BA Owner Faces Strike Threat Over Job Cuts

Staff at Spanish airline Iberia have rejected a restructuring plan that involves 4,500 job cuts and are willing to strike, labour unions said.

The threat of industrial action comes after IAG - the company formed by merging BA and Iberia - revealed an operating profit of just £13.5m in the nine months to September 30.

In addition to cutting nearly a quarter of the workforce, IAG has proposed a staff salary cut of 25-35% for three years.

"We are willing to take any necessary action," the airline unions said in a statement.

The results show Iberia is the weak link in the group, making a standalone operating loss of £209m in the period, while BA contributed operating profits of £228m.

On a pre-tax basis, taking wider cost pressures into account, the group made a loss of £134m in the nine months.

IAG shares have shed 40% of their value since the group's formation in 2011.

Iberia is Europe's leading carrier to Latin America, but it has been battling against increased competition from low-cost airlines and high-speed trains, labour disputes and Spain's deep economic crisis.

It is bleeding cash as revenues fail to cover its high operating costs, with a 15% spike in fuel costs.

"Iberia is in a fight for survival and we will transform it to reduce its cost base so it can grow profitably in the future," IAG chief executive Willie Walsh said in a statement.

Mr Walsh is no stranger to battles with trade unions and took on employees of BA over reforms when he was boss of the UK flag carrier.

He has also been a vocal critic of the British Government's aviation policy and said it was a "disgrace".

A BA aircrew strike in 2010 cost the airline up to £7m per day, but Mr Walsh used contract pilots and retrained ground staff on planes.

Mr Walsh stood firm on an airline's decision to withdraw travel perks from striking cabin crew, but staff called the ploy "bullying tactics".

Mr Walsh rejected suggestions the withdrawal of concessions was a "punishment" or an attempt to "break the union".

He added: "We told them about the consequences if they went on strike."

IAG's transformation plan for Iberia includes the fleet being downsized by 25 aircraft and routes cut by 15% in 2013, to concentrate on longer haul, profitable destinations.

Iberia head Rafael Sanchez-Lozano said: "It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability.

"Unless we take radical action to introduce permanent structural change the future for the airline is bleak."

Whilst the possibility of strikes by Iberia staff now loom, passengers booked from Heathrow to Madrid should feel secure, Business Travel News editor-in-chief Malcolm Ginsberg.

"Previously Iberia operated out of Terminal 3 at Heathrow but have now joined sister carrier British Airways in Terminal 5," he told Sky News.

"From a practical point of view if an Iberia flight is cancelled at short notice it should be relatively easy to transfer to British Airways - providing they have space."

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Treasury Gets £35bn Windfall From QE Interest

The Treasury is to receive a £35bn boost as part of a deal with the Bank of England that will effectively reduce public debt.

Chancellor George Osborne and Bank Governor Sir Mervyn King have agreed that the BoE will give the Treasury interest earned through its £375bn economy-boosting programme known as quantitative easing (QE).

The cash - currently on the BoE's books - will flatter the public accounts by reducing the budget deficit, while also acting as a "small loosening of monetary conditions" equivalent to taking more QE action, according to the Bank.

The announcement comes a day after it decided not to extend QE at its monthly policy-setting meeting.

The Treasury said the agreement was in line with similar practices surrounding QE in the United States and Japan.

In a letter to Mr Osborne, Sir Mervyn stressed the cash transferred to the Government would likely need to be paid back to the Bank in the future.

The move comes at an apt time for Mr Osborne as he faces pressure on his plans to cut borrowing.

But JP Morgan Chase economist Malcolm Barr said it was "still likely" that the Chancellor will need to push back debt reduction targets in his upcoming autumn statement.

Shadow chief secretary to the Treasury Rachel Reeves said it was a "smoke and mirrors" deal.

"Instead of changing course and taking action to create the jobs and growth we need to get the deficit down. The Chancellor seems to think he can just be bailed out in the short term by money from the Bank of England," she added.

Under the arrangement, £11bn is expected to be handed to the Treasury this year, with the remaining £24bn paid in four instalments over the next financial year.

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Olympic Stadium: Dismay Over Delayed Future

By Enda Brady, Sky News Correspondent

Olympic and Paralympic champions have voiced their dismay at news that the stadium may not open fully until the summer of 2016.

Four bids are still being considered as full-time tenants at the Stratford venue, but each bid will require significant and time-consuming modifications.

Dennis Hone, chief executive of the London Legacy Development Committee, revealed this week that it will not re-open until August 2015 at the earliest and probably not before August 2016.

Olympic champion Jessica Ennis told Sky News it was important the stadium was opened to the public without delay.

She said: "I've some amazing memories of the stadium, like a lot of other athletes.

"I'd love to see it opened to the public as soon as possible."

Leyton Orient FC are among four bidders to use the stadium in Stratford

Paralympic double gold medallist Hannah Cockroft said it was vital to speed up the process so that the goodwill generated by the success of London 2012 could be tapped into.

"The danger is that if it's not opened fully to the public for four years then that interest will wane," she said.

"It's an amazing venue and people want to see it, they want to be a part of it. I really hope they sort this out, they have to."

A transformation project costing nearly £300m is currently under way at the site and is expected to last up to 18 months.

The park itself will be opened to the public on July 27 next year, one year to the day the Games opened in London.

Maria Miller, Secretary of State for Culture, Media and Sport, told Sky News: "The stadium is vital for the legacy of the Games, but the important thing is to get the right tenant in."

The four bidders are West Ham United FC, Leyton Orient FC, a Formula One venture and the University College of Football Business - an academic institution owned and run by Burnley FC.

A final decision is expected in the first half of 2013, or possibly sooner.

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Fuel Duty: Osborne Faces Call To Delay Hike

Chancellor George Osborne is being challenged to use money saved from closing tax loopholes to fund a delay in next year's planned fuel duty hike.

Labour is pushing for the planned 3p hike to be postponed for a second time and will force a Commons vote next week.

The move will increase the pressure on Mr Osborne to take action on fuel in his Autumn Statement next month.

The Chancellor has already postponed the hike once but it is due to come into force in January. Labour wants a further delay to at least April.

Shadow chancellor Ed Balls insists "it cannot be right" to hit struggling families and businesses with another tax rise.

Ed Balls wants George Osborne to delay the hike

In a blog for PoliticsHome, he wrote: "I am clear that now is not the right time to hit the economy with another tax rise on small firms and people on low and middle incomes.

"The Government needs to act and clamp down on those avoiding paying their fair share of tax so that millions don't have to pay more.

"And I hope MPs from other parties will join us next week in pushing them to do so."

He suggested the money could come from clamping down on tax avoidance, citing one example of employment agencies using a loophole to lower their liability.

Mr Balls said they categorised part of a worker's pay as expenses, which means they pay less tax and national insurance and have higher profit margins.

"HM Revenue and Customs has forecast that these schemes cost the exchequer £650m a year. Recent estimates have now put it as high as £1bn a year," he wrote.

Scrapping the rise in August cost the Treasury £500m and it is estimated the further delay will cost another £350m.

However, campaigners from FairFuelUK claim allowing it to go ahead in January could lead to 35,000 job losses and hit economic growth.

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BA Owner IAG Hit By Iberia Performance

IAG - the company formed by merging BA and Iberia - has made an operating profit of just £13.5m in the nine months to September 30.

The results show Iberia is the weak link in the group, making a standalone operating loss of £209m in the period, while BA contributed operating profits of £228m.

On a pre-tax basis, taking wider cost pressures into account, the group made a loss of £134m in the nine months.

IAG has announced a transformation plan for Iberia, which will result in 4,500 job losses at Iberia.

Iberia's fleet is being downsized by 25 aircraft and its routes are being cut by 15% in 2013, to concentrate on those which are most profitable.

"Iberia is in (a) fight for survival," the carrier's chief executive Rafael Sanchez-Lozano said in a statement.

"It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability.

"Unless we take radical action to introduce permanent structural change the future for the airline is bleak."

Mr Sanchez-Lozano added: "However this plan gives us a platform to turn the business around and grow."

The group reported a 9% increase in passenger numbers and a 15% hike in fuel costs, as more job losses look likely at the Spanish airline.

Mr Sanchez-Lozano said "the Spanish and European economic crisis has impacted on Iberia, but its problems are systemic and pre-date the country's current difficulties."

IAG said it was announcing "a comprehensive plan to save Iberia after record losses and return it to profitability."

The parent group's said plans to cut 4,500 jobs are designed to safeguard around 15,500 posts across the airline.

IAG added that a deadline of January 31, 2013, had been set to reach agreement with unions over the cuts.

The group warned: "If agreement is not reached, deeper cuts and a more radical reduction in the size and scale of Iberia's operations will take place to secure the natural long haul traffic flows at Madrid and safeguard the company's future."

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HSBC Offshore Account Holders Investigated

HM Revenue and Customs (HMRC) has said it is studying a list of British HSBC customers in Jersey after a whistleblower handed over a list of names, addresses and account balances.

The department will now investigate the customers' details to establish whether any of them used the offshore accounts to evade tax.

Together, the 4,388 UK-based customers have a total of £699m in the bank accounts - which were often undisclosed to tax authorities, the Daily Telegraph claimed.

It said a number of criminals, former bankers, doctors, mining and oil workers, celebrities and other well-known figures are on the list.

"We can confirm we have received the data and we are studying it," HMRC said in a statement.

"We receive information from a very wide range of sources which we use to ensure the tax rules are being respected.

"Clamping down on those who try to cheat the system through evading taxes and overclaiming benefits is a top priority for us and we value the information we receive from the public and business community."

HSBC, the UK's largest bank, said: "We are investigating the reports of an alleged loss of certain client data in Jersey as a matter of urgency.

"We have not been notified of any investigation in relation to this matter by HMRC or any other authority but, should we receive notification, we will cooperate fully with the authorities.

"HSBC remains fully committed to adoption of the highest global standards including the procedures for the acceptance of clients."

The report comes after the bank set aside a further $800m (£500m) to cover settlements for breaching anti-money-laundering rules, as revealed by Sky News' City Editor.

The move takes its total bill to around $1.5bn (£935m) to cover fines from US authorities, which are investigating the bank's procedures in Mexico.

Tax authorities around the world are in the process of clamping down on people who evade taxes by putting their money offshore.

Last week a Greek magazine published the details of more than 2,000 HSBC clients with Swiss accounts.

The information came from a list distributed to European authorities in 2010 by Christine Lagarde, then France's finance minister, after a whistleblower in Geneva sold the details.

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Supermarkets Cut Petrol Prices By Another 2p

Three supermarket chains have cut their petrol prices again, reducing the cost of fuel by 2p at pumps across the nation.

Asda was the first to announce the discount, which follows similar reductions towards the end of last month.

It will now charge 137.7p for a litre of diesel and 131.7p for unleaded petrol on its forecourts.

Sainsbury's and Tesco followed suit, saying they would also slash 2p off their prices.

Welcoming the move, the president of roadside recovery group AA, Edmund King, said: "Once again the supermarkets have led the way on fuel price reductions.

"We have said there is scope for price cuts given wholesale price falls and welcome the move and hope all the other retailers follow."

He said that many people are cutting back on the number of car journeys they make because of the high cost of fuel.

"This reduction will go a little way towards helping families and businesses keep mobile," he added.

Asda's petrol trading director, Andy Peake, said his company was "leading the way" in reducing the price at the pump.

"Unlike other retailers, our price cuts benefit everyone across the country, meaning that no one filling up at Asda will be forced to play a postcode lottery," he said.

A Tesco spokesman said: "As Britain's biggest petrol retailer with 490 forecourts, more motorists will make savings at the pumps at Tesco than at any other fuel retailer."

And Sainsbury's head of fuel, Richard Crampton, said: "With Christmas on the horizon, we know that this can be an expensive time of year so we're delighted to announce that we will be lowering our petrol and diesel prices."

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World Stock Markets Fall After Obama Victory

Four More Years: A City Expert's View

Updated: 6:25am UK, Thursday 08 November 2012

By David Buik, Cantor Index

There is a considerable school of thought that Barack Obama was rather an insipid and ineffectual Commander-in-Chief and that his first term achieved very little.

Maybe it would be no bad thing to reflect on what did happen in the US and the world at large over the past 4 years and what he did achieve in his first four years as well as what he abjectly failed to do.

As they say in the trade, President Obama inherited a horrific 'hospital pass' from George W Bush in the form of a savaged economy, which was heading vertically in to a vortex of deep recession courtesy of the sub-prime lending crisis, which took the US financial sector to the brink of disaster, triggering 'bail-outs' orchestrated by Hank Paulson, Bush's Treasury Secretary, for Bear Stearns, AIG, Freddie Mac and Fannie Mae, but NOT Lehman, which clearly exacerbated the magnitude of the crisis.

This financial meltdown manifested itself thanks to the breathtaking and irrationally exuberant incompetence of the FED Chairman Alan Greenspan, who recklessly encouraged banks to lend money indiscriminately without adequate regulation.

Consequently, shortly into his Presidency, Obama was forced to agree a recommended $789bn 'bail-out support fund' for the financial sector, implemented by the new FED Chairman Ben Bernanke.  This rescue act was the start of quantitative easing.  At the end of November 2008 the DOW had dropped to 8829. Once QE had been introduced it rallied sharply and today it stands at circa 13000 – up 47%.

QE provided financial institutions with cheap money which underwrote the value of equities.  However there is no doubt that Wall Street was not the flavour of the month for the man in the street – never has been; never will be!

Unfortunately equity markets are not necessarily a reliable barometer of economic activity.  Unemployment was at 7.9% in November 2008 and steadily rose to 10% by October 2009.  Since then it has slowly, but not resolutely fallen back to 7.9%.

The $50bn auto industry bail-out in 2009 probably saved 150,000 jobs and also certainly stopped the President losing the support of Ohio. However unemployment remains a huge problem and the rate of 7.9% is probably distorted as so many people have stopped applying for jobs in dismay.  So the real rate is probably nearer 13%.  Then of course there is the housing market, which is slowly improving from a completely trashed base level, though many people remain under water with negative equity.

President Obama has some way to go before he implements his healthcare/Obamacare and pension ideals against virulent opposition from the GOP in Congress.

Easily the most worrying aspect of the US economy is the manner the budget deficit has grown since 2008 – from $9 trillion to $16 trillion.

In the long-term this is totally unacceptable, particularly as the US is so reliant on outside support for Treasuries, particularly from China. If this support were to be withdrawn or even cut, it could have a very adverse effect on the cost of funding for the US, thus severely damaging the recovery process as well as increasing unemployment dramatically.

Very important changes are shortly being made in China's government.  It will not be long before China overtakes the US as the most important economy in the world.  President Obama will need to improve his relationship with China, cutting back on the jingoistic rhetoric on currency and trade protection. He should try negotiating!

President Obama has proved to be an extremely abrasive and divisive politician.  The Democrats lost their majority in Congress on 2010 and Obama failed to find any common ground with the Republicans, which resulted in the government failing to get through its legislative programme. I cannot see that impasse changing.

The 'fiscal cliff' will appear over the horizon at the end of December.  Common ground has to be found over public expenditure cuts and taxation increases need to be agreed.  The President's interpersonal skills for dealing with his opponents need sharpening up. If not - There will be trouble in River City!" The President was very lucky to be up against a Republican candidate, who never really caught the public's imagination.  He has a chance to redeem himself!

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Morrisons' Sales Fall Ahead Of Xmas Battle

Morrisons supermarket chain says customer confidence remains "fragile" as it reports a fall in underlying sales.

The UK's fourth largest grocer said sales at stores open for over a year, excluding fuel, fell 2.1% in the first three quarters of this year.

It compares with a fall of 0.9% in the first half, and total sales, excluding fuel, were down 0.4%.

"With consumer confidence still fragile and high levels of promotional activity a persistent feature of the market, the trading environment has remained challenging through the period and sales were lower than anticipated," the chain said in a statement.

It added that it expects the environment to "remain challenging" over the rest of the year, but that its financial performance will be in line with expectations.

Industry data released by Kantar Worldpanel showed Morrisons, which has 450 stores, lagging behind its three big rivals: Tesco, Sainsbury's and Asda.

The figures also show it missing out on the sales growth seen by smaller chains, including discounters Aldi and Lidl.

It means competition this Christmas - when supermarkets battle to cash in on the festive spending rush - will be tougher than ever.

In response, Morrisons promised customers they could buy their Christmas lunch groceries for £2.49 per head as part of its "Dreaming Of A Tight Christmas" campaign. 

Retail analysts Conlumino said the supermarket needed "short term remedies" to help quash its loss of market share to rivals.

"A resurgent Tesco is discounting and vouchering extensively, the deep discounters continue to gain ground and Asda is pushing its 'everyday low price' message harder than ever," senior consultant Joseph Robinson said. 

"Against this backdrop Morrisons – whose customers remain more price sensitive than average – has simply lost ground and lost footfall and spend to other players."

He added: "The key challenge going forward will be to balance longer term aspirations and strategies with shorter term tactics to drive footfall and spend."

Following the news, Morrisons' share fell over 1%, while rival Tesco's were up over 1.6% making it the biggest riser on the FTSE 100 in early trading. 

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Pay Gap In Reverse As Women Work 'For Free'

The gender pay gap is so large that women will effectively work the rest of the year for free, it is claimed.

A study by the campaign group Fawcett Society suggests that, rather than improving, the pay and jobs prospects of women are going into reverse amid the Government's austerity measures.

Chief executive Ceri Goddard said: "At the same time, women's unemployment stands at a 24-year high and growing numbers of women have been forced into low paid, part-time and insecure  employment - underemployment.

"Far from slowly moving forward, we now face going into reverse. If Government wants to avoid an unprecedented backwards step on its watch, they must take more action."

The conclusions were released as separate research for the Chartered Management Institute (CMI) found that the average female company executive earns more than £400,000 less than a male counterpart over her career.

According to the Institute, the average gender pay gap for UK executives is more than £10,000 annually.

It also claimed that women receive less than half the bonus payments given to men and 4.3% of female executives were made redundant in the past year, 1.1 percentage points more than male bosses.

It found that while women now make up 57% of company executives only 40% are departmental heads and fewer than one in four are chief executives.

The survey of more than 38,000 executives revealed a "substantial" gender pay gap at the higher end of the executive career ladder, the Institute said.

"A lot of businesses have been focused on getting more women on boards but we've still got a lot to do on equal pay and equal representation in top executive roles," said CMI chief executive Ann Francke.

"Women make up almost three out of four at the bottom of the ladder but only one out of four at the top."

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