LONDON MARKET OPEN: Airlines Fall After Lufthansa's Profit Warning

(Alliance News) - Stock prices in London opened higher on Monday, with airlines weighing on the FTSE 100 after a profit warning by Germany's Lufthansa, while in the FTSE 250, Kier Group's woes continued as the construction firm axed its dividend. The FTSE 100 was up just 2.10 points at 7,347.88. The FTSE 250 was up 37.51 points, or 0.2%, at 19,155.85. The AIM All-Share was up 1.98 points, or 0.2%, at 939.19.The Cboe UK 100 index was up 0.1% at 12,470.39. The Cboe UK 250 was up 0.1% at 17,158.89, and the Cboe UK Small Companies was flat at 11,670.12.In European equities, the CAC 40 in Paris was flat and the DAX 30 in Frankfurt was up 0.1%.In the FTSE 100, Severn Trent was up 1.0% after Macquarie started coverage on the water company with an Outperform rating. The Australian bank initiated fellow utility stocks National Grid and United Utilities at Outperform. National Grid and United Utilities were up 0.4% and 0.3% respectively. At the other end of the large cap index, airlines were the worst performers after German carrier Lufthansa lowered its profit outlook for 2019, amid market over capacity and intense competition from low-cost carriers in Europe.Budget airline easyJet and British Airways parent International Consolidated Airlines Group were down 3.3% and 3.1%, respectively. Midcap peer Wizz Air was down 4.6% and Irish carrier Ryanair Holdings was down 4.2%. Lufthansa blamed "price deterioration in Europe caused by market-wide overcapacities and aggressively growing low cost competitors are putting pressure on yields in the European short-haul market".The German airline said it now expects adjusted earnings before interest and tax of EUR2.0 billion to EUR2.4 billion in 2019, on the basis of low-single-digit revenue growth. In 2018, Lufthansa reported adjusted Ebit of EUR2.8 billion, down from EUR3.0 billion in 2017.It said its network airlines are expected to have an adjusted Ebit margin of between 7% and 9%, with budget carrier Eurowings suffering an adjusted Ebit margin of negative 4% to negative 6%.British American Tobacco was down 1.6% after Morgan Stanley downgraded the Dunhill and Lucky Strike cigarette maker to Underweight from Equal Weight. In the FTSE 250, Babcock International was up 3.7% after the defence contractor confirmed it rejected in January an approach from outsourcer Serco Group.The proposal was unsolicited and "highly preliminary", Babcock said, and involved an all-share merger. No further proposal has been received since January. The Sunday Times had reported Serco made at least two attempts to merge with Babcock. Serco shares were flat. At the bottom of the midcap index, Kier Group was down 6.6%. The troubled construction firm suspended dividend payments and earmarked several non-core business for disposal as it looks to get its balance sheet under control.Kier has put up for sale Kier Living, its housebuilding business, saying that despite being a strong business it would require significant funding to keep growing. So far there have been "a number" of expressions of interest.Kier Property also has been put up for sale, with the investment required likewise "incompatible" with Kier's capital requirements, and Kier also will be quitting the Management and Environmental Services businesses.Kier has suspended dividend payments for its year ending June, and the following financial year. At the interim stage, Kier slashed its first half dividend 79% to 4.9 pence a share. The stock is down 71% so far in 2019. Kier will be demoted from the FTSE 250 when the FTSE Russell index review changes come into effect next Monday. The Japanese Nikkei 225 index closed flat. In China, the Shanghai Composite closed up 0.2%, while the Hang Seng index in Hong Kong is up 0.5%.The pound was quoted at USD1.2577 Monday, down from USD1.2604 at the London equities close Friday.The British Chamber of Commerce cut its UK growth forecasts for the next two years, it revealed Monday, despite a more positive outlook on 2019.For 2020, the BCC has cut its growth forecast to 1.0% from 1.3%, and for 2021 to 1.2% from 1.4%. But for 2019, the BCC has upgraded its UK growth estimate to 1.3% from 1.2%, mainly due to "exceptionally rapid" stockbuilding early in 2019, as manufacturers prepared for the intended end-March Brexit."However, the immediate boost to UK GDP is forecast to come at the cost of more subdued growth in 2020 and 2021 as the unwinding of historically-high inventory levels, coupled with weaker business investment, weigh on economic activity," said the BCC.The economic events calendar has Ireland first-quarter GDP data at 1100 BST.