Tourism sector eyes brighter 2010

Link to the article: BBC News

By Will Smale
Business reporter, BBC News

The cold, grey morning in east London was an apt metaphor for the difficulties faced by the global tourism industry in 2009.

With much of the world having been in recession, this year has undoubtedly been a tough time for travel companies around the globe - commercial sunshine has been in short supply.

Put simply, people have been cutting back on taking holidays in the face of the economic uncertainty.

Either due to the direct impact of unemployment, or the wider sense of a need to be more financially cautious, would-be holidaymakers have been much more reluctant to book a vacation - as the latest figures show.

A report published this week to tie in with one of the world's largest gatherings of travel industry leaders - the World Travel Market fair in London - estimates that global travel bookings will fall 8% this year.

British Airways announces record loss

Link to the article: Channel 4 News

By Channel 4 News

The troubled airline company announces a pre-tax loss of £292m as cabin crew hours are "unwillingly" slashed in a bid to save money.

The airline, which recorded a loss of £401 million in its previous financial year, said total revenues slumped by almost 14 per cent in the six months to the end of September.

It is the first time that BA has recorded a first half loss - normally a buoyant period for the airline as it includes the holiday season.

Today's deficit is around £40m higher than city analysts had been expecting. Even when items such as pension costs are excluded BA made a loss of £111m, against a profit of £140m a year earlier.

The industry as a whole is expected to lose £6.65bn this year as a result of the recession's impact on passenger numbers and demand for business class travel.

Willie Walsh, chief executive, said the company reduced costs by some £400m after manpower was cut by 1,900 roles through reduced overtime, increased part-time working and voluntary redundancy.

"With revenue likely to be £1bn lower this year, we can't stand still and further cost reduction is essential," he said.

He said a further manpower reduction equivalent to 3,000 roles was planned by March next year, along with a 6 per cent cut in winter capacity.

BA is locked in a fight with unions over its plans for job cuts and a pay freeze and has faced the threat of industrial action from different sections of its workforce.

The union Unite launched legal action in the High Court yesterday in a bid to stop the imposition of new contracts for new cabin crew. It has agreed to work to the new schedule until the outcome of the legal action is known.

Business Correspondent John Sparks said:

"Analysts are now predicting that the airline will lose £600m for the entire year and if you add up those losses after the last two years you come to the grand total of a billion pounds.

"But here's the funny thing - BA's shares actually went up 12 per cent this morning which is strange when you consider that the full service airlines like BA have taken a real hammering this year because of the recession.

"But investors clearly think that Willie Walsh and his team can cut costs and they can turn this airline around. But he has got serious problems with his cabin crew - a real industrial dispute.

"He will implement new changes to the cabin crew in ten days time. Their numbers will be reduced on planes and the union Unite is likely, I understand, to ballot members on a national strike starting next week with the potential of strikes before Christmas a real reality."

Steel giant Corus cuts 2,000 jobs

Link to the article: Channel 4 News

By Nick Martin

The struggling steelmaker has made the redundancies in another round of sweeping job losses across the country.

Plants in Rotherham and Scunthorpe will be hardest hit - as the company blamed a slump in demand.

The government called it "very disappointing news" and said it was working with Corus to help secure the futures of as many workers as possible.

But union leaders said it was now a fight for the future of British steelmaking.

800 British Airways staff to work unpaid

Link to the article: Channel 4 News

By John Sparks

They were asked to work for nothing - and 800 BA staff have volunteered to work unpaid for up to a month to help the struggling airline cut costs.

In all, almost 7,000 BA employees have agreed to take some kind of pay cut, including unpaid leave and switching to part time work.

The airline called it a "fantastic response" which would save up to £10m.

But this programme understands that BA's proposed cost-cutting goes far deeper, with plans to slash salaries of cabin crew and cut jobs to a minimum.

Mick Rix, the national officer for aviation at the GMB union, gave his view on the current situation.

Interview: Jim Rogers

Link to the article: Channel 4

Last Modified: 03 Mar 2009
By: Faisal Islam

Jim Rogers, the co-founder of the hedge fund, the Quantum Fund, talks to Faisal Islam about the world economic downturn.

Rescue plan 'ludicrous and insane'

Speaking exclusively to Channel 4 News, Jim Rogers says politicians could be leading us into another Great Depression.

One of the world's leading financiers has called the economic rescue plans being put forward by Gordon Brown and President Obama ludicrous and insane.

He has been called a Wall Street legend for his investment nous. Now he sees a fundamental shift of power from the west to east. Our economics correspondent Faisal Islam reports.

Who is Jim Rogers?

Jim Rogers is an American investor and financial commentator.

After studying at Yale and Oxford, Rogers joined Arnhold & S. Bleichroeder in 1970. There he met George Soros with whom he co-founded the hugely successful Quantum hedge fund.

Ten years later Rogers decided to retire at the age of 37. Soros was estimated to have made £1bn betting against the British pound on Black Wednesday when the pound crashed out of the ERM in 1992.

Rogers has also featured in the Guinness Book of World Records twice - motorcycling 100,000 across six continents from 1990-1992 and later visiting 116 countries on a round-the-world trip with his wife.

Rogers continues to invest, but is now also an author, lecturer and regular international financial commentator. In 2006 he sold his $16m home in New York and moved to Singapore as a result of his conviction about the economic rise of Asia and his desire for his two young daughters to learn Mandarin.

Watch the full interview

Watch the complete interview with Jim Rogers on his analysis of the current world economic climate and the longer-term effects of the downturn on the US and the UK.

Cadbury Sticks to Forecasts as Candy Defies Recession

By Sarah Shannon

Feb. 25 (Bloomberg) -- Cadbury Plc, the world’s largest confectionery maker, said revenue growth this year will meet the lower end of its forecast and kept its goal for higher profit margins as chocolate and gum sales defy the global recession.

Cadbury rose the most in three months in London trading. Sales growth in 2009 will be “around the lower end” of the company’s 4 to 6 percent target range, the maker of Trident gum and Wispa chocolate bars said today. Cadbury repeated its target for “mid-teen” growth in profit margins by 2011.

Sales have held up as consumers from Asia to the U.K. and Ireland continue to buy “affordable treats,” Chief Executive Officer Todd Stitzer said on call with journalists. Cadbury last year spun off its U.S. soft-drinks division and sold its Australian beverages unit, transforming itself into a dedicated candy maker. Profit from continuing operations more than doubled in 2008, and rose 35 percent on a so-called underlying basis.

“We were impressed with Cadbury’s guidance for 2009 as it showed a confidence in the business we have not really seen out of management in the past,” Sanford Bernstein analyst Andrew Wood said in a report. He rates the stock “outperform.”

Cadbury rose 20 pence, or 3.9 percent, to 528.5 pence in London trading. The stock has fallen 13 percent in 2009, more than competitor Nestle SA’s 7.6 percent drop.

Excluding currency movements, sales in 2008 rose 6 percent to 5.4 billion pounds from 4.7 billion pounds a year earlier.

Increased Margins

“It’s a very good first year as a focused confectionary company,” said Martin Deboo, an analyst at Investec Securities with a “hold” recommendation on the stock. “The fact that margin progression has been achieved despite increased investment in marketing will read well.”

The underlying profit margin widened by 1.8 percentage points to 11.9 percent in fiscal 2008, boosted by the weakness of the pound against currencies in which sales are made.

The rising cost of cocoa, which increased 40 percent last year, has been recovered through price increases, Stitzer said. Price rises will only be “modest” this year if commodity expenses continue to increase, he said.

“We are recession-resilient, not recession-proof,” Stitzer said. “2008 has demonstrated the resilience of the total confectionary model, but we don’t expect to be immune from economic weakness.”

Refinancing Plan

Cadbury said today that it plans to refinance a 1 billion- pound revolving credit line “well in advance” of the March 2010 expiry date. Net debt at the year-end was 1.9 billion pounds, down from 3.2 billion pounds at the end of 2007.

Net income fell 10 percent to 364 million pounds ($529 million), from 405 million pounds in 2007. Profit from continuing operations rose to 370 million pounds from 149 million pounds, missing the 390 million-pound median estimate of seven analysts surveyed by Bloomberg News.

Cadbury agreed to sell its Australian drink business to Asahi Breweries Ltd. for 550 million pounds ($780 million) on Dec. 24. The company spun off its U.S. soft-drinks unit, Dr Pepper Snapple Group Inc., in May.

The candy maker plans to increase the final dividend to 11.1 pence a share from 10.5 pence, raising the payout for the year by 6 percent to 16.4 pence.

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

Link to full article: Bloomberg

Dairy Milk sales help Cadbury defy the recession

Cadbury has bucked the economic gloom with a 30% rise in annual profits thanks to strong growth in its main brands, as recession-hit consumers turned to chocolate treats.

In a record year for the company, sales of its biggest brands, Dairy Milk chocolate and Trident gum, grew by 11% while Halls cough drops posted a 9% rise in sales.

The confectionery giant also reported higher profit margins after putting up its prices to offset rising cocoa costs.

"Chocolate and chewing gum are performing well as consumers seek to comfort themselves with brands they are familiar with," said Todd Stitzer, the chief executive.

Link to the full article: Guardian

Bankers 'sorry' but not 'responsible'

Link to article at Channel 4

Last Modified: 10 Feb 2009
By: James Blake

Four of the men at the centre of the banking crisis deny being "personally responsible" for what happened and say they have all lost money.

The four bankers in the firing line were Lord Stevenson of Coddenham, the former chairman of Halifax Bank of Scotland, Andy Hornby, the bank's former chief executive, as well as Sir Fred Goodwin, the former chief executive of the Royal Bank of Scotland and Sir Tom McKillop the former chairman.

It was the "s-word" that everyone wanted and expected, as bank bosses finally said "sorry" in public this morning for the chaos that led to the massive taxpayer bailout.

The apologies came as they faced hostile questioning from MPs on the treasury select committee.

Rates cut amid warning of a 'severe and synchronised' downturn

Link to the article at Channel 4

Last Modified: 05 Feb 2009
By: Faisal Islam

The Bank of England base rate is cut by half a per cent to stand at just 1 per cent, the lowest level ever, as Faisal Islam reports.

The Bank of England today warned of a "severe and synchronised" economic downturn spreading across the world.

But with rates now heading towards zero, attention is switching to what else the bank can do to keep boosting the economy.

Base rate: how low can you go?

Link to article

Last Modified: 08 Jan 2009
By: Siobhan Kennedy

Today's 0.5 per cent cut by the Bank of England puts interest rates at their lowest since 1694 - the year Newton discovered gravity.

And the reduction indicates the gravity of today's crisis, amid signs that the government will have to find other ways to reignite bank lending and stave off the worst recession in modern history.

The widely expected base rate cut puts the country in uncharted territory. But business leaders have insisted that, regardless of the cut, it is the availability of credit that remains the vital factor in the face of deepening recession.

And their fears were underlined today by the announcement by car maker Nissan that its Sunderland car plant - the biggest and most productive in the country - is to see 1,200 jobs cut, almost one in four of the workforce there.