British Airways; Bank of England; Thomas Cook: Business news in brief, Friday September 9 2016

Airline scales back expansion; Bank says it won't stifle burgeoning financial technology industry with rules; Travel agent shares boosted by Chinese venture

British Airways owner IAG is to scale back orders for new planes (Reuters)

British Airways Owner IAG ponders reducing orders

IAG, the owner of British Airways and Spanish carrier Iberia, is considering reining in expansion plans as worldwide economic growth slows and the company grapples with the effects of the Brexit vote. “Without doubt all airlines, including airlines within IAG, are reassessing their requirements for new aircraft,” as the outlook for growth has “softened,” Willie Walsh, BA chief executive said on Thursday. “I don’t think we’re going to see growth rates that were anticipated.”

The comments reflect a tougher sales environment for plane manufacturers. Airbus and Boeing racked up their lowest tally of aircraft orders in six years at the aviation industry’s annual showcase this summer. While both firms sit on huge order backlogs, that cushion could provide little protection if headwinds continue and airlines start to feel the pinch from lower fares.

IAG, which also owns Irish carrier Aer Lingus, ordered 20 single-aisle Airbus A320neo planes a year ago, and Mr Walsh outlined plans earlier this year to buy used widebody Boeing 777s and lease Airbus’s double-decker A380s for British Airways.

Following the UK vote in late June to quit the European Union, Mr Walsh said IAG will have to cut spending amid a plunge in the pound’s exchange rate and a slowdown in traffic growth as business customers scale back travel.

Corporate customers are still holding off on business trips as they analyse how the Brexit vote will affect Britain’s economy and currency, Mr Walsh said on Thursday. Another question carriers must consider with plane orders is the drop in the price of oil in recent years, and “whether it’s worth buying this new-technology aircraft to get the fuel-cost advantage,” he said.

Bloomberg

New fintech rules won’t stifle innovation, says BoE

The Bank is grappling with how to regulate fintech (Getty)

The Bank of England will not “stifle” innovation in financial technology with new rules as it seeks to get to grips with its impact, a senior central bank official said on Thursday.

Victoria Cleland, the BoE’s chief cashier, said a priority for the central bank this year was devising its regulatory approach to so-called fintech. It was looking at the risks and benefits of applications including digital currencies and blockchain, a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms.

Ms Cleland’s reassurances over regulation come at a time when British policymakers are looking for any signs that fintech firms in London, which has become a global hub for the sector, will move to mainland Europe.

Fintech firms have expressed worries they could be cut off from the single market once Britain leaves the bloc. Berlin has already begun a marketing drive to attract fintech firms from the British capital.

Ms Cleland said firms in the fast-growing fledgling sector want to know where the goalposts will be and the BoE was working with them. “It’s very difficult to decide how to regulate something you don’t quite know what it is,” she told a conference on peer-to-peer lending, adding fintech was a global industry and a similar approach was needed by other regulators.

The Financial Stability Board, a global watchdog chaired by BoE Governor Mark Carney, is looking at whether using blockchain for processes such as settling transactions could undermine financial systems and if any new rules are needed.

Reuters

Thomas Cook shares surge on China travel venture

The travel company is targetting the wealthiest chinese tourists (Getty)

Thomas Cook, Europe’s second-biggest tour operator, set up a high-end Chinese travel agency with minority shareholder Fosun International in a bid to capture a more lucrative slice of China’s booming tourism market. The shares rose to their highest in more than three months.

The agency will sell overseas holidays to the wealthiest 20 per cent of Chinese travellers, and guide them beyond Europe’s obvious destinations, as Thomas Cook aims to make China a “substantial” part of its business, Peter Fankhauser, Thomas Cook chief executive said in an interview with Bloomberg News in Shanghai.

Thomas Cook shares, which have lost 38 per cent this year, rose as much as 7.3 per cent yesterday, bringing the company’s market value to £1.2bn.

The companies are betting that China’s outbound tourism market – the largest in the world – can help drive growth in Europe, where travel has been depressed by recent terror attacks and the UK’s vote to leave the EU. Fosun, a unit of a Shanghai-based conglomerate backed by billionaire Guo Guangchang, said it expects the number of Chinese travelling outside the country to grow by as much as 20 per cent annually.

Fosun, which owns 8.2 per cent of Thomas Cook, will use its resources globally to support the tour operator’s online travel services. Its financial muscle will ease restrictions on Thomas Cook’s expansion plans, which have been hampered by stretched finances. In July, the 180 year-old company cut earnings forecasts for 2016 after a string of terror attacks across Europe depressed summer travel.

Bloomberg

Dixons Carphone shrugs off Brexit

Dixons Carphone was positive about its outlook despite Brexit (Getty)

Dixons Carphone, Britain’s biggest consumer electricals and mobile phone retailer, reported better than expected first-quarter sales on Thursday and said it had not seen any impact on demand from Junes Brexit vote. Shares in the company, which trades as Currys, PC World and Carphone Warehouse, have fallen 12 per cent in the past three months given its exposure to big ticket goods, and perceived vulnerability to any slide in consumer demand. In the 13 weeks to 30 July, Dixons Carphone, which also trades as Elkjop and El Giganten in Nordic nations and Kotsovolos in Greece, said sales at stores open more than a year rose 4 per cent, beating forecasts of 2.5 per cent, thanks to strong sales of mobiles, televisions and domestic appliances.

Though the shock Brexit vote stunned markets, they have since recovered and consumers, who drove the country’s recovery after the financial crisis, appear to have largely taken the referendum result in their stride for now. Data has suggested the economy has not suffered the kind of devastating impact forecast by some Remain supporters in advance of the 23 June referendum, although some economists say it is heading for a sharp slowdown.

“We’re not experiencing anything at the moment, we’re full steam ahead for peak [Christmas] and Black Friday (25 November). If the consumer environment changes then we’ll trim our sales to match,” Seb James, Dixons Carphone chief executive said. “We’ve just got to take the world as we find it. We’re absolutely on the lookout and preparing ourselves in case something like that should happen,” he told reporters.

Reuters

Zoopla earnings at top end of range despite market uncertainty

Property website Zoopla said annual earnings would hit the top end of forecasts, boosted by a higher number of property listings and growth in its price comparison service, confounding predictions that Brexit would freeze the market. Zoopla’s positive update matched the confident outlooks from British house builders Barratt Developments and Redrow in recent days. Housing market strength was also apparent in data from the Royal Institution of Chartered Surveyors which said on Thursday that its monthly house price index jumped to +12 in August, from July’s three-year low of +5, the first rise in six months.

For the year to 30 September, Zoopla said its core earnings would be at the top end of a £69m-to-£76m range from a poll of analysts.

Reuters

Amazon adds Alexa to discounted Fire tablet

Amazon wants to be under lots of Christmas trees this year. It’s cut the price of its new Fire tablet almost in half and added its popular voice assistant, Alexa, in the hope of making it a hot holiday item, despite a slump in overall tablet sales. The new Fire HD8 tablet will cost £70, down from £120. Mixed-use battery life is up to 12 hours from eight, and the base storage is doubled to 16 gigabytes. The biggest change is that the tablet will have Alexa functionality. That means that when users tap and hold the tablet’s home button, they can ask the assistant for anything from weather reports to news queries, and also get the device do things like adjusting the lights or temperature on compatible smart-home devices. The tablet market in general has been decreasing. Most people have already bought one who wanted one and see little reason to upgrade.

AP

Small businesses get Facebook tools

Facebook is expanding its services to small businesses that want to sell to customers in other countries. The social media company said on Thursday it’s adding features to its small business sites that allow companies to search for and advertise to customers in other countries. Businesses will be able to choose which countries they want to target, and can aim at customers in specific regions or the entire world. The features will be available to small businesses around the world.

Sixty million businesses have Facebook pages, and more than 1bn people using the social media site are connected to at least one business in another country, the company said. In the US, more than 60 per cent of Facebook users are connected to a company in another country. Catalysts for the expansion included data that showed Facebook users and small businesses are increasingly engaging in cross-border transactions, the company said.

AP

Playboy can block picture links, landmark ruling says

Playboy’s Dutch publisher can stop a news and entertainment website from posting links to its images without permission, a top EU court said in a ruling that could reverberate across the internet. The European Court of Justice in Luxembourg said GeenStijl, owned by GS Media, broke copyright laws when it published links to pictures of TV personality Britt Dekker without the permission of Sanoma Oyj’s Dutch unit, which runs Playboy in the Netherlands.

Thursday’s ruling, which guides a Dutch court making a final decision in the dispute, says the website may fall foul of copyright rules because the links were posted for profit in the full knowledge that the photos were published online without consent. “An eye on profit, that’s something dirty, according to the European clowns,” GeenStijl said in a statement on its website. “The consequence is that from now on, you always run the risk of being sued, just for placing a hyperlink.”

Bloomberg