Top 10 Stories of Last Week! 10/04/17

This weeks news includes; United Airlines shares fall, Uber banned in Italy, Mastercard £700m merger gets CMA approval, Toshiba forecasts £7bn loss.

Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories.

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Opinion articles of the week:

  • The Telegraph looks at what happens now for SMEs after triggering Article 50.
  • City A.M lists six reasons why US stock markets are set to tumble.
  • Business Insider  explores the PwC’s chairman claim that “we’ll see ‘that scenario of a negative growth rate’ if we don’t deal with job-killing robots.”
  • CNBC looks at Fitch’s change of mind. Fitch claims that Trump isn’t a threat to the world economy after all.

 

 

1. UNITED AIRLINES SHARES FALL AFTER PASSENGER REMOVAL

Shares in the owner of United Airlines recovered some ground after the airline’s boss issued a second statement apologising over its removal of a passenger. United Continental Holdings stock fell 4% at one point before losses narrowed to finish down 1%. Videos of a passenger being dragged off a United flight in the US sparked outrage on social media.

United’s chief Oscar Munoz apologised for the “truly horrific” incident.

Mr Munoz initially issued a statement on Monday apologising “for having to re-accommodate these customers” before an internal email to United staff emerged revealing that the chief executive had called the passenger called “disruptive and belligerent”.

Mr Munoz released another statement later on Tuesday, saying he “continues to be disturbed” by the incident and the company would “fix what’s broken so it never happens again”.

But it started to pare losses in afternoon trading and was given a further boost by a second statement from Mr Munoz. The footage taken inside the airliner shows a man being pulled out of his seat and dragged down the aisle. He is later seen with blood on his face.

Communications experts have predicted the incident could damage United Airlines’ brand. It comes just weeks after the company, whose slogan is “Fly the Friendly Skies”, was criticised on social media for refusing to allow two teenage girls to board a flight because they were wearing leggings. (BBC news)

2. UBER BANNED IN ITALY

Uber has been banned in Italy after a Rome court ruled that it represents unfair competition for traditional taxis. The court said Uber could not use its apps in the country and could not promote or advertise its services, following legal action brought by Italy’s traditional taxi unions, Reuters reported.

Uber has ten days from the date of the court decision on Friday to shut down its services. Uber says it plans to appeal the decision.

A spokesperson said: “We are shocked by the Italian court’s decision. Thousands of professional, licensed drivers use the Uber app to make money and provide reliable transportation at the push of a button for Italians.”

Italian taxi drivers have staged a number of strikes, protesting against Uber’s presence in the country. They say the US ride-hailing service has an unfair advantage because, unlike normal taxi drivers, its drivers can purchase licenses in small towns where they cost less, and use them to work in cities, the Local reported.

Uber has faced opposition in countries around the world as its rapid expansion has hit established providers. London’s black cab drivers have staged protests against the service, which they say has an unfair advantage because it is subject to less stringent regulation and uses its international structure to pay less tax.

In February, Uber laid out plans it hopes will bring its long-running war with black cab drivers to a close. Uber now lets traditional black cab drivers book their journeys through the app without paying the company. (The Independent)

3. VODAFONE ENDS EUROPEAN ROAMING CHARGES

Vodafone has scrapped roaming charges for UK customers in 40 countries, meaning they can use their plans there without additional costs.

However, the new terms are being applied initially only to new or upgraded contracts.

The EU is expected to abolish roaming charges for its 28 member states in June.

Countries in Vodafone’s roam-free destinations list include non-EU states such as Norway, Iceland and Turkey.

Beyond these territories, mobile phone users will be charged £5 per day to use UK plans in 60 states including the United States, Russia, China and India. Vodafone rival Three already offers free roaming in 42 countries on advanced plans. (BBC News)

4. MASTERCARD £700m MERGER GAINS CMA APPROVAL

The competition authority has approved Mastercard’s £700m acquisition of payments technology firm VocaLink, after they addressed competition concerns. Mastercard picked up a majority stake in the payments processor in a £700m deal in July last year.

VocaLink had been owned by a collective of 18 banks, including Barclays, Santander, Lloyds, Royal Bank of Scotland and HSBC, and provides the infrastructure for many payments in Britain such as Bacs and the faster payments service as well as the Link ATM network.

Concerns had been raised that Mastercard’s ownership would reduce competition in these areas, as VocaLink and Mastercard are two of only three credible providers of service for the Link system. The Competition and Markets Authority (CMA) examined whether the measures offered up by Mastercard and VocaLink removed the need to carry out an in-depth merger investigation.

Measures offered up by Mastercard and VocaLink to address the concerns included opening up VocaLink’s existing network to a new services supplier and contributing to the costs of Link members who want to swap to a new supplier.

Now the deal has gained regulatory approval, Mastercard and VocaLink will work to close the transaction within the next few weeks. (City A.M)

5. BOWLING COMPANY TEN ENTERTAINMENT GROUP FLOATS ON THE LONDON STOCK EXCHANGE

The UK’s second largest 10-pin bowling operator floated on the London Stock Exchange. Ten Entertainment Group, which operates 40 Tenpin centres across the UK, listed on the main market with a price of 165p, giving it a market capitalisation of £107.25m.

Ten Entertainment’s initial public offering (IPO) follows the flotation of the UK’s largest operator, Hollywood Bowl, last year.

Hollywood Bowl’s share price on admission was less than Ten Entertainment’s, at 160p, though this gave the company a larger market capitalisation of £240m. Hollywood’s share price closed yesterday at 164p. The company, which is floating 25 per cent of its shares to raise £26.8m, is being advised by Numis on the deal.

After the listing, private equity investor Harwood Capital Management will own around 69.4 per cent of the group’s shares, while the directors will hold 5.6 per cent. (City A.M)

6. INFLATION RISES – STUDENT LOANS COSTS TO INCREASE

Students appear to be paying a heavy price for the UK’s inflation surge after the Brexit vote, which will drive the interest rate on their loans up by a third to 6.1%.

The rise in inflation, driven by a decline in the value of the pound since June, means students will be charged substantially more interest on their loans, despite the fact that many other consumers are benefiting from record low interest rates. Personal loans from high street banks have rates starting at 2.8%, while five-year fixed-rate mortgages are available from 1.29%.

Student loan interest rates are tied to March’s retail price inflation figure, published on Tuesday. At the moment, new starters and current students are charged 4.6% – the March 2016 RPI figure of 1.6%, plus 3% – on their loans. But from September this will rise to 6.1%, made up of the March 2017 figure of 3.1%, plus 3%.

As a result current students and a sizeable number of graduates will see the interest rate on their student loan jump to more than 24 times the official Bank of England base rate. Those who took out their student loan on or after 1 September 2012 and who have now graduated will from this autumn be charged between 3.1% and 6.1%, depending on their income.

Students are also paying the price for being tied to the RPI rate, which is typically higher than the consumer prices index figure and is now relatively little-used. The latest CPI inflation figure for March was 2.3%. (The Guardian)

7. UBER’S FIRST FINANCIAL FIGURES RELEASED

Ride-hailing app Uber has opened up about its financials for the first time, revealing it more than doubled gross bookings last year but still registered a loss. In 2016 gross bookings at the scandal-hit transport group reached $20bn (£16bn), while its net revenue came in at $6.5bn.

Although its sales growth has outpaced losses, it still booked an adjusted net loss of $2.8bn – excluding its Chinese business, which was sold last summer. Gross bookings accelerated 28 per cent to $6.9bn in the final quarter of last year, but though losses reached $991m in the same period.

Uber did not provide specific first quarter figures to Bloomberg, which released the results in an interview, but a company spokeswoman said they “seem to be in line with expectations”.

As a private company, Uber (or, in its full name, Uber Technologies Inc) is not required to publicly report any annual or quarterly figures. It is valued at $68bn.

The results release comes soon after a slew of controversies and executive-level departures at the firm.

In February, it was hit by serious allegations of sexism in the workplace after explosive revelations from a former engineer, followed soon after by a leaked video showing chief executive Travis Kalanick in a heated argument with a driver over the app’s pay rates.

Uber’s president Jeff Jones quit around a fortnight after the video was released (he had been at the firm for just six months) and earlier this week its communications director, Rachel Whetstone, left the firm after a two-year stint. (City A.M)

 8. TOSHIBA FORECASTS £7 BILLION LOSS

Toshiba, one of the biggest names in consumer electronics, has warned it is facing annual losses of more than £7bn and the future of the company is in doubt as a result of financial turmoil at its nuclear power plant construction business.

The Japanese company finally released third quarter results, after twice delaying publication while auditors attempted to quantify the scale of the problems at Toshiba’s US nuclear engineering subsidiary Westinghouse, which filed for bankruptcy last month.

Toshiba took the unusual decision to publish them on Tuesday without the approval of auditor PricewaterhouseCoopers Aarata. The company said PwC Aarata had been too uncertain about the financial impact of Westinghouse’s takeover of nuclear construction company CB&I Stone and Webster in 2015.

Westinghouse’s plight stems from a $6.1bn (£4.9bn) writedown because costs have overrun on the two plants CB&I is building in Georgia and South Carolina, the first new US nuclear power stations for decades. The unaudited results showed Toshiba’s total losses widened by 53bn yen to 532bn yen (£3.9bn) in the nine months ending December 2016, adding that losses for the full year ending March could amount to more than 1tn yen (£7.3bn). It would be one of the biggest losses in Japanese corporate history.

Failure to file audited results fuelled speculation that the company could be forced out of the Tokyo Stock Exchange. Toshiba’s president, Satoshi Tsunakawa, called the auditor’s decision not to approve the figures “truly regrettable” and said he hoped the company would not be delisted.

Toshiba is attempting to strengthen its balance sheet by selling other assets, including its memory chip business.

The company’s escalating crisis also heightened fears about the future of Toshiba’s planned Moorside nuclear plant in Cumbria. Earlier this month it was forced to take full control of the venture behind the project, Nugen, after its previous partner, the French utility Engie, exercised the right to sell its 40% stake under an option triggered by Westinghouse’s bankruptcy filing. (The Guardian)

9. CRAFT BEER MAKER BREWDOG VALUED A £1 BILLION

The “punk” craft beer maker Brewdog has been valued at £1bn after a US-based private equity firm plunged fresh cash into the hipster brand.

TSG Consumer Partners, which has previously backed Pop Chips and Vitamin Water, has splashed at least £100m on a 22 per cent stake in the Scottish-born brewery, giving it an enterprise valuation of £1bn it said in an update to shareholders.

More than 50,000 beer fans who invested in Brewdog’s crowdfunding over the years were told the deal had boosted the value of their investment by as much as 2,765 per cent.

The deal includes TSG buying up shares from existing shareholders, with the Sunday Times reporting another £113m going on this, bringing its total investment in £213m. The firm will also offer other shareholders the opportunity to cash out up to 15 per cent of their equity, or up to 40 shares.

It comes after shareholders approved a shake up of shareholdings to make way for the investment. 95 per cent voted in favour of several measures, including a share dilution in order to issue more capital and a new management equity programme for senior management, a share buyback scheme and the issuing of preferred shares to TSG. (City A.M)

10. SPORTS DIRECT APPOINTS FIRST ELECTED EMPLOYEE REP

Sports Direct workers have elected their first representative to attend the retailer’s board meetings as it looks to counter criticism of poor working conditions.

The company – founded and run by billionaire Mike Ashley – pledged a series of reforms at the firm amid outrage among unions and MPs over allegations of “Victorian” practices – mainly concentrated on its Shirebrook warehouse.

They included plans to appoint a workers’ representative to allow their voices to be heard by the board. Sports Direct said on Wednesday that Alex Balacki, a 13-year veteran of the shop floor, had won the vote to secure the 12-month appointment.

The manager of the chain’s Barnstaple store will attend his first meeting within weeks. The FTSE 100 firm endured a PR horror show last year, with investors piling in to demand governance reforms at the same time as MPs battled the company on working conditions. (Sky News)

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