<preform>Michael Harrison's Outlook: Will Rose smell sweet enough to save M&S?</preform>

Raining at Ryanair; Russian roulette
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The Independent Online

Stuart always seems to come up smelling of Roses and, wouldn't you know it, he is in clover all over again having landed the job of his dreams. Being chief executive of Marks & Spencer is not so much a job, of course, more a case of destiny fulfilled, which strongly suggests Mr Rose intends to stick around for longer than usual.

Stuart always seems to come up smelling of Roses and, wouldn't you know it, he is in clover all over again having landed the job of his dreams. Being chief executive of Marks & Spencer is not so much a job, of course, more a case of destiny fulfilled, which strongly suggests Mr Rose intends to stick around for longer than usual.

But one way of another, he cannot lose. Either Mr Rose triumphantly leads M&S back to its rightful place in the hearts of Britain's Size 14 classes. Or he fails valiantly in his attempt to see off Philip Green and retires, reputation intact, with a £2m payment. Not quite the £25m that he walked away with from Arcadia after his last tangle with the Green machine. But still, not bad for a few months, or perhaps even a few weeks, work.

Mr Rose has developed the knack of being in the right place at the right time, having also arrived at Argos just as it was being bought by GUS and Booker just before it merged with Iceland. In each case, he departed with a handsome pay off. M&S shareholders will be hoping that some of his luck rubs off on them because they were badly shortchanged by the previous management.

Whilst he has built a reputation as much for deal making as retailing, running M&S is clearly a different proposition. It is the job he has coveted since he began work as a management trainee in the business more than 30 years ago and, with luck, it will be the one which crowns his career.

His appointment, along with that of Paul Myners as interim chairman, changes the dynamics of the putative takeover dramatically. Before, M&S looked a hopeless cause with a lame duck chairman and a chief executive who had lost the confidence of investors. Now Mr Green has a scrap on his hands and M&S a chance of survival.

It is idle to speculate on the terms of the Green bid until it actually lands. But it is reasonable to suppose that Mr Rose's arrival has just added a few pence to the figure that he comes up with.

The question comes down to this: How does Philip Green's desire to get his hands on M&S and become the unquestioned king of the high street compare with Stuart Rose's burning ambition to make this the culmination of his retailing career?

There are questions to be asked about the retailing flair of both men and these will be tested in the heat of battle. Mr Rose has a reputation for making money both for himself and shareholders. Mr Green is famous for making money for himself at the expense of shareholders. This time around, he has been forced to offer outside investors a share in the upside. If Mr Rose sees the Green bid off, it may prove to be have been by far the easiest part of the job.

Raining at Ryanair

Here is the weather forecast for the European airline industry, sponsored by Ryanair. It is going to be raining low-cost carriers for the next two years with repeated outbreaks of fare-cutting and higher fuel prices moving in from the Middle East. Flying conditions will be particularly hazardous in Germany and Italy. Closer to home, a cold front will cause severe problems later in the year. Sunny spells for most passengers while current fare levels last but rather windy for everyone else. The general outlook: Cloudy everywhere except Dublin.

Michael O'Leary stuck his finger in the air yesterday and, with his usual penchant for understatement, forecast a bloodbath in the airline sector. For once the Ryanair boss was probably not guilty of exaggeration. At the last count, Europe had 52 budget airlines and a new entrant seems to take off every week, replacing one that has just fallen out of the sky. It is akin to the phenomenon which followed deregulation of the US airline market and, as in America, only the strongest will survive.

Ryanair's growth engine may have spluttered last year, resulting in the first drop in annual profits since 1989, but the forecast still looks rather better from where Mr O'Leary is sitting than for the bulk of his would-be rivals. Who would give a candle in the wind for the chances of Hungary's Whizz Air or a Snowflake in hell for SAS's aptly named entry into the low-cost sector. Then there's EUJet based at Kent International Airport (ie Manston), and let's hear it for CUJet from Scotland.

Ryanair, of course, is doing everything it possibly can to make the bloodbath more gruesome. Even after cutting prices by 14 per cent last year, it still managed to generate profit margins of 21 per cent and Ryanair's deep pockets, critical mass and brand power mean that it can withstand a good bit more downward pressure yet on fares. The majority of its low-cost rivals cannot and, were it not for state backing, nor could the likes of high-cost carriers such as Alitalia.

If there is a birdstrike heading Mr O'Leary's way it could be in the shape of higher oil prices. As a proportion of overall expenditure, Ryan's fuel bill is twice that of BA and, hedging apart, it is the one bit of the cost base it can do nothing about. Mr O'Leary says that fuel costs could double and Ryanair would still be profitable but that relies on fare levels recovering when the airline's own forecast is for a further fall of between 5 and 20 per cent. Mr O'Leary has ruled out a BA-style surcharge on passengers. No wonder, then, that his forecast also includes a fall in oil prices this winter.

With his usual bombast, Mr O'Leary declares he is not going to sell any of his remaining 5 per cent stake in Ryanair because the price is too cheap. But his fellow shareholders should tighten their belts for a bumpy ride.

Russian roulette

Until recently, the name Sibir Energy may not have meant anything to the chief executive of BP, Lord Browne of Madingley. Indeed, why should it? Sibir is a tiny, AIM-listed stock, not so much an oil minnow, more of a flea compared to the elephant that is BP, Britain's most valuable company and the second biggest oil major in the world.

Nevertheless, the extraordinary story of Sibir cannot have escaped Lord Browne's notice. A year ago, it agreed a joint venture with Sibneft, the Russian oil company controlled by the owner of Chelsea football club, Roman Abramovich. Sibir's 45 per cent share of the joint venture was conservatively valued at $75m. In April, it was notified by its Russian partner that its stake had mysteriously been diluted to 1 per cent. Why and by whom, no one quite seems to know. Sibir is clear about one thing, however, and that is that the dilution was illegal. It is now seeking restoration of its interest in the joint venture. Meanwhile, Sibir shares remain suspended.

No one is remotely suggesting that the same thing is about to happen to BP's rather bigger Russian joint venture TNK-BP, which is valued at some $14bn. Nevertheless, the first rumblings of discontent have begun to be heard from the three Russian oligarchs with whom BP struck the deal. They have made it plain they want the money which BP still owes them upfront and in cash, rather than in BP shares over the next three years.

Now it is reported that Russia's secret service is investigating TNK-BP on the grounds that its British chief executive has got his hands on state secrets in the shape of the joint venture's oil reserves.

It is an increasingly uncertain time to be an oligarch in Putin's Russia. The former chairman of the country's biggest oil company and once its richest man, Mikhail Khodorkovsky, languishes in jail while his company Yukos falls apart.

According to some analyses, Mikhail Fridman, one of the oligarchs with whom BP is in bed, may be next to fall foul of the Kremlin. If so, that would leave the future of TNK-BP in the air. As Lord Browne observed when the deal was signed last summer: "In business, trust is never 100 per cent." Let's hope those words do not come back to haunt him.

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