Bernanke's inflationary fears dampen market enthusiasm
Washington: With Ben Bernanke, chairman of the Federal Reserve, yesterday expressing strong personal concern over the recent rise in inflation, stocks and bonds went lower in US trading. Investors thought his comments made it increasingly likely that the Fed will raise interest rates again at its policy meeting later this month, in spite of signs that the economy is weakening.

Bernanke told a conference organised by the American Bankers Association that core inflation - excluding energy and food prices - had reached a level "at or above the upper end of the range that many economists, including myself, would consider consistent with price stability".

He pledged to be "vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained".
Bernanke also dismissed suggestions that the rise in core inflation was simply due to monthly volatility, citing figures for inflation over the past three and six months. He described these numbers as "unwelcome".
Back to News Review index page  

IATA forecasts $3bn loss for global airlines industry
Paris: The International Air Transport Association (IATA) has increased its forecast for global airline losses this year to $3 billion from $2.2 billion.

The forecast comes on the back of comments by David Bonderman, founding partner of private equity firm Texas Pacific Group (TPG) and chairman of Ryanair, saying that 2006 would be "as good as it gets". Bonderman told the IATA's annual conference in Paris that losses would deepen next year because of continuing high fuel costs and a market flooded with millions of extra airline seats.

Bonderman, a billionaire based in Texas, predicted that airlines would be canceling orders for more than 1,000 aircraft because the industry was about to enter a downturn in its economic cycle.

He said: "Today is as good as it gets in the airline industry. It's going to get worse. In two years' time we will see everyone canceling those 1,000 airplanes."

Bonderman said that low-cost carriers such as Ryanair were less vulnerable to the surplus in capacity because they could still make a profit when ticket prices were falling steeply.
Back to News Review index page  

Ferrovial wins showdown for BAA
London: The board of BAA, the world's biggest airports operator, agreed late Monday night to recommend a takeover offer of 950p a share from a consortium led by Spain's Ferrovial. The board's assent thwarts a rival bid from a group led by Goldman Sachs, the US investment bank.

However, there is still some fight left in the takeover bid, as BAA will not pay its proposed final dividend of 15.25p a share, as part of Ferrovial's offer. This is likely to spark fierce controversy as it is understood that the Goldman Sachs consortium offered 940p but would also have paid the final dividend, thereby offering BAA shareholders a better deal with a bid worth 955p a share.

BAA is expected to contend on Tuesday that other conditions attached to the bid made the Ferrovial offer a superior deal. It would still be open to the Goldman Sachs consortium to return to try to win BAA board backing, however, for a higher offer by Friday or any later deadline agreed by the Takeover Panel.

The Ferrovial offer values the BAA equity at £10.3bn. Together with net debt of £5.3bn it places an enterprise value on BAA of £15.6bn, making it one of the largest foreign takeovers of a FTSE-100 company.
Back to News Review index page