Tag: Business and finance

ALL should be rosy at Europe’s largest low-cost airline. Ryanair’s passenger numbers are growing and costs per seat-kilometre flown are—just about—lower than its competitors’. But investors have been sent into a flap by its announcement on July 23rd that its profits in the first quarter fell 20% year-on-year, which sent its share price down nearly 7% on the day. Growing demand for pilots and cabin crew is having an effect. Last September the airline was forced to cancel over 2,000 flights owing to a pilot shortage. To attract enough staff to keep up with its breakneck expansion it has been improving pay and conditions, as well as recognising trade unions for the first time. That decision has already made itself felt: this week Ryanair is cancelling more than 600 flights because of striking staff.

Neil Sorahan, Ryanair’s finance director, cites other factors for the slide in profits. The amount of airline capacity in Europe is growing faster than demand, putting downward pressure on fares. And on the cost side, rising oil prices has…Continue reading

THE question of who would replace Sergio Marchionne has been in the air for a year or more, ever since the boss of Fiat Chrysler Automobiles (FCA) announced that he would step down in 2019. But the way the answer came was both shocking and sad. Complications after a routine operation around three weeks ago have had a devastating effect on the health of the 66-year-old, who was hard-working even by the standards of big-name CEOs. Not only will Mr Marchionne leave the helm of FCA earlier than planned but he will also quit as boss of Ferrari, a sportscar-maker, which he had been expected to lead until at least 2021.

A sudden deterioration in Mr Marchionne’s condition forced FCA’s board to meet on July 21st to confirm that Mike Manley, boss of the Jeep brand, would take his place. Replacing someone who is regarded as one of the all-time stars of the car industry is a tough job.

Mr Marchionne was refreshingly outspoken in an era when bosses have become ever more wary of…Continue reading

TRAVELLING for work can be expensive, uncomfortable and unpleasant, even for those without a mobility issue. But spare a thought for people who do, many of whom get appalling service from train firms and airlines around the world. The latest case to have hit the headlines is that of Tanyalee Davis, a Canadian living in England, who has said that she was left feeling so humiliated that she “wanted to crawl under a rock and die” after a recent train journey from Plymouth to Norwich. Ms Davis, who uses a mobility scooter as she has a form of dwarfism, was forced to move from an unreserved wheelchair space to make way for a pushchair (pushchairs do not have priority for such spaces). When she complained, the guard announced to the train that they would be stopping indefinitely at the next station because the “woman in the mobility scooter was causing problems.” 

For Ms Davis, a touring comedian, incidents like this are all too frequent and are no laughing matter. And she is not alone. Frank Gardner, a disabled journalist at the BBC, a…Continue reading

WORK can make you sick and shorten your life. That is the argument of a hard-hitting book* by Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business. In an obvious way, that claim is outdated. Health-and-safety rules help explain why deaths from accidents in American workplaces fell by 65% between 1970 and 2015. But one problem has not gone away: stress. As many as 80% of American workers suffer from high levels of stress in their job, according to a survey entitled “Attitudes in the American Workplace”. Nearly half say it is so debilitating that they need help.

Firms are at least aware of the issue. A study in 2008 by Watson Wyatt (a consultancy that is now part of Towers Watson) found that 48% of organisations said job-related stress affected performance. But only 5% of employers said they were doing anything to deal with the matter.

Mr Pfeffer’s book focuses on America, where the problem seems particularly acute. One survey found that 55% of employees log into…Continue reading

SQUEEZING the top 1% ought to be the most natural thing in the world for politicians seeking to please the masses. Yet, with few exceptions, today’s populist insurgents are more concerned with immigration and sovereignty than with the top rate of income tax. This disconnect may be more than an oddity. It may be a sign of the corrupting influence of inequality on democracy.

You might reasonably suppose that the more democratic a country’s institutions, the less inequality it should support. Rising inequality means that resources are concentrated in the hands of a few; they should be ever more easily outvoted by the majority who are left with a shrinking share of national income.

Indeed, some social scientists think that historical expansions of the franchise came as governments sought credible ways to assure voters that resources would be distributed more equitably. Daron Acemoglu and James Robinson argue that in the 19th century governments across the West faced the threat of…Continue reading

EVEN the most celebrated firms have their hiccups. On July 16th Netflix, an online-streaming giant, presented disappointing news to investors: it had added just 5.2m new subscribers in the second quarter of 2018, well below its projected number of 6.2m. Shares plunged by 14%; they have since recovered some ground.

This most recent bout of volatility may say more about the firm’s soothsaying abilities than the strength of its underlying business. Although Netflix’s subscriber growth fell short of its own projections, it was still in line with that of past quarters (see chart). In percentage terms, Netflix registered a bigger miss against projected subscriber growth in the second quarter of 2016, when its shares fell by 13%. The firm has also had much bigger forecasting misses on the upside.

When asked this week to explain the forecasting error, Netflix’s chief executive, Reed Hastings, responded that the company never worked out what happened in 2016 either, “other than…Continue reading

Songs of Solomon

LAME-DUCK periods can last for only so long. It was clear beforehand that a Goldman Sachs earnings call this week would be packed with questions about succession. When would the chief executive, Lloyd Blankfein, step down? (He had said in March he was leaving, but gave no date.) What would his departure mean for the firm’s other over-achievers? Several had already decamped, including Harvey Schwartz, the bank’s co-president and co-chief operating officer. Left as heir-apparent was the man he had shared both jobs with, David Solomon, but with no hint of when his elevation would take place.

On July 17th Goldman ended the speculation by confirming the choice of Mr Solomon as CEO and saying that he would take over in October, earlier than predicted. Quarterly results presented that day by Martin Chavez, the chief financial officer, who is thought to be in his own succession battle to replace Mr Solomon, beat forecasts. Still, the share price sagged….Continue reading

Going with the flow

OPEN a toolbox, pull out a spanner and you may be holding a bit of the answer to global warming: vanadium, a metal named after Vanadis, the Scandinavian goddess of beauty. Used mostly in alloys to strengthen steel, its appearance may not live up to the romance of its name. Yet vanadium could become a vital ingredient in large clean-energy batteries, in which case it will shine a lot brighter.

Its price has already been rising faster than cobalt, copper and nickel, all of which are used in lithium-ion batteries (see chart). The main reason for the run-up is prosaic. About nine-tenths of the world’s vanadium is used to harden steel; China has tightened standards on the strength of rebar to make buildings more earthquake-proof. Mark Smith, boss of Largo Resources, which mines high-purity vanadium in Brazil, says this alone should increase demand for the metal by up to 15,000 tonnes in 2018-19. Last year total production was 83,000 tonnes.

But…Continue reading

TO PAY for his professional flight degree at Purdue University in Indiana, Andrew Hoyler had two choices. He could rely on loans and scholarships. Or he could cover some of the cost with an “income-share agreement” (ISA), a contract with Purdue to pay it a percentage of his earnings for a fixed period after graduation.

Salaries for new pilots are low. Mr Hoyler made $1,900 per month in his first year of work. Without the ISA, monthly loan payments would have been more than $1,300. Instead, for the next eight-and-a-half years he will pay 7.83% of his income. He thinks that, as his pay accelerates, he will end up paying $300-400 more each month than with a loan. But low early payments, and the certainty that they would stay low if his earnings did, made an ISA the better option, he says. “I’ve been able to pay what I could afford.”