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Roundup-Ryanair pulls out all the stops

Tuesday, February 05 08:16:01

Ryanair has offered to give British airline Flybe E100 million in cash to help establish an operation in Ireland that could take over 43 routes from Aer Lingus as it seeks to gain approval from the European Commission to acquire its Irish rival.

The routes in question are expected to generate a profit of E20 million for Flybe, according to Ryanair's submission.

Ryanair has also withdrawn a proposal that British Airways would take over Aer Lingus's Heathrow slots.

Instead, BA has agreed to take over Ryanair and Aer Lingus Gatwick slots for flights to Dublin, Cork and Shannon.This is an important change to the remedies package submitted to the commission.

Government veto

At present, the Government, which owns 25.11 per cent of Aer Lingus, could veto a transfer of the Heathrow slots to British Airways if it were to gain the support of another 5 per cent of shareholders in the former state-owned airline.

This is likely given that Aer Lingus's code-sharing partner Etihad Airways owns just under 3 per cent of the Irish airline and that pilots and other staff also have significant holdings in the business and are unlikely to sell to Ryanair. The Irish Times

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Ghostly skeletons of large residential estates, half-finished shopping malls, empty apartment buildings with no windows, serviced by dirt tracks full of potholes. Sound familiar?

These images of half-built luxury ghost developments are known to Irish readers, but they are relatively new in China, where the property market has slowed significantly since the government introduced cooling measures to stop the boom turning into a bubble.

In places like Ordos in Inner Mongolia, hundreds of projects have ground to a halt after a building boom fuelled by over-investment went bust, leaving tens of thousands of investors at risk of default.

In the search for options that offer more than the minimal return of a bank deposit book, investors in China have been piling into investment vehicles known as trusts, which promise high annual interest rates and a return of principal for people with more than a million yuan (E120,000) to invest.

According to Wang Tao, chief China analyst at UBS, trusts account for more than a quarter of the country's estimated $3.35 trillion (E2.56 trillion) in non-bank lending, or about 45 per cent of China's gross domestic product.

The investment bank Sanford C. Bernstein Co estimates that shadow finance in China totals about 20 trillion yuan (E2.45 trillion), or a third of the current size of the bank lending market.

Shadow banking in China includes banks' off-balance-sheet vehicles, such as commercial bills and entrusted loans, as well as underground lending by individual. The reason it is booming in China is because more than 90 per cent of the nation's 42 million small and medium-sized enterprises (SMEs) - find it difficult to get bank loans. The Irish Times

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Ireland is the "standout" country when it comes to recovery and may bounce back more quickly than previously expected, rating agency Standard and Poor's has said in a report

"Wage flexibility and investment inflows make Ireland a standout," S and P analyst Frank Gill wrote in a report on Europe's economies.

Highly indebted countries are making faster progress in rebalancing their economies than the rating agency had previously anticipated, the report says.

Rising exports are helping Ireland, Spain and Portugal, the report concludes. Greece is not benefiting from this trend and has seen exports fall.

Spain and Portugal both saw exports hit record highs last year thanks to demand from China, Brazil, Angola, Mozambique and the US. Irish exports are close to an all-time high.

Ireland, Spain, Portugal, and Greece all improved their current account positions last year.

"For 2013, we forecast that Spain, Portugal and Ireland will operate outright current account surpluses, potentially enabling them to post an earlier recovery of GDP (gross domestic product) than we had previously anticipated," the report said.

Current account surpluses occur when countries receive more in payments for selling domestic goods than they do in payments buying imports.

S and P highlighted Ireland's reduction in unit labour costs - with cuts to both public and private sector wages as well as large-scale job cuts, especially in the construction sector.

The report says Spain's unit labour costs also fell but blamed the decrease on rising unemployment.

The rating agency said Ireland and Estonia are both champions when it comes to attracting foreign investment. The Irish Independent

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Dunnes Stores boosted its share of Ireland's multi-billion-euro grocery market by the most in four years as heavy promotional activity over Christmas helped it steal a march on its rivals.

New data from research group Kantar Worldpanel shows that Dunnes Stores' share of the grocery market rose 4.6pc to 24.3pc in the 12 weeks to January 20.

Tesco and the Musgrave-controlled SuperValu and Super-quinn all lost ground in the period.

The decline posted by Tesco is the first time that the retailer has fallen behind the market growth rate since October 2009. In the latest period, the market growth rate was 0.6pc. Kantar said Tesco could grow its share again by capitalising on shoppers who've been making more frequent trips to its stores.

The performance by Dunnes firmly reverses what had been previously difficult trading for the family-owned retailer.

Generous

But retail insiders say the group effectively "bought Christmas" by rewarding customers with generous vouchers in the run-up to the season.

The strategy worked. Dunnes Stores was the only one of the larger multiples to pick up market share.

Tesco's market share fell 1pc to 27.6pc, but it's still the country's biggest grocery retailer. SuperValu's share slipped 0.5pc to 19.8pc while Superquinn's fell 4.5pc to 5.3pc. Aldi's market share was 5.9pc. Lidl's was virtually unchanged at 5.7pc.

David Berry, commercial director at Kantar Worldpanel, said that shoppers responded well to Dunnes' promotional 'Shop and Save' offer, buying more items when they did shop and increasing the average size of their baskets by almost E3 to E36.70, a rise of 9pc. The Irish Independent