US Business

European airline group Air France-KLM said Friday that its third quarter revenues had exceeded its pre-pandemic turnover in 2019, fuelled by strong post-Covid demand for travel.

The company recorded a net profit of 460 million euros ($459 million) between July and September in a second consecutive quarter of profitability, despite the pressures of soaring inflation and fuel costs, it said in a statement.

The Covid-19 pandemic grounded planes worldwide as the global health emergency triggered stringent travel restrictions, devastating the aerospace and tourism industries.

But pent-up demand as economies and borders reopened saw the French-Dutch group record a turnover of 8.1 billion euros in the third quarter, its key summer season. 

The result exceeded the equivalent figure for 2019, the last pre-pandemic year, by more than 500 million euros.

The airline group transported 25 million passengers in the third quarter, an increase of almost 50 percent on the same period last year.

It said the performance will allow it to reduce its debt and pay back one billion euros of state loans.

Chief executive Benjamin Smith said the group “remains confident in its ability to further increase capacity during the winter season”.

Air France-KLM made huge losses in 2020 and 2021 after the pandemic slashed passenger numbers to around a third of normal levels, but has made a profit so far this year.

The French and Dutch governments intervened to prop up the airline at the most acute moment of the crisis, but the group is emerging stronger after two recapitalisations.

Elon Musk begins on Friday his first full day leading Twitter, with critics and fans anxious to see how the planet’s richest man will run one of the world’s leading social media platforms.

The mercurial Tesla chief’s tumultuous, $44 billion bid to buy the company concluded after months of uncertainty and speculation, and now users could start to see his plans.

Musk tweeted “the bird is freed” on Thursday, a jokey reference to the firm’s logo, shortly after he said he made the purchase “to help humanity, whom I love”.

Yet the idea of Musk running Twitter has alarmed activists who fear a surge in harassment and misinformation, with Musk himself known for trolling other Twitter users.

European politicians were quick to warn him that the continent had regulations for social media companies.

“In Europe, the bird will fly by our rules,” tweeted Thierry Breton, the EU internal market commissioner, in response on Friday to Musk’s “bird” message.

Musk said on Thursday Twitter “cannot become a free-for-all hellscape where anything can be said with no consequences”.

He had previously vowed to dial back content moderation and was expected to clear the way for former US president Donald Trump to return to the platform.

The then-president was blocked over concerns he would ignite more violence like the deadly attack on the Capitol in Washington to overturn his election loss.

Far-right users were quick to rejoice over the purchase on the network, posting comments such as “masks don’t work” and other taunts, under the belief that moderation rules will now be relaxed.

“Free speech will always prevail,” tweeted Republican Senator Marsha Blackburn of Tennessee, prompting hundreds of mostly angry replies accusing her of hypocrisy.

– Benefit of the doubt –

Among Musk’s first acts in power on Thursday were the reported firing of chief executive Parag Agrawal and other senior officials — though the company did not reply to AFP’s request for comment and Agrawal still listed himself as CEO on his Twitter profile.

Agrawal previously went to court to hold Musk to the terms of the deal, and the takeover came just before a deadline imposed by the judge.

Musk, who is using a combination of his own money, funds from wealthy investors and bank loans to finance the deal, has conceded he is overpaying for a company that has regularly posted eye-watering losses.

Twitter says it has 238 million daily users, dwarfed by the likes of Facebook’s two billion, but has not been able to monetize in the same way as its rivals.

However, Twitter holds an outsized influence on public debate because it is the favoured platform for many companies, politicians, journalists and other public figures.

Musk, though, has expressed frustration at content moderation and critics fear his ownership will be seen as a greenlight for hate speech and misinformation.

Musk is already the boss of car firm Tesla and rocket company SpaceX and it is not clear what his Twitter role might be, though unconfirmed reports suggested he might become interim CEO.

The closure of the deal marks the culmination of a long back-and-forth between the billionaire and the social network.

Musk tried several times to step back from the deal after his unsolicited offer was accepted in April, accusing Twitter of misleading him over the number of “bot” accounts.

Twitter dismissed his claims and accused him of inventing excuses, eventually filing a lawsuit to hold him to the agreement.

With a trial looming, the unpredictable billionaire capitulated and revived his takeover plan.

During the tumult, some employees have quit the firm over Musk’s takeover, said a worker who asked to remain anonymous.

“But a portion of people, including me, are willing to give him the benefit of the doubt for now,” the employee said.

Shares in British bank NatWest tumbled nine percent Friday following an earnings update that added to concerns that borrowers would be unable to repay loans owing to soaring interest rates.

The group said it was setting aside £242 million ($279 million) in bad debt provisions, as the bank posted a 20-percent jump in revenue as rates rise on loans including mortgages.

It caps a week in which UK rivals Barclays, HSBC and Lloyds have also increased provisions for the same reason.

“At a time of increased economic uncertainty, we are acutely aware of the challenges that people, families and businesses are facing up and down the country,” said chief executive Alison Rose.

“Although we are not yet seeing signs of heightened financial distress, we are very conscious of the growing concerns of our customers and we are closely monitoring any changes to their finances or behaviours,” she added in the earnings release, which also revealed a big drop in net profits owing to other exceptional costs.

Shares in NatWest were down nine percent at 225 pence following the update, a much bigger loss than any other company trading on London’s benchmark FTSE 100 index.

“There are similar themes… to the rest of the sector,” noted Richard Hunter, head of markets at Interactive Investor. 

“The bank has felt the need to take a conservative approach to the possibility of bad debts, even though at present there is little sign of customer behaviour switching towards default.” 

Swedish prosecutors said Friday they would conduct a new complementary crime scene investigation of the Nord Stream leaks, after the navy and the pipeline owner also began surveys this week.

“I have decided to together with the Security Service (Sapo) conduct a number of complementary inspections of the crime scene,” public prosecutor Mats Ljungqvist said in a statement.

The Swedish armed forces have decided to assist the investigation following a request, Ljungqvist added, without giving any details as to what they were looking for.

Four leaks emerged on the two Nord Stream pipelines in the Baltic Sea off the Danish island of Bornholm at the end of September with seismic institutes reporting they had recorded two underwater explosions prior to the leaks appearing.

While the leaks were in international waters, two of them were in the Danish exclusive economic zone and two of them in Sweden’s.

In early October, the Swedish prosecution authority announced that they had collected “pieces of evidence” during an underwater inspection of the leaks in the Swedish economic zone, which had backed up suspicions of sabotage.

The new inspection comes as Sweden’s navy and the owner of the pipeline Nord Stream AG both announced earlier this week that they were conducting their own inspections of the burst pipelines.

Jimmie Adamsson, head of communications for the Swedish navy, confirmed they were at the scene with a ship specialised in diving operations and that they were supporting the prosecution’s new inspection.

But he stressed that it was not linked to the survey they had initiated on their own this week.

“The first investigation has not sparked the second, but they are two separate things,” Adamsson told AFP.

Nord Stream AG, which is majority-owned by Russia’s Gazprom, said Thursday that a “specially equipped vessel” had arrived at the location of “the pipeline damage in the exclusive economic zone of Sweden”.

The pipelines, which connect Russia to Germany, have been at the centre of geopolitical tensions as Russia cut gas supplies to Europe in suspected retaliation to Western sanctions over Moscow’s invasion of Ukraine.

Although they were not in operation when the leaks occurred, they both still contained gas which spewed up through the water and into the atmosphere.

Japan will spend $260 billion on a stimulus package to cushion the economy from the impact of inflation and the weak yen, Prime Minister Fumio Kishida announced on Friday.

But the central bank is refusing to budge from the ultra-loose policy that has hammered the Japanese currency this year, wiping out more than 20 percent of its value against the dollar.

The government hopes the 39 trillion yen in fiscal spending will rise to 72 trillion when private sector investments are taken into account, Kishida said after ministers approved an extra budget to partly fund the relief measures.

“We want to protect people’s livelihoods, employment and businesses, while strengthening our economy for the future,” he told reporters, adding that the move should help push up GDP by 4.6 percent.

Prices are rising in Japan at their fastest rate in eight years, although the three-percent inflation rate remains well below the sky-high levels seen in the United States and elsewhere.

Japan — which has one of the world’s highest debt-to-GDP ratios — has already injected hundreds of billions of dollars into its economy over the past two years to support recovery from the Covid-19 pandemic.

Friday’s package, funded by a special budget of $200 billion, will include measures to encourage wage growth and support households with energy bills, which have spiked since Russia’s invasion of Ukraine.

“We’ll aim to push down prices by more than 1.2 percent next year by lowering electricity bills by 20 percent and curbing gasoline prices,” Kishida said.

It is also designed to help people and businesses affected by the plummeting yen, currently at 147 against the dollar.

Japan spent nearly $20 billion in September in an effort to curb the yen’s slide, and further expensive government interventions have reportedly taken place in recent days.

– No change from Bank of Japan –

The yen’s steep falls have been driven by the widening gap between the monetary policies of the US and Japanese central banks — with the Bank of Japan keeping rates ultra-low to encourage sustainable growth, while the Federal Reserve ramps them up.

Following a two-day policy meeting, the BoJ said it would keep its easy-money policy, defying growing pressure to tweak its strategy as the yen drops.

Bank Governor Haruhiko Kuroda said officials would stick to their guns until prices rise “in a sustainable manner”, adding there would be no change “any time soon”.

Kuroda declined to comment on suspected currency interventions in the past week, which the finance ministry has not confirmed.

But “it is extremely important that (forex rates) reflect economic fundamentals, and move in a stable manner”, he told reporters.

“The recent depreciation of the yen is rapid and unilateral,” which is “negative for the Japanese economy”, Kuroda said.

Ahead of the BoJ meeting, UBS economists Masamichi Adachi and Go Kurihara said that a mix of continued easing by the central bank and the government’s stimulus measures would be “optimal”.

That is because Japan’s inflation is not demand-driven, but largely down to soaring energy costs, they explained in a commentary.

This view was echoed by Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“Japan’s economy faces weak demand due to price rises, in contrast to the United States, where demand is strong, with the Fed trying to cool down inflation,” he told AFP.

“It’s impossible that Japan would hike rates to curb inflation, for this reason.”

Cash is king in Italy, and the debate over limiting payments in notes and coins is heating up again under the country’s new right-wing government.

A new bill introduced this week by the League party, a member of Prime Minister Giorgia Meloni’s coalition, would raise the cash payment ceiling for Italians to 10,000 euros from 2,000 euros today.

The ceiling was already scheduled to decrease further to 1,000 euros as of January 1.

Credit card use has been steadily on the rise throughout the eurozone in recent years, but Italy has doggedly persisted in its preference for cash despite numerous incentives to encourage electronic payments.

Italians used cash for 82 percent of transactions, versus the 73 percent eurozone average, according to a 2020 study by the European Central Bank.

Defenders cite high card fees for shopkeepers and the preference among the elderly for cash.

However, critics say its use contributes to tax evasion and money laundering — two problems that have long dogged the Italian economy.

“Mafia and (tax) evaders thank you,” tweeted Andrea Orlando, labour minister under former premier Mario Draghi, about the League’s bill.

– Helps the poor –

Meloni — who has sought to reassure the EU that she will be fiscally prudent — told the Senate Wednesday she will support a higher cash ceiling, although reports suggest she will back a lower level than proposed by the League.

She denied any link between high cash limits and the shadow economy, saying the higher ceiling “helps the poor”.

Cash is preferred by low earners in the centre and south of Italy, where unemployment is higher, and among women and the self-employed, according to a Bank of Italy analysis of European Central Bank surveys published in March.

In a May report, the ECB estimated there were 13.5 million people in the eurozone with no bank account or access to financial services, arguing that cash needed to be remain accessible and accepted. 

However, an October 2021 Bank of Italy research paper found a direct correlation between the use of cash and the shadow economy, noting that restrictions on cash use “are an effective instrument to tackle tax evasion”.

– Tax evasion –

A 2016 decision to raise Italy’s ceiling from 1,000 euros to 3,000 euros to boost spending raised the share of the shadow economy by about 0.5 percentage points, the Bank of Italy report found.  

Italy’s cash ceiling has gradually been lowered over the past three decades, although it rose to a high of 12,500 euros under two governments of then-premier Silvio Berlusconi, whose Forza Italia party is also part of Meloni’s coalition.

Elsewhere in Europe, Greece has the most stringent cash limit, at 500 euros, while the ceiling rises above 10,000 euros in countries such as Malta, the Czech Republic and Croatia. 

Germany, Sweden and Ireland, among others, have no limits, but restrictions exist.

Italy’s largest business association, Confcommercio, said that as soaring inflation eats into household budgets, “it does not appear appropriate to impose new limitations on forms of payment”.

It said that lowering merchants’ credit card processing fees was a priority.

Massimo Vidiri, 51, who runs a Rome tobacco shop, said clients increasingly wanted to use credit cards, although he himself likes carrying cash.

“If something happens, like a blackout, what do I do?” he asked. “If the internet goes down throughout Italy, what do we do?”

He complained about high fees, a view shared by another shopkeeper nearby, Angelo Bruno.

Bruno, 71, denied small merchants like himself were a problem, telling AFP: “The big cases of tax evasion are the politicians, the only ones who get picked on are the little shopkeepers.”

The Bank of Italy report found that because small business owners were more susceptible to bureaucratic burdens and high taxes, they were “more prone to shifting into the shadow economy”.

Digital payments accelerated in Italy during the Covid-19 pandemic, when shops were shut and online shopping spiked.

A “cashback” scheme put in place in 2021 by then-prime minister Giuseppe Conte to encourage consumer spending and fight tax evasion through refunds on credit card purchases was considered inefficient and costly, and suspended by Draghi. 

IAG, owner of British Airways and Spanish carrier Iberia, revealed Friday revenue slightly above pre-pandemic levels as it posted third-quarter profits on rebounding passenger demand.

Revenue soared to 7.3 billion euros (dollars) in the peak July-September demand period, from 2.7 billion euros in the third quarter last year, IAG said in a statement.

The latest result was almost one percent higher compared with the third quarter in 2019, or before the coronavirus pandemic grounded planes worldwide at the start of the following year.

It comes despite the group’s airlines, which include Aer Lingus and Vueling, facing higher costs, notably from soaring jet fuel prices. 

Airlines are tackling this by charging higher fares.

“While demand remains strong, we are conscious of the uncertainties in the economic outlook,” IAG chief executive Luis Gallego said in the earnings statement. 

“Leisure demand is particularly healthy and leisure revenue has recovered to pre-pandemic levels. Business travel continues to recover steadily.”

Profit after tax stood at 853 million euros in the third quarter compared with a net loss of 574 million euros one year earlier.

The second quarter had seen IAG fly back into profit for the first time since the start of the pandemic.

IAG said its third-quarter performance was impacted also by a strong dollar, while passenger capacity was 81 percent of pre-pandemic levels.

Despite the headwinds, “this is no doubt an impressive turnaround from BA’s parent company”, noted Derren Nathan, head of equity research at Hargreaves Lansdown. 

“Planes are just as full as before the pandemic but IAG is flying less of them.”

In reaction, shares in IAG were down 1.2 percent on London’s falling FTSE 100 index. 

The group had collapsed into annual losses in 2020 and 2021 as Covid ravaged global demand for international air travel, forcing BA and its peers to slash thousands of jobs.

That has left airlines and airports struggling to recruit staff. 

Japan will spend $260 billion on a stimulus package to cushion the economy from the impact of a weak yen and inflation, Prime Minister Fumio Kishida said Friday.

But the nation’s central bank is refusing to budge from the ultra-loose policy that has hammered the currency this year, wiping out more than 20 percent of its value against the dollar.

The government hopes the 39 trillion yen in fiscal spending will rise to 72 trillion yen when private sector investments are taken into account, Kishida said after the cabinet approved an extra budget to partly fund the relief measures.

“This… is a comprehensive economic package meant to combat inflation and revitalise the economy,” he told reporters.

“We want to protect people’s livelihoods, employment and businesses, while strengthening our economy for the future.”

Prices are rising in Japan at their fastest rate in eight years, although the three-percent inflation rate remains well below the sky-high levels seen in the United States and elsewhere.

Japan — which has one of the world’s highest debt-to-GDP ratios — has already injected hundreds of billions of dollars into its economy over the past two years to support recovery from the Covid-19 pandemic.

Friday’s package will include measures to encourage wage growth and support households with energy bills, which have spiked since Russia’s invasion of Ukraine.

It is also designed to help people and businesses affected by the plummeting yen, currently at 147 against the dollar.

Japan spent nearly $20 billion in September in an effort to curb the yen’s slide, and further expensive government interventions have reportedly taken place in recent days.

The yen’s steep falls have been driven by the widening gap between the monetary policies of the US and Japanese central banks — with the Bank of Japan keeping rates ultra-low to encourage sustainable growth, while the Federal Reserve ramps them up.

– Bank of Japan stands pat –

Following a two-day policy meeting, the BoJ said it would keep its easy-money policy, defying growing pressure to tweak its strategy as the yen drops.

Bank Governor Haruhiko Kuroda told reporters officials would stick to their guns until prices rise “in a sustainable manner”, adding there would be no change “any time soon”.

Kuroda declined to comment on suspected currency interventions in the past week, which the finance ministry has not confirmed.

But “it is extremely important that (forex rates) reflect economic fundamentals, and move in a stable manner”, he added.

“The recent depreciation of the yen is rapid and unilateral,” which is “negative for the Japanese economy”, Kuroda said.

Ahead of the BoJ meeting, UBS economists Masamichi Adachi and Go Kurihara said that a mix of continued easing by the central bank and the government’s stimulus measures would be “optimal”.

That is because Japan’s inflation is not demand-driven, but largely down to soaring energy costs, they explained in a commentary.

This view was echoed by Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

“Japan’s economy faces weak demand due to price rises, in contrast to the United States, where demand is strong, with the Fed trying to cool down inflation,” he told AFP.

“It’s impossible that Japan would hike rates to curb inflation, for this reason.”