Good morning. This is your captain speaking and welcome to this Virgin Atlantic flight from Heathrow to New York. Yes, it is quiet, isn't it? That's because the engines haven't been switched on yet. We'll only need them when we get to the actual runway, so for now we're being towed. In the meantime, sit back and enjoy the complimentary champagne. We've already taken the bottles off board to save weight so if you wanted some more, too bad. You probably didn't notice, but even the paint on the outside of the aircraft is lighter. The same goes for the cargo bins. And the oxygen bottles. I could go on, but I won't. One last thing, ladies and gentlemen. Please remain in your seats and keep your seat belts fastened for the duration of the flight. We will be starting our descent into JFK a little earlier than usual. Just past Greenland, in fact. It's called Continuous Descent Approach. I won't bore you with the details but take it from me, it saves fuel. Well, we're all green now, aren't we? Even airlines.
Welcome to "sustainable aviation", Branson-style. It may sound like an oxymoron. Or as specious as "Beyond Petroleum". But it is a sign of the times that the airline industry has begun to take carbon emissions seriously - and, more particularly, the threat of a backlash from consumers and regulators. Ryanair's Michael O'Leary says the answer to global warming is to shoot the world's cow population on the grounds that they emit more CO2 than the aviation industry ever will. British Airways and easyJet prefer the idea of bringing aviation into some form of carbon trading system which rewards eco-friendly airlines and penalises the rest. But even this will only slow the rise in carbon emissions from aircraft, not reverse it.
The Virgin chairman thinks he has come up with some ideas that will actually cut carbon emissions from aviation. In fact, implemented worldwide he reckons his ideas could reduce them by about a quarter within two years. Like the Branson pledge last week to invest $3bn on renewable energy initiatives, it takes a small leap of faith and imagination to get to the big number. It includes, for instance, a single European-wide air traffic control system to optimise the routing of aircraft and thereby improve their environmental performance.
Like last week's initiative, the Virgin chairman is motivated as much by business self-interest as concern for the planet. For the pressure on the airline industry to do less damage to the environment can only increase. Chris Huhne, the Liberal Democrats' environment spokesman, made the case again last night for a new levy on flights on the grounds that Britain's entire carbon allowance would be used up by aviation if air travel continued to grow at current rates. Ken Livingstone suggested it should be £15 a ticket. Ultimately, airline passengers will be condemned as carbon criminals and priced out of the sky unless the industry responds with a blend of better technology and improved operating practices. Alternatively, Sir Richard could simply tell people to fly less. That would be radical.
Kazakhmys: caution outside investors
Vladimir Kim, the executive chairman of the FTSE 100 copper miner Kazakhmys, may well have Joseph Stalin to thank for his good fortune. For reasons lost in the mists of time, the dictator was fond of deporting ethnic Koreans from the Soviet far east to the wilds of Kazakhstan and Mr Kim's forebears could easily have been among them.
When the Soviet Union broke up 15 years ago, it was Mr Kim's luck to be in charge of the then republic's copper industry. Today, he is sitting on 47 per cent of a company worth £5.4bn having just bought another lump of stock from his chief executive, Cha Yong Keu, who is selling up most of his shares and returning to Korea $1bn richer. So rich is Mr Kim that he felt able to gift £135m worth of his shareholding to one of his lieutenants in Kazakhstan.
Since Kazakhmys floated in London last October, it has virtually doubled in value and outside shareholders have gone along for the ride.
It may be a fabulous business. But with all of its assets so far away and just a brass plate in Victoria to testify to its presence in London, it is quite hard to say. What we do know is that the company's lock-up rules had to be waived in order for yesterday's share dealings to take place. We also know that nearly half the company is in the hands of one man whom the London market did not know from Adam a year ago and who has now assumed the combined role of chairman and chief executive, which is a breach of corporate governance rules. The company has two independent directors but one of them, the former diplomat Lord Renwick, works for the bank that advises Kazakhmys. All in all, not a copper-bottomed guarantee that things won't go wrong.
Climb on board Aer Lingus
Aer Lingus and Hogg Robinson operate in the same market in the widest of senses. The fact that the Irish airline got its IPO safely away yesterday, while the business-travel group pulled its a day earlier, just goes to show that you can still float companies in these markets if they are correctly priced. Admittedly, abandoning the Aer Lingus offer would have been a good deal more embarrassing for the Irish government than the decision to scrap the Hogg Robinson listing was for its private-equity owners, Permira. Pricing is an inexact science and all the more so with a "hybrid" airline like Aer Lingus which is both a low-cost short-haul operator and a full-service transatlantic airline with all the frills to match.
Arguably, Dublin could have got a little more for its flag carrier, given the level of investor interest. But the managers of IPOs risk being castigated if they don't leave some upside for the market and the 8 per cent climb in the Aer Lingus share price yesterday suggests they got it just about right. It also leaves the selling shareholder sitting on a stake worth a further €300m.
In the end, Aer Lingus was valued on roughly the same basis as British Airways, which has one of the lowest valuations among Europe's flag carriers.
Anyone who has travelled through Dublin airport recently will know that the Irish airline market is going gang-busters. In its new slimline format Aer Lingus is well placed to benefit from that and the growth of low-cost travel. Its neat little deal with Emirates, which enables Middle East businessmen to clear US customs in Dublin, adds a further kicker. The shares should have some way to climb.
Times-a-changing for Tony Blair
Rupert Murdoch's Times newspaper was moved to speculate yesterday on who might employ Tony Blair when he finds himself out of a job next year. The list included the private-equity firm KKR and the investment banks Merrill Lynch, Goldman Sachs and UBS. Alas, there was no mention of the paper's parent company News Corporation. This is despite the rumours that Mr Blair might follow the former Spanish premier José Maria Aznar on to its board when he finally leaves Downing Street. Or at least sell his memoirs to HarperCollins (Prop: R Murdoch). Mr Blair will not be short of job offers, concludes the Thunderer. But will that include one from its proprietor?Reuse content