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(Alliance News) - Heathrow on Tuesday reported a strong April for travel, but the west London airport warned that it still expects to remain loss-making in 2022, complaining that the regulator will not allow it to raise charges even as airlines increase their own fares.
Heathrow said 5 million passengers travelled through the airport last month, partly thanks to British holidaymakers cashing in airline travel vouchers issued as flights were cancelled during the pandemic.
The airport raised its 2022 forecast to nearly 53 million passengers, up from 45.5 million previously expected. Still, this is short of potential. Heathrow noted that British Airways, its largest carrier, is expecting to return to only 74% of pre-pandemic capacity this year.
The UK Civil Aviation Authority is in the final stages of setting Heathrow's airport charge for the next five years.
"There are significant challenges ahead," CEO John Holland-Kaye said.
"The CAA can either plan for them with a robust and adaptable regulatory settlement that delivers for passengers and withstands any shocks, or it can prioritise airline profits by cutting back on passenger service, leaving the industry to scramble when things go wrong in future."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.9% at 7,279.89
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Hang Seng: down 1.7% at 19,657.50
Nikkei 225: closed down 0.6% at 26,167.10
S&P/ASX 200: closed down 1.0% at 7,051.20
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DJIA: closed down 653.67 points, or 2.0%, at 32,245.70
S&P 500: closed down 132.10 points, or 3.2%, at 3,991.24
Nasdaq Composite: closed down 521.41 points, or 4.3%, at 11,623.25
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EUR: up at USD1.0551 (USD1.0535)
GBP: up at USD1.2338 (USD1.2320)
USD: soft at JPY130.40 (JPY130.45)
Gold: soft at USD1,860.30 per ounce (USD1,861.75)
Oil (Brent): down at USD105.42 a barrel (USD107.50)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's key economic events still to come
1100 CEST Germany ZEW indicator of economic sentiment
1630 EDT US API weekly statistical bulletin
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The UK opposition Labour party believes it can show leader Keir Starmer did not break lockdown rules after the party leader vowed he would resign if he is fined by police. In a dramatic statement on Monday, Starmer said he would do the "right thing" if he was issued with a fixed penalty notice in relation to a gathering in Labour offices in Durham in April last year. The move was seen a huge gamble, placing his future in the hands of Durham Police after it was announced last week officers would reopen an investigation into the event where Starmer drank beer and ate curry. However, Labour sources are confident they can prove it was a work event and that those present were taking a break to eat while working late on preparations for the Hartlepool by-election.
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The UK foreign secretary will reportedly move to discard large portions of the Northern Ireland Protocol after giving up on Brexit negotiations with the EU. The Times reported officials working for Liz Truss have drawn up draft legislation to unilaterally remove the need for checks on all goods being sent from Britain for use in Northern Ireland. The law would also ensure businesses in Northern Ireland are able to disregard EU rules and regulations and remove the power of the European Court of Justice to rule on issues relating to the region, the paper said. Importantly, the bill would override the protocol agreed by UK Prime Minister Boris Johnson in 2019 and mean the UK had breached its obligations under the Brexit agreement. The Times said Truss is understood to have concluded talks with the EU and has been told the proposed bill could lead to a trade war with the bloc.
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BROKER RATING CHANGES
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Deutsche Bank cuts Direct Line to 'hold' (buy) - price target 300 (335) pence
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Berenberg raises Domino's Pizza to 'hold' (sell) - price target 310 (330) pence
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Berenberg raises IWG to 'buy' (hold) - price target 310 pence
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COMPANIES - FTSE 250
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Power utility Centrica said its performance has been "strong" in the first four months of 2022. As a result, the British Gas-owner said 2022 adjusted earnings per share will be around the top end of market expectations, which range from 6.7 pence to 10.8p. In 2021, Centrica recorded adjusted EPS of 4.1p. Its British Gas Services & Solutions unit has seen "some" supply chain issues, which has hurt its cost base and customer demand. Centrica expects these issues to continue, which will "at least partially offset" underlying operational progress. Centrica added: "However, volumes from our nuclear and gas production assets in the UK have been strong and our Energy Marketing & Trading business has both secured increased volumes of gas and renewable energy to improve the UK and Europe's security of supply and managed increased commodity price volatility well, supporting performance in British Gas Energy." The firm also pointed to the "significant uncertainties" that lie ahead, which includes commodity prices movements, asset performance, and the potential for increased bad debt charges.
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Coats Group said it plans to exit is businesses in Brazil and Argentina, which it said is in line with its strategic initiatives. The industrial thread maker is offloading the South American businesses to Reelpar SA, an entity backed by a Sao Paulo-based private equity firm. "As a result of the disposal, there will be a positive annualised impact of circa 50 [basis point] uplift to the group's adjusted operating margins. Under the terms of the disposal, Coats will fund USD10 million to Reelpar SA to support restructuring of the business," Coats said.
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Budapest-based budget airline Wizz Air said it is looking to expand its operations into Saudi Arabia. "The kingdom has launched a strategic and ambitious vision to triple passenger traffic in the kingdom by 2030 as part of the Vision 2030 programme. This will provide unprecedented opportunities for airlines and the aviation supply chain," Wizz said. The airline has signed a memorandum of understanding with the Ministry of Investment, supported by the Saudi National Air Connectivity Programme, which is a Ministry of Tourism initiative. "The purpose of the MoU is to explore airline market development opportunities in the kingdom," Wizz explained.
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Renishaw said its total revenue in the first nine months of its financial year have exploded thanks to growth in all of its product lines. For the nine months to March 31, total revenue is up 21% to GBP492.4 million from GBP407.4 million, with Manufacturing Technologies revenue up 22% to GBP467.4 million. Pretax profit was up 13% in the period to GBP120.2 million. Renishaw said it expects financial 2022 revenue to be between GBP655 million and GBP675 million, a rise from GBP565.6 million reported the year prior.
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COMPANIES - SMALL CAP
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Construction firm Galliford Try, which is holding an investor day on Tuesday, said it is trading in line with management expectations. Galliford also noted it is "making good progress" against its sustainable growth strategy and target operating margin.
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FD Technologies said its annual performance was driven by each of its businesses hitting performance targets. Pretax profit in the financial year that ended February 28 fell by 19% to GBP9.0 million from GBP11.1 million the year prior, even as total revenue rose 11% to GBP263.5 million from GBP237.9 million. In a "year of transformation", FD Technologies saw its R&D expenditure rise to GBP21.1 million from GBP15.9 million, while sales & marketing costs increased to GBP47.4 million from GBP39.3 million. Chief Executive Seamus Keating said: "Across the group, our investment in systems and people positions us to scale our operations to meet our growth ambitions. The opportunities across the markets in which we operate are significant."
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Tuesday's shareholder meetings
Capita PLC - AGM
Centamin PLC - AGM
Direct Line Insurance Group PLC - AGM
Doric Nimrod Air One Ltd - EGM re amending articles of incorporation
Gresham Technologies PLC - AGM
HgCapital Trust PLC - AGM
IWG PLC - AGM
Just Group PLC - AGM
Macfarlane Group PLC - AGM
Temple Bar Investment Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
