Business of the World

SAS ports futher losses

2010-04-26T01:51:00.000-07:00

Scandinavian airline SAS has posted another quarterly loss – of 100 million euros.
The airline, which is half-owned by the governments of Sweden, Norway and Denmark,
said it was seeing signs of improving demand but was not sure when revenues will stabilise.
In March it experienced a monthly rise in passenger traffic for the first time in 19 months but warned disruptions from the Icelandic volcano will take a toll.

IMF ups 2010 growth forecast

2010-04-22T00:55:00.000-07:00

The International Monetary Fund says the global economy has recovered from recession more quickly than anticipated.
The IMF said emerging countries are leading the upturn with their economies expected to grow nearly three times as fast as those of developed nations.
In its latest World Economic Outlook the IMF’s forecast for global growth this year has been nudged up to 4.2 percent. Back in January the IMF was predicting growth of 3.9 percent.
Its forecast for next year is unchanged at 4.3 percent growth.
There is a strong warning from the IMF’s experts that country’s have to “urgently” get their public debt under control.
It believes the trillions spent in emergency rescue efforts have worsened public finances, leaving countries vulnerable to new shocks.
That has been illustrated by Greece’s intensifying fiscal problems and the IMF said that other countries will have to follow the same route with tax increases and spending cuts.
The euro zone can expect weak growth this year and next of around one percent.
The prediction is that only Greece’s economy will still be shrinking in 2011 as the region emerges from the recession.

Bank of America profit beats expectations

2010-04-20T03:38:00.000-07:00

Bank of America has made its first quarterly profit since last summer.
The largest US bank in terms of assets said its net income increased to $2.83 billion dollars from $2.81 billion a year earlier.
That was three times what analysts has forecast.
Much of that profit was due to strong investment banking results from Merrill Lynch.
Bank of America was widely criticised for paying too much when it controversially bought Merrill Lynch at the height of the financial crisis.
In a further sign of US economic recovery the bank said it had set aside less money to cover bad loans.
Industry observers took that to mean borrower defaults may be levelling out after rising for nearly two years.
However, Bank of America’s shares fell, along with the rest of the sector after Goldman Sachs was charged with fraud by regulators at the US securities regulators.
A Goldman vice president, Fabrice Tourre, who the SEC said was principally responsible for creating the product, was also charged with fraud.
The charges related to the structuring and marketing of a debt product tied to subprime mortgages.
The move marks a dramatic expansion of regulatory efforts to hold people and companies responsible for activity that contributed to the financial crises.
The charges hit the shares of European banks included BNP Paribas, Banco Santander, Barclays, Deutsche Bank and HSBC which ended the day down between 2.3 and 7.3 percent.

Greek crisis talks delayed

2010-04-20T03:01:00.000-07:00

Talks between Greek officials and teams from the European Central Bank, the European Commission and the International Monetary Fund are now not likely to take place until Wednesday because of travel delays from the volcanic ash cloud.
Eurogroup chairman Jean-Claude Juncker has said they will discuss the possibility of more austerity measures for Greece.
The delay in the talks caused further sell-offs of Greek assets.

EADS close to tanker decision

2010-04-11T06:04:00.000-07:00

Sources say EADS is close to a decision on bidding for a deal to supply air refuelling tankers to the United States.
The aerospace company’s executives were said to be meeting on Friday on whether to go ahead with a US partner to provide the electronics – the reported favourite for that role is New York based L3-Communications.
The alternative is for EADS to conserve resources for cash-hungry aircraft development projects in Europe.

European manufacturing activity rises

2010-04-03T12:24:00.000-07:00

There have been more signs that the economic recovery in Europe is gathered pace.
As production was cranked up last month, manufacturing activity in the euro zone grew at its fastest pace in over three years according to a survey of purchasing managers.
A jump in output and new orders in the region’s biggest economy meant German manufacturing activity hit a level not seen in almost 10 years.
France, the second biggest euro zone economy, saw factory activity expand at its best pace since November 2006.
Spain also seems to be catching up as purchasing managers there reported manufacturing in March grew for the first time since November 2007.
However economists said demand remains fragile and there was no sign of a return to growth in employment.
And British manufacturing activity grew last month at its fastest rate since October 1994.
Exports continued to benefit from sterling’s weakness versus other major currencies.
But 15 percent of firms reported job cuts and inflation remains a potential problem with companies saying they plan to raise prices.

Daimler says there's no 'maybe' over Maybach

2010-04-02T08:50:00.000-07:00

The German car manufacturer Daimler has played down talk that it is to sell its super luxury Maybach brand to a Chinese company.
The Guangzhou Daily and other Chinese media said the firm BYD, based in Shenzhen, was ready to make a move once Maybach is put up for sale.
A Daimler spokesman said the Maybach brand is an important part the company’s portfolio.
BYD also denied the reports, saying they will work with Daimler to develop electric cars for China.

French car sales accelerate

2010-04-02T04:55:00.000-07:00

French car sales rose in March, boosted by a scrapping incentive.
They were up by 12.8 percent, adjusted to take into account the fact that March this year had one more working day than the same month last year.
For the first three months of the year sales were up 17 percent, but Renault and PSA Peugeot Citroen are both forecasting a decline with the end of the scrappage scheme.

China may back Iran sanction despite trade links

2010-04-02T03:44:00.000-07:00

Western governments have become increasingly confident that the Beijing government will back UN sanctions against Iran over its disputed nuclear activities.
China is currently Iran’s leading economic partner having filled many of the gaps left by Western companies forced out by international sanctions.
One diplomat familiar with the situation has said China will probably support US proposals to blacklist banks, impose travel bans and freeze assets, but would not be happy to stop dealing with Iranian shipping companies, ban arms imports, or target oil and gas industries.
Trade between the two has grown from the equivalent of 300 million euros in 1995 to 11 billion in 2006 and 16 billion last year.
China exports weapons and imports oil and gas – 14 percent of its arms exports in the last five years went to Iran, and China’s largest energy firm recently agreed to invest 6.6 billion euros in Iranian gas and oil projects.
China has an ever increasing need for oil to power its factories.
But in the first two months of this year, Chinese imports of Iranian crude oil dropped 37.2 percent compared to the same period last year.
Experts said that is probably linked to price rather than politics.

Japan's expoters enjoy new order surge

2010-03-31T09:41:00.000-07:00

Japanese companies won new export orders in March at a rate not seen in almost six years.
A survey showed the manufacturing sector is likely to keep recovering on the back of demand from emerging markets, particularly China.
But domestic demand in Japan is still stagnant, and as companies struggle to cope, earnings among Japanese workers fell for the 21st month in a row.

Turkey rallies to reduce 2009 GDP shrinkage

2010-03-31T09:29:00.000-07:00

Turkey’s strong economic performance towards the back-end of last year helped to take a little of the sting out of the recession.
Six per cent year-on-year growth in quarter four meant the economy shrank by 4.7 per cent in 2009 which is considerably better than experts had predicted.
Turkey’s trade deficit though widened sharply to 2.5 billion euros in February, but that is still less than forecast.
The government expects the economy to grow 3.5 per cent in 2010.

Inflation pumped up in eurozone

2010-03-31T09:25:00.000-07:00

Inflation in the eurozone has been pushed up much faster than economists had predicted, and the jobless rate reached double digits in March.
According to the EU’s statistics office in the 16 countries that use the euro inflation hit 1.5 per cent. That is the highest since December 2008.
The figures suggest a return to pressure on prices despite low demand from consumers.
The 10 per cent unemployment figure is the highest since August 1998, but was what the market had expected.

Car giant set for symbolic share swap

2010-03-27T16:29:00.000-07:00

Partners Renault Nissan are reportedly in final stage talks with German car giant Daimler to swap stakes in each other. All three automakers have declined to comment and any amount would only be symbolic as the firms look to share technology amid intensifying competition. Carmakers are out to slash costs and share investment, especially in new hybrid and electric vehicles.

Government billions revive confidence in Dubai

2010-03-27T15:47:00.000-07:00

There is renewed optimism over Dubai’s ability to get the debt monkey off its back.
The emirate’s government has announced it is to support its investment vehicle Dubai World to the tune of just over seven billion euros and repay its property unit Nakheel’s bonds in full within eight years.
And that will reassure investors, believes Mohammed Ali Yasin, CEO of SHUAA Securities. He said:
“I think it will return alot of confidence that maybe has been lost. Especially that really the government has stood up and taken care of all its responsibilities and addressed all of the people who are concerned with this. It’s not just here, the banks. It’s the investors, it’s the end-users who bought these projects. The delivery of those projects, of which people didn’t know the outcome, will be addressed.”
The debt comes from the bursting of the Dubai property bubble.
When Dubai World said in November that it was seeking to delay debt repayment, it sent ripples of worry through the markets. It is hoped the debt restructuring plan will calm many of those nerves.

Fiat reportedly planning inceased job cuts .

2010-03-26T04:40:00.000-07:00

Reports that car giant Fiat is planning higher-than-expected job cuts of 5,000 in Italy have boosted the company’s shares sharply.
Italian newspaper La Repubblica said Fiat would announce the job losses as it unveils its next strategic plan in April.
The cuts would affect car plants in Italy and represent 15 percent of the 30,000 workers employed on assembly lines in the country.

Former Chairman retourns to helm of Samsung

2010-03-26T04:33:00.000-07:00

The man who transformed South Korea’s Samsung brand into the world’s largest electronic powerhouse has returned as chairman of its flagship unit.
It comes four months after Lee Kun-hee was granted a presidential pardon for tax evasion.
Fund managers and analysts say his return will give the conglomerate clearer direction and speed up big management decisions.
“Chairman Lee’s return will provide a dynamic force for the new business of Samsung Electronics, we expect employment expansion, renewed investment and an acceleration of new enterprise. So, it is a favorable factor in the stock market.” said market analyst Shim Jae-youb.
Samsung is facing fierce competition in key businesses such as chips and TVs, and is having to cultivate new revenue sources.
The company is studying the viability of areas like health, environment and renewable energy.

Fallout from Google China row grows

2010-03-25T05:44:00.000-07:00

Two US companies that sell internet domain names have stopped registering new domains in China amid what they say are increasingly tough regulations from the Chinese government.
The news comes just two days after internet search giant Google pulled the plug on its Chinese search site in protest at Beijing's online censorship.
One of the companies, Go Daddy, announced its change in policy at a congressional hearing in Washington on Wednesday, saying it was concerned for the privacy of its customers.
Another company, Network Solutions also based in the US, said it in a statement that it had dropped registrations of Chinese .cn domain names in December because of what it called "intrusive" government regulations.
Go Daddy, one of the world's largest internet domain companies, said they had taken the action because the Chinese government has begun demanding identification information from their customers.
'Chilling effect'
"We're concerned about the chilling effect we believe the requirements could have on new domain name registrations, and, therefore, the free exchange of ideas on the internet," Christine Jones, Go Daddy's executive vice president, told Wednesday's hearing.
"We just made a decision that we didn't want to act as an agent of the Chinese government and that's really why we stopped offering the .cn domain name."
The move makes Go Daddy the first US company to publically follow Google's exit from the China market over disagreements with Chinese government regulations.
Go Daddy however was a far smaller player than Google, having just 27,000 domains in China accounting for less than 1 per cent of the company's revenue.
Jones told the hearing of the Congressional-Executive Commission on China that Go Daddy had also been targeted by the same cyber attacks, believed to have originated in China, which prompted Google's decision to stop following Chinese censorship rules.
Go Daddy said the China Internet Network Information Centre (CNNIC), a semi-government agency, had always required it to collect customer information such as names, addresses and contact details since it began registering .cn domain names in 2005.
But a policy change late last year required domain name registrars to also include photo headshots, business identifications and signed registration forms from new customers.
Information gathering
Subsequently, the CNNIC wanted similar information collected from existing customers, threatening to disable their websites if they failed to provide the additional details.
Kaiser Kuo, an independent technology analyst based in Beijing, said Go Daddy's decision seemed to be "an opportunistic move" following the huge global publicity of Google's exit.
Go Daddy's business in China, he said, had "already been killed by regulations to begin with, and... represents a very tiny fraction of the company's revenue of about one per cent."
Kuo conceded that China was a very difficult environment to operate in, and one which posed an inherent risk to users.
"I think Go Daddy is doing the right thing in not compelling their people to turn over the information... or giving them the option of whether they want to continue with the domain name registration."
Go Daddy's Jones said only 20 per cent of the 1,200 customers it contacted had submitted the relevant documentation.
Byron Dorgan, a Democratic senator and chairman of the commission, praised the stance shown by Google and Go Daddy against China's tightening of online regulations.
"I compliment Google and I compliment Go Daddy," he said.

WTO report on AirBus-Boeing expected

2010-03-25T05:28:00.000-07:00

It is likely to define the rules of the civil aviation market for years to come.
The World Trade Organisation is expected to confirm criticism of European aid for Airbus when it issues a final ruling on subsidies.
This is by far the biggest international trade dispute the WTO has handled.
The US argues that Airbus got a total of 151 billion euros in unfairly priced loans and other benefits from France, Germany, Spain and Britain over two decades.
But the EU is likely to argue that the full picture will only emerge when the WTO rules in turn on a countersuit brought by Brussels.
The decision, although final, is confidential and the result is not expected to be known straight away.
In theory, a WTO ruling could require the EU to end further aid within weeks. In practice, both sides are likely to appeal both cases, stringing litigation out for years.

Manufacturing morale is on the up in France

2010-03-24T08:39:00.000-07:00

Latest figures show morale in France’s manufacturing sector is the highest it has been for 19 months.
Doubts over future output and foreign orders seem to have eased, as have concerns that the French economy is flagging.
Observers say falls in the euro and an upturn in the global economic environment are both helping to buoy economic activity across the Eurozone.

China talks of trade deficit

2010-03-24T08:22:00.000-07:00

China will probably run a trade deficit of around six billion euros in March, according to state media.
If proved correct, it would be the country’s first monthly deficit since April 2004, but is expected to be a one-time blip.
Nonetheless, analysts say Beijing will want to see several consecutive months of strong export growth before allowing the Yuan to rise.

Trichet speaks out against speculators

2010-03-24T08:05:00.000-07:00

The head of the European Central Bank, Jean-Claude Trichet, has called for tougher regulation and oversight of hedge fund speculators.
At a conference at the European Commission, Trichet spoke out against the speculative use of credit default swaps.
They are used to insure against debt default and have been blamed by some for worsening Greece’s debt crisis.
Trichet said: “I would like to highlight the importance that certain financial instruments which were introduced in consideration of their positive effects for the hedging of risks should not be misused. I share the consensus at global level that regulators should be equipped with appropriate tools to be able to investigate and act in an effective and coordinated manner.”
At the same conference it was revealed the
European Union is considering making the banks pay for an emergency fund should one of them go bankrupt:
The EU Internal Market Commissioner, Michel Barnier, said: “The financial institutions should contribute to a resolution fund. It’s about making contingency plans. It is also an ethical issue.”
Barnier added: “Why should our citizens foot the bill?”
European governments, which were forced to bail out overstretched lenders, are now looking for a way of preventing a repeat.
But the Bank of England’s Deputy Governor, Paul Tucker, was sceptical and said such a fund would have to be “absolutely ginormous, maybe a trillion euros.”

Kabel Deutschland debuts just above IPO price

2010-03-23T08:43:00.000-07:00

The champagne flowed to celebrate Europe’s biggest flotation so far this year.
But shares in cable television company Kabel Deutschland have remained fairly static since their debut – testimony, experts say, to the cautiousness of investors.
Germany’s largest cable operator raised 759 million euros in its Initial Public Offering or IPO on the Frankfurt stock exchange.
The Chief Executive said his company was bucking the trend: “Kabel Deutschland has developed a business model which shows that it can be considered recession-proof also in times of crisis. We can present double-digit growth, we are operative in TV, Internet and phone sectors, these are all growth markets.”
Guided by US private equity firm Providence Partners, Kabel Deutschland’s debut on the stock exchange is being seen as a test of investor appetite for IPOs.
Only five of the 12 IPOs undertaken in Europe this year are trading up on their initial value – which could dissuade potential investors from getting involved.

Private equity firms reportedly eyeing German stores

2010-03-23T08:11:00.001-07:00

Private equity firms are reportedly among those interested in acquiring Metro’s department store chain Kaufhof and Arcandor’s Karstadt chain in Germany, aiming to merge them into one.
German Sunday paper Bild am Sonntag reported without citing sources that U.S. investors were among those interested in buying the two rival store chains. Previous attempts at merging the two have failed.

Credit Suisse restricts staff travel to Germany

2010-03-23T08:07:00.000-07:00

Credit Suisse says it is restricting its bankers’ travel to Germany after the authorities there said they were investigating 1,100 of the bank’s clients for tax evasion. Staff are also under scrutiny on suspicion of aiding evasion. It comes after the German state of North Rhine-Westphalia bought a CD holding client data.

Beijing buys into Australian coal-seam gas industry

2010-03-23T07:36:00.000-07:00

Arrow Energy Limited has agreed to sell its Australian coal-seam gas assets to Royal Dutch Shell and Petrochina for a sweetened 2.3 billion euros, giving resource-hungry China its first bite of Australia’s burgeoning coal seam gas industry. The revised takeover offer still needs approval from Australian regulators and Arrow shareholders.

Euro area trade gap narrwos

2010-03-21T11:14:00.000-07:00

The euro zone’s trade deficit narrowed year-on-year in January.
It was 8.9 billion euros, down from 12.1 billion a year earlier.
Exports were up five percent year-on-year while imports only increased by one percent.
That indicated rising demand in key overseas markets but muted domestic consumption.
The euro zone’s two biggest trading partners are Britain and the United States.

Siemens cuts IT jobs

2010-03-21T10:59:00.000-07:00

Europe’s biggest engineering conglomerate, Siemens, plans to slash 4,200 jobs at its information technology unit – nearly half of those in Germany.
That would set it up for a possible spinoff as a separate company.
Siemens’ Chief Financial Officer Joe Kaeser would not be pinned down when asked about the future of the unit, which is known as Solutions and Services (SIS).
Talking to reporters he stressed investment over cuts: “What we’ve been talking about today, it’s not just about cutting jobs – but also about major investment. We’re going to spend over 500 million euros between now and 2012. We are going to re-focus the IT section, in the areas where Siemens does best, that is energy and environmental technology, technology for the health sector and industry.”
Siemens has been undergoing huge restructuring to recover from the effects of the global economic crisis including nearly 2,000 jobs cuts in Germany in its industry section.
The conglomerate is considered a bellwether of Germany’s economy for the wide-ranging products it makes.

Volvo sale snag

2010-03-21T10:48:00.000-07:00

It seems the talks between Ford and China’s Geely over the sale of Volvo are turning out to be tougher than anticipated.
Geely’s chairman Li Shufu told the Wall Street Journal that they have hit a snag due to problems at Ford.
However he said he continues to expect to complete the deal.
Geely is reportedly aiming to complete the purchase of Volvo for nearly 1.5 billion euros by May.

Lloyds looks to 2010 profit

2010-03-20T11:48:00.000-07:00

Lloyds Banking Group is predicting that it will return to profit this year thanks to fewer bad debts. In 2009 it lost seven billion euros.
The bank, which had to be rescued with British taxpayers’ money and is 41 percent owned by the government, said the improved outlook reflected “good” overall trading in the first 10 weeks of the year.
Its shares rose on word that loan repayments had improved and costs were down compared with the same period last year.

Chinalco and Rio Tinto announce joint venture

2010-03-20T11:34:00.000-07:00

Aluminium Corporation of China has signed a joint venture deal with Anglo-Australian mining company Rio Tinto to develop one of the world’s biggest iron ore deposits in the west African country of Guinea.
The two billion euro project marks a turn around for the two companies.
Last year they scrapped a share and assets tie-up over Australian government fears it would give a foreign company too big a strategic stake.

BMW forecasts profit rise

2010-03-18T04:00:00.000-07:00

BMW has said it expects a significant rise in pretax profit this year.

That would come from demand for new models like its 5 Series and the four door, four-wheel drive Mini Countryman SUV.

It also forecast better results in all three of its businesses – cars, motorcycles and loans to buyers.

BMW, which made a loss in its car division last year, expects sales of more than 1.3 million vehicles.

Renault & Daimler shares rise on tie-up reports

2010-03-18T03:55:00.000-07:00

Shares in France’s Renault and Germany’s Daimler rose on Tuesday, following reports that they were in talks about each acquiring shares in the other as part of a possible longer-term partnership.

The two were already discussing working together to cut costs, share technology and build economies of scale in response to the industry’s recession

Neither Renault nor Daimler would comment on the reports.

Air Berlin cuts 787 order

2010-03-18T03:49:00.000-07:00

Air Berlin has cancelled firm orders for Boeing 1.25 billion euros.

Germany’s second-biggest airline said that was done to cut its financial obligations amid uncertainty over whether it would expand the number of its long-haul flights.

It now plans to buy 15 of the planes rather than 25.

It also deferred delivery of nine other Boeing aircraft.

Toyota cuts Prius production : source

2010-03-18T03:44:00.000-07:00

The world’s biggest car-maker Toyota has slashed production of its hybrid-powered Prius model according to a source within the group.

Sales in the United States plummeted about 40 per cent last month, leading a worldwide slowdown in sales from a peak last year.

Two factories in Japan had been building 50,000 cars a month on average – according to the source that will drop to 45,000 from this month.

Lehman examiner says gimmck hid debt billions

2010-03-13T14:16:00.000-08:00

Lehman Brothers used accounting gimmicks to hide billions in debt and was insolvent for weeks before it filed for bankruptcy in September 2008.

That is the finding of a more than year-long investigation by a court-appointed examiner.

Ernst & Young, which audited Lehman’s accounts is criticised as possibly “negligent” and the examiner says it may face claims for “professional malpractice.”

Lehman’s collapse was the largest bankruptcy in US history and deepened the global financial crisis.

The report suggested that those who are working to complete Lehman’s bankruptcy could pursue claims through the courts against banks like JPMorgan and Citigroup for taking some 16 billion dollars in collateral out of Lehman’s coffers as it struggled to stay afloat.

Lehman’s ex bosses could also face claims.

And the examiner found that creditors’ claims could be made on assets held by Lehman affiliates that were transferred to British bank Barclays which bought Lehman’s core US brokerage after it filed for bankruptcy.

Eni lowers growth target

2010-03-13T14:00:00.000-08:00

The Italian oil and gas group Eni has lowered expectations for production growth.

It said investors would have to wait until 2011 to see any growth in output or dividends.

Eni, which is the world’s seventh-biggest listed oil company, now anticipates production expanding annually by an average of more than 2.5 percent over the next three year.

Its previous target was 3.5 percent.

Air China share rise on stock sale

2010-03-13T13:54:00.001-08:00

Air China’s shares soared to a two-year high as it announced it will raise 690 million euros by selling new stock.

Investors believe Air China, which is the world’s largest in terms of market value, will use the money to buy up or take strategic stakes in other Asian airlines.

Earlier this week, rival China Southern announced it is to sell 1.1 billion euros worth of new shares.

More US millionaires

2010-03-12T00:26:00.000-08:00

The number of households in the United States with a net worth of at least one million dollars jumped last year according to calculations based on surveys carried out by industry consulting group Spectrem.

The increase came as US stock markets bounced back from the 2008 meltdown.

Last year there were 16 percent more millionaires households; an estimated total of 7.8 million. That was still way down on the record 9.2 million in 2007.

The numbers of ultra high net worth families – those worth at least five million dollars – also jumped 17 percent last year.

The ranks of the rich were considerably thinned by the recession and dropped 27 percent in 2008.

And it seems wealthy Italians have grown richer during the economic crisis according to a PricewaterhouseCoopers study.

The reason – 85 billion euros returned to Italy from secret accounts in Switzerland and other countries last year when the government granted a generous tax amnesty.

Airline business picking up

2010-03-12T00:13:00.000-08:00

IATA, the airline industry association, has said that things are starting to turn around after the economic crisis.

It has halved its forecast for airline losses this year as passenger numbers pick up along with the amount of freight being flow.

IATA said losses this year will likely come to 2.1 billion euros. In December it was talking about twice that amount.

It is now forecasting passenger demand would rise by 5.6 percent and cargo demand would jump 12 percent.

Last year passenger numbers fell 2.9 percent and cargo demand slumped 11 percent.

IATA’s Director-General Giovanni Bisignani said the recovery is much better than expected.

The recovery is good news for both the industry and the global economy as a whole, indicating that exports are reviving, he said.

Chinese inflation jumps

2010-03-12T00:08:00.000-08:00

China’s economy continues to race ahead and consumer inflation hit a 16-month high in February: it was up 2.7 percent from a year earlier.

That had economists suggesting the government might soon move to prevent overheating.

China’s central bank could increase commercial banks’ required reserves for a third time this year and perhaps even raise interest rates or let the yuan appreciate.

Raising protectionism allegations over Pentagon aerial refueler contract

2010-03-12T00:01:00.000-08:00

The European Commission has raised the spectre of protectionism in the transatlantic refueling tanker plane affair.

European industry as well said the Pentagon changed the contract rules on a 26 billion euro tender to supply the US air force. Boeing looks set to win it, after the American Northrop Grumman and its European partner EADS dropped their joint offer.

France’s minister for Europe, Pierre Lellouche, in Paris called it a serious matter, and said his country would respond, though without going into detail. He said Europe’s credibility was at stake.
Berlin also warned it would not take it lying down.

The Pentagon, however, insists that the bidding process was fair. The Air Force chose Northrop and EADS over Boeing for its refueler in 2008, but Boeing complained. Brussels calls the latest development “highly regrettable” and says it is extremely concerned.

Air France and Ryanair in subsidy row

2010-03-11T23:52:00.000-08:00

Air France is angry at low-cost Irish carrier Ryanair which it said is getting unfair subsidies from European regional governments to use their airports. It has complained to the European Commission. That complaint was made last November, but details have only just emerged.

The French airline said “open-ended subsidies” in the form of discounts, preferential treatment and marketing help violated European competition rules.

Ryanair hit back saying Air France had received state aid whereas it had not

BP buys Devon assets

2010-03-11T23:41:00.000-08:00

BP, Europe’s second-largest oil company, has agreed to pay US producer Devon Energy five billion euros for assets in Brazil, Azeri and the Gulf of Mexico.

BP is also selling Devon a 50 percent stake in its Kirby oil sands interests in Alberta, Canada.

Analysts said it is hard to tell whether BP is paying a good price as the deal includes fields whose reserves are unknown as they are still being explored.

Fortis back in the black

2010-03-11T23:31:00.000-08:00

Belgium-based insurance group Fortis said it returned to profit last year.

As a result it resumed paying a dividend to shareholders.

Net profit was almost 1.2 billion euros from a massive 28 billion euro loss in 2008.

Fortis – which is about to change its name to ageas – was rescued and split up by the Dutch, Belgian and Luxembourg governments in late 2008 which sold off the banking arm.

Ad falls hit Springer profits

2010-03-11T23:25:00.000-08:00

The German media giant Axel Springer has posted lower profits and sales for last year due to a “massive” fall in advertising spending.

Restructuring and extra marketing costs pulled its net profit down 40 percent to 152 million euros.

The publisher of over 170 newspapers and magazines in 35 countries said it did manage to outperform the overall market.

EADS pulls out of US tanker programme

2010-03-09T02:09:00.000-08:00

Europe’s aeronautic defence giant EADS has withdrawn its bid for the US Air Force’s 25-billion euro tanker programme.

The decision by its American partner Northrop Grumman Corp leaves Boeing as the only bidder for the contract.

The Pentagon re-issued bid requests last month for the third time in nine years to replace its fleet of KC-135 refuelling tankers.

EADS had complained that the draft proposal appeared to favour a smaller plane offered by its Chicago-based rival.

Although its bid had won the contract before, this time the firm warned that the US Air Force’s new requirements would impose serious “financial burdens.”

Russia starts car scarappage scheme

2010-03-09T02:05:00.000-08:00

A scrappage scheme has started in Russia to try to boost new car sales.

The government is offering 200,000 vouchers – each worth 1,200 euros – to people who scrap their old car and buy a new one built in Russia.

Sales in Russia reportedly slumped by 56 percent last year to 1.4 million vehicles.

However there are concerns that corruption and red tape may undermine the scheme.

Shell and PetroChina target Arrow

2010-03-09T01:47:00.000-08:00

Royal Dutch Shell and PetroChina have confirmed that they have formed a partnership to try to buy Australia’s Arrow Energy. The price would be the equivalent of around 2.2 billion euros.

Arrow has Australia’s largest reserves of coal-seam gas, that is natural gas trapped in seams of coal. Its shares soaring by nearly half, indicating investors expect a higher bid.

Sarkozy pushes nuclear for develping countries

2010-03-09T01:41:00.000-08:00

Opening a Paris conference, French President Nicolas Sarkozy has urged a massive expansion of nuclear energy by emerging nations.

European Commission President Jose Manuel Barroso told the conference nuclear is now part of a mix of power sources that states need to develop to ensure their energy security.

Sarkozy also called for rating of international reactors on safety: “I would like to see an independent body under the auspices of the International Atomic Energy Agency establish an international analysis model on an incontestable scientific and technical basis, and I ask the director of the IAEA Yukiya Amano to classify reactors offered for sale on the market according to their safety and not price.”

Sarkozy said it was “a scandal” that the World Bank and international development banks do not finance the building of nuclear power plants in developing countries.

France is one of the world’s largest users of nuclear energy and is actively seeking to sell its nuclear technology to countries around the world.

A400M agreement reached

2010-03-07T03:21:00.000-08:00

Partners in the troubled A400M military transport plane have reportedly reached a basic agreement on financing its cost overruns.

A source told Reuters that painfully drawn-out negotiations have finally borne fruit.

Problems in developing the plane’s huge turbo-prop engines have pushed Europe’s largest defence project over budget by billions of euros, forcing seven European NATO customer nations to step in with a mixture of direct aid and guarantees.

This comes as it was reported that Spain and Britain were heading for a clash over the location of hundreds of high-skilled production jobs on the plane.

Spain was said to be pressuring the UK to surrender those aviation jobs.

Madrid’s argument was that Britain does not deserve the jobs if it will not contribute its full share of a 3.5 billion euro government bailout package for the project.

No German or Eurogroup aid for Greece

2010-03-06T14:15:00.001-08:00

The Greek Prime Minister started a diplomatic tour to get international support for his government’s response to the crisis in Luxembourg.

There George Papandreou was told that the group of countries using the euro has ruled out any immediate financial aid for his debt-ridden country.

Luxembourg’s Prime Minister Jean-Claude Juncker, who is also chairman of the 16-country Eurogroup, said the tough measures taken by the Athens government pave the way for Greece to exit the situation it is in.

And he dismissed the idea of an International Monetary Fund bailout: “As I said publicly as the chairman of the Eurogroup I’d like to exclude any further involvement of the IMF. What we need is technical assistance from the IMF, but I don’t think that the IMF should take a lead, this is a problem of the euro area.”

After Luxembourg, Papandreou’s next stop was Berlin to meet with Chancellor Angela Merkel. She’s offering political, not financial, support. Her economy minister said: “The German government does not intend to give a single cent.”

Veolia forecasts higher profits

2010-03-06T13:55:00.000-08:00

French utility Veolia is pledging to boost its profits over the next three to five years by disposing of a billion euros in assets annually and cutting costs faster than previously planned.

The world’s biggest listed water group, which also runs waste management and transport businesses, said net profit for last year rose 44 percent to 584 million euros, though that figure was boosted by disposals of assets.

Analysts were disappointed with the company’s targets and its shares fell.

WPP says ad recession nearly over

2010-03-06T13:19:00.000-08:00

WPP, the world’s largest advertising agency has said it believes the worst of the advertising recession is over.

The group, which cut jobs last year to reduce costs, forecast unchanged revenues for 2010 after they fell 8.1 percent last year.

WPP, with big name clients including Unilever, Vodafone, HSBC and Ford, said it was looking to emerging markets and digital sales to help it maintain earnings.

No cheers for No.1 brewer

2010-03-06T13:10:00.000-08:00

The world’s biggest brewer, Anheuser-Busch InBev, has said says it is facing a challenging start to the year, with sales in the United States under particular pressure.

Its fourth-quarter 2009 earnings were mixed, but boosted by a sharp increase in Brazilian sales.

The maker of Budweiser, Stella Artois and Becks said it expected to sell slightly more beer this year than last, but with limited profit growth in the early months.

ECB moves on crisis lending

2010-03-05T07:05:00.000-08:00

The European Central Bank’s policymakers have started to take steps towards reversing the loose monetary policy brought in to help the euro zone economy climb out of recession.

ECB President Jean-Claude Trichet said conditions for making some short term loans to banks will be tightened up: “We have continued to gradually and (in a timely manner) phase out the non-conventional measures that we had taken. I would say that these decisions have been taken on the basis of an overwhelming consensus.”

But forecasting a fragile and uneven recovery, the ECB held interest rates at a record low level of one percent.

Trichet also had praise for Greece’s efforts to cut spending and bring its deficit under control. He said: “Greece today is in a much better state – taking into account its own activity, its own output – than it was before”

The draconian measures announced by Athens to help put its finances in order included pay cuts, a pensions freeze and tax increases.

That angered Greek unions, but did help it sell five billion euros worth of 10-year government bonds.

There was strong demand for the bonds, but Greece had to offer a better rate of return, because investors remained nervous about the possibility of default.

French jobless total rises

2010-03-05T06:58:00.000-08:00

Unemployment in France jumped to its highest level in 10 years in the final three months of last year, as companies cut jobs in reaction to sluggish economic growth.

The jobless rate was 9.6 percent of the working population, up from 9.1 percent in the previous quarter.

Young people are suffering worst with nearly a quarter of under 25s out of work.

France does not produce a monthly jobless rate, but the European Union’s statistics office said this week that French unemployment rose to 10.1 percent in January.

UBS off the hook for Madoff billions

2010-03-05T06:52:00.000-08:00

Investors defrauded by US swindler Bernard Madoff will not be able to pursue Swiss bank UBS for compensation.

They had put their money into the LuxAlpha fund. UBS was the custodian but did not run it.

A court in Luxembourg has ruled that the investors have to try and get their cash back through the fund’s liquidators.

The verdict could have direct implications for many cases pending against UBS involving billions.

Portugal : austerity measure sparck strike

2010-03-05T06:46:00.000-08:00

A strike by civil servants has hit schools, courts, hospitals and social security offices across Portugal.

The stoppage is in protest at a freeze on public sector wages this year.

The Socialist government said spending cuts were needed in response to the deep economic downturn that has taken unemployment in Portugal to its highest in a quarter of a century.

Union leader Manuel Carvalho da Silva of the General Confederation of Portuguese Workers said: “We need jobs and workers being better paid in order to overcome this crisis”

The unions are threatening more strikes if the wage freeze continues.

They said 70 to 90 percent of public service workers were on strike but the government insisted participation was much lower.

The State Secretary for Public Administration, Castillo Dos Santos, told reporters: “A majority of public employees in this country has accepted a message of realism and responsibility, which is the message we need, and the majority did not participate in the strike”

The Lisbon government’s efforts to cut the deficit are being closely watched by investors who are concerned that Portugal is the next weak link in the euro zone after Greece, even though its debts and deficit are much lower than Greece’s.

Geneva going greencer

2010-03-04T03:58:00.000-08:00

With sales unpredictable, the world’s carmakers are keen to drive up interest by showing off new green technologies at this year’s Geneva Auto Show.

Companies that were hit hard by the recession have been surviving with the help of government funded incentive schemes designed to boost sales, but those are ending and the underlying recovery remains far from certain.

As well as a focus on more environmentally friendly cars the manufacturers are looking to growth markets like developing nations.

Patrick Pelata, Renault’s Chief Operating Officer, told euronews: “We see the world car market growing very weakly, but with a lot of contrasts. Asia on the rise, Latin America on the rise, perhaps Russia rising and Europe falling. We reckon sales in Europe are going to decline by around 10 percent this year.”

The once dominant Toyota is reeling from recalls and criticism over its safety failings; its sales have been sliding sharply, but the company’s top man in Europe, Didier Leroy, said they will not cut prices to lure buyers back.

Leroy added: “The recent recalls had the effect of making us respond to our customers. The first thing was to reassure them and then to deal with the problem, as quickly as possible, as we’re doing now right across Europe.”

Toyota was the pioneer of hybrids and that trend is spreading this year at Geneva, even luxury car makers are going greener with the likes of Mercedes rolling out models fitted with electric motors as well as the main engine to cut fuel consumption.

They join a growing range of smaller eco cars aimed at taking advantage of tighter emissions legislation and attracting drivers looking for greater fuel efficiency.

Summing up, euronews correspondent Fabien Farge said: “The car market needs perking up, which is the goal of every manufacturer at the Geneva Auto show: somewhere over the rainbow we can perhaps forget the gray days of the crisis. Green is the colour, for low emission vehicles, from hybrids to electric powered one, from Peugeot to Audi, and even the most unlikely carmakers such as Ferrari and Porsche, green is the way to go in Geneva this year.”

Another tough Greek austerity plan

2010-03-04T03:55:00.000-08:00

The Greek government has approved even more spending cuts to try and rein in its bulging budget deficit and secure European financial support.

Prime Minister George Papandreou presented the third austerity programme in as many months to the country’s president.

It includes public sector pay cuts and tax increases.

An extra 4.8 billion euros will be trimmed off government budgets.

Papandreou said: “I informed the president of the difficult decisions we took, decisions that were a necessity for the survival of our country and our economy so the country can escape the speculators and the defamation, so we can breathe and fight, along with the Greek people, for a more just society, for the big changes that will bring development, jobs, and prospects to the country.”

He added that Greece is now awaiting strong support from the European Union.

The measures include freezing state-funded pensions this year and angry pensioners protested in Athens holding banners blaming banks for Greece’s financial woes:

One man said: “Things are going to be really difficult for both pensioners and workers, it’s going to be really bad.”

While a woman railed against the bankers: “They should be ashamed they have ruined Greece, the Greek people have made so many sacrifices and fought so many battles, they should leave.”

Despite the noisy demonstrations, recent opinion polls showed majority support for the government’s response to the crisis.

And financial support has come from one of the country’s best known singers.

Nana Mouskouri said she will donate to the Greek treasury the pension she gets as a former member of the European parliament until the crisis is over. That is 14,700 euros a year.

The 75-year-old Mouskouri – who has sold over 300 million records – said the offer was her “duty to the country.”

Daimler warns of Airbus related losses

2010-03-03T10:23:00.000-08:00

Daimler has said it may have to take a significant charge in the current business year because of losses by Airbus on the A400M military transport plane.

The German luxury carmaker holds 22.5 percent of the votes in Airbus’ parent company EADS.

In its 2009 annual report, Daimler warned of a potential heavy non-cash accounting loss by the end of this month from writedowns by EADS.

Adidas looks World Cup

2010-03-03T10:08:00.000-08:00

Adidas, the world’s second largest sporting goods company, has posted a weak finish to 2009 and its outlook for the current year is less optimistic than investors were hoping for.

Net profit last year was 245 million euros.

It is counting on the World Cup and the revival of its Reebok brand for a return to growth this year anticipating a net profit of as much as 450 million euros.

Standard Chartered profit jumps

2010-03-03T10:02:00.001-08:00

Standard Chartered has reported a 13 percent jump in 2009 profit – in line with analysts’ expectation.

Strong investment banking growth in its core Asian markets offset a jump in bad debts in the Middle East.

The bank also said it would pay out more than 800 million euros in management bonuses, unlike many of its rivals.

It said that was necessary to retain talented staff in the face of “red hot” competition.

GM triples Opel financing

2010-03-02T13:12:00.000-08:00

General Motors has tripled the mount of money it will put into the restructuring of its European arm Opel and Vauxhall and reduced the amount of state aid it wants.

European governments – particularly Germany – had been cool to the idea of funnelling taxpayer funds into Opel.

The US carmaker had now said it will provide nearly two billion euros in equity and loans and is asking for about the same from European countries.

Spanish unemployment up again

2010-03-02T13:02:00.000-08:00

Spain’s job centres got busier in February. The number of people registered as jobless increased by more than 82,000, the seventh consecutive monthly rise. The total is now just over 4.1 million.

The Madrid government pointed out the rise was significantly less than the same month last year, when the economic crisis was at its worst.

But that was of little comfort to jobseekers. One man in a long queue outside a Madrid employment office said: “I see a very dark future for this country. Because very few people have jobs now. It’s the same thing here every day.”

Another frustrated woman said: “We’ve been waiting here for three hours until those guys give us a piece of paper with a number like in the supermarket. As far as the numbers go, and the if they run out, people have to come back the day after and so on, and so on and so on.”

In the past year the number of jobless has risen by nearly 20 percent.

Over half of the jobs lost in February came from the services sector, followed by construction with just over 10 per cent.

Euro zone inflation slows

2010-03-02T12:44:00.000-08:00

Euro zone consumer prices rose by a smaller-than-expected 0.9 per cent year-on-year in February.

That is according to the first estimate from the European Union’s statistics office.

It slowed from January’s one percent gain.

There are no details or breakdown available with the flash estimate.

The main factor was energy prices which declined from a year earlier.

The European Central Bank wants to keep inflation just below two per cent in the medium term.

ECB policymakers meet to decide on interest rates on Thursday.

CeBIT trade fair opens

2010-03-02T12:35:00.000-08:00

German Chancellor Angela Merkel and Spanish Prime Minister Jose Luis Zapatero have opened the CeBIT trade fair in Hanover, the world’s biggest such event for telecommunications and information technology companies.

Zapatero was there because Spain is CeBIT’s official partner this year.

The show’s theme is “Connected Worlds” and the Spanish leader called for a “single digital market” for the European Union.

The electronics industry has suffered from the recession, but the German technology and telecoms association Bitkom, which organises the fair, is upbeat.

Bitkom’s President, August Wilhelm Scheer, said: “Consumers are buying computers, buying mobile phones, buying flat screen TVs. The ind

EU tells Greece to cut more

2010-03-02T12:32:00.000-08:00

EU Economic and Monetary Affairs Commissioner Olli Rehn has urged Greece to quickly announce further austerity measures to tackle its debt crisis.

Rehn made the call after his first round of talks with Greek officials including Finance Minister George Papaconstantinou.

He promised EU help for Athens to overcome the problem that has shaken the euro zone.

Rehn said: “Additional consolidation measures are necessary to ensure that the four percent target of deficit reduction for this year 2010 is met.”

Prime Minister George Papandreou appeared to be preparing Greeks for more sacrifices in broadcast remarks at a cabinet meeting appealing for public support.

“The crisis in our country is not limited to our fiscal problem. It is only the tip of the iceberg. It is extremely urgent to deal with it because it has assumed dramatic dimensions,” Papandreou said.

Reportedly, euro zone governments are discussing possible mechanisms to support Greece if necessary on the international bond markets.

The region’s biggest economy, Germany, would bear the brunt of any joint action but Chancellor Angela Merkel said: “We have a [European] treaty under which there is no possibility of paying to bailout states in difficulty. That means we can only help Greece for the moment by supporting Greece in getting its affairs in order.”

A German member of the European parliament has said that Germany, France and the Netherlands are planning to buy Greek government bonds through state-owned financial institutions and Merkel did not explicitly rule that out.

Prudential in talks over AIG Asia

2010-03-01T04:26:00.000-08:00

Prudential, the British insurer, says it is in "advanced" talks to purchase AIA, the Asian arm of US insurance company AIG, in a deal that would create the biggest insurer in Southeast Asia.

A source close to the deal said late on Sunday that AIG had agreed to sell its Asian division to Prudential for around $35bn.

"The board of Prudential plc notes the recent press speculation regarding a possible transaction involving AIA Group Limited," the London-listed Prudential said in an official statement on Monday.

"Prudential confirms that it is in advanced discussions with AIG Inc regarding a possible combination of its business with that of AIA."

'No certainty'

The statement, however, gave no mention of the possible price that Prudential was willing to pay for AIA.

Also, Prudential said: "There can be no certainty that these discussions will lead to any agreement or as to the terms or timing of any such agreement".

The deal, if approved, will transform Prudential into the world's biggest non-Chinese insurer by market capitalisation, ahead of major competitors Allianz and AXA.

AIG on Friday reported a worse-than-expected fourth quarter net loss of $8.9bn, although the shortfall was nearly 10 times less than in 2008, when AIG recorded $99.2bn in losses.

Prudential will be transformed by the deal to buy AIA, which will double its size.

The company, founded in 1848, currently has a market capitalisation of about $23bn.

Sales in Asia already make up half of new contracts for Prudential across a number of countries including China, India, Indonesia, Malaysia and Thailand.

The company also has a strong presence in Britain and the US.

Prudential stepped in as AIG was planning an initial public offering for its Asian arm in Hong Kong in April.

Estimates had valued the market flotation at around $10bn, which would have been the largest on global markets this year.

AIG was forced into giving up some of its assets after the company's near collapse in the depths of the financial crisis led the US government to hand it a bailout of around $180bn.

The Wall Street Journal reported that some of the proceeds from the sale of AIA to Prudential were already earmarked for US government coffers.

Toyota seeks China damage-control

2010-03-01T00:34:00.000-08:00

The president of embattled Japanese carmaker Toyota is to speak in China about the company's safety woes.

Akio Toyoda is to give a news conference at a Beijing hotel on Monday, his spokeswoman, Ririko Takeuchi, said.

The visit by Toyoda, who is also the chief executive, appears aimed at improving the company's image after a recent spate of recalls across the world.

It comes on the heels of a US congressional hearing last week where legislators grilled the grandson of Toyota's founder over the company's safety recalls.

Toyota announced a recall of 75,552 units of its RAV4 sport-utility vehicle in China in late January.

The recall, due to an accelerator pedal problem, was a relatively small number out of the 8.5 million vehicles it has recalled worldwide since October for faulty accelerator pedals, floor mats and glitches in braking software.

Key market

But the Japanese car giant has ambitious plans for growth in China and the company has said its plans to expand in the Chinese market remain unchanged, with sales in the country expected to rise to 800,000 vehicles this year, up from 709,000 in 2009.

China's overall vehicle sales increased by 45 per cent last year to 13.6 million, overtaking the US as the world's biggest vehicle market.

And Toyota, which started relatively late in the country, remains behind competitors such as General Motors, Volkswagen and Nissan in vehicle sales.

Toyota rolled out its first made-in-China Camry in May 2006, in partnership with Guangzhou Automobile Group based in the southern Chinese market near Hong Kong.

It also has a partnership with FAW Group, another state-owned carmaker based in northern China.

Toyoda's move to visit China, despite the limited number of recalls there, appears to reflect the company's eagerness to restore its reputation for high quality that is its key advantage there.

"China is the biggest market for automakers, so Toyota can't ignore its importance," Mamoru Kato, an analyst at Tokai Tokyo Research Centre in Nagoya, told the Associated Press news agency.

"They have to hurry to overcome anxiety about the quality of their cars."

At the congressional hearing in Washington last week, Toyoda admitted that his company's rapid expansion may have led to the recalls.

He added that "priorities became confused" as the carmaker grew.

So far, China's state-controlled media has made little comment on the recalls and the problem is mainly viewed as an example of the potential downfalls for China's nascent car industry.

Greek PM urges austerity measures

2010-03-01T00:33:00.000-08:00

George Papandreou, the Greek Prime Minister, has warned that his country risks bankruptcy unless strict austerity measures are enacted fast to cut the deficit.

Greece's government overspending reached 12.7 per cent of output in 2009 as the global downturn sent public deficits through the roof.

The deficit ordeal has put government bonds under pressure, weakening the euro and pushing the eurozone into crisis.

Greece is widely expected to issue government bonds next week and experts believe it could resort to selling them directly to a few large institutional customers rather than auction them off on capital markets.

In his efforts to seek a way out of the financial crisis, Papandreou held talks with Josef Ackermann, Deutsche Bank CEO on the country's debt crisis on Friday.

He also accepted an invitation to meet German Chancellor Angela Merkel on March 5, government officials said.

The crunch talks were scheduled ahead of a visit next week by EU Finance Commissioner Olli Rehn to inspect Greece's budget reforms, in view of a March 16 EU deadline to show fiscal improvement or face further spending cuts.

Relations with Germany

Tensions between Greece and Germany over the debt crisis have been played down by officials.

"There is clearly a slight disagreement" between Berlin and Athens, Stefan Bredohl, a foreign ministry spokesman, told a regular briefing.

The German ambassador sought to offer "clarification" to Greece after a Greek consumer association, enraged by the cover of a German magazine, called for a boycott on German goods.

The cover of this week's Focus magazine showed the ancient Greek statue the Venus de Milo making an obscene hand gesture with the caption: "A cheat in the euro family."

The association, Inka, demanded an apology from Chancellor Angela Merkel, who will hold clear-the-air talks with Prime Minister Papandreou in Berlin next Friday.

The talks will cover "all topics relating to bilateral relations, European policy and other international questions," Sabine Heimbach, a government spokeswoman said, adding that "current events" would also be tackled.

But adding to bilateral tensions is a decades-old spat over war reparations, reheated by Athens as concerns over its debt mountain sent the euro spiralling downwards on the foreign exchange markets.

The mayor of Athens, Nikitas Kaklamanis, said: "You owe us 70 billion for the ruins you left behind."

UK emerged faster from deeper recession

2010-02-28T12:45:00.000-08:00

It turns out Britain’s economy grew faster than previously estimated in the last three months of 2009.

That is according to revised official figures just released which showed fourth quarter GDP growth was 0.3 percent rather than the 0.1 percent originally reported.

But the 18-month recession from which the UK emerged turned out to be deeper than first calculated and was the worst in over 50 years.

The politician in charge of the British economy, Alistair Darling, welcomed the upward revision of
fourth quarter GDP growth but said there were still big risks and that government stimulus support for the economy could not be withdrawn yet.

Telefonica dials up in line profit

2010-02-27T04:07:00.000-08:00

Full year profit at Spain’s Telefonica came in pretty much as expected at 7.8 billion euros.

Europe’s second largest telecoms company was able to offset a tough home market in Spain with healthier operations in Latin America.

But investors remain concerned about whether it can meet its targets, as well as weakness in some units and the chance of a costly merger with Telecom Italia.

BBC to cut output

2010-02-27T04:02:00.000-08:00

British state-owned broadcaster the BBC is reportedly considering major cutbacks to its radio, online and TV output.

Two British newspapers have said that a draft report, to be published next month, talks of closing two digital radio stations, halving the size of its website and cutting spending for rights to sports events.

The move is reportedly in response to political concerns about the spread of the BBC’s activities.

The BBC has not commented on the reports.

Lloyds trimes losses

2010-02-27T03:56:00.000-08:00

There was mixed news from Lloyds, Britain’s largest retail bank.

Its losses last year at the equivalent of seven billion euros, were smaller than the previous years 7.5 billion euros.

The bailed-out bank is still saddled with major bad loans from its takeover of rival HBOS – 27 billion euros worth were not paid back last year -but Lloyds said that situation is improving.

Italian fashion

2010-02-26T06:14:00.000-08:00

talian fashion week is underway in Milan with the industry staggering along the catwalks having been dealt a body blow by the economic crisis.

The rag trade is a mainstay of the Italian economy accounting for four percent of the country’s gross domestic product.

The industry’s turnover fell 15 percent last year with evidence emerging that cash strapped fashionistas are turning to fakes.

Euronew’s Patrícia Cardoso in Milan said: “In just this one week of fashion shows, here in Milan, the Italian fashion industry makes half of the season’s turnover, in this case, for the Autumn/Winter season 2010/2011. That money makes it a major target for counterfeiters”

Indeed Italian police recently seized 500,000 tons of fake goods near Rome.

Italy’s national retailers association estimates the counterfeit market is worth seven to eight billion euros a year in Italy and the garment workers union said it cost cost 4,000 jobs with billions lost in sales tax on the fakes.

Armando Brancchini of the trade association for the Italian luxury industry told euronews: “Counterfeiting has a very rich market in Italy and 90 percent of these products are made in China. What is needed is stricter customs controls to stop these items getting into the European market.”

Italy is trying to protect its 57,000 fashion firms, employing 650,000 people.

The industry says it is under seige with 2,000 companies having gone out of business in the last two years.

End of road for Hummer

2010-02-26T06:01:00.000-08:00

General Motors has said it will wind down production of Hummers after government regulators in Beijing refused to approve a bid by a small Chinese heavy-machinery maker.

GM had been trying to sell the money losing division that makes the gas-guzzling four-wheel-drive Hummer as part of its restructuring.

The closure mean 3,000 jobs will go including production line workers and dealers.

Iberia's profit slump

2010-02-26T05:52:00.000-08:00

Spanish airline Iberia posted a deeper than expected net loss of two hundred and seventy three million euros for last year which it called “the worst ever for the aviation sector.”

A strict cost control programme failed to offset falling passenger numbers, particularly in business class, due to the economic crisis.

Iberia is about to merge with British Airways to create the world’s third largest airline by revenue.

German jobless rises in February

2010-02-25T10:28:00.000-08:00

Unemployment in Germany rose in February by just 7,000 from the previous month in figures adjusted to take into account seasonal factors.

That was better than economists had forecast and came despite harsh winter weather.

The more commonly quoted unadjusted figure increased by 26,000 from January with just over 3.6 million people registered as unemployed.

Coca-Cola buy biggest bottler

2010-02-25T10:19:00.000-08:00

Coca-Cola has said it is going to buy the North American operations of its largest bottler, Coca-Cola Enterprises.

The deal means it can cut costs and be make its distribution more flexible.

The rest of the bottling company would remain independent and would also acquire some of Coca-Cola’s assets in Scandinavia and Germany.

The announcement came as rival PepsiCo was about to close on the purchase of its largest bottlers.

Euronpean telecoms results

2010-02-25T10:07:00.000-08:00

France Telecom has posted a net profit of three billion euros for last year, which was about what was expected by analysts.

Europe’s third-largest telecom operator predicted sales will be stable this year.

And Germany’s Deutsche Telekom made a net profit of 353 million euros, that was 76 percent down on 2008.

The two companies are working on merging their UK mobile phone businesses.

European banks upbeat

2010-02-25T10:03:00.000-08:00

As they reported their 2009 figures, several major European banks were upbeat about the year ahead.

France’s biggest high street bank, Credit Agricole said despite losses at its Greek bank Emporiki, it had made a good start to the year.

Agricole’s net profit rose to 433 million euros

Royal Bank of Scotland, which is 84 percent owned by the UK government after a series of bailouts during the financial crisis, posted a seven billion euro loss, but said prospects are brighter for the coming year.

Deutsche Postbank, Germany’s largest retail bank in numbers of customers, suffered an 398 euro pretax loss last year.

But it said lower loan loss provisions and lower writedowns on toxic assets will help it achieve a pretax profit in 2010.

Carrefour to axe Belgian stores

2010-02-24T01:04:00.000-08:00

Faced with falling sales at its stores in Belgium, French retailer Carrefour is to close 21 of them and sell off as many as 20 more by the end of June.

The world’s second largest retailer will lay off nearly 1,700 of its 16,000 workers in Belgium.

The unions blamed uninspired management for Carrefour’s problems

Union representative Patrick Savauche said: “Why are our competitors doing better than us? Because they have a strategy, they have good prices. Here, at Carrefour, we’ve never had that. Which isn’t the fault of the workers, that I’m sure about.”

But Carrefour Belgium’s boss, Gerard Lavinay, said the problems are structural and because the workforce is too expensive compared with other stores around Europe.

He told reporters: “The problems of Carrefour Belgium, the problems with a cost structure that is abnormal and different from that of our competitors, that’s specific to Belgium.’‘

Carrefour’s Belgian operations have struggled for years amid intense competition from Belgian groups Delhaize and Colruyt and discounters Aldi and Lidl.

The group does plan to invest 300 million euros over the next three years to refurbish the Belgian stores it is keeping and to try to cut costs it will
renegotiate contracts with suppliers.

US politicians question Toyota safety issues

2010-02-24T00:59:00.000-08:00

Top executives at Toyota have promised a shake-up of its quality procedures as the US government said it would hold the carmaker’s chief to his pledge to address safety issues.

In the wake of massive recalls of Toyota vehicles
over unintended acceleration and braking issues, member of the US Congress are holding two days of hearings to question Toyota bosses.

The politicians also called for more research into the problems.

At the same time, Toyota has revealed that it faces a criminal investigation in the US into the handling of its massive safety recalls.

A federal grand jury in New York has asked for documents relating to problems, including sticky accelerators.

A similar request has come from the financial regulator, the US Securities and Exchange Commission.

Unintended acceleration problems have been linked to at least five deaths in the US.

RBS boss spurns bonus

2010-02-24T00:54:00.000-08:00

Stephen Hester,the boss of Royal Bank of Scotland has reportedly waived his 1.8 million euros bonus for last year.

The bank, which had to be rescued with British taxpayers’ money, is now 84 percent owned by the government.

This follows a similar move by top bosses at another big British bank, Barclays.

It will put pressure on Eric Daniels, who heads Lloyds Banking Group, also bailed out by the state.

Schlumberger to merge with Smith International

2010-02-24T00:52:00.000-08:00

A big merger in the energy sector. Schlumberger, which is the number one oilfield services company, is to buy Smith International.

The all-stock deal is worth the equivalent of 8.3 billion euros.

It will boost Schlumberger’s revenue to double that of its nearest rival, Halliburton.

The merger will have to be approved by shareholders and competition regulators.

Lufthansa pilots suspend strike

2010-02-23T06:39:00.000-08:00

Lufthansa pilots have halted a strike after their union and the German airline agreed to hold fresh negotiations.

The walkout was scheduled to last four days but ended after just 24 hours when both sides agree to a suspension and to hold talks following a two-hour session in a Frankfurt labour court on Monday.

"The parties agreed that the strike is to be suspended through the 8th of March,'' Lufthansa spokesman Andreas Bartels said.

Lufthansa had cancelled about 800 of its estimated 1,800 daily flights on Monday, affecting some 10,000 passengers, and the strike was supposed to have lasted four days and would have cost 25m euros ($34m) a day.

Bartels said pilots would return to work on Tuesday although it would take time for normal operations to resume.

Joerge Handwerg, a spokesman for the Vereinigung Cockpit (VC) union representing the pilots said the union was "happy with the agreement because Lufthansa now has to resume negotiations without preconditions'.

More than 4,000 pilots had gone on strike at midnight on Monday over concerns that cheaper crews from Lufthansa's subsidiaries in other countries could eventually replace them, concerns Lufthansa said were unfounded.

The union also wants a 6.4 per cent pay rise, more say in company decisions and commitments that pilots would keep their jobs when Lufthansa shifts passengers to cheaper, foreign affiliates.

Looming strikes

The suspension of the strike is not the end of Lufthansa's woes.

Late on Monday, Germany's UFO cabin crew union said it was considering walkouts of its own "in the coming weeks".

And travellers in Europe face more disruptions ahead as five unions representing French air traffic controllers on Monday announced a four-day strike beginning on Tuesday.

France's aviation authority ordered airlines to cancel half their flights at Orly airport and a quarter at Charles de Gaulle in Paris.

French carrier Air France said it would maintain all of its long-haul flights during the strike, with the protest movement affecting only its routes within France and Europe.

British Airways faced a renewed threat of cabin crew strikes, after the Unite union announced that most of its members had voted in favour of a walkout.

Britain's biggest labour union said after the vote that its members would meet on Thursday to discuss the ballot result before deciding on a strike date.

A previous strike threat by BA cabin crew, planned for the Christmas and New Year holidays, was cancelled only after the airline obtained an emergency court injunction to block it.

And Eurostar, the main train alternative to planes between Paris, Brussels and London, experienced an embarrassing train failure when a Paris-to London train broke down in southern England late on Sunday.

The failure plunged more than 700 passengers into darkness, forced them to climb down ladders on to the track to a replacement train, and caused them to arrive in London more than four hours late.

Toyota boss pledges improvements

2010-02-23T06:21:00.000-08:00

The head of Toyota, the Japanese car manufacturer, has vowed to change the way the company does business in the wake of a series of safety recalls.

Writing in the Wall Street Journal on Tuesday, Akio Toyoda said the company had not responded quickly enough to reports about vehicle defects and promised "transparency" in the way it handles customers' concerns.

The recalls over potentially faulty accelerator pedals and brakes have together affected more than eight million vehicles around the world, badly damaging Toyota's reputation for quality and reliability.

Toyoda's article comes two days before he is due to give testimony before a US congressional hearing into his company's handling of the recall and its response to safety concerns.

It also appeared on the same day that the car manufacturer was presented with a subpoena from a US federal grand jury ordering it to handover documents related to the recalls.

Depending on the evidence the grand jury probe reveals, the case could lead to eventual criminal charges being brought against Toyota.

Toyota's US headquarters said on Monday that it would co-operate fully with the inquiry but gave no further details.

As well as two congressional investigations, Toyota is facing a host of US class-action lawsuits potentially costing billions of dollars that link defects in its vehicles to more than 30 deaths.

'Back to basics'

Writing in Tuesday's Wall Street Journal a contrite Toyoda said: "I recognise that we must do better - much better - in responding to safety issues."

He said: "It is clear to me that in recent years we didn't listen as carefully as we should - or respond as quickly as we must - to our customers' concerns".

Toyoda, who is the grandson of the carmaker's founder, said he would take the company "back to basics", pledging that "Toyota will set a new standard for transparency and speed of response on safety issues".

He is due to begin testimony before the congressional inquiry on Wednesday

Critics, including some members of the US congress, have attacked Toyota's response to complaints of sudden, unintended acceleration, accusing it of trying to cover up defects, which also extend to the brake systems of its flagship Prius hybrid cars.

'Evidence hidden'

News of the US grand jury investigation came hours after the release of a document apparently showing Toyota knew of accelerator safety problems in its vehicles as early as 2007.

The internal memo appears to show Toyota executives gloating over their success in limiting a 2007 recall on some cars where the driver's foot mat interfered with the accelerator.

The memo is among thousands that a congressional committee has requested in a subpoena of Dimitrios Biller, who worked as a US lawyer for Toyota from 2003 to 2007.

Biller, who is now in a legal dispute with Toyota, said the internal company documents show the firm was hiding evidence of safety defects from consumers and regulators.

News Middle East Jordan and France sign uranium deal

2010-02-22T03:16:00.000-08:00

Jordan has signed an agreement with France's nuclear giant Areva, giving the company exclusive uranium mining rights.

The deal was agreed on Sunday during a visit by Francois Fillon, the French prime minister, who was received by King Abdullah II.

The agreement gives Areva exclusive rights to extract and mine uranium in the central parts of Jordan.

The desert kingdom, which is poor in energy and water resources, is seeking to develop nuclear energy to generate power and desalinate water.

Fillon said he also spoke with Samir Rifai, the Jordian PM, about the prospects for building nuclear plants by French firms in the Gulf of Aqaba on the Red Sea.

"Our goal is to create a full partnership with Jordan on training and obtaining nuclear technology ... or with any other country in the region that seeks civilian nuclear technology," he told reporters.

"We discussed offers to build nuclear plants in Aqaba, and we will work on providing the best offers."

Jordanian officials have said that Areva, which started mining in central Jordan in 2008, could extract around 130,000 tonnes of uranium from the kingdom's 1.2 billion tonnes of phosphate reserves and build a nuclear reactor.

Energy needs

The country, which imports around 95 percent of its energy needs, aims to bring its first nuclear plant on line by 2015.

Officials have said they hope nuclear power will supply 30 percent of energy production by 2030.

Jordan is the latest Arab country to announce plans for nuclear power programmes, despite the controversy which has surrounded Iran's atomic ambitions.

Fillon, who arrived late Saturday in Jordan at the head of a large delegation, also attended an economic forum and said that Paris wanted to forge an "ambitious global partnership" with Jordan and boost economic ties.

Recall memos up stakes for Toyota

2010-02-22T03:09:00.000-08:00

Documents released in the US have shown that Toyota knew of safety problems with some of its vehicles as early as last June, and lobbied US regulators to head off an investigation.

One internal company memo uncovered by congressional investigators showed Toyota officials boasting of saving $100m by limiting the extent of vehicle recalls.

The documents also cite efforts to delay safety regulations, avoid investigations, and stall industry requirements.

The latest development in Toyota's safety crisis came as the company's president arrived in Washington to prepare for a congressional hearing on Wednesday, in a bid to salvage the Japanese car giant's dented reputation.

The memos are among thousands that a congressional committee has requested in a subpoena of Dimitrios Biller, who worked as a US lawyer for Toyota from 2003 to 2007.

'Hiding evidence'

Biller said the internal company documents show the firm was hiding evidence of safety defects from consumers and regulators

In a document referring to important security issues, Toyota mentioned "sudden accelerations" on some of its vehicles, showing the company was aware of such problems in July of last year.

Toyota has recalled more than 8.5 million vehicles worldwide in recent months following a series of complaints and a slew of lawsuits linking vehicle flaws to 30 deaths across the US.

The problems include sticky accelerators, accelerators that can be pinned down by loose floor mats and a braking glitch affecting its hybrid models.

Akio Toyoda, the president of Toyota Motor Corp, is due to face a hearing before the House of Representatives Oversight and Government Reform Committee on Wednesday.

Euro zone manufacturing boost

2010-02-20T03:34:00.000-08:00

The euro zone’s manufacturing sector enjoyed its best month in two and a half years in February.

The survey of purchasing managers showed Germany was a driving force; its manufacturing sector expand at its fastest pace since June 2007.

The euro trading around nine-month lows against the dollar boosted exports while firms rebuilding inventories also benefited manufacturers.

However the region’s dominant service sector expanded at a slower pace than expected.

Fed changes bank loan rate

2010-02-20T03:32:00.000-08:00

The Federal Reserve has sent a message to the market by raised the interest rate it charges banks for short-term loans.

It was the first step by the US central bank towards normalising lending, signalling that the era of cheap borrowing is drawing to a close.

However bank policymakers, led by Fed chairman Ben Bernanke, stressed that borrowing costs for consumers or companies would not rise.

Its main interest rate will remains unchanged, near zero percent, to help sustain a fragile US economic recovery.

What has been raised – for the first time since June 2006 – is the discount rate.

It has gone up from 0.5 percent to 0.75 percent.

That was a response to improved financial market conditions which means the banks do not need so much help.

The Fed was at pains to point out that the move did “not signal any change in the outlook for the economy or for monetary policy.”

It cautioned that recovery from the recession will probably be sluggish and its main interest rate will likely stay near zero for “an extended period.”

Bad news on UK jobs

2010-02-20T03:31:00.001-08:00

The number of Britons claiming unemployment benefit rose unexpectedly in January.

There were 23,500 more people on the dole last month.

That wiped out the declines seen in the previous two months and took the total number of claimants to its highest since 1997.

In jobless total in the UK is 7.8 percent of the working population. In the euro zone it is 10 percent and in the US it is 9.7 percent.

Lufthansa strike looms

2010-02-20T03:26:00.000-08:00

Late on Friday German airline Lufthansa remained on a collision course with its pilots with neither side seemingly prepared to compromise in a dispute over pay and job security.

Lufthansa said a four-day strike due to start on Monday will cost it at least 100 million euros.

Jörg Handwerk, a spokesman for the Cockpit union, said the pilots would not back down: “It’s important that Lufthansa makes a substantial offer. As it stands now, we haven’t received a single serious offer from them, but a solution is most likely to be found during negotiations.”

The pilots have asked for a 6.4 percent pay rise but said more importantly they want to prevent jobs being moved to Lufthansa subsidiaries where pay is significantly lower.

Lufthansa said it has contingency plans to limit the number of cancellations.

On Friday two Lufthansa passengers questioned at Frankfurt Airport were philosophical.

One said: “From the pilots’ point of view, I can see that it’s a good thing if they are not getting what they think they deserve to get. For the tourists and people travelling, it’s of course a nightmare.”

Another was supportive of the pilots: “Honestly I can understand it. Everyone has the right to strike and even if it’s not particularly good for individuals, it’s a democratic right.”

Ticket sales have fallen as travellers book flights with other carriers in anticipation of disruptions at the airlines.

Lufthansa has said even after the strikes end it will take days to return flights to normal.

Nestle sees strong 2010

2010-02-20T03:20:00.000-08:00

Switzerland’s Nestle is predicting higher sales growth this year.

Its 2009 results beat forecasts thanks to strong growth in North America and developing markets. Lower commodity prices also helped.

The world’s biggest food group enjoyed growth in underlying sales of 4.1 percent last year, ahead of rivals Unilever and Danone.

Net profit was just over seven billion euros.

Carrefour facing though times

2010-02-20T03:17:00.000-08:00

Carrefour, the world’s second largest retailer, has said it expects a tough 2010 as it posted a plunge in profits.

Operating profit was down 16 percent as sales slipped 1.2 percent but its overall earnings slumped 70 percent to 385 million euros.

That was due to writedowns in the value of assets in Italy and price cuts to lure cash-strapped shoppers.

Carrefour, which has over 15,500 stores in 35 countries, suffered a particularly weak performance in its home market France.

It is also reviewing its Belgian operations.

SocGen's results disappoint

2010-02-20T03:12:00.000-08:00

Lacklustre results from France’s second-biggest bank Societe Generale.

The lender, which issued a profit warning last month, announced weak fourth-quarter figures.

Chief Executive Frederic Oudea said he is “confident of its ability to bounce back.”

Net profit for the year was 678 million euros, down by two thirds on the previous year.

In the last quarter it made 221 million euros, must less than in the third quarter.

It will pay out 250 million euros in bonuses.

Frederic Oudea said he will not be taking a bonus but rejected criticism of bonuses.

Just over half of those that are being paid to traders will be in the form of shares, handed out over the next three years.

In addition, if traders do not meet performance criteria they will not get the payments.

The bank’s shares ended the day seven percent lower.

Toyota boss to testify in Congress

2010-02-19T04:45:00.000-08:00

Toyota's president has confirmed that he will appear before a US congressional panel next week, to explain the Japanese carmaker's handling of a series of damaging safety recalls.

In a statement Akio Toyoda said he would speak sincerely to the US Congress and the American people about his company's commitment to tackle the problems that have led to recalls of more than 8 million cars around the world.

Toyoda, the grandson of the carmaker's founder, had said earlier this week that he would not attend the US hearings.

His change of mind follows a direct invitation from the head of the congressional panel leading an investigation into the Toyota recalls.

"I look forward to speaking directly with Congress and the American people," Toyoda said in a statement.

He is expected to give testimony in Washington on Wednesday.

Toyota has recalled more than 6 million vehicles in the US – its biggest single market – over problems involving the accelerator pedal becoming stuck, either because of a loose floor mat or as a result of a design fault in the pedal assembly.

According to US safety regulators up to 34 crash deaths have been blamed on unintended acceleration in Toyota vehicles since 2000.

'Helpful'

A separate recall involving the braking system on Toyota's Prius hybrid cars is also under way.

n a joint statement Edolphus Towns, the Democratic chairman of the congressional oversight panel and Darrell Issa, the ranking Republican, said they were "pleased" Toyoda had agreed to appear in person to answer questions.

"We believe his testimony will be helpful in understanding the actions Toyota is taking to ensure the safety of American drivers," they said.

Towns added that Toyoda's appearance was needed to address what he said was "growing public confusion" about the recalls.

Speaking to reporters in Tokyo on Friday, Japan's transport minister said it was the right decision for Toyoda to travel to the US, but added it was regrettable that he had earlier said he would not be going.

"It's good that he has decided to accept," Seiji Maehara said. "But it's a shame there was flip-flopping on the decision."

The massive scale of the recalls has badly damaged Toyota's reputation for quality and reliability, and hit its share price.

Toyota's US sales dropped 16 per cent in January and are expected to take a big hit in February as well.

China in record US debt sell-off

2010-02-19T04:42:00.000-08:00

China sold a record amount of its US Treasury holdings in December, ceding its place as the world's biggest foreign holder of US debt to Japan.

According to Treasury figures released on Tuesday, Beijing sold off more than $34bn of its holdings in the final month of 2009, cutting its holding of US debt by just over 4 per cent to $755.4bn.

Japan now holds almost $11bn more US debt than China, with a total of nearly $769bn.

Japan had been the largest holder of US Treasury bonds until September 2008, when it was overtaken by China.

'Subtle message'

The Chinese sell-off of US bonds follows increasingly vocal concern from Beijing over the ballooning US deficit, and comes amid a deterioration in relations between the US and China on a range of fronts.

Eswar Prasad, a trade policy professor at Cornell University in New York state, said the Chinese sales of US Treasuries could contain "a subtle economic and political message" aimed at Washington.

"Chinese leaders are deploying their reserves to try and pressure the US to stop haranguing China about its currency and trade policies and to back off from interference in its domestic political and human rights issues," he told the AFP news agency.

In the latest spat between Beijing and Washington the White House has rejected a Chinese demand that Barack Obama, the US president, cancel his meeting this week with the Dalai Lama, the exiled Tibetan spiritual leader.

Complicating issues still further the rows over Tibet, a US arms sales to Taiwan, China's dispute with Google and a raft of others trade and currency disagreements, come at a time when Obama is seeking China's help to toughen sanctions on Iran.

Chinese dependence

However, US think-tank Stratfor in a note to clients on Tuesday said that while the debt sell-off may have political undertones, China remains fully aware of its own dependence on the US.

"While China may reduce its holdings of US debt in order to send a signal to Washington - though this is not necessarily the only reason it would do so - it has no intention of selling debt to the point that it wrecks the US economic recovery, since doing so would destroy China's own economic and socio-political stability," it said.

China invests the bulk of its $2.2trn in foreign exchange reserves in US Treasury bonds which has virtually financed the snowballing US budget and current account deficits.

At the same time, despite recent increases in China's domestic consumption, its economy and millions of Chinese factory jobs remain highly dependent on US export markets.

Nonetheless, in recent months Chinese officials have repeatedly voiced concern about the mushrooming US debt, fearing it could erode the value of the dollar and its Treasury holding.

Last June Timothy Geithner, the US Treasury Secretary, travelled to Beijing to reassure Chinese leaders, saying their money is "very safe" and pledging to cut the deficit.

Lufthansa pilots to strike

2010-02-18T07:18:00.000-08:00

Pilots at German airline Lufthansa have voted to strike in a dispute over wages and job security.

The pilots’ union Vereinigung Cockpit wants a 6.4 percent pay rise for the next 12 months.

It has also demanded job guarantees for pilots at Lufthansa, as well as its cargo unit and at the low-cost airline Germanwings which Lufthansa owns.

Cockpit said 94 percent of its members had voted for strike action during a month-long ballot.

It plans a four-day stoppage from Monday 22 February and has threatened to hold additional walkouts if necessary.

Talks between management and the union broke down at the end of last year.

Lufthansa called the strike action “disproportionate” and it would “hurt the company, its customers and workers to a high degree.”

One industry analyst it would cost the airline at least 10 million euros a day.