Outlook: Saunders sure to find that it's cold out there on your own

Costing the earth; Ryanair; Londis calling
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So farewell then, Robin Saunders: rain maker, City pin-up, and, at least for your previous boss at WestLB, femme fatale. The head of the bank's principal finance unit finally resigned yesterday to pursue a career elsewhere after being strategically focussed out of a job.

With WestLB's star financier, many were called but few were chosen. In fairness, her list of hits was nearly as long as the misses. Unfortunately, it is the misses that everyone remembers and her fate was sealed almost from the moment she put her name at the bottom of the press release announcing the refinancing of the television rental chain BoxClever.

For five years, WestLB punched above its weight with the aid of its London-based principal finance unit and at one time it even entertained a takeover of the railways. A combination of rock-bottom financing costs from the state-owned parent company and a eye for the main chance brought with it a string of deals. But when the music stopped, it became obvious that, however cheaply WestLB had been able to lend, the quality of the loan book was what mattered.

WestLB has managed to extract itself from Pubmaster and Bhs at a tidy profit. But BoxClever left WestLB sinking in a sea of red ink while the investments in Odeon and Formula One hang around its neck like the balance sheet equivalent of an albatross. As for Whyte & Mackay and Mid-Kent Water, the jury is out.

The word is that Ms Saunders, far from high-tailing her way back to Texas, plans to stick around in London and branch out in the principal finance arena under her own steam.

If that sounds reminiscent, it is because Guy Hands did precisely the same thing when he finally grew too big for Nomura. Mr Hands had his own little disaster - the Le Meridien hotel chain which, in effect, went bust under the weight of its debts, forcing the Japanese bank to write off its equity.

It's cold on the outside and without the large arm of an international bank around his shoulders Mr Hands has found it tough to raise his own funds and even tougher to land deals. The only one of significance his Terra Firma fund has pulled off is the refinancing of a waste business. There may be brass in muck but it is hardly the stuff of which City legends are made.

With £1m in severance pay and the dividends rolling in from her personal stake in Philip Green's Bhs, Ms Saunders should be able to keep the wolf from the door. And, if she does make a comeback in her own right, then we will see just how good she really is.

Costing the earth

They will, says Patricia Hewitt, look like "the tiny masts of distant yachts", even on the clearest of days. Offshore wind turbines, some up to 260ft high, she is referring to. The Trade and Industry Secretary had better be right since the Crown Estate has just sanctioned the construction of six giant wind farms off the Norfolk coast, where Ms Hewitt holidays most years.

Altogether, the go-ahead was given this week for up to 2,500 offshore turbines capable of generating enough electricity to power one in six UK homes. The move offshore will encounter much less environmental opposition than the increasingly contentious siting of onshore wind farms. But it is not so much the aesthetic issues that are likely to concern us but the cost of this new source of energy.

The wind may be free but the electricity generated from it certainly is not. Wind power is up to twice the price of fossil-fuelled electricity and even nuclear energy beats it on cost, if the back-end decommissioning costs are excluded.

Advances in technology, allied to bigger turbines, have brought costs down and the economies of scale of building up to 7,000 megawatts of offshore wind capacity should further narrow the differential with other energy forms.

But as far ahead as it is possible to see, wind will need a subsidy to compete and that subsidy will be paid for by the consumer. The Government simply cannot afford to allow it to fail as a technology for the simple reason that without wind power, Britain has no hope of meeting its greenhouse gas targets. So consumers will have to get accustomed to dearer electricity. They will also have to get used to more expensive water, as the industry regulator Philip Fletcher pointed out yesterday to his political masters. If the Government were to choose everything from the menu of environmental improvements before it, then up to £13.4bn would have to be added to water bills.

As Mr Fletcher reminded the Environment Secretary Margaret Beckett, hard choices will have to be made quite shortly. The same applies to electricity. Saving the earth does not come cheap.


From one kind of wind power to another; the indefatigable Michael O'Leary, who was in full flow as usual yesterday, telling an interviewer that he was neither a "cloud bunny", nor an "aerosexual". The Ryanair boss has bounced back from his latest setback in the courts with a tirade against the French for banning the state subsidies the airline receives to fly the London-Strasbourg route.

Some time early next year the European Commission will rule likewise in respect of the deal Ryanair gets to operate into Brussels Charleroi airport. The fear is that the two judgements will have implications for the whole of Ryanair's network and the low-cost model on which it operates.

It would be unwise to overstate the impact of these rulings. The vast bulk of Ryanair's passengers fly through private or state-owned airports where subsidies are not an issue. In the case of Charleroi, there is also an answer to the state subsidy problem - simply privatise the airport.

But there is a gnawing worry that Mr O'Leary's chickens may at last be coming home to roost. He still boasts profit margins that British Airways can only dream of but he is beginning to have difficulty filling his planes. Hence the endless stream of free flight promotions which are at least as responsible for the decline in Ryanair's average fares as the further cost improvements it is making.

And whilst Ryanair's balance sheet remains strong, it has had to stop buying all of its aircraft outright and start lease financing some of them instead in order to support its exponential expansion.

Ryanair may be on the way to overtaking BA as Europe's favourite airline as well as its most valuable. But Mr O'Leary is as aware as anyone of the dangers of flying too close to the sun. As he also told The Daily Telegraph yesterday: "There's a danger I'll self-combust."

Londis calling

The Londis farce gets more tragic by the day. To alienate one bidder is unfortunate but to alienate both of them looks like more than carelessness. Not content with infuriating their shareholders, the directors of Londis have now got both the Big Food Group and Musgrave on their backs. Not bad going for a week.

The army of corner-shop grocers who own Londis can afford to sit back, watch the bids roll in and block any offer which does not distribute most of the sale proceeds to them. The executive directors could waive their right to half of the money and allow a sale to proceed. Or they could insist on exercising their own blocking stake, in which case Londis will remain the privately run co-operative it is. But who would want them as its managers? The so-called independent directors are out of their depth and either way it goes, the four executive directors look like toast.