Airlines to lose over US$ 5.2 bn: IATA

Global airline industry is expected to lose more than an estimated USD 5.2 billion this year as international passenger traffic has substantially declined despite a fall in oil prices by half.


Airlines in the Asia-Pacific region, including India and China, experienced a sharp fall of 6.8 percent in September compared with the same month last year.

The latest figures were released by the International Air Transport Association (IATA) at the Freedom Summit in Istanbul, which concluded on Sunday, with the global airline body asking governments to take urgent steps to help the industry and do away with archaic rules.

"The deterioration in traffic is alarmingly fast-paced and widespread. We have not seen such a decline in passenger traffic since SARS in 2003," said IATA chief Giovanni Bisignani at the Summit.

"Even the good news that the oil price has fallen to half its July peak is not enough to offset the impact of the drop in demand. At this rate, losses may be even deeper than our than our forecast of USD 5.2 billion," he said, adding that airlines in all major regions reported shrinking of passenger traffic.

On the cargo front, the Asia-Pacific region's carriers reported a 10.6 percent decline, the "most alarming drop" experienced by the largest players in the market, the IATA said in its latest report.

Up to August, the drop in international passenger traffic was isolated to Asia-Pacific carriers.



"The economies of the region's two major growth markets-- China and India-- slowed and Japan saw industrial production drop five per cent, the IATA figures showed. The cargo market saw the "worst decline since the technology bubble burst in 2001", the report said.



Pointing out that the crisis facing the industry was deepening, the IATA Director General and CEO said "but unlike other companies, they are denied some basic commercial freedom-- access to markets and to global capital-- that could help them manage their business in this difficult time."



He said a "web of 3,500 bilateral air service agreements" governing the international air transport "denies market access until specifically agreed. And the ownership clauses that are contained in these agreements preclude merger across borders."



In this context, Bisignani pointed towards the banking industry and said it was accessing global capital and carrying out mergers.



On the other hand, "airlines are not asking for handouts (bailout packages). But today's crisis highlights the need for airlines to be able to run their businesses like normal global businesses," he argued at the Freedom Summit which is being attended by government representatives of 15 countries including India.



At the Summit, IATA circulated a paper for these governments to examine solutions within the bilateral system that could be quickly implemented to expand opportunities for airlines to access markets and global capital.

IMF aid for Ukraine and Hungary

The International Monetary Fund (IMF) is to offer a $16.5bn (£10.4bn) loan to Ukraine and has agreed an as yet undisclosed package with Hungary.

Ukraine is to receive the loan to help it "maintain confidence and economic and financial stability", the IMF said.

The country has seen its stocks, banks and currency badly shaken by the global credit crunch.

The "substantial financing package" for Hungary is due to be finalised in the next few days, the IMF said.

It is conditional upon Hungary adopting "strong policies" and will be drawn from the IMF, the EU, and some individual European governments "together with regional and other multilateral institutions", IMF Managing Director Dominique Strauss-Kahn said in a statement.

"The policies Hungary envisages justify an exceptional level of access to fund resources," he added.

Hungary's currency, the forint, has seen a sharp fall, stocks have tumbled and the country has cut its growth forecast for 2009.

Currency plunge

Internal political turmoil has delayed economic development in Ukraine and the IMF loan depends on the ex-Soviet state being able to balance its budget and make reforms to its banking sector.

Last week, the IMF said it was to give Iceland a £2.1bn loan as its banking system came close to collapse.

Pakistan and Belarus are also in talks about accessing IMF funding.

"The authorities' programme is intended to support Ukraine's return to economic and financial stability, by addressing financial sector liquidity and solvency problems, by smoothing the adjustment to large external shocks and by reducing inflation," said Mr Strauss-Kahn.

"At the same time, it will guard against a deep output decline by insulating household and corporations to the extent possible."

Easy credit and a property boom have seen Ukraine's capital Kiev expand rapidly but the global downturn has seen investors and those willing to offer loans withdraw.

Ukraine also relies heavily on steel, but prices have collapsed and its currency, the hryvnia, has fallen sharply in the past two weeks.

Global shares recover lost ground

European shares opened higher on Tuesday after Asian stock markets staged late rallies, clawing back some of their recent losses.

In early trading, the FTSE 100 was up 2.2%, the Dax in Frankfurt rose 8.0% and the Cac 40 in Paris was unchanged.

Trading is expected to remain volatile as concerns remain about the depth of the global downturn.

The Nikkei 225 in Tokyo fell below 7,000 for the first time in 26 years before recovering to close up 6.4%.

Authorities said that to stabilise markets, they would bring forward a ban on traders selling shares that they did not already own and had not borrowed.

The Nikkei closed up 459.02 points at 7,621.92.

Exporters were helped by a sharp fall in the value of the Japanese yen against the US dollar.

The yen has been appreciating against the dollar recently, but on Tuesday, its value fell to 95.51 yen to the dollar from 93.01.

Asian gains

Share prices across Asia had initially lost ground again on opening, following volatile trading throughout the world.

Hong Kong's Hang Seng closed up 14.4%, which was its biggest daily percentage gain for 11 years.

It followed a 12.7% decline on Monday.

Even after Tuesday's gains, the Nikkei and Hang Seng had fallen more than 30% since the beginning of the month.

South Korea's Kospi index initially dropped 2.6%, but later rose to finish 5% up on the day.

Early ban

Japan's Finance Minister Shoichi Nakagawa told reporters that the ban on naked short-selling, which had been due to come into force on 4 November, would be brought forward.

Naked short-selling involves making a deal to sell shares that you do not own and relying on being able to buy the shares before the deal has to be settled.

It is done by traders who hope that the price of the shares will fall between the sale and the purchase of the shares, allowing them to pocket the difference.

The announcement follows similar moves by governments in the US, Australia and Europe.

"I decided on the measure because these few days will be critical and stock exchanges are facing risks unless we take quick action," said Mr Nakagawa.

"Japan was easily under pressure from other sources and that is why it was important to change the rules to US and European standards."

Japan's Prime Minister Taro Aso has said he will delay calling a general election in order to handle the economic crisis, according to the Kyodo news agency.

Mr Aso, who took office a month ago, had been widely expected to call an early election to address the deep divisions in the Japanese parliament.

Iceland ups interest rate to 18%

Iceland's central bank has raised its key interest rate to 18% from 12% as the country battles against financial collapse

The move came as Iceland's prime minister said the country needed another $4bn (£2.6bn) in loans.

"It's not a precise number, it's not a scientific number but we are looking in that neighborhood," Geir Haarde said.

The country has already agreed a $2bn loan from the International Monetary Fund (IMF).

Oil falls to USD 63 as investors eye falling demand

Oil prices fell to 17-month lows at USD 63 a barrel on Monday in Asia as investors weighed Friday's OPEC output cut against growing evidence of a severe global economic slowdown that would undermine crude demand.


Light, sweet crude for December delivery fell 32 cents to USD 63.83 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore.



Investors brushed off a 1.5 million barrel-a-day cut announced by the Organisation of Petroleum Exporting Countries on Friday, focusing instead on falling crude demand as economies across the globe reel from the impact of a credit crisis.



On Friday, oil fell USD 3.69 to settle at USD 64.15. Prices have plunged 57 per cent from a record USD 147.27 on 11th July.



"The mood is fairly negative reflecting worry about the international economic outlook," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.



"If there is further weak economic data in the US or Europe, prices could come under more downward pressure."



Iran's OPEC governor Mohammad Ali Khatibi said on Sunday a reduction in production "will be considered" at the group's next meeting in Algiers in December - a meeting that might even be held early if necessary.



"I thought the OPEC cut was a fairly decisive act, but concerns of recession in the major economies remain dominant," Moore said. "OPEC's cut does take a step toward tightening the market."



Investors have been paying close attention to signs that a slowing economy and higher gasoline prices earlier this year have hurt crude demand in the US, the world's largest oil consumer.



The US Department of Transportation said Friday that Americans drove 5.6 per cent less, or 15 billion fewer miles (24 billion fewer kilometers), in August compared with same month a year ago - the biggest single monthly decline since the data was first collected regularly in 1942.



Oil investors have also been eyeing stock markets to gauge sentiment on global economic health.



Most Asian stock indexes fell on Monday, led by Hong Kong, South Korea and Australia. Japanese shares rebounded slightly after plummeting last week.



The Dow Jones industrial average fell 3.6 per cent Friday.



"If we're looking a severe economic downturn, it's hard to say what the bottom of any commodity price will be," Moore said.



In other Nymex trading, heating oil futures rose 0.13 cent to USD 1.95 a gallon, while natural gas for November delivery fell 19.8 cents to USD 6.04 per 1,000 cubic feet.



In London, November Brent crude was down 60 cents to USD 61.45 a barrel on the ICE Futures exchange.

Asia stocks crash, Nikkei hits 26 yr low

Japan's Nikkei slumped nearly 500 points on Monday to its lowest close in 26 years as the yen advanced on the dollar, battering exporters such as Toyota amid a slide in Asian shares.


The benchmark Nikkei 6.4per cent to 7,163, its lowest close since October 1982.



The yen rose against the dollar and was approaching a 13-year high as the risk of a global recession and an extended slump in the world's stock markets prompted investors to slash carry trades.



The Bank of Korea slashed interest rates by the most ever in an attempt to restore confidence after stocks lost a fifth of their value and the won fell to a decade low last week.



Elsewhere in Asia, stocks continue to trade deep in red.



Meanwhile world oil prices weakened in Asian trade today with OPEC's decision to cut supply at a time of global financial turmoil seen as hurting already weak energy demand further, dealers said.

Sensex down 191 points in pre-close trade

After dipping below 8,000-points level, the benchmark Sensex recovered most of its early losses, to quote 191 points down in pre-close trading on the back of buying by domestic financial institutions and short-covering by speculators.


The 30-share index, which had lost over 1,000 points at midsession on major sell-off by jittery funds, recovered partially to trade 191.89 points down at 8,509.18 points after touching the day's low of 7,697.39, a level last seen on October 2005.

The wide-based National Stock Exchange index Nifty was down by 79.80 points at 2,504.20 points after dropping to 2,252.75 points at one stage.

Marketmen said emergence of buying by domestic financial institutions and covering-up of short positions by speculators at prevailing lower levels helped Sensex to recover part of lost ground.

Porsche raises Volkswagen stake

Porsche has increased its stake in Volkswagen, saying it hopes to have a majority holding in Europe's biggest carmaker by the end of the year.

Porsche revealed its stake had risen to 42.6% - saying it had chosen to make the announcement because of uncertainty in the car market.

It had previously already been been the largest shareholder, holding about 35%.

Porsche has said it did not want to merge with VW - but create an alliance that could take on competition.

It has also argued that it needs a strong influence at VW, which makes components for a third of Porsche cars.

The car industry, which is often seen as a barometer of the world economy, is entering a deep recession, with sales and profits tumbling.

Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.

United plans

Last week Porsche said disagreements between family members in the company had been resolved.

Two cousins, Wolfgang Porsche and Ferdinand Piech, have held conflicting opinions on how to take over VW.

Mr Piech - who is both the Porsche boss and head of the VW supervisory board - has backed unions who object to the takeover of their company.

But Mr Porsche said that the families were "united" on plans including the idea of co-management of both companies.

The so-called "VW Law" - which essentially gives German authorities the right to veto strategic decisions Volkswagen - will also be scrapped.

Global shares continue to slide

European markets have fallen sharply in morning trade, touching five-year lows, as investors continue to fret about the depth of the global economic slowdown.

The UK's FTSE 100 fell 5.6% to 3,665 at one point, its lowest level since April 2003, before recovering slightly to 3,693, down 4.9% from Friday's close.

Its decline came after Japan's Nikkei index earlier ended at a 26-year low.

The pound also continued its recent falls, dropping against the dollar to $1.5341 in early trading.

The euro was also lower, sliding to $1.2377, around levels last seen in April 2006.

Earlier on Monday the Group of Seven (G7) industrialised nations issued a statement warning that the strength of the yen was a threat to economic stability, which was taken as a threat of co-ordinated action to reduce the value of the currency.

While the yen briefly weakened, it soon climbed back towards Friday's 13-year high against the dollar.

The yen has been strengthening as a result of the end of the carry trade, in which traders borrowed the Japanese currency and used it to buy currencies with higher interest rates.

As the difference between Japanese rates and those elsewhere in the world has fallen, traders have been unwinding the carry trade, which means they have been using other currencies to buy yen, which has boosted the Japanese currency.

In other currency news, the Australian government intervened for a second time to support its currency, which was trading at a 5-year low against the US dollar. One US dollar was worth 0.6122 Australian dollars.

The Australian central bank last intervened more than a year ago and before that had not done so since 2001

Sensex opens lower; Suzlon, Unitech surge

MUMBAI: Equities extended overnight losses to open with a gap down Friday. Bombay Stock Exchange’s Sensex was at 8588.86, down 112.21 points and National Stock Exchange’s Nifty was down 34.25 points at 2549.75.

Banking major State Bank of India, on standalone basis, has posted a net profit of Rs 2259.72 crore for the quarter ended Sep 30, 2008 against Rs 1611.42 crore in the same quarter of 2007. Interest earned stood at Rs 15566.50 crore against Rs 11616.28 crore previous year. Interest expended was Rs 10111.15 crore against Rs 7853.36 crore same quarter last year. The scrip was down 2.73 per cent at Rs 1133.

Beaten down scrips Suzlon and Unitech were up over 12.53 per cent 28.39 per cent respectively.

Asian markets continued to remain under pressure. Hang Seng fell 4.53 per cent, Shanghai Composite was down 2.73 per cent, Taiwan Weighted plunged 5.52 per cent and Nikkei average was 0.40 per cent higher.
US markets ended with heavy losses Friday. Dow Jones ended 3.59 per cent lower, Nasdaq closed 3.23 per cent down and S&P 500 closed 3.45 per cent down.

Mutual funds may see some redemptions pressure and jittery traders are expected to off-load their positions to minimise losses after the carnage in Indian bourses Friday.

Equities all over the world including India witnessed one of the worst trading session as cash-strapped foreign investors hammered the market.