The airline industry will bear costs of as much as £100m because of the UK air traffic control collapse on Monday, according to the former chief executive of British Airways’ owner who now leads the industry’s lobby group.

Willie Walsh, director general of the International Air Transport Association (Iata), said that 1,100 flights were cancelled and hundreds of thousands of passengers had their journeys affected.

He told BBC Radio’s Today programme:

We’re looking at costs in the tens of millions, probably at this stage – too early to estimate fully – but I would imagine at an industry level we’ll be getting close to £100m of additional costs that airlines have encountered as a result of this failure.

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A British Airways Airbus A380 airplane on final approach flying over the houses in Myrtle Avenue, arriving for landing in London Heathrow Airport.

British Airways has reportedly cancelled another 34 domestic and European flights as the disruption from Monday’s air traffic control failure continues.

Flights were cancelled linking London Heathrow to Aberdeen, Edinburgh and Glasgow in the UK, and Berlin, Budapest, Dublin, Frankfurt, Geneva, Munich, Prague and Rome in Europe, according to the Independent.

Martin Rolfe, the chief executive of Nats, the company controlling UK airspace, did not deny on Wednesday that an “unusual piece of data” may have been behind the failure of a key part of the airspace management system.

He was asked this morning about a report in the Independent that a “dodgy flight plan” was behind the failure of the system.

Ashley Webb, a UK economist at Capital Economics, a consultancy, said the consumer borrowing and mortgage data suggested interest rate increase are starting to weigh more heavily on the UK economy.

He said:

The drag from higher interest rates on bank lending grew further in July, particularly in the housing market. We think this effect will intensify as the Bank of England presses ahead with another 25 basis points interest rate hike, from 5.25% to 5.50%, in September and keeps rates there until the second half of 2024.

And the subdued £0.4bn increase in households’ bank deposits is much smaller than the pre-pandemic average and may suggest that households finances are becoming more stretched.

UK consumer borrowing also fell back in July, according to the Bank of England’s data.

Net borrowing of consumer credit by individuals fell to £1.2bn in July, down from £1.6bn in the previous month, the Bank said.

Paul Heywood, chief data and analytics officer at Equifax UK, a credit scoring company, said:

Today’s Bank of England figures have revealed that consumer borrowing fell by a quarter in July. This fall in borrowing has come as mortgage rates have continued to fluctuate in the face of a further increase to the base rate in September – a sign that inflationary pressures and uncertainty will last into autumn.

For many consumers, housing costs will likely continue to top their list of money worries, as rate rises push the number of mortgages with a monthly repayment above £1,000 up by 28% year-on-year according to the latest Equifax figures. These increasing costs combined with sky-high costs for everyday goods will mean wallets remain squeezed for the foreseeable future.

A photo of estate agents’ “to Let” and “for sale” signs in Islington, north London.

The UK’s housing market showed further signs of slowing in July as the number of mortgage approvals dropped to 49,400 in July, down from 54,600 in June, according to data from the Bank of England.

The decline was bigger than economists had expected: a poll found an average forecast of 51,000.

Economists are watching the housing market closely for signs that rising interest rates are dampening demand. The Bank has raised interest rates steadily in an effort to reduce inflation, which was at 6.8% in July, well above the Bank’s 2% target.

The higher rates have fed through to costs for house purchases. The “effective” interest rate – the actual interest rate paid – on newly drawn mortgages rose by 0.03 percentage points, to 4.66% in July, the Bank said.

Approvals for homeowners remortgaging slightly increased from 39,100 to 39,300 during the same period.

The Superdry Store on Regent Street, London.

Fashion retailer Superdry has suspended its shares on the London Stock Exchange because of a delay to its accounts, blaming problems with “normal procedures” for the failure to report on time.

It is just the latest issue for Superdry, which has struggled over the last five years. As well as the pandemic and the shift away from high street stores, retailers are now facing the cost of living crisis after a damp summer.

In early 2018 its share price was above £20. Before the suspension its share price was 56p.

A chart showing that Superdry's share price is only a small fraction of what it was in 2018.

The company said:

Under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, the Company is required to publish its audited full year 2023 results by 29 August 2023. The Company is currently working with its auditor, RSM UK Audit LLP, to complete the final technical points of the audit of its full year 2023 results and expects to announce later this week.

The board confirms that the delay is a result of normal procedures taking longer than anticipated during the first year that RSM are auditing the company.

Rolfe has been asked about delays to investments in new systems.

He said Nats invests £100m a year, and the piece of the system that failed was replaced only five years ago.

Asked if Nats should pay for the failures, or if he should lose his £280,000 bonus, Rolfe said there are well established processes for working out who pays.

On his pay, he says he has been focused on getting people to their destinations.

Rolfe said:

If we receive an unusual piece of data, a piece of data that we don’t recognise, it is critically important that that information, which could be erroneous, is not passed to air traffic controllers.

Martin Rolfe, chief executive of Nats, the UK’s air traffic controller, has apologised for the collapse and said that part of the system collapsed because it “didn’t recognise a message”.

Rolfe told the BBC’s Today programme that it was “absolutely not correct” that the whole of the UK’s air traffic system went down. The UK lost a “part of the system”.

He said:

I would like to offer my sincere apologies.

We worked absolutely as quickly as we could to make sure we could safely restore the service.

Almost all the time it handles it absolutely perfectly. In fact, this is staggering, in the sense that it is incredibly rare. And we make it our business to make sure it is incredibly rare.

Willie Walsh said said he finds it “staggering” that a single corrupted flight plan could have caused the collapse of the whole air traffic control system.

He said:

If it is true it demonstrates a considerable weakness that must have been there for some time. I’m amazed if that is the cause of this.

Willie Walsh has said the UK’s air traffic controller, Nats, should bear the costs related to the delays and cancellations.

Airlines can afford the costs. Since the end of the coronavirus pandemic restrictions airlines have made huge profits: Walsh’s old employer, British Airways owner International Airlines Group (IAG), made profits of £1.1bn in the first half of the year. But Walsh is using the opportunity of the Nats failures to argue for a major change in rules on who compensates passengers.

Walsh said:

I believe there is a great opportunity for the UK post-Brexit to look at the way passenger compensation is dealt with to ensure that the people who are responsible for delays and cancellations ultimately bear the cost – and it’s borne by them, not passed on to other players in the system.

At the heart of this is a failure that should not have happened. Nats have a lot of questions to answer.

Airlines boss Willie Walsh said the airlines are unlikely to be able to recoup any of the costs from Nats.

It is fair to say he is not happy with Nats, the private company that runs the UK’s airspace.

He told the BBC’s Today programme:

This is what really frustrates and angers airlines. This was completely outside the control of the airlines and yet airlines are subject to paying customers for delays, for cancellations, for looking after them, which is very considerable.

It’s very unfair because the air traffic control system that was at the heart of this failure doesn’t pay a single penny.

The airline industry will bear costs of as much as £100m because of the UK air traffic control collapse on Monday, according to the former chief executive of British Airways’ owner who now leads the industry’s lobby group.

Willie Walsh, director general of the International Air Transport Association (Iata), said that 1,100 flights were cancelled and hundreds of thousands of passengers had their journeys affected.

He told BBC Radio’s Today programme:

We’re looking at costs in the tens of millions, probably at this stage – too early to estimate fully – but I would imagine at an industry level we’ll be getting close to £100m of additional costs that airlines have encountered as a result of this failure.

European stock markets have edged up at the opening bell, with the UK’s FTSE 100 up by 0.2%, in line with its peers.

Insurer Prudential is the biggest FTSE 100 gainer, up 2.5% after publishing half-year results which showed increased profits.

Here are the opening snaps from across Europe, via Reuters:

  • EUROPE’S STOXX 600 UP 0.2%

  • FRANCE’S CAC 40 UP 0.3%, SPAIN’S IBEX UP 0.2%

  • EURO STOXX INDEX UP 0.2%; EURO ZONE BLUE CHIPS UP 0.2%

  • GERMANY’S DAX UP 0.2%

Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.

EasyJet has said it will put on five repatriation flights to ensure stranded customers can get home as disruption from the collapse of UK air traffic control systems continued for a third day.

The failure of the air traffic control system, run by private company Nats, has been blamed on a single corrupted flight plan entered by an unnamed airline, according to reports.

Martin Rolfe, the chief executive of Nats, the national air traffic service, said the company has “worked incredibly hard since we restored the service back on Monday to make sure that this type of event can’t happen again”.

In interviews with the BBC, he said:

Clearly we live in a world where things like this occasionally do happen. The vast majority of them are fixed and nobody notices, no one is disrupted. Very occasionally we end up with a situation which isn’t possible to fix immediately.

While I agree it is absolutely not the service that we would ever want to provide, our absolute core is providing a safe service that gets everybody to their destination.

In a statement last night, easyJet said:

During this traditionally very busy week for travel, options for returning to the UK are more limited on some routes and so easyJet will be operating five repatriation flights to London Gatwick over the coming days from Palma and Faro on August 30, and Tenerife and Enfidha on Thursday August 31 and from Rhodes on Friday September 1.

We are also operating larger aircraft on key routes including Faro, Ibiza, Dalaman and Tenerife to provide some additional 700 seats this week.

The agenda

  • 9:30am BST: UK Bank of England consumer credit (July; previous: £1.66bn; consensus: £1.3bn)

  • 9:30am BST: UK Bank of England mortgage approvals (July; prev.:54.7k; cons.: 51k)

  • 10am BST: EU economic sentiment index (August; prev.: 94.5; cons.; 93.7)

  • 1:15pm BST: US ADP national jobs created (August; prev.: 324k; cons.: 195k)

  • 1:30pm BST: US GDP second estimate (Q2; prev.: 2.4% annualised; cons.: 2.4%)

Article source: https://airlines.einnews.com/article/652755472/1XA5qIsTrk6ne5Xy?ref=rss&ecode=vaZAu9rk30b8KC5H

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