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British Airways shares remain depressed by the prospects of an Open Skies deal. They are still more than 6 per cent lower this afternoon in a London market that has recovered some of its earlier losses to trade down 1 per cent.
The draft Open Skies deal is proving a hot topic of discussion online. The deal, struck on Friday between the EU and the US, would allow any European or US airline to buy slots at Heathrow but would also allow any European airline to fly from anywhere in Europe to anywhere in the US. This should encourage competition on transatlantic flights and make it easier for European airlines to merge.
Richard Howard, in a blog for the Globalisation Institute, perhaps not surprisingly, applauds the deal. The existing “oligopoly” has “caused very high prices”, he says. “The average business class ticket from Heathrow to New York costs £4000 compared to just over £1000 from Amsterdam. The benefits to the consumer of this agreement are obvious. Many more airlines will be able to fly to the US, including low-budget airlines.”
“The worry for many critics is that the deal favours US carriers, and that companies such as British Airways and Virgin would have to give up valuable prime-time landing and take-off slots at Heathrow airport,” says Aviationwatch. On the other hand, says AviationViews, “could this proposal signal a change that could help Virgin America get its wings? Or will Congress stop this one in its tracks?”
There is serious discussion taking place on PPRuNe, the professional pilots’ rumour network. However, Pax Britanica doubts whether the deal will mean much change at Heathrow. “LHR cannot accept any meaningful number of extra flights and one small problem – 3 hours of fog say – disrupts half the world’s airlines because of delayed aircraft in Heathrow. I just do not see O’Leary and FR wanting to be tangled up in that.” Until Heathrow has a third runway (”years away”) all this is “largely cosmetic”, he says.
In contrast to the view from London, RedeyeAV8r on the Airline Pilot Forums, says the deal is “generally bad for US carriers. While some competition is a good thing, There is already a lot of competition to/from Europe. Just when the US carriers are beginning to get back on their feet.” On the same forum, though, Linebacker35 welcomes it. “Get some mergers going here in the states, create a few Super airlines and take the fight to them europeans.” he says.
Julian Ku on Opinio Juris says: “One day I will be able to fly a foreign airline like Lufthansa from New York to Seattle. That day is not quite here yet, but (hopefully) it’s getting closer.” I fear not much, though: this is one important concession the EU failed to secure.
The big corporate news remaims the results from HSBC. In addition to a full story and all the details here on FT.com, you can also watch Peter Thal Larsen give his initial assessment of the numbers and we have commentary from Lex.
Blackstone has agreed to buy Madame Tussauds for £1bn from Dubai International Capital. This will put the waxworks together with Legoland and the London Eye to create, it claims, the world’s second largest leisure park operator by number of visitors after Disney. DIC, which bought Madame Tussauds two years ago, will keep a 20 per cent stake in the enlarged business.
Fewer disasters helped Amlin this morning announce a special dividend as it unveiled record profits, while fellow Lloyd’s of London insurer Kiln said its syndicates’ returns for the 2004 year of account closed at the high end of expectations. Elsewhere among the financials, we have a pretty mixed set of results from Close Brothers.
William Hill, the bookmaker, plans to slow down its share buy-back programme in the short term as it seeks acquisitions internationally and in the UK. The group had planned to return £320m-£400m to shareholders by the end of 2007 but David Harding, chief executive, now says he has better ways of using the capital. Presumably this relates to the opening up of the Italian and Spanish betting markets.