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| Airline profits nosedive as leaders debate finance crisis |
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Time is GMT + 8 hours
Posted: 7-Nov-2008 20:49 hrs |
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| Investors look at monitors outside a stock trading house in Taipei. World leaders thrashed out ways of combatting the global financial crisis as plunging profits in the airline industry underscored fears of a protracted recession. |
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World leaders thrashed out ways of combatting the global financial crisis on Friday as plunging profits in the airline industry underscored fears of a protracted recession.. Incoming US president Barack Obama was to convene a meeting of his top economic advisers at talks in Chicago after discussing the current financial turmoil with the leaders of nine US allies in a series of phone calls.. Leaders of the European Union also gathered in Brussels to firm up proposals for an overhaul of the global financial system which they will present to outgoing US President George W. Bush in Washington next weekend.. Meanwhile in Asia, South Korea became the latest leading economy to slash its interest rate in a bid to cushion the impact of the downturn after similar moves by the European Central Bank and the Bank of England.. But while governments intensified their efforts to restore confidence, grim news continued to roll in with British Airways blaming "incredibly difficult trading conditions" as it announced a 92-percent plunge in half-year profits.. Pre-tax profits dived to 52 million pounds (64 million euros, 82 million dollars) from 616 million during the same six-month period a year earlier.. The airline recorded a net loss of 42 million pounds for the six months to the end of September and said passenger numbers were down by almost four percent.. "The six-month period will be remembered as the bleakest on record," BA chief executive Willie Walsh said in a statement.. There was similar news from Japan Airlines , Asia's largest carrier, which said its operating profit fell by 47 percent in the fiscal first half.. The airline industry has been one of the worst hit by the financial turmoil and Europe's biggest airline, Air France-KLM, announced last month it would seek to cut costs by 1.2 billion euros over the next five years.. Another major European company to take a hit from the crisis was Munich Re, the second-biggest reinsurance group in the world, which dropped its 2008 profit target following a plunge in third-quarter results.. "The ongoing volatility of the markets does not permit a reliable profit forecast for the year as a whole," said the German firm's financial director Joerg Schneider.. French President Nicolas Sarkozy, who chaired the meeting in Brussels, said the turmoil of recent months underlined the need for better coordination.. "I maintain that in the face of the economic crisis, the coordination of economic policies is a strong obligation," he said ahead of the summit.. "There is no other choice than to understand and listen and try together to preserve economic growth.". German Chancellor Angela Merkel said it was essential Europe learned from its recent woes.. "We want a programme, based on the lessons drawn from the crisis, that will prevent that such crises are repeated. Europe will bring its proposals," she said.. In a sign of growing coordination within Europe, the Bank of England and the European Central Bank cut their main lending rates within hours of each on Thursday.. South Korea's central bank followed suit Friday, cutting its benchmark lending rate by a quarter of a point to 4.0 percent -- its lowest level since February 2006.. However the rate cuts appeared to have had only a marginal impact with Europe's main markets only fractionally higher and Asia seeing a fall in share prices.. In late morning trading in Europe, the London stock market was up 2.01 percent, Frankfurt won 1.35 percent and Paris gained 1.17.. In Asia, Tokyo's Nikkei stock index closed down 3.55 percent after dropping as much as seven percent at one point following a profit warning from Toyota. Sydney lost 2.4 percent.. "Despite huge rate cuts in the UK and Europe, the markets continued to fall on continued concerns over the deteriorating global economy," said Ben Potter, research analyst at IG Markets in Australia.. Investors were also bracing for Friday's report on US payrolls for October to show a loss of 200,000 jobs amid weak economic momentum.. Investors were beginning to take the view that "the US may in fact suffer the deepest and longest recession of any economy," said Clifford Bennett, chief economist at Sonray Capital Markets in Australia.. "This time it may be a case of first into recession, and last out, for the US," he warned.. US automaker Ford announced a loss of 129 million dollars in the third quarter Friday, and said it would be cutting 10 percent of its jobs.. However the figures compare with a loss of 380 million dollars in the same quarter a year earlier, representing a six-cent loss per share against a 93-cent loss previously. — AFP
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