36 1R M Tuesday February 19 2019 | the times the times | Tuesday February 19 2019 1R M 37 Business World World Business Need to know Barclays chief President Trump threatened a Selling Heathrow’s trade war by imposing hefty 1tariffs on European car imports. A US commerce loses key backer department report is expected to recommend that the EU motor industry be classified as a threat to national security as it robs the slots at auctions as Tiger bows out country of an industrial base to produce military hardware. Tabby Kinder position in the bank last summer. The Honda is to shut its only Professional Services Correspondent bulk of its holding was through deriva- British factory. The Japanese tives contracts, which do not have to be 2carmaker is expected to An American hedge fund has wound made public on a share register and announce tomorrow that its plant ‘will push up fares’ down a stake of more than $1 billion in which it allowed to expire. in Swindon, Wiltshire, will shut in Barclays as the bank fights off an attack Mr Staley, who has run Barclays 2022. The closure will directly from an activist investor. since 2015, has struggled to keep large affect 3,500 people employed by Graeme Paton Transport Correspondent of slots being allocated to “new Tiger Global Management, which shareholders onside amid calls for the the company. entrant” airlines. It considers criteria held a 2.5 per cent stake, making it a top company to split off its investment Ministers are considering auctioning including whether airlines are propos- ten shareholder, has sold its entire hold- banking division. Tiger bought much of Dame Judith Hackitt, head of take-off and landing slots at an ing new routes and destinations that ing over the past year, according to the its stake when Barclays’ shares were the industrial manufacturers’ expanded Heathrow, despite warnings Q&A are not well served by other carriers. Financial Times. trading at about 180p. They rallied to 3lobbying group Make UK, has that such a move would inflate costs for Existing slots are held by airlines The hedge fund was believed to have 217p in March last year, but have since attacked the political classes for airlines and passengers. Who allocates slots at airports? using so-called “grandfather rights”. In been a supporter of plans by Jes Staley, fallen to 158½p. selfishly pursuing ideology in the Runway access may be sold off for Landing and take-off slots are Britain, they can be traded in a “second- 62, Barclays’ chief executive, to revive Tiger’s decision to unwind its holding delivery of an unsatisfactory millions of pounds to the highest allocated independently in the UK ary market”, often commanding huge the lender’s fortunes. However, the in Barclays could be seen as a new blow withdrawal from the European bidders when Britain leaves the Euro- by Airport Co-ordination, following sums. A record $75 million was paid by bank’s shares have lost about a third of to Mr Staley’s strategy, which is also Union that could end up being a pean Union, representing an overhaul EU slot regulations of 1993 Oman Air for a set of rights at Heath- their value over the past two years, under pressure from Edward Bramson, catastrophe for British of existing aviation regulations. row. prompting concerns about Mr Staley’s an activist investor. Mr Bramson, 67, businesses. A strategy paper published by the How are slot allocations made? The government said in its Brexit turnaround strategy. holds a 5.5 per cent stake in Department for Transport said that Slots are handed out twice a year, planning guidance that slot allocations Barclays is one of Brit- Barclays through Sher- Ethnic minority employees auctioning all or a limited number of for summer and winter schedules. would remain unchanged in the event ain’s four biggest high borne Investors, his are leaving the Bank of highly sought-after slots would im- “Grandfather” rights entitle of no deal. It insisted that the rights street banks. It em- company. The invest- 4England in disproportionate prove competition and raise cash. incumbent airlines to continue using would be allocated in a “transparent ploys more than ment firm was re- numbers and feel less comfortable Senior officials are believed to favour the slot if it has been used for at and non-discriminatory way”. How- 100,000 staff buffed last year with the organisation’s culture, the system as a means of distributing least 80 per cent of the previous ever, the transport department is worldwide in when it made an according to the minutes of a access when Heathrow expands. period. In the UK, slots are traded in understood to be seriously considering retail, informal attempt recent meeting of the non- Europe’s busiest airport will cater for an the secondary market the adoption of an auction system. commercial and to gain board rep- executive directors. additional 260,000 flights a year when The department’s aviation strategy, investment resentation in its third runway is opened in 2026, What about new slots? published before Christmas, confirmed banking services. private talks with Ministers are considering creating 356 lucrative daily pairs of New slots are put into a pool. Half that the government was considering Tiger Global the bank. It has auctioning take-off and take-off and landing slots. are supposed to go to new airlines “market-based mechanisms for release was founded in since raised its 5landing slots at an expanded The auction system also may be of additional capacity”, and added: 2001 by Chase attack by submit- Heathrow after Britain leaves the applied to any additional flights at What’s being proposed? “This could include auctioning all slots Coleman, 43, one of a ting a resolution to EU, despite warnings that the Gatwick, which wants to bring its emer- The government wants to promote or a limited number that would be most group of “tiger cub” appoint Mr Bramson to move would inflate costs for gency landing strip into full operational competition, including auctioning sought-after.” hedge fund managers the Barclays board. Mr airlines and passengers. use as a second runway to create an slots to the highest bidder. The A House of Commons library paper who had worked for Julian Bramson says Barclays has additional 50,000 flights a year. existing system provides incentives from 2017 admitted that auctions “may Robertson, 86, a renowned New “strategic weaknesses” and that it People’s confidence in their Critics have warned that the changes for “slot hoarding”, when airlines be more difficult for small carriers with Air traffic controllers will have a third runway to manage at Heathrow from 2026, with more flights and passengers passing through Europe’s busiest airport York investor. Its investment in Bar- should scale back its investment bank. finances has fallen at its would create a disaster for the industry retain as many slots as possible and lower purchasing power”. clays, accumulated in November 2017, Mr Bramson met Barclays bosses, 6fastest rate in almost a year because it would give priority to airlines sell them to make a profit Lara Maughan, the IATA head of that would force airlines to prioritise was regarded as a departure for the including Mr Staley, in mid-November and employees are increasingly with the most funds and thus shut out worldwide airport slots, said: “Making the most lucrative long-haul routes.” New York-based fund, which typically and has another meeting scheduled for concerned about their job security, smaller carriers. New slots are allocated airlines pay for entering or growing at IAG said: “We support IATA’s view Investors spooked by Norwegian boss invests in technology companies, and March 12 after the bank’s annual a survey has suggested. free of charge, at present. The new What landing slots are worth an airport means consumers will be the that slot auctions would negatively as a vote of confidence in Mr Staley’s results, set to be published on Thursday. system probably would promote more losers. At a time when Britain is looking impact consumers and undermine Robert Lea Industrial Editor dustry, offering fares of £150 one-way strategy to focus on developing the in- Barclays and Tiger Global declined A hedge fund has wound profitable, well-worn routes rather to improve its competitiveness and to Britain’s aviation industry.” 6 The future of Flybmi is in the across the Atlantic. However, its oper- vestment banking division in the to comment. down a stake of more than than opening up access to new destina- build more connections to the world, A transport department The chief executive of Norwegian Air hands of BDO, the insolvency ating losses last year nearly doubled to United States and the consumer bank $75m accountancy, and Stephen and Peter 7$1 billion in Barclays as the tions in Britain or emerging markets, it Oman Air paid a record sum to KLM these proposed changes will do the spokesman said: “We have has denied that he lacks confidence in £350 million, with net debt of £2.9 bil- business in Britain. Jes Staley, pictured with his wife Bond, the multimillionaire brothers bank fights off an attack from an has been claimed. for a pair of slots in 2016 exact opposite. Extracting even more been clear that any slot his airline after it emerged that he had lion, and it announced a £270 million Tiger Global started to offload its Debora, has led Barclays since 2015 activist investor. Tiger Global The International Air Transport cash from airlines and their allocation system should sold his rights to new shares to undis- (Robert Lea writes). Flybmi, the rights issue to patch up its finances. Management, which held a 2.5 per Association insisted that the “only passengers will mean higher costs, less be designed to stimulate a closed third parties on the cheap. trading name of British Midland Mr Kjos and Bjorn Kise, Norwegian’s cent stake, sold its entire holding winner” would be the Treasury, which $60m choice and less invest- competitive market and The manoeuvre by Bjorn Kjos, the Regional, the last remnant of the chairman, had indicated that they over the past year, according to would be likely to pocket the receipts of American Airlines to SAS for a pair ment. The govern- this is just one of a 72-year-old founder of the low-fares British Midland empire created by would take up their rights to subscribe Lord Glendonbrook, 77, went bust at the Financial Times. any slot auction. International Airlines of slots in 2015 ment’s stated objec- range of options. carrier, sent shares in Norwegian to a for up to 27 per cent of new shares Banks to offer ‘Brexit Group, the parent company of British tive to improve We are work- seven-year low, at one point dropping the weekend. Its routes out of Bristol issued. However, it has emerged that Any break-up of Reckitt Airways, which holds more than half of regional access to ing with the by nearly 10 per cent and closing down and Aberdeen were snapped up by Mr Kjos and Mr Kise are to sell some of Benckiser would be unlikely Heathrow slots, said that it would be $209m Heathrow would aviation in- 4.3 per cent at NKr93.67, valuing the Loganair. Flybmi and Loganair are these rights to other investors at a dis- clinics’ for small firms 8to happen before the middle opposed to the move, even though it Continental Airlines to GB Airways be irreparably dustry in company’s stock at about NKr4.2 bil- owned by Airline Investments count of about 70 per cent of their value. of next year and would be probably would be the biggest winner of for four pairs of slots in 2007 damaged by an considering lion, or about £377 million. Limited, controlled by the Bond That spooked other investors into ($52.5m per pair) brothers, who made a fortune when overseen by a new chief executive, any auction system. auction system any potent- Norwegian is the world’s fifth largest worrying whether the rights issue James Hurley Britain’s departure. Companies also will the company indicated yesterday. The allocation of slots is handled by ial reforms to low-cost airline, flying 500 routes they sold Bond Aviation, their late would get away on the published terms. be advised to consider alternative fi- father’s helicopter company, now The consumer goods group said Airport Co-ordination and follows Environmentalists the system so across Europe and long-haul to coun- Norwegian said that the pair “have The banking industry and business nance options in the event that a bank part of Babcock International. There that it continued to “evaluate the common EU rules that came into force $47m are against plans for it delivers the tries including the United States. It was repeatedly communicated their full groups representing hundreds of does not lend. Delta Air Lines to an unknown was no indication last night of what opportunities to maximise 26 years ago. Under the system, any 260,000 more flights best outcome for founded in 2002 and employs 11,000 confidence in the business, something thousands of employers are set to join Yesterday Barclays, one of the so- airline for two pairs of slots in 2012 will happen to other Flybmi services. shareholder value”. new airport capacity is pooled, with half a year at the airport passengers.” people. It has been shaking up the in- the rights issue also underlines”. forces to urge business owners to make called Big Four high street banks, along contingency plans for Brexit. with HSBC, Lloyds and Royal Bank of Britain’s largest private The Times understands that UK Scotland, said that it would host 100 construction company said continued from page 31 Finance, the banking trade body, is Brexit “clinics” around the country 9that a no-deal Brexit would Commons ‘pamtomime’ working with groups including the next month to provide support for its pose a minimal risk, if any, to its Small businesses may need agent to trade with EU Chapter is over for Pearson Federation of Small Businesses, the customers. It said that the clinics present projects as it reported a YouGov found that 6 per cent of manu- British Chambers of Commerce and would be held by its more than 1,500 £46.5 million post-tax loss for its James Hurley Enterprise Editor “authorised economic operator” within would have to find and appoint a EU ambassador to the US, to warn that facturing companies have already re- Alex Ralph future dividends to equity-holders and the CBI on an initiative to urge small relationship managers and would take latest financial year. Laing the single market. The proposal, meant representative, assuming they do not the rules would “disrupt trade flows and located facilities abroad to get round will receive 20 per cent of net proceeds and medium-sized companies to “plan place in branches. Topics covered will O’Rourke is filing its annual Businesses dealing in a vast array of to prevent unsafe products entering the have an existing agent to take on the re- unduly and disproportionally burden the perceived constraints of Brexit, Pearson offloaded its American schools if the business is sold by Nexus. ahead”, despite the lack of clarity about include managing cashflow and work- results today, more than four consumer goods may have to appoint a EU, would force manufacturers to sponsibility. The FSB estimates that the small manufacturers and ecommerce with a further 12 per cent considering it. textbook business yesterday, more than Pearson is a FTSE 100 company Britain’s trading position after March ing capital, exporting goods, supply months late. representative inside the European designate a person to hold compliance costs could be at least £1,500 a year for resellers to the EU”. In 2010, the EU The survey found that nearly a quarter 18 months after it effectively put it up specialising in educational assessment 29, when the country is scheduled to chain management, labour and pro- Union after Brexit in order to keep documentation inside the bloc and to each product category they deal in. successfully lobbied against plans to of companies were stockpiling goods. for sale. and courseware. It employs more than leave the European Union. tecting against fraud, the bank said. The banking industry and trading with the single market. be accountable for non-compliance, The group, which represents more introduce similar measures in the US. Dame Judith will also attack politi- The education publisher said that it 30,000 people in 70 countries and The groups are due to issue guidance Jes Staley, chief executive of Barclays, groups representing The Federation of Small Businesses including criminal penalties. than 100,000 small employers, is Mike Cherry, national chairman of cians over the collateral damage caused had agreed to sell its K12 courseware generated a pre-tax profit of £408 mil- this week recommending that said that the clinics would help small 10hundreds of thousands of warned that companies selling to The rules, which could be imple- concerned that the proposals may put the FSB, said that the proposals would by months of parliamentary deadlock business to Nexus Capital Manage- lion last year on sales of £4.5 billion. It companies consider how customers companies to “prepare and cope with employers are set to join forces to customers in the EU could face an mented in 2021, would cover consumer off some UK businesses from trading provide “paper-thin” protection for EU over EU secession. “The other very real ment, a private equity firm, for announced a review of its courseware and suppliers could be affected by Brex- whatever Brexit will bring”. urge business owners to make additional “massive barrier to trade” products ranging from kitchen and with the EU after Brexit. It is urging the consumers. consequence of so much time being de- $250 million as part of its plans to publishing business in the United it and what their financial needs might The FSB estimates that only about contingency plans for Brexit. UK when Britain leaves, if proposals to bathroom scales to toys to electrical government to “ramp up engagement” “Many of the EU’s largest and closest voted to Brexit is the opportunity cost create a digitally focused business. States in May 2017, alongside a be should they suffer cashflow prob- one in seven small companies has Finance, the banking trade body, is force businesses from third countries to appliances and lighting equipment. Re- with the European bloc and to follow trading partners, like the US, are mak- of other very serious issues that aren’t Under the terms of the transaction, £300 million cost-cutting drive. lems. started planning for a no-deal Brexit. working with groups including the appoint authorised representatives are sellers would need to cite the manufac- the example set by the United States, ing their concerns about these rules being addressed: our future aviation Nexus will pay only $25 million initially, Despite the sale, Pearson said that It is understood that the banking in- The Times revealed last month that Federation of Small Businesses, implemented. turer’s responsible person and details which lobbied against the proposals on clear,” he said. “I foresee further action capacity, transport infrastructure, with a further $225 million to be paid the broader American schools market dustry will seek to reassure companies banks and business advisers were plan- the British Chambers of The EU is planning to require busi- may need to be included on packaging behalf of American companies. and challenges at the World Trade Or- energy supply and, most critically for via a vendor note due in the next three “remains an important area of focus”. that it is in a position to lend to viable ning for the possibility of a significant Commerce and the CBI. nesses from countries outside the bloc or accompanying documents. This month, the Congressional EU ganisation, with temporary retaliatory our sector, our future skills needs in an to seven years. Once the note is repaid, Shares in Pearson closed down 9½p, businesses should they find themselves increase in demand for loans in the that trade in certain goods to appoint an UK companies affected by the rules Caucus wrote to David O’Sullivan, the measures being imposed.” era of digitisation,” she is scripted to say. Pearson is entitled to 20 per cent of all or 1 per cent, at 911p. with a short-term cashflow issue after event of a no-deal Brexit.