with Marconi.

A day later, consumer goods giant Unilever is expected to report a fall in second-quarter profits due, in part, to a higher tax charge.