Business

FRANKFURT, Germany — German airline giant Lufthansa slashed its 2024 profit forecast recently after a weak second quarter and launched a "turnaround" plan for its flagship carrier, which it warned might not break even.

It was further evidence of renewed turbulence at one of Europe's biggest aviation groups, which has been on the back foot in recent months as a post-pandemic bounce peters out.

The group said in a statement it now expects operating profit of 1.4-1.8 billion euros ($1.5-$1.9 billion) for the year, down from a previous estimate of around 2.2 billion euros.

Second-quarter operating profit was 686 million euros, tumbling almost 40 per cent from a year earlier, according to preliminary figures for the group, whose airlines include Lufthansa, Eurowings, Austrian, Swiss and Brussels Airlines.

Nevertheless, the result was slightly higher than the 646 million profit predicted by analysts surveyed by financial data firm FactSet. 

Flagship carrier Lufthansa saw its profits fall particularly sharply due to poor market conditions, inefficient flight operations and delayed aircraft delivery, the statement said.

"It is becoming increasingly challenging for Lufthansa Airlines to break even for the full year," the group said. 

"To counteract this, a comprehensive turnaround programme is being launched," it said, without giving further details. 

Lufthansa's shares were down more than 2 per cent in Frankfurt after the results were published. 

Stormy skies 

Earnings for the group's other passenger airlines as well as its cargo and maintenance businesses were expected to be broadly at the previous year's level, and in some cases higher, it said. 

More information on the financial outlook will be released alongside its final results for the second quarter on July 31.

Lufthansa had to be bailed out by the German government during the coronavirus pandemic but rebounded strongly when demand roared back, racking up healthy profits last year and in 2022. 

But the airline giant is now facing multiple challenges.

The group reported a hefty first-quarter loss after facing a wave of walkouts as staff pushed for higher pay to compensate for elevated inflation.

The strikes have ended now after Lufthansa agreed on deals with key unions, although the group previously warned the impact would also overshadow the second quarter. 

The Hamas-Israel war and broader tensions in the Middle East have had an impact, forcing Lufthansa on occasion to suspend flights to and from several destinations in the region.

Last month the group said it would introduce an environmental charge for fares in Europe to cover additional costs from increasing EU climate regulations, particularly rules related to sustainable aviation fuel.

It will be hoping for a boost from the acquisition of a stake in ITA Airways, created from the ashes of Alitalia. The EU this month gave conditional approval for the deal following a probe over concerns it could hurt competition.

Lufthansa's major European rival, Airbus-KLM, has also struggled this year, losing 522 million euros in the first quarter on rising costs and geopolitical tensions despite a higher number of passengers and higher ticket prices. 

AMMAN — The Kingdom’s instant payment service CliQ, recorded 32.9 million transactions, worth JD4.95 billion during the first half of 2024, according to the Jordan Payments and Clearing Company (JoPACC) on Saturday.

The CliQ transactions executed throughout June this year are valued at JD963 million, compared to transactions, worth JD923 million in May, increasing by 4.4 per cent.

The JoPACC revealed that the total number of CliQ users had reached 1.43 million users by end of June, rising by nearly 2.6 per cent when compared with the number of users in May.

The company's data showed that 96.6 per cent of users are Jordanians, and 3.4 per cent are non-Jordanians. Gender wise, 62.8 per cent are males, and 34.7 per cent are female users.

According to age groups, 5,000 users are below the age of 18, 555,000 users are between 18 and 30 years of age, and 377,000 users are aged between 31 and 40, in addition to 242,000 who are between 41 and 50 years old.

Also, around 146,000 of users are aged from 51 to 60 years, among other age groups. 

Sarah Younes, a Jordanian banker, told The Jordan Times over the phone that "people in the Kingdom use this system to make transfers or payments from their bank to other accounts…it is increasingly utilised as it is free of charge".

Adding that the service is equipped with high security and this has increased people’s confidence in the service which enables the customer to monitor the payment.

The majority of banks in Jordan are participants on CliQ, according to JoPACC which showed that the service is overseen by the Central Bank of Jordan and operated by JoPACC.

PARIS — The International Energy Agency trimmed its forecasts on Thursday as it said world oil demand growth continues to slow and consumption in China dipped. 

The Paris-based body that advises industrial nations on energy policy said oil demand increased by just 710,000 barrels per day in the second quarter, the slowest rate in over a year. 

"Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May" the IEA said in its monthly report on the oil market. 

Chinese demand in the second quarter was also marginally below the same period in 2023. 

While demand in that quarter benefitted from the reopening of the Chinese economy after Covid lockdowns, the IEA said that the recent drop also "points to an intrinsic slowdown" and that "the downswing in the industrial fuels indicates a broader weakness in manufacturing". 

The world's second-largest economy is grappling with a real estate debt crisis, weakening consumption, an ageing population and geopolitical tensions overseas. 

The IEA trimmed its forecast for Chinese oil demand this year by 0.2 million barrels per day (mbd) to 17 mbd. While that would be a gain of 0.5 mbd from 2023, it is far short of the 1.5 mbd gain last year. 

The IEA sees Chinese demand growth slowing to 0.3 mbd in 2025, also a drop of 0.2 mbd from its previous forecast. 

The return to pre-COVID normalcy and weak growth will also see China's weight in global oil demand growth decline, from about 70 per cent of gains last year to 40 per cent this year and next, according to the IEA. 

Emerging economies such as India and Brazil will account for a greater share in global oil demand growth, while advanced economies in the OECD will see consumption decline. 

"Global gains are forecast to average just below 1 mbd in 2024 and 2025, as subpar economic growth, greater efficiencies and vehicle electrification act as headwinds," the agency said. 

It trimmed its 2024 global oil demand forecast by 0.1 mbd to 103.1 mbd and its 2025 forecast by 0.2 mbd to 104.0 mbd. 

Earlier this month the IEA said it expected global oil demand to stabilise at around 106 mbd by the end of the decade as demand in advanced economies falls. 

DUBAI — Energy majors TotalEnergies, Shell and BP will each take a 10 per cent stake in a liquefied natural gas project in the United Arab Emirates, state energy giant ADNOC said on Wednesday.

Japanese trading company Mitsui & Co. will also acquire 10 per cent of the Ruwais LNG plant, scheduled to come online in 2028, the Abu Dhabi National Oil Company (ADNOC) said.

ADNOC, the UAE's key revenue-earner, will retain a 60 per cent majority stake, the firm said following a signing ceremony.

The Ruwais plant, currently under development in Abu Dhabi, is expected to produce about 9.6 million metric tonnes per annum (mtpa), ADNOC said, more than doubling the company's LNG production capacity in the UAE.

Ruwais, which will run on nuclear power, will be "one of the world's lowest carbon-intensive LNG facilities", said ADNOC Chief Executive Sultan Al Jaber.

ADNOC also said it has signed "several" long-term LNG sales agreements with international partners, including for one mtpa with Shell and 0.6mtpa with Mitsui & Co., taking Ruwais's committed production capacity to 70 per cent.

Gas is being touted as cleaner than other fossil fuels as countries around the world strive to reduce their emissions and slow global warming.

Demand for gas spiked following Russia's invasion of Ukraine, with several Gulf countries looking to boost output.

Qatar this year announced new plans to expand output from the world's biggest natural gas field, saying it will boost capacity to 142 million tonnes per year before 2030.

LONDON — Britain's embattled Thames Water on Tuesday said its debt continues to rise despite increased revenues, leaving the group with cash reserves taking it through only until May next year.

 Britain's biggest water supplier avoided a state rescue under the previous Conservative government, leaving the newly-elected Labour administration to decide whether taxpayers should renationalise the company. 

Thames said that debt increased around nine per cent to nearly £15.25 billion ($19.5 billion) in the year to the end of March.

Britain's water regulator is on Thursday due to respond to a five-year business plan laid out by UK water companies including Thames, which on Tuesday said it had sufficient liquid funds of £1.8 billion — enough to see it through until May 2025.

 "The challenges we face are well documented," Chief Executive Chris Weston said in the results statement.

 "But our operational and financial performance for the last year show good progress, and these positive results provide the right foundations on which to build and improve." 

 Thames on Tuesday said its last financial year saw record investment — up 18 per cent at £2.1 billion — to improve "ageing" infrastructure.

 It was helped by a 10-per cent rise in revenue to £2.4 billion as customers paid more for their water.

 The company, which supplies around 16 million homes and businesses in London and elsewhere in southern England, has missed targets to reduce leaks and slash sewage discharges into rivers, despite the major investment.

 Environmentalists have increasingly voiced outrage at the rise in pollution on the UK's beaches and waterways, and have pointed the finger at privatised water companies.

 The new Labour government waded into the debate Tuesday after bringing an end to 14 years of Conservative rule in last week's general election.

 Communities minister Jim McMahon said there was "no programme of nationalisation for the water industry" should Thames Water collapse.

 But he added: "The days of putting shareholder interest above the national interest, frankly, can't carry on and so we do need to look at that and Thames do need to look at their own house and get it in order."

ISTANBUL — China's electric vehicle (EV) giant BYD on Monday signed an agreement with Turkey to open a plant in the country in a move that would help it dodge new EU tariffs.

The signing ceremony in Istanbul between BYD's CEO Wang Chuanfu and Turkey's industry and technology minister Fatih Kacir was overseen by President Recep Tayyip Erdogan. 

According to the Turkish industry and technlogy ministry, BYD will open a production facility with an annual capacity of 150,000 vehicles and a research and development centre, with an approximately one-billion-dollar investment.

The news comes days after the EU slapped additional provisional tariffs of up to 38 per cent on Chinese EVs following an investigation that concluded state subsidies meant they were unfairly undermining European rivals.

Turkish-made cars enjoy beneficial access to the EU under a customs union that dates to 1995 and the Marmara region around Istanbul has become one of the leading centres of the world's automobile industry.

Major car makers including Fiat and Renault opened plants there at the beginning of the 1970s, with others like Ford, Toyota and Hyundai following, taking advantage of Turkey's position at the crossroads between Europe, Asia and the Middle East.

The land that was previously allocated for Volkswagen in Manisa in the north of the Western porty city of Izmir would be given to the Chinese company, the pro-government daily Yeni Safak reported. 

"BYD is the world's largest manufacturer of electric vehicles and one of the most advanced in terms of technology and manufacturing quality," independent consultant Levent Taylan told AFP. 

"Indeed, this will be an investment for the Turkish market but especially European market, by circumventing the customs tariffs imposed on vehicles of Chinese origin," he said. 

He said BYD has a potential to sell around 20-25,000 vehicles per year on the Turkish market and export 75,000 to the EU. 

Under new Turkish regulations on investment incentives BYD will be able to circumvent a new 40 per cent tariff that Turkey imposed on electric vehicle imports. 

China has led the global shift to electric vehicles, with almost one in three cars on its roads set to be electric by 2030, according to the International Energy Agency's annual Global EV Outlook.

Chinese EV manufacturers have also stepped up exports, prompting many nations to take measures to protect their auto makers.

They have also begun looking at manufacturing abroad, with BYD having already announced plans to open its first European factory in Hungary.

In July, BYD opened a factory in Thailand. 

The plant in Rayong, an industrial area southeast of Bangkok, will be able to build up to 150,000 vehicles a year, according to the company, which dominates its domestic market.

Beijing has warned the EU tariff move could spark a trade war.

MADRID — Shareholders in Spanish banking giant BBVA on Friday approved a capital increase needed to pursue its hostile takeover of its smaller rival Sabadell, which is opposed by the government. 

At an extraordinary general meeting in the northern port city of Bilbao, 96 per cent of shareholders gave their "overwhelming support to the capital increase needed", a bank statement said, hailing it as "a very important milestone". 

The measure will allow the issuing of more than 1.1 billion shares, each worth 0.49 euros, which could raise up to 552 million euros (about $600 million). 

The final sum will depend on the number of Sabadell shareholders who agree to accept the offer. 

Raising the capital limit was necessary for BBVA to fund its bid, which was made on May 9, in which it is offering to exchange one of its shares for every 4.83 Sabadell shares. 

"We are fully confident in the success of this transaction, which represents a clear commitment to Spain and its SMEs," or small and medium-sized companies, Chairman Carlos Torres Vila said in a statement.

"The combination with Banco Sabadell will create a stronger, more profitable bank with greater capacity to support families and businesses in their projects for the future."

"BBVA shareholders will obtain high returns on their investment, with limited capital consumption." 

while their Sabadell counterparts "will receive a highly attractive premium and a 16 per cent stake in the bank resulting from the merger", it said. 

The takeover bid, the first hostile one in the Spanish banking sector in nearly four decades, would create a banking powerhouse capable of competing with Spain's leading bank Santander.

It would also rival European giants such as HSBC and BNP Paribas.

BBVA initially tried to merge with Sabadell, which is based in the northeastern Catalonia region, in November 2020 but the smaller bank rejected the offer on grounds it didn't reflect the real value of its business.

The takeover has also been rejected by the left-wing government of Socialist Prime Minister Pedro Sanchez on grounds it would destroy jobs and reduce competition in the sector. 

Economy Minister Carlos Cuerpo has warned the government would "have the last word when it comes to authorising the operation".