23 October 2018

Scott Reid

23 October 2018

Good morning,

There’s only so much you can expect from an airline whose tagline reads “low fares, made simple”. It certainly promises to place passengers' commercial interests at heart, with an approach perhaps best described as ‘stripped back’. 

Which is why, despite its supposed realisation that customer service could benefit business, no-one seems surprised that Ryanair is facing another PR crisis over footage showing a woman being subjected to racist abuse by another passenger on one of its flights from Barcelona. The kicker? She was the one asked to move. 

The episode gets to the heart of a business strategy that prioritises profit – via extremely tight timetables – above people. Sure, commentators can suggest that any airline would have done the same. But when you consider each Ryanair flight’s ultra-thin margins, it’s a bit easier to see why a staff member decided it would be harder to ask the noisy offender to move, lest they risk delaying take-off.

And yet at Ryanair, whose chief executive Michael O’Leary once quipped that its customers would “crawl bollock-naked over broken glass to get low fares”, another thing we have come to expect is that – as long as the price is right – passengers nor investors seem to care much.

Yesterday’s half-year results saw the airline fly 76.6 million passengers during the six months to September, up six per cent. It also boasted an eight per cent rise in revenues to €4.8 billion, and in turn was rewarded by a 4.19% rise in its share price.

But all is not rosy. During what is usually the busiest six months of flying, Ryanair saw a seven per cent drop in profits to €1.3 billion, thanks to softer fares and higher fuel and staff costs – of which pay rises were won following years of testy labour relations. Furthermore, the company is still paying compensation to customers following last autumn’s cancellation of 20,000 flights after the company miscalculated staff holidays.  

If O’Leary is to live up to his description as a go-to commentator for the industry, he should realise that change starts at the top. With the prospect of rising fuel prices affecting airline profitability, he might find that an airline which treats customers correctly - even if costs a bit more - could be his best strategy yet.


Theresa May has unveiled a ‘four-point plan’ to unblock Brexit talks which leaves open the possibility that Britain could remain subject to EU regulation until 2021. In a statement to the House of Commons yesterday, the prime minister insisted that (i) any backstop to the withdrawal agreement would apply to the UK as a whole; (ii) it would be subject to extension following a parliamentary vote; (iii) it would last for a defined period; and (iv) it would guarantee full access to the UK market for Northern Ireland. Other than the backstop, the prime minister confirmed that “95%” of the Brexit deal had been agreed. (£) 

UK public coffers could be up to £13 billion better off than originally thought according to the latest forecast from the Office for Budget Responsibility. The figure marks the biggest annual decrease in the UK’s budget deficit since records began in 1982-3, more than fifty lower than the initially anticipated figure of £25 billion for 2018-19. The FT reports that the Chancellor is likely to use the funds to announce investment in the NHS when he presents the Autumn Budget next Monday. (£)

The world’s oldest shipwreck has been found in the Black Sea where it is thought to have been lying for more than 2,400 years. British scientists from the Black Sea Maritime Archaeological Project found the ship 50 miles off the coast of Bulgaria at a depth of 2.09km. The 23-metre merchant vessel has been found intact, complete with mast, rudders and rowing benches, a fact scientists have attributed to the lack of oxygen below 490ft. (£)

Business & Economy

Telefonica O2 is to postpone a speculated £10 billion stock market flotation over ‘Brexit fears’. According to the Press Association, the mobile operator had been expected to list on the London Stock Exchange this year following 4G and 5G spectrum auctions in April but will now hold off until after the UK leaves the EU amid market uncertainty. Analysts have valued Telefonica O2 at between £9 billion and £10 billion.

Morrisons could be forced to pay out “vast” sums in compensation to employees whose details were lost in a data breach. In the UK’s first data leak class action, the Court of Appeal ruled yesterday that the supermarket chain was liable for the loss which saw thousands of its employees’ details posted online including national insurance numbers and bank details. Morrisons was seeking to overturn a decision taken against it in December 2017, which the High Court chose to uphold yesterday.

Addison Lee Group has unveiled plans that would see self-driving taxis launched in London by 2021. The taxi firm, in partnership with Oxbotica, an Oxford-based start-up specialising in autonomous software, said the plans will create digital maps of more than 250,000 miles of public road, including the position of every kerb, road sign, landmark and traffic light. The government has forecast the autonomous vehicle industry to be worth up to £28 billion in the UK by 2035.


What happened yesterday?

Political uncertainty over Brexit talks following the prime minister’s statement to parliament led the pound to a six-week low yesterday, as the FTSE finished the day on a similarly pessimistic note. By close of play, the FTSE 100 had given up its early gains to finish the day down by 0.10% or 7.0 points at 7,042.80, whilst the pound was down on both the euro by 0.31% at €1.13 and the dollar by 0.81% at $1.30. 

Despite overall losses, strong gains were made in the mining sector, as Anglo American (up 1.55%), Antofagasta (up 0.7%) and Glencore (up 0.75%) all benefited from a rise in metal prices on news that the Chinese government is set to bolster investment in the economy.

Offsetting these gains were losses among energy giants BP (down 1.20%) and Cairn Energy (down 6.63%) as crude oil futures suffered following news of continued higher readings on activity in the US Permian basin and reports that Libya may be able to add several hundred thousands of barrels of oil per day in output during early 2019.

Betting companies GVC Holdings (down 2.34%), Paddy Power Betfair (down 3.84%) and William Hill (down 3.49%) all fell in response to a report over the weekend that the Chancellor is set to announce a clamp down on offshore gambling companies when he announces the Budget next week.

Investors in Debenhams were similarly uninspired following rumours that the department store is preparing a radical overhaul of its corporate strategy. According to reports, Debenhams is set to review its store portfolio and slash its dividend to zero whilst it gets its finances in order, leading the share price down by 3.85%.

Bloomsbury Publishing
Q3 Results
Travis Perkins
Trading Announcements
Anglo American
Intu Properties
Plus500 Ltd (DI)
St James’s Place 

Aberforth Split Level Income Trust
Coral Products
OPG Power Ventures
Vela Technologies
UK Economic Announcements
(11.00) CBI Industrial Trends Surveys
Intl. Economic Announcements
(07.00) Producer Price Index (GER)

Columns of Note

In The Times, Patrick Hosking reviews likely decisions to be taken by the Chancellor in next Monday’s Budget, suggesting he is stuck between political imperatives to increase public spending and his promise to balance the books by the mid-2020s. Hosking predicts that a windfall for the NHS is likely, as are concessions for universal credit, paid for by ending tax relief on pensions savings among the better off. But the Chancellor should tread carefully – amid many unforeseeables, Hosking warns that any hasty move to invest or tax more could be a misjudged stab in the dark.

Stephen Bush asks in the News Statesman whether we are at last witnessing the final days of Theresa May’s premiership? Given the PM’s problems began in June 2017 after the General Election, Bush calculates that May has been “in peril” for more than half her administration, and whether she is at the helm or not, makes little difference to problems facing the Conservative party. Any Tory administration would still face pressure to raise taxes in next Monday’s Budget, and to “square the circle” of Northern Ireland in Brexit negotiations.

Did you know?

There are more rooms in the Bellagio hotel in Las Vegas than there are people in the town of Bellagio in Italy. 

Parliamentary highlights

House of Commons
Oral questions
Health and Social Care (including Topical Questions)
Ten Minute Rule Motion
Abortion - Diana Johnson
Civil Liability Bill [Lords] - Remaining Stages
Elder abuse - Giles Watling

House of Lords
The Lord Bishop of Bristol
Oral questions
Impact on children of the £1,012 fee to apply to register their entitle to British citizenship - Baroness Lister of Burtersett
Food security following Brexit - The Lord Bishop of St Albans
Prevention of anonymous social media accounts - Lord Balfe
Shortage of flu vaccines - Lord Naseby
Mental Health Units (Use of Force) Bill - Committee stage - Baroness Massey of Darwen
Voyeurism (Offences) (No. 2) Bill - Second reading - Lord Keen of Elie
Scottish Parliament
Ministerial Statement
Response to recommendations on financial redress for survivors of child abuse in care
NHS performance
Culture, Tourism, Europe and External Affairs Committee Debate
Making Scotland a Screen Leader, Report Examining the Scottish Screen Sector
Members’ Business
Fife Out-of-Hours Closure – Jenny Gilruth
House of Commons
Oral questions
Prime Minister's Question Time
Ten Minute Rule Motion
Housing Reform - Mr Richard Bacon
Business of the House
Northern Ireland (Executive Formation and Exercise of Functions) Bill - All Stages
Government approach to detrimental home insulation issues - Sir Mark Hendrick

House of Lords
Oral questions
Access to treatment in Children and Adolescent Mental Health Services - Baroness Tyler of Enfield
Whether forecasts for the UK economy show a better outcome if the UK were to remain in the EU than if it were to leave - Lord Strasburger
Government plans to (1) promote freedom of religion or belief, and (2) mark International Freedom of Religion or Belief Day on 27 October - Baroness Anelay of St Johns
Protecting the impartiality of the civil service following recent political criticisms of the Brexit process - Lord Luce
Non-Domestic Rating (Nursery Grounds) Bill - Third reading - Lord Bourne of Aberystwyth
Ivory Bill - Report stage - Lord Gardiner of Kimble
Report from the EU Committee 'Subsidiarity Assessment: discontinuing seasonal changes of time'; Reasoned opinion relating to discontinuing seasonal changes of time - Lord Whitty
Scottish Parliament
Portfolio questions
Health and Sport
Scottish Labour Party Debate
Members’ Business
Support for Families of Loved Ones Killed Abroad – Angela Constance