Premium travellers boost BA group

29 July 2011 Last updated at 08:46 GMT International Airlines Group CEO Willie Walsh: "It's good to be back in the black"

International Airlines Group (IAG), formed by the merger of BA and Iberia, has swung to a first-half profit of 39m euros (?34m), boosted by a rise in premium travellers.

That compared with a 419m-euro loss made in the same period a year earlier.

But it said fuel costs had risen 34.8% to 2.4bn euros in the six-month period and said that fuel was still a "significant issue".

The company expects its annual fuel bill to total 5.2bn euros.

BA and Iberia completed their merger in January this year.

'Significant growth'

Revenues for the half-year rose 17.9% to 7.8bn euros.

The company also reduced its net debt by almost a half to 480m euros.

IAG said it had seen "continued strength in premium markets", adding that while its long-haul business was stable, the short-haul European market remained "highly competitive".

"We expect significant growth in operating profit this year, with improvements in both our unit revenue and unit cost performance versus 2010 and are on track to reach our synergy targets," IAG said.

But it said it expected the earthquake and tsunami in Japan and the political unrest in North Africa and the Middle East to reduce its operating profit for the year by 90-100m euros.

Charles Stanley analyst Douglas McNeill said: "These are good results at the upper end of expectations but the year-ago period was depressed by the ash cloud crisis and strikes at BA."

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Savers' group calls for rate rise

7 July 2011 Last updated at 11:04 GMT Savers have suffered from low rates, but mortgage borrowers have benefited The value of UK savings has been eroded by ?50bn in the past year because of inflation and low interest rates, a campaign group has said.

The Save Our Savers group wrote to each member of the Bank of England's rate-setting committee urging them to raise the Bank rate to help pensioners and encourage saving.

But the Monetary Policy Committee kept the rate on hold at 0.5%.

Mortgage borrowers have benefited from rates remaining at the record low.

'Permanent' impact

In a plea to all nine members of the MPC ahead of the decision, Save Our Savers said that "a country without savings is a country without a future".

It warned that those on fixed incomes, such as pensioners, were suffering terribly from the combination of extremely low interest rates and above target inflation.

"For many this is not a temporary setback. Its effect will permanently reduce the value of their future income," the letter said.

However, the MPC later announced that it was maintaining the Bank rate at 0.5%. It has now been at this record low for more than two years.

This has hit savers, but it has made home loans cheaper, ensuring some can meet their mortgage payments.

Financial information service Moneyfacts reported a week ago that interest rates on new mortgage deals had fallen to their lowest level, on average, in 23 years.

Halifax - a lender now part of Lloyds Banking Group - said typical mortgage payments for a new borrower had fallen from a peak of 48% of average disposable earnings in mid-2007 to 28% in the second quarter of 2011.

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RAC sold to private equity group

23 June 2011 Last updated at 08:10 GMT Aviva bought the RAC in 2005 for ?1.1bn Insurance group Aviva has agreed to sell the RAC to US private equity firm Carlyle Group for ?1bn.

The move is part of Aviva's drive to focus on its main insurance and savings operations.

Aviva said it expected to make an accounting profit of ?600m from the sale and that it would use the proceeds to strengthen its balance sheet and invest in its priority markets.

The RAC is the UK's second-biggest car breakdown service.

Based in Birmingham, it employs 4,000 staff and has more than seven million customers.

It made a pre-tax profit of ?82m in 2010.

Aviva shares were up 1.2% in morning trading.

The sale is expected to be completed by the end of the third quarter of 2011.

Under the terms of the deal, Aviva will make a one-off contribution of ?67m into the RAC pension scheme, which had a deficit of about ?160m at the end of 2010.

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