April 20 (Bloomberg) -- Tata Consultancy Services Ltd. reported the fastest profit growth in three years as overseas companies and governments outsourced more computer operations to India’s largest software-services provider.
Net income rose 47 percent to 19.3 billion rupees ($431 million) in the three months ended March 31, Mumbai-based Tata Consultancy said yesterday. That compared with the 18 billion rupee average of 26 analyst estimates compiled by Bloomberg. Profit jumped by the most since the three months through March 2007.
Tata Consultancy joins second-ranked Infosys Technologies Ltd. in signaling demand for their services is strengthening as customers in the U.S. and Europe resume spending. Orders are set to rise at Indian technology vendors after Oracle Corp. forecast the fastest growth in new software licenses since the onset of the global recession, according to Forrester Research Inc.
“Work will soon start to kick in following these licensed software sales” as companies hire Tata Consultancy and rivals to customize software, Andrew Bartels, an analyst at Cambridge, Massachusetts-based Forrester said by phone before the earnings announcement. “For service vendors, it looks like it’s going to be a summer, not just a spring.”
Tata Consultancy fell 0.4 percent to 811.95 rupees in Mumbai yesterday. The earnings were announced after markets closed. The stock was the third-best performer in the past 12 months on India’s Sensitive Index, almost tripling in value compared with a 58 percent advance by the benchmark index in the period.
‘Across the Board’
Fourth-quarter sales grew 7.9 percent to 77.4 billion rupees, after the company won orders including a five-year contract for information-technology infrastructure services from Malaysian Airline System Bhd. Tata Consultancy, which provides computer services and back office support to 917 clients including Citigroup Inc. and BP Plc, was last month picked by the Personal Accounts Delivery Authority in the U.K. to administer the national pension program.
“The good thing is traction is happening and we are seeing a deal pipeline across the board,” Chief Executive Officer N. Chandrasekaran told reporters in Mumbai yesterday. “Growth will be led by the U.S. and emerging markets followed by the U.K. and Europe.”
Pursuing Contracts
Tata Consultancy is pursuing contracts of various sizes ranging from $50 million to $500 million and plans to spend about $200 million on salary increases in the year that started April 1. Revenue from corporations in North America accounted for 54 percent of sales in the last quarter, rising from 52.5 percent in the prior three-month period, the company said.
Worldwide information and communication technology spending, which includes computer and network equipment purchases, will grow 7.7 percent this year from an estimated $1.46 trillion in 2009, according to Forrester. Spending in the U.S. will outpace gross domestic product growth as companies increase discretionary spending to make up for orders delayed during last year’s recession, the researcher said.
Infosys last week forecast sales in the 12 months ending March 31, 2011, may increase as much as 18 percent to $5.67 billion, the fastest pace in three years. Accenture Plc has projected sales may grow as much as 10 percent next year as companies resume technology spending, which is forecast to grow 8.4 percent in the U.S. this year, according to Forrester.
Tata Consultancy, which ended the 12-month period through March with 160,429 employees, has made more than 20,000 job offers on college campuses, according to a company presentation to analysts on its Web site.
Monday, April 19, 2010
Asian Stocks Rise on Divided Goldman Sachs Vote, Citigroup, Yen
April 20 (Bloomberg) -- Asian stocks rose, led by finance companies, as people familiar with the matter said regulators were split on suing Goldman Sachs Group Inc., easing concern over the impact increased scrutiny on banks will have on profits.
Sumitomo Mitsui Financial Group Inc. rose 1.4 percent in Tokyo as Morgan Stanley upgraded the nation’s banks and Citigroup Inc.’s profit beat estimates. National Australia Bank Ltd., the nation’s third-biggest lender, climbed 2.8 percent in Sydney. Honda Motor Co., which gets 44 percent of its sales in North America, gained 1.7 percent in Tokyo after the yen weakened against the dollar.
The MSCI Asia Pacific Index gained 0.6 percent to 126.30 as of 9:44 a.m. in Tokyo. The gauge slumped the most since Feb. 19 yesterday after regulators sued Goldman Sachs for fraud related to collateralized debt obligations. Securities and Exchange Commission officials voted 3-2 to pursue the case, two people familiar with the matter said.
“The divided vote on Goldman suggests excessive regulation that would reduce bank earnings will be avoided,” said Fumiyuki Nakanishi, a senior strategist at SMBC Friend Securities Co. in Tokyo.
Futures on the Standard & Poor’s 500 Index advanced 0.1 percent. The gauge rose 0.5 percent yesterday as the index of U.S. leading indicators rose in March by the most in 10 months.
Sumitomo Mitsui Financial Group Inc. rose 1.4 percent in Tokyo as Morgan Stanley upgraded the nation’s banks and Citigroup Inc.’s profit beat estimates. National Australia Bank Ltd., the nation’s third-biggest lender, climbed 2.8 percent in Sydney. Honda Motor Co., which gets 44 percent of its sales in North America, gained 1.7 percent in Tokyo after the yen weakened against the dollar.
The MSCI Asia Pacific Index gained 0.6 percent to 126.30 as of 9:44 a.m. in Tokyo. The gauge slumped the most since Feb. 19 yesterday after regulators sued Goldman Sachs for fraud related to collateralized debt obligations. Securities and Exchange Commission officials voted 3-2 to pursue the case, two people familiar with the matter said.
“The divided vote on Goldman suggests excessive regulation that would reduce bank earnings will be avoided,” said Fumiyuki Nakanishi, a senior strategist at SMBC Friend Securities Co. in Tokyo.
Futures on the Standard & Poor’s 500 Index advanced 0.1 percent. The gauge rose 0.5 percent yesterday as the index of U.S. leading indicators rose in March by the most in 10 months.
Sunday, April 18, 2010
India May Increase Rates for Second Time in Month on Inflation
April 19 (Bloomberg) -- India’s central bank may raise interest rates for the second time in a month to tame the fastest inflation among Group of 20 nations.
The Reserve Bank of India will probably increase the reverse repurchase rate to 3.75 percent from 3.5 percent and the repurchase rate to 5.25 percent from 5 percent, according to the median forecast of 25 economists in a Bloomberg News Survey. The announcement is due at 11:15 a.m. in Mumbai tomorrow.
Governor Duvvuri Subbarao’s struggle against inflation exposes the roadblocks in the Indian economy -- inadequate capacity in power, roads and ports that drive up prices. In China, where infrastructure spending is double that of India, the fastest growth in almost three years in the first quarter came with a slowdown in inflation, complicating the decision in the country on when to raise interest rates.
“Domestic demand pressures are building in the Indian economy without a commensurate increase in capacity creation,” said Chetan Ahya, a regional economist at Morgan Stanley in Singapore. “That coupled with a rise in global commodity prices is resulting in a spike in non-food inflation.”
Consumer prices paid by industrial workers in India rose 14.9 percent in February from a year earlier. The nation’s wholesale-price inflation rate held at a 17-month high of 9.9 percent in March.
India’s $1.2 trillion economy may grow 7.5 percent in 2010, the fastest pace after China among the major economies, according to the World Bank. Subbarao on March 19 raised interest rates by a quarter-point for the first time in almost two years.
Poor Roads
The Reserve Bank may also increase the cash reserve ratio, or the proportion of deposits that lenders need to set aside as reserves, to 6 percent from 5.75 percent, according to the Bloomberg survey. Nine of 25 economists surveyed forecast a half-point increase in the reverse repurchase rate.
India produces about 10 percent less electricity than it needs, while roads, which account for 65 percent of the nation’s cargo, are plagued by single lanes and irregular surfaces, boosting companies’ costs, according to government estimates.
Infrastructure spending accounts for just 4 percent of India’s gross domestic product compared with 9 percent of GDP in China, according to CLSA Asia-Pacific Markets. The Planning Commission of India estimated last month the country needs to more than double spending on infrastructure to $1 trillion in the five years to March 2017.
Oil Prices
Increasing costs for commodities such as oil, which India imports to meet three-quarters of its needs, are also spurring price pressures. Crude oil prices have surged 70 percent in the past year.
Wal-Mart Stores Inc., the world’s largest retailer, said last week India’s inflation would slow by at least two percentage points if the government agreed to allow foreign investment in retail.
Wal-Mart, Carrefour SA and Tesco Plc are betting that their supply chain network and sourcing ability will allow them to remove middle men and sell products directly to consumers in India at lower prices. Local laws, aimed at protecting small shop owners, let global companies operate only wholesale stores that sell groceries and goods to retailers and businesses. An increase in the cost of Indian interest-rate swaps signaled investors are using the derivatives to guard against an increase in borrowing costs. One-year swap rates have added 12 basis points in the past two weeks, the most in such a period since December. The rate, a fixed payment made to receive floating rates, touched a two-month high of 5.13 percent on April 15.
Stronger Currency
The yield for benchmark 10-year Indian government bonds has added 47 basis points this year to 8.06 percent on the inflation outlook. The central bank has allowed the rupee to appreciate to make imports cheaper and fight inflation. The currency has gained 4.4 percent since Jan. 1 against the U.S. dollar.
“India has the highest inflation of any of the economies currently around Asia,” said Timothy Moe, Goldman Sachs Group Inc. chief Asian strategist. “The economy we felt was most in need of raising rates.”
Consumer prices in China rose 2.4 percent in March, less than economists expected. India, Australia and Malaysia have already raised borrowing costs, while Singapore last week announced it will allow its currency -- the city-state’s principal monetary tool -- to strengthen, as Asia Pacific economies recovered from the worst recession since World War II.
‘Cost Pressures’
Prices may rise further in India as the Purchasing Managers’ Index, released by HSBC Group Plc and Markit Economics, was 57.8 in March, indicating growing consumer demand. A reading above 50 indicates a gain in factory production.
HSBC economist Robert Prior-Wandesforde said the most “attention-grabbing” aspect of the March factory index data was the surge in input prices, which suggests that companies are facing “sizeable and mounting cost pressures.”
Toyota Motor Corp.’s Indian unit on April 1 raised prices of its Corolla, Innova and Fortuner vehicles to offset rising input costs, while Indian Oil Corp., the nation’s second-largest refiner, increased jet fuel prices.
The Reserve Bank of India will probably increase the reverse repurchase rate to 3.75 percent from 3.5 percent and the repurchase rate to 5.25 percent from 5 percent, according to the median forecast of 25 economists in a Bloomberg News Survey. The announcement is due at 11:15 a.m. in Mumbai tomorrow.
Governor Duvvuri Subbarao’s struggle against inflation exposes the roadblocks in the Indian economy -- inadequate capacity in power, roads and ports that drive up prices. In China, where infrastructure spending is double that of India, the fastest growth in almost three years in the first quarter came with a slowdown in inflation, complicating the decision in the country on when to raise interest rates.
“Domestic demand pressures are building in the Indian economy without a commensurate increase in capacity creation,” said Chetan Ahya, a regional economist at Morgan Stanley in Singapore. “That coupled with a rise in global commodity prices is resulting in a spike in non-food inflation.”
Consumer prices paid by industrial workers in India rose 14.9 percent in February from a year earlier. The nation’s wholesale-price inflation rate held at a 17-month high of 9.9 percent in March.
India’s $1.2 trillion economy may grow 7.5 percent in 2010, the fastest pace after China among the major economies, according to the World Bank. Subbarao on March 19 raised interest rates by a quarter-point for the first time in almost two years.
Poor Roads
The Reserve Bank may also increase the cash reserve ratio, or the proportion of deposits that lenders need to set aside as reserves, to 6 percent from 5.75 percent, according to the Bloomberg survey. Nine of 25 economists surveyed forecast a half-point increase in the reverse repurchase rate.
India produces about 10 percent less electricity than it needs, while roads, which account for 65 percent of the nation’s cargo, are plagued by single lanes and irregular surfaces, boosting companies’ costs, according to government estimates.
Infrastructure spending accounts for just 4 percent of India’s gross domestic product compared with 9 percent of GDP in China, according to CLSA Asia-Pacific Markets. The Planning Commission of India estimated last month the country needs to more than double spending on infrastructure to $1 trillion in the five years to March 2017.
Oil Prices
Increasing costs for commodities such as oil, which India imports to meet three-quarters of its needs, are also spurring price pressures. Crude oil prices have surged 70 percent in the past year.
Wal-Mart Stores Inc., the world’s largest retailer, said last week India’s inflation would slow by at least two percentage points if the government agreed to allow foreign investment in retail.
Wal-Mart, Carrefour SA and Tesco Plc are betting that their supply chain network and sourcing ability will allow them to remove middle men and sell products directly to consumers in India at lower prices. Local laws, aimed at protecting small shop owners, let global companies operate only wholesale stores that sell groceries and goods to retailers and businesses. An increase in the cost of Indian interest-rate swaps signaled investors are using the derivatives to guard against an increase in borrowing costs. One-year swap rates have added 12 basis points in the past two weeks, the most in such a period since December. The rate, a fixed payment made to receive floating rates, touched a two-month high of 5.13 percent on April 15.
Stronger Currency
The yield for benchmark 10-year Indian government bonds has added 47 basis points this year to 8.06 percent on the inflation outlook. The central bank has allowed the rupee to appreciate to make imports cheaper and fight inflation. The currency has gained 4.4 percent since Jan. 1 against the U.S. dollar.
“India has the highest inflation of any of the economies currently around Asia,” said Timothy Moe, Goldman Sachs Group Inc. chief Asian strategist. “The economy we felt was most in need of raising rates.”
Consumer prices in China rose 2.4 percent in March, less than economists expected. India, Australia and Malaysia have already raised borrowing costs, while Singapore last week announced it will allow its currency -- the city-state’s principal monetary tool -- to strengthen, as Asia Pacific economies recovered from the worst recession since World War II.
‘Cost Pressures’
Prices may rise further in India as the Purchasing Managers’ Index, released by HSBC Group Plc and Markit Economics, was 57.8 in March, indicating growing consumer demand. A reading above 50 indicates a gain in factory production.
HSBC economist Robert Prior-Wandesforde said the most “attention-grabbing” aspect of the March factory index data was the surge in input prices, which suggests that companies are facing “sizeable and mounting cost pressures.”
Toyota Motor Corp.’s Indian unit on April 1 raised prices of its Corolla, Innova and Fortuner vehicles to offset rising input costs, while Indian Oil Corp., the nation’s second-largest refiner, increased jet fuel prices.
Volcanic Ash May Weigh on European Economy
FRANKFURT — The past weekend was definitely not a good time to be a Kenyan flower grower, an Israeli avocado farmer, a package tour operator or anyone else trying to run a business that depends on air transport to or from Europe.
Consider TUI, the largest travel operator in Germany. With all the country’s airports closed because of the danger posed by a cloud of volcanic ash from Iceland, the company, based in Hanover, had to take extraordinary — and costly — steps to bring customers back from Mediterranean vacations.
Late Saturday, TUI flew 540 of its customers from the Spanish island of Mallorca to Barcelona. After staying overnight in hotels paid for by TUI, the vacationers boarded a dozen buses for a 20-hour trip to Frankfurt. From there they continued home by train.
Economists have begun considering when, and to what extent, the extra costs sustained by companies like TUI — not to mention the airlines — will start to damage Europe’s already shaky economy.
Most say the effects will not be catastrophic if the skies clear soon.
There were signs of hope Sunday as airports in Frankfurt, Berlin and some other European cities reopened on a restricted basis, at least temporarily.
But a longer spell of airport closures — or intermittent disruptions in the coming weeks and months as the volcano continues to erupt and winds carry the ash to Europe — could start to take a toll.
“Given that the recovery of the euro-area economy is anyway so weak, it might have an impact,” Daniel Gros, director of the Center for European Policy Studies in Brussels, wrote in an e-mail message.
While most economists are not predicting that the volcano will push Europe back into recession, there is a risk of unexpected consequences that could amplify the economic damage.
If, for example, ash falls to the ground in greater quantities than expected, creating a real or perceived health risk, consumer sentiment could have a serious decline.
“People get spooked and they don’t do anything anymore,” said Jacques Cailloux, chief European economist for Royal Bank of Scotland in London.
While such a prospect is unlikely, Mr. Cailloux said, “it’s something to be monitoring.”
Even if the macroeconomic effects are limited, businesses and industries that depend on air transport are already feeling the pain. Kenyan growers, who account for 35 percent of the European Union’s imports of flowers, are losing up to $2 million a day in earnings because they cannot fly their blooms to market, Reuters reported.
Produce growers in North Africa and Israel will suffer the same effect. Most fresh produce travels by air because it is perishable.
“Europe is the market where they get the most profit,” said Aliza Fleischer, a specialist in the economic effects of climate change at the Hebrew University of Jerusalem.
Makers of high-tech goods like semiconductors and cellphones could have their finely tuned logistics operations thrown out of whack.
“Where you might have an impact is where the goods are mission critical — phones, parts that are important to the production process,” said Mr. Cailloux of Royal Bank of Scotland.
As if Greece did not already have enough problems managing its debt, the country could be among the hardest hit if the disruptions continue long enough to interfere with the peak holiday season.
“It could make matters worse for Greece, which obviously needs every penny from tourism,” Mr. Cailloux.
Hard to measure, but potentially significant, is the effect of the air travel shutdown on productivity. Hundreds of thousands of people will miss work because they are stuck in a foreign city somewhere, said Peter Westaway, chief economist for Europe at Nomura’s offices in London. He should know. Mr. Westaway spoke by cellphone from Tokyo, where he was watching British football on a barroom television at 3 a.m. and waiting for news of when he might be able to get back to London.
The effect will not be drastic if the airport shutdowns end soon, but could be significant if the situation lasts longer.
Consider TUI, the largest travel operator in Germany. With all the country’s airports closed because of the danger posed by a cloud of volcanic ash from Iceland, the company, based in Hanover, had to take extraordinary — and costly — steps to bring customers back from Mediterranean vacations.
Late Saturday, TUI flew 540 of its customers from the Spanish island of Mallorca to Barcelona. After staying overnight in hotels paid for by TUI, the vacationers boarded a dozen buses for a 20-hour trip to Frankfurt. From there they continued home by train.
Economists have begun considering when, and to what extent, the extra costs sustained by companies like TUI — not to mention the airlines — will start to damage Europe’s already shaky economy.
Most say the effects will not be catastrophic if the skies clear soon.
There were signs of hope Sunday as airports in Frankfurt, Berlin and some other European cities reopened on a restricted basis, at least temporarily.
But a longer spell of airport closures — or intermittent disruptions in the coming weeks and months as the volcano continues to erupt and winds carry the ash to Europe — could start to take a toll.
“Given that the recovery of the euro-area economy is anyway so weak, it might have an impact,” Daniel Gros, director of the Center for European Policy Studies in Brussels, wrote in an e-mail message.
While most economists are not predicting that the volcano will push Europe back into recession, there is a risk of unexpected consequences that could amplify the economic damage.
If, for example, ash falls to the ground in greater quantities than expected, creating a real or perceived health risk, consumer sentiment could have a serious decline.
“People get spooked and they don’t do anything anymore,” said Jacques Cailloux, chief European economist for Royal Bank of Scotland in London.
While such a prospect is unlikely, Mr. Cailloux said, “it’s something to be monitoring.”
Even if the macroeconomic effects are limited, businesses and industries that depend on air transport are already feeling the pain. Kenyan growers, who account for 35 percent of the European Union’s imports of flowers, are losing up to $2 million a day in earnings because they cannot fly their blooms to market, Reuters reported.
Produce growers in North Africa and Israel will suffer the same effect. Most fresh produce travels by air because it is perishable.
“Europe is the market where they get the most profit,” said Aliza Fleischer, a specialist in the economic effects of climate change at the Hebrew University of Jerusalem.
Makers of high-tech goods like semiconductors and cellphones could have their finely tuned logistics operations thrown out of whack.
“Where you might have an impact is where the goods are mission critical — phones, parts that are important to the production process,” said Mr. Cailloux of Royal Bank of Scotland.
As if Greece did not already have enough problems managing its debt, the country could be among the hardest hit if the disruptions continue long enough to interfere with the peak holiday season.
“It could make matters worse for Greece, which obviously needs every penny from tourism,” Mr. Cailloux.
Hard to measure, but potentially significant, is the effect of the air travel shutdown on productivity. Hundreds of thousands of people will miss work because they are stuck in a foreign city somewhere, said Peter Westaway, chief economist for Europe at Nomura’s offices in London. He should know. Mr. Westaway spoke by cellphone from Tokyo, where he was watching British football on a barroom television at 3 a.m. and waiting for news of when he might be able to get back to London.
The effect will not be drastic if the airport shutdowns end soon, but could be significant if the situation lasts longer.
Europe Carriers Press for Airspace Re-Opening After Ash Cloud
April 19 (Bloomberg) -- Deutsche Lufthansa AG, Air France- KLM Group and industry groups are pressing European governments to re-examine an unprecedented closing of the region’s airspace from last week’s Icelandic volcanic eruption as losses from the grounding of aircraft pile up.
Lufthansa and Air France’s KLM unit reported successful testing of flights without passengers during the weekend, and Air France said an inspection of an Airbus A320 flown yesterday from Paris to Toulouse showed “no anomalies.” The Association of European Airlines, which represents 36 carriers, said it wants an “immediate” assessment of the airspace restrictions.
“We’re appealing to the government day and night to get an easing of the ban, but frankly there’s not much more we can do but keep knocking on the door,” Andreas Bartels, a spokesman for Cologne, Germany-based Lufthansa, said in a telephone interview. “We’re an airline and we want to fly.”
As many as 63,000 flights have been canceled after the April 14 eruption at the Eyjafjallajökull volcano spewed dust across Europe’s airspace, causing airports from Dublin to Moscow to shutter. Spain, holder of the European Union presidency, called a video conference among transport ministers today to discuss emergency plans.
The disruptions are costing carriers $200 million a day, according to an estimate by the International Air Transport Association. British Airways Plc, with daily revenue of about 24 million pounds ($37 million), has canceled all flights to and from London through tomorrow. Chief Executive Officer Willie Walsh was on a test flight yesterday from Heathrow to Cardiff that encountered “no difficulties,” the carrier said.
Stock Slump
Airline stocks, including British Airways, Lufthansa, and Ryanair Holdings Plc, slumped on April 16, with the Bloomberg EMEA Airlines Index falling 3.1 percent, the steepest decline in 2 1/2 months.
Volcanic ash can cause jet engines to fail by melting and then congealing in the turbines.
While Brussels-based Eurocontrol, which oversees Europe’s flight paths, predicts as much as half of Europe’s airspace may be “risk free” today, U.K. Transport Minister Andrew Adonis said in televised comments yesterday that flights across northern Europe won’t be safe in the next 24 hours, citing advice given by the country’s Met Office.
KLM operated 10 test flights with only a crew over the weekend and concluded that the quality of the atmosphere is “in order.” Air France said its engineers found no visual impact during a flight from Paris to Toulouse and no problems with the jet afterwards. Lufthansa sent 10 aircraft from Munich to Frankfurt to reposition its fleet on April 17.
‘Worse Than 9/11’
“With 313 airports paralyzed at the moment, the impact is already worst than 9/11,” Olivier Jankovec, Director General at Airports Council International, said in a statement. “While safety remains a non-negotiable priority, it is not incompatible with our legitimate request to reconsider the present restrictions.”
The disruption to European air traffic caused by the cloud of volcanic ash is “unsustainable,” Transport Commissioner Siim Kallas told a briefing in Brussels yesterday. The Commission will set up a group to assess the impact of the ash cloud on the economy and European travel.
A Eurocontrol spokesman didn’t answer calls for comment.
German Transport Minister Peter Ramsauer expects restrictions over the country’s airspace to be maintained for “the coming days,” he told the Bild newspaper in an interview published today.
French Environment Minister Jean-Louis Borloo, speaking to reporters yesterday, said he doesn’t expect a complete reopening of the European airspace “from one day to the next.”
France, Germany
France’s airspace in the north and east, which includes the airports of Paris and Lyon, will remain closed until at least the morning of April 20. Civil aviation authorities reopened the airspace over the southwest, allowing Air France to fly seven long-haul flights from Toulouse today.
Germany’s DFS flight safety authority shut all of the country’s airports by 10 p.m. yesterday after easing a ban earlier on hubs including Berlin and Frankfurt. Airspace closure will remain until at least 2 p.m.
U.K. airspace remains restricted until at least 7 p.m., flight-control authority National Air Traffic Services said. The Netherlands extended the closure of its airspace until 8 p.m.
Norway re-opened some airspace north of Bergen airport until Berlevag, and the south may be cleared later. Sweden re- opened the area north of Soderhamn, including Kiruna airport. Airspace in northern Spain was shut.
Asia, U.S.
“We hope to receive permission as soon as possible after that to start up our operations and to transport our passengers to their destinations,” KLM Chief Executive Officer Peter Hartman said in a statement.
Airlines in the Asia-Pacific region canceled most Europe- bound flights, with Qantas Airways Ltd. saying it won’t fly to European destinations before April 20. Carriers including Air China Ltd., Japan Airlines Corp., Thai Airways International Pcl, Korean Air Lines Co. and Cathay Pacific Airways Ltd. also shut down services to Europe.
United Parcel Service Inc., the world’s largest package- delivery firm, began trucking items from Asia through Istanbul and into Europe. The company made a flight from Dubai to Istanbul yesterday, then put those goods on trucks bound for Europe, according to spokesman Norman Black. UPS’s air hub in Cologne, Germany has been closed since April 16.
Little Visibility
Haraldur Eiriksson, a meteorologist at the Icelandic meteorological office, predicts little change in the ash pattern in Europe at least through April 23.
“This could have an ongoing impact on European air travel,” he said. “The forecast hasn’t changed, although the height the volcano is spewing the ash into has decreased from 5 to 6 kilometers to less than 3 kilometers and now it can’t be seen on our radars.”
Volcanic eruptions may continue for months and curtail European air traffic, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “It could erupt, pause for a few weeks, and then possibly erupt again.”
The last eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before reaching the air, she said.
Obama, Merkel
“We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone.
The volcanic ash cloud also led world leaders, including Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy to cancel plans to attend yesterday’s funeral of Polish President Lech Kaczynski, killed with 95 others in an April 10 plane crash.
The U.S.-based Air Transport Association said yesterday that 310 non-stop flights scheduled between the U.S. and Europe, or 92 percent of the total for the day, were canceled.
Delta Air Lines Inc., the world’s largest carrier, scrapped 97 flights yesterday to and from Europe, spokesman Anthony Black said. A further 49 flights have been grounded for today. AMR Corp.’s American Airlines canceled 60 flights to and from Europe.
The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the icecap that covers most of the mountain.
Lufthansa and Air France’s KLM unit reported successful testing of flights without passengers during the weekend, and Air France said an inspection of an Airbus A320 flown yesterday from Paris to Toulouse showed “no anomalies.” The Association of European Airlines, which represents 36 carriers, said it wants an “immediate” assessment of the airspace restrictions.
“We’re appealing to the government day and night to get an easing of the ban, but frankly there’s not much more we can do but keep knocking on the door,” Andreas Bartels, a spokesman for Cologne, Germany-based Lufthansa, said in a telephone interview. “We’re an airline and we want to fly.”
As many as 63,000 flights have been canceled after the April 14 eruption at the Eyjafjallajökull volcano spewed dust across Europe’s airspace, causing airports from Dublin to Moscow to shutter. Spain, holder of the European Union presidency, called a video conference among transport ministers today to discuss emergency plans.
The disruptions are costing carriers $200 million a day, according to an estimate by the International Air Transport Association. British Airways Plc, with daily revenue of about 24 million pounds ($37 million), has canceled all flights to and from London through tomorrow. Chief Executive Officer Willie Walsh was on a test flight yesterday from Heathrow to Cardiff that encountered “no difficulties,” the carrier said.
Stock Slump
Airline stocks, including British Airways, Lufthansa, and Ryanair Holdings Plc, slumped on April 16, with the Bloomberg EMEA Airlines Index falling 3.1 percent, the steepest decline in 2 1/2 months.
Volcanic ash can cause jet engines to fail by melting and then congealing in the turbines.
While Brussels-based Eurocontrol, which oversees Europe’s flight paths, predicts as much as half of Europe’s airspace may be “risk free” today, U.K. Transport Minister Andrew Adonis said in televised comments yesterday that flights across northern Europe won’t be safe in the next 24 hours, citing advice given by the country’s Met Office.
KLM operated 10 test flights with only a crew over the weekend and concluded that the quality of the atmosphere is “in order.” Air France said its engineers found no visual impact during a flight from Paris to Toulouse and no problems with the jet afterwards. Lufthansa sent 10 aircraft from Munich to Frankfurt to reposition its fleet on April 17.
‘Worse Than 9/11’
“With 313 airports paralyzed at the moment, the impact is already worst than 9/11,” Olivier Jankovec, Director General at Airports Council International, said in a statement. “While safety remains a non-negotiable priority, it is not incompatible with our legitimate request to reconsider the present restrictions.”
The disruption to European air traffic caused by the cloud of volcanic ash is “unsustainable,” Transport Commissioner Siim Kallas told a briefing in Brussels yesterday. The Commission will set up a group to assess the impact of the ash cloud on the economy and European travel.
A Eurocontrol spokesman didn’t answer calls for comment.
German Transport Minister Peter Ramsauer expects restrictions over the country’s airspace to be maintained for “the coming days,” he told the Bild newspaper in an interview published today.
French Environment Minister Jean-Louis Borloo, speaking to reporters yesterday, said he doesn’t expect a complete reopening of the European airspace “from one day to the next.”
France, Germany
France’s airspace in the north and east, which includes the airports of Paris and Lyon, will remain closed until at least the morning of April 20. Civil aviation authorities reopened the airspace over the southwest, allowing Air France to fly seven long-haul flights from Toulouse today.
Germany’s DFS flight safety authority shut all of the country’s airports by 10 p.m. yesterday after easing a ban earlier on hubs including Berlin and Frankfurt. Airspace closure will remain until at least 2 p.m.
U.K. airspace remains restricted until at least 7 p.m., flight-control authority National Air Traffic Services said. The Netherlands extended the closure of its airspace until 8 p.m.
Norway re-opened some airspace north of Bergen airport until Berlevag, and the south may be cleared later. Sweden re- opened the area north of Soderhamn, including Kiruna airport. Airspace in northern Spain was shut.
Asia, U.S.
“We hope to receive permission as soon as possible after that to start up our operations and to transport our passengers to their destinations,” KLM Chief Executive Officer Peter Hartman said in a statement.
Airlines in the Asia-Pacific region canceled most Europe- bound flights, with Qantas Airways Ltd. saying it won’t fly to European destinations before April 20. Carriers including Air China Ltd., Japan Airlines Corp., Thai Airways International Pcl, Korean Air Lines Co. and Cathay Pacific Airways Ltd. also shut down services to Europe.
United Parcel Service Inc., the world’s largest package- delivery firm, began trucking items from Asia through Istanbul and into Europe. The company made a flight from Dubai to Istanbul yesterday, then put those goods on trucks bound for Europe, according to spokesman Norman Black. UPS’s air hub in Cologne, Germany has been closed since April 16.
Little Visibility
Haraldur Eiriksson, a meteorologist at the Icelandic meteorological office, predicts little change in the ash pattern in Europe at least through April 23.
“This could have an ongoing impact on European air travel,” he said. “The forecast hasn’t changed, although the height the volcano is spewing the ash into has decreased from 5 to 6 kilometers to less than 3 kilometers and now it can’t be seen on our radars.”
Volcanic eruptions may continue for months and curtail European air traffic, said Sigrun Hreinsdottir, a geophysicist at the University of Iceland in Reykjavik. “It could erupt, pause for a few weeks, and then possibly erupt again.”
The last eruption of the 1,666-meter (5,466-foot) Eyjafjallajökull in December 1821 continued until January 1823. The current blast has sent ash as high as 7 kilometers (4.5 miles), according to Gudrun Larsen, a vulcanologist at the University of Iceland. The magma had to pierce 200 meters of ice before reaching the air, she said.
Obama, Merkel
“We really don’t know if this eruption is going to last as long as the previous one, but we can’t say it’s not a possibility,” Larsen said by telephone.
The volcanic ash cloud also led world leaders, including Barack Obama, German Chancellor Angela Merkel and French President Nicolas Sarkozy to cancel plans to attend yesterday’s funeral of Polish President Lech Kaczynski, killed with 95 others in an April 10 plane crash.
The U.S.-based Air Transport Association said yesterday that 310 non-stop flights scheduled between the U.S. and Europe, or 92 percent of the total for the day, were canceled.
Delta Air Lines Inc., the world’s largest carrier, scrapped 97 flights yesterday to and from Europe, spokesman Anthony Black said. A further 49 flights have been grounded for today. AMR Corp.’s American Airlines canceled 60 flights to and from Europe.
The eruption began on March 20 with a lava flow on the eastern flank of the Eyjafjallajökull volcano, according to the Institute of Earth Sciences at the University of Iceland. After a lull, it resumed early on April 14, directly under the icecap that covers most of the mountain.
National Bank of Oman, NBK, Sabic, Samba: Gulf Equity Preview
April 18 (Bloomberg) -- The following stocks may rise or fall in Persian Gulf markets. Stock symbols are in parentheses and prices are from the last close.
The Dubai Financial Market General Index lost 0.4 percent to 1,816.43, the lowest in a week. Abu Dhabi’s measure gained 0.1 percent, while Kuwait’s index declined 0.2 percent. Qatar’s measure lost 1.2 percent and Oman’s measure gained less than 0.1 percent. Saudi Arabia’s Tadawul All Share Index fell 0.1 percent.
Dar Al Arkan Real Estate Development Co. (ALARKAN AB): Saudi Arabia’s biggest developer by market value said first- quarter profit declined 6.1 percent to 398.6 million riyals ($106.3 million) as property prices fell. The shares lost 1.1 percent to 13.85 riyals.
National Bank of Kuwait SAK (NBK KK): The country’s largest lender said first-quarter profit rose 20 percent to 76.3 million dinars ($265 million), bolstered by income from expansion in Egypt and Qatar. The shares were unchanged at 1,220 fils.
National Bank of Oman SAOG (NBOB OM): The Persian Gulf country’s second-biggest bank by assets said first-quarter profit declined 10 percent to 6.57 million rials ($17 million). The shares declined 0.6 percent to 0.344 rials.
Oman Cable Industry SAOG (OCAI OM): The sultanate’s biggest cables and wires maker by market value posted a first-quarter profit of 1.7 million rials compared with a loss of 950,000 rials in the year-earlier period. The shares dropped 2.3 percent to 1.442 rials.
Samba Financial Group (SAMBA AB): Saudi Arabia’s second- largest bank by market value said first-quarter profit declined 4.8 percent to 1.21 billion riyals. The shares fell 1.2 percent to 60.25 riyals.
Saudi Basic Industries Corp. (SABIC AB): The world’s largest petrochemical maker posted a first-quarter profit of 5.43 billion riyals on renewed global demand for fertilizers and plastics. The shares were unchanged at 103.25 riyals.
The Dubai Financial Market General Index lost 0.4 percent to 1,816.43, the lowest in a week. Abu Dhabi’s measure gained 0.1 percent, while Kuwait’s index declined 0.2 percent. Qatar’s measure lost 1.2 percent and Oman’s measure gained less than 0.1 percent. Saudi Arabia’s Tadawul All Share Index fell 0.1 percent.
Dar Al Arkan Real Estate Development Co. (ALARKAN AB): Saudi Arabia’s biggest developer by market value said first- quarter profit declined 6.1 percent to 398.6 million riyals ($106.3 million) as property prices fell. The shares lost 1.1 percent to 13.85 riyals.
National Bank of Kuwait SAK (NBK KK): The country’s largest lender said first-quarter profit rose 20 percent to 76.3 million dinars ($265 million), bolstered by income from expansion in Egypt and Qatar. The shares were unchanged at 1,220 fils.
National Bank of Oman SAOG (NBOB OM): The Persian Gulf country’s second-biggest bank by assets said first-quarter profit declined 10 percent to 6.57 million rials ($17 million). The shares declined 0.6 percent to 0.344 rials.
Oman Cable Industry SAOG (OCAI OM): The sultanate’s biggest cables and wires maker by market value posted a first-quarter profit of 1.7 million rials compared with a loss of 950,000 rials in the year-earlier period. The shares dropped 2.3 percent to 1.442 rials.
Samba Financial Group (SAMBA AB): Saudi Arabia’s second- largest bank by market value said first-quarter profit declined 4.8 percent to 1.21 billion riyals. The shares fell 1.2 percent to 60.25 riyals.
Saudi Basic Industries Corp. (SABIC AB): The world’s largest petrochemical maker posted a first-quarter profit of 5.43 billion riyals on renewed global demand for fertilizers and plastics. The shares were unchanged at 103.25 riyals.
New Hope Will Seek Other Acquisitions If Bid Fails
April 18 (Bloomberg) -- New Hope Corp., battling Peabody Energy Corp. and Noble Group Ltd. for control of Macarthur Coal Ltd., will look for other acquisitions if it is unsuccessful in its bid for Australia’s largest producer of pulverized coal, Chairman Rob Millner said.
Macarthur said April 15 that New Hope’s revised takeover bid, which included A$950 million ($878 million) in cash, doesn’t represent an adequate premium for control of the company, and therefore will not recommend the offer to shareholders. Instead, Brisbane-based Macarthur said April 16 it intends to enter into talks with St. Louis-based Peabody, which sweetened its bid to A$16 a share, valuing the company at A$4.1 billion.
New Hope, based in Ipswich, Queensland, will continue to focus on coal acquisitions, Millner said today in an interview on the Australian Broadcasting Corporation. “If we can’t find anything in coal, we’ll have to go and look somewhere else.”
Growing demand from China and India led coal prices to double last year, and boosted the resources industry in Australia, the world’s biggest shipper of coal and iron ore. In 2009, China’s coal imports more than tripled to 125.8 million tons, according to data from the Beijing-based General Administration of Customs.
“Going forward, there’s a real shortage of particularly pulverized coal in the world, and most of the ports around the world are constrained by capacity, so I see a good future for coal, both thermal and PCI coal,” Millner said.
New Hope’s Offer
New Hope is in a good position financially to make a play for Macarthur, Andrew Harrington, coal analyst at Paterson Securities, said in an interview on ABC.
“They don’t have any debt on their balance sheet,” he said. “They’ve got A$1.5 billion in cash in the bank and probably another half billion coming from the sale of their Arrow Energy shares, so they could easily plonk down the cash and raise some financing to afford this.”
If New Hope is successful in its bid for Macarthur, the company will have about A$1 billion to develop its own and Macarthur’s assets, Millner said.
“Both companies have some considerable development work to do in the next two to three years, so we will need that cash,” he said.
Macarthur Bids
Xstrata Plc may have joined the tussle for Macarthur, offering major shareholders a cash-and-shares offer of just under A$16 a share, the Australian Financial Review reported April 15 in its Street Talk column.
Macarthur’s second-largest shareholder, ArcelorMittal, said Peabody’s revised bid, a 14 percent improvement on its previous offer, merits further study. Third-largest shareholder Posco said it supported the offer in the absence of a higher bid and depending on Macarthur recommending the deal, the companies said April 16.
Macarthur postponed a shareholder meeting scheduled for April 19, a condition of Peabody’s revised offer, to vote on a proposal to make Hong Kong-based Noble its biggest shareholder.
Noble’s offer proposes that Macarthur buy Gloucester Coal Ltd., which is 87.7 percent owned by the Hong Kong commodity supplier. Noble is backed by China’s sovereign wealth fund.
Macarthur said April 15 that New Hope’s revised takeover bid, which included A$950 million ($878 million) in cash, doesn’t represent an adequate premium for control of the company, and therefore will not recommend the offer to shareholders. Instead, Brisbane-based Macarthur said April 16 it intends to enter into talks with St. Louis-based Peabody, which sweetened its bid to A$16 a share, valuing the company at A$4.1 billion.
New Hope, based in Ipswich, Queensland, will continue to focus on coal acquisitions, Millner said today in an interview on the Australian Broadcasting Corporation. “If we can’t find anything in coal, we’ll have to go and look somewhere else.”
Growing demand from China and India led coal prices to double last year, and boosted the resources industry in Australia, the world’s biggest shipper of coal and iron ore. In 2009, China’s coal imports more than tripled to 125.8 million tons, according to data from the Beijing-based General Administration of Customs.
“Going forward, there’s a real shortage of particularly pulverized coal in the world, and most of the ports around the world are constrained by capacity, so I see a good future for coal, both thermal and PCI coal,” Millner said.
New Hope’s Offer
New Hope is in a good position financially to make a play for Macarthur, Andrew Harrington, coal analyst at Paterson Securities, said in an interview on ABC.
“They don’t have any debt on their balance sheet,” he said. “They’ve got A$1.5 billion in cash in the bank and probably another half billion coming from the sale of their Arrow Energy shares, so they could easily plonk down the cash and raise some financing to afford this.”
If New Hope is successful in its bid for Macarthur, the company will have about A$1 billion to develop its own and Macarthur’s assets, Millner said.
“Both companies have some considerable development work to do in the next two to three years, so we will need that cash,” he said.
Macarthur Bids
Xstrata Plc may have joined the tussle for Macarthur, offering major shareholders a cash-and-shares offer of just under A$16 a share, the Australian Financial Review reported April 15 in its Street Talk column.
Macarthur’s second-largest shareholder, ArcelorMittal, said Peabody’s revised bid, a 14 percent improvement on its previous offer, merits further study. Third-largest shareholder Posco said it supported the offer in the absence of a higher bid and depending on Macarthur recommending the deal, the companies said April 16.
Macarthur postponed a shareholder meeting scheduled for April 19, a condition of Peabody’s revised offer, to vote on a proposal to make Hong Kong-based Noble its biggest shareholder.
Noble’s offer proposes that Macarthur buy Gloucester Coal Ltd., which is 87.7 percent owned by the Hong Kong commodity supplier. Noble is backed by China’s sovereign wealth fund.
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