EasyJet and Lufthansa make offers for parts of Alitalia

 
Media captionItalian airline Alitalia went into administration in May

German airline Lufthansa and the UK’s EasyJet have both submitted offers to buy parts of Italy’s Alitalia airline.

Lufthansa said it hoped to establish a “new Alitalia”, but was only interested in parts of the existing business.

EasyJet said it had submitted an expression of interest but also only wanted “certain assets of a restructured Alitalia”.

Europe’s airline industry is fiercely competitive, with Monarch and Air Berlin failing in recent weeks.

On Monday, the last of 110,000 Monarch customers who were abroad when the airline collapsed were flown home, according to the UK aviation regulator.

Ongoing competition from budget airlines, terror attacks in popular holiday destinations, and rising fuel prices have made it difficult for some airlines to keep going.

Lufthansa agreed a €210m (£190m) deal for parts of Air Berlin last week, with EasyJet also in talks to buy parts of the failed carrier.

Italian loans

Alitalia said it had received seven offers by the 17:00 GMT deadline on Monday and would now assess them.

The Italian government has postponed the deadline for making a final decision over the Alitalia sale from 4 November to April 2018.

The government also announced a further €300m (£267m) in loans on Friday to keep the carrier flying.

Rome has already provided €600m in funds since May, but has now extended the repayment deadline to 30 September 2018, following the decision to delay completion of the sale.

Alitalia went into administration at the start of May after staff rejected job and salary cuts as part of a €2bn rescue plan.

Alitalia Made of Italy posterImage copyrightGETTY IMAGES
Image captionItaly’s government has provided loans to Alitalia to keep it flying

Lufthansa said in a statement it was interested in “parts of the global network traffic and European and domestic point-to-point business”.

Italian newspaper Corriere della Sera, referring to anonymous sources, said on Monday that the Lufthansa bid was worth €500m, but was likely to be rejected as the authorities in Rome wished to sell the airline’s assets as a complete package.

The newspaper reported Lufthansa was bidding for the planes, airport runway slots and air crew and was proposing to halve Alitalia’s workforce of 12,000 employees as well as reducing its short- and medium-range flights.

Irish budget airline Ryanair expressed early interest in Alitalia, but two weeks ago said it was dropping the idea.

At the time it was struggling to contain the fallout from a pilot shortage, which led to the cancellation of flights for about 700,000 passengers.

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Ryanair to challenge Lufthansa’s Air Berlin deal

Air Berlin planesImage copyrightREUTERS

Ryanair is set to challenge a Lufthansa deal to to buy parts of failed German carrier Air Berlin.

The budget Irish airline said it would take the €210m deal to European competition authorities.

Lufthansa plans to use Air Berlin planes to expand its Eurowings budget airline business.

Air Berlin filed for bankruptcy in August after its main shareholder, Etihad, said it would not give further financial support.

Flights continued after a transitional loan of €150m from the German government.

Germany’s second-largest carrier has since been negotiating with potential buyers for parts of its business.

Lufthansa has agreed to buy Air Berlin’s Austrian leisure travel airline Niki, its LG Walter regional airline and 20 additional aircraft.

Ryanair previously described the negotiations as a “stitch-up” intended to strengthen Lufthansa.

“We will be referring the matter to the EU competition authority in due course,” a Ryanair spokesman.

Andreas Mundt, head of Germany’s cartel office, said the European Commission would take a close look at the deal and that German authorities would follow the process closely.

Lufthansa chief executive Carsten Spohr said earlier he expected the Air Berlin deal to receive European Union approval by the end of the year.

Shares in Lufthansa rose 2.8% in Frankfurt.

Air Berlin, which accumulated debt for almost a decade, reported a record loss of €782m (£713m) for last year.

World Bank chief sounds alarm over job automation

World Bank Group President Jim Yong Kim says the world is a on a "crash course"Image copyrightGETTY IMAGES
Image captionWorld Bank Group President Jim Yong Kim says the world is a on a “crash course”

The world is on a “crash course” as people’s hopes collide with a future in which millions of jobs are automated, the World Bank chief has said.

Jim Yong Kim said policymakers should take action by investing in education and health.

The World Bank president was speaking in New York ahead of the group’s annual meeting in Washington DC this week.

The remarks come amid wider concerns about political threats to economic growth.

The World Bank plans to publish a ranking of countries that measures investments in “human capital”, such as education.

The focus is a shift for the organisation, which was established after World War Two to spur infrastructure reconstruction.

But Dr Kim said other kinds of investments are important to economic growth in the future, as robots displace millions of low-skill workers.

“The one thing you know for sure that you’ll need in whatever the economy looks like in the future is people who can learn,” he told the BBC.

“We want to create a sense of urgency to invest in people that we think is necessary given the way … the global economy is changing.”

Political risks

The push for education and health investments comes as outlooks for economic growth improve.

In July the IMF said it expected the global economy to expand by 3.5% this year and by 3.6% in 2018.

Christine LagardeImage copyrightGETTY IMAGES
Image captionIMF chief Christine Lagarde says the global economic recovery should not be wasted

IMF managing director Christine Lagarde said updated forecasts, to be released this week, were likely to be even more optimistic.

However, bankers from the IMF, World Bank and other organisations have warned that the progress is threatened by political movements that favour trade barriers, isolation, military aggression and other measures.

“If your aspirations start to rise but then there’s no opportunity it can lead to fragility, conflict, violence,” Dr Kim said. “This is the crash course we’re going down.”

Political uncertainties are increasingly behind many of the risks identified by sovereign debt analysts, said Moritz Kraemer, managing director of S&P Global Ratings, which tracks economic and political movements in dozens of countries to devise credit ratings.

The subject was also the topic of a speech by European Central Bank president Mario Draghi earlier this year.

Ms Lagarde said this month that policymakers “should not let a good recovery go to waste”.

“We know what can happen if we let the moment pass,” she said. “Growth will be too weak, and jobs too few. Safety nets will be unable to handle aging populations. Our financial system will be unprepared for future shocks.”

Dyson to make electric cars from 2020

Sir James DysonImage copyrightHEATHCLIFF O’MALLEY
Image captionSir James Dyson accused the mainstream car industry of polluting the world with diesel emissions

Dyson, the engineering company best known for its vacuum cleaners and fans, plans to spend £2bn developing a “radical” electric car.

The battery-powered vehicle is due to be launched in 2020.

Dyson says 400 staff have been working on the secret project for the past two years at its headquarters in Malmesbury, Wiltshire.

However, the car does not yet exist, with no prototype built, and a factory site is yet to be chosen.

Sir James declined to give further details of the project. “Competition for new technology in the automotive industry is fierce and we must do everything we can to keep the specifics of our vehicle confidential,” he told staff in an email.

Important points that are undecided or secret include the firm’s expected annual production total, the cost of the car, or its range or top speed.

Sir James said about £1bn would be spent on developing the car, with another £1bn on making the battery.


Analysis: Richard Westcott, BBC transport correspondent

It was a slightly unusual launch, but then, Sir James Dyson likes to be different.

In a small room above his swanky London shop he told us about his vision for a clean car.

First up, we were treated to an old clip of Blue Peter, from the 90s, where Anthea Turner interviewed him about his new device to clean soot from the exhaust of diesel vehicles… it was the cyclone from his vacuum cleaner, put to a different use.

“That is how long I have wanted to do this,” he told us.

In fact he first hatched the idea in the late 1980s.

Since then, he has developed motors and batteries and now he is able to bring all that expertise together in a new, electric car.

He promised that it will be radical and different, because, as he put it, what is the point of making it like any other car?

And he promised that it will not be cheap.

I did ask how much it would be to put down a deposit… he told me he would have to think about it.


Further development work will take place at a former RAF base at Hullavington in Wiltshire, where staff will move to in February.

Sir James also said that his firm’s car would look “radical and different”, but will not be aimed at the mass market.

The motor is designed and ready to go, he said, but the firm is still designing the car.

Dyson’s decision means it is joining the rush within the global car industry to develop and make electric cars.

People visit the electric carmaker Tesla showroom at El Corte Ingles store in Lisbon, on September 1, 2017Image copyrightAFP
Image captionDyson hopes to challenge other electric car manufacturers such as Tesla

Some manufacturers such as Nissan, Tesla, Renault, BMW and Hyundai already manufacture them.

Others such as VW, Volvo, Mercedes, Honda and Jaguar Land Rover have announced plans to sell electric or hybrid versions of their existing petrol and diesel engine ranges.

VW, for instance, plans to spend 20bn euros (£17.5bn) by 2030 to develop its battery powered vehicles.

Sir James said he had been interested since 1990 in developing filtration technology to stop vehicle diesel emissions polluting the environment.

But as the motor industry had shown no interest in adopting this idea, he would instead join the fast-growing trend to make electric vehicles.


Analysis: Theo Leggett, BBC business correspondent

The electric car market is growing rapidly, but it is also about to become a lot more crowded.

Within the next few years, many new models are due to come on to the market, including Jaguar’s Ipace, Porsche’s Mission E, Volkswagen’s I.D. family and Mercedes’ EQ range. Tesla also has big plans for its recently launched Model 3.

They will be joining established models such as the Nissan Leaf, the BMW i3, the Renault Zoe and the Tesla Model S.

Dyson clearly sees an opportunity here. As new designs become available, and prices come down, more consumers will be willing to try electric vehicles.

Policymakers, concerned about air pollution, want them to do just that.

The big question is whether Dyson can muscle in on territory that the major manufacturers are already trying to make their own. And let’s not forget Google’s designs on the electric/self-driving market.

Tesla was able to build a new car brand from scratch, but only by producing a design which effectively moved the goalposts and changed people’s expectations of what an electric car could provide.

If Dyson wants to play with the big boys, it may have to pull off a similar trick.

Air Berlin pushes ahead with EasyJet and Lufthansa talks

Air Berlin planesImage copyrightAFP

Insolvent airline Air Berlin, Germany’s second-largest carrier, is pushing ahead with talks with EasyJet and Lufthansa about a possible sale.

Air Berlin, which is still flying after a 150m euro (£130m) rescue loan from Germany’s government, said a deal could help 80% of its staff.

Talks will continue with the two airlines until 12 October to sell parts of the business, Air Berlin said.

The final deal would need to be approved by European Union regulators.

Earlier, British Airways’ parent company IAG confirmed it was putting in a bid for part of Air Berlin, but said it expected the airline would go mainly to Lufthansa.

IAG chief executive Willie Walsh said at an industry conference that it would not “come as any surprise” if Lufthansa was the main winner.

‘Good prospects’

Air Berlin, which has about 140 aircraft, filed for insolvency in August after its main shareholder, Gulf carrier Etihad, withdrew financial support.

Thomas Winkelmann, chief executive of Air Berlin, said: “We are on the way to achieving good job prospects for around 80% of our colleagues with our bidders. However, we will not be able to breathe a sigh of relief until the EU Commission has finally authorised the transactions.”

Earlier this month, the European Commission approved the 150m euro loan from the German government, saying it would help to protect the interests of air passengers.

Air Berlin was recently forced to cancel about 100 flights after a large number of its pilots called in sick.

It prompted the airline to accuse them of sabotaging rescue talks with potential investors.

Ryanair pilots reject bonus to work through cancellation crisis

Ryanair planeImage copyrightGETTY IMAGES

A group of Ryanair pilots has rejected a cash bonus to work extra days after the airline cancelled 2,100 flights because it “messed up” crew holidays.

In a letter seen by the BBC, pilot representatives from 17 of the company’s 80 or so European bases have told bosses that most are not enthused.

They want new contracts and better working conditions instead.

Ryanair had offered captains a one-off payment of £12,000 or 12,000 euros, and first officers £6,000 or 6,000 euros.

But the letter said: “The pilot market is changing, and Ryanair will need to change the ways which the pilots and management work together to ensure a stable and common future for everyone”.

New contracts, it says, “should help stop the large number of colleagues who are leaving for “greener pastures”

It also asks to bring in professional negotiators to help broker a deal.

They have given the airline until tomorrow to respond.

One pilot told me that this is their one chance to improve conditions at work.

The letter comes from staff based all over Europe including Germany, Italy, Holland, Belgium and Sweden.

In recent days I’ve been contacted by almost 20 current and former Ryanair pilots telling me that the company is losing unhappy crews quicker than it can replace them.

They all told me that a shortage of pilots is the key reason why so many flights have had to be cancelled in recent days.

But it is a claim strenuously denied by the airline’s boss Michael O’Leary.

It seems that, for the first time, scattered Ryanair pilot reps are joining forces in some numbers – often making contact over social media – because they have spotted a chance to collectively bargain for new, improved contracts.

I asked Ryanair what they made of the counter-offer but they haven’t got back to me yet.

The big question now is, if pilots decide to escalate things, say, a work to rule for example, will Ryanair be able to get through the next few weeks without having to cancel yet more flights?

At the weekend Ryanair decided to cancel 40 to 50 flights every day for the next six weeks.

Ryanair said earlier that it had sent out emails to 315,000 affected customers on Monday, telling them about flight changes, alternative flights, and refunds.

It said the fiasco was down to its own mistaken decision to force its pilots to take their remaining annual leave before the end of the year, rather than by the end of the financial year next March.

This means it does not have enough pilots to crew all its scheduled flights this month and next.

Alphabet profits rocked by EU fine

Google sign in Menlo Park, Calif.Image copyrightAFP/GETTY

Profits at Alphabet, the parent company of search giant Google, have been hit by the record fine imposed by the European Commission last month.

The firm said it saw strong growth in the second quarter, with revenues of about $26bn (£19bn), up 21% compared to the same period in 2016.

But profits for the three months to the end of June were $3.5bn, more than 40% lower than they would have been without the fine.

Year-on-year profits fell almost 30%.

Google was fined 2.42bn euros ($2.7bn; £2.1bn) by the European Commission last month after it ruled the company had abused its power by promoting its own shopping comparison service at the top of search results.

The amount was the regulator’s largest penalty to date against a company accused of distorting the market.

Alphabet has already said it may challenge the fine.

Google ShoppingImage copyrightEPA
Image captionGoogle faces further penalties if it does not change the way Google Shopping ads are displayed within three months

Analysis by Dave Lee, North America technology reporter:

Naturally, this quarter’s earnings tell a very skewed picture of the health of Alphabet. It’s been a terrific quarter which, were it not for that record breaking fine, would have exceeded expectations in almost every way.

Google is appealing that fine, so we could find at some point in the future those “lost” billions are added back on, making for a particularly bountiful quarter somewhere down the line.

The company wants to keep an eye on its advertising business, however. The cost per click – i.e how much money Google makes with every ad click – has dropped by 23% year on year. That’s much more than analysts had hoped.

It’s a sign that Google is having to work harder to keep those incredible revenues coming in.

And if it is to comply with what it sees as overly strict European Commission measures, its ability to use its market power to dominate online advertising may be restricted. Just as well, then, that the non-advertising side of Alphabet is doing well too.


On Monday, chief financial officer Ruth Porat said the firm is reviewing the decision and working on ways to address the regulator’s concerns. She refused to comment further on how it may affect the business, describing it as an ongoing legal matter.

“The main thing is we’re very focused on helping users and advertisers and are reviewing our options,” she said.

The tech giant’s shares, which had risen ahead of the firm’s publication of its earnings, fell more than 3% in after-hours trading. Some said that was a sign shareholders were cashing in.

‘Strong growth’

Alphabet makes most of its money from advertising. It said revenues from advertisers on its own sites, such as YouTube and Gmail, and other sites together increased 18% year-on-year to $22.7bn.

YouTube, for example, now has about 1.5bn monthly viewers, who watch an average of 60 minutes a day, said Google chief executive Sundar Pichai.

The firm has also been working to diversify its revenue stream, investing in areas such as driverless cars, cloud services and life sciences that it says are united by the opportunities presented by machine learning.

Alphabet’s other revenues – which include money from things such as app purchases and its cloud services – jumped more than 40% to about $3bn.

“We’re delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams,” Ms Porat said.