BAE warns of giant jobs cull if merger is blocked

It is understood that numerous reports conducted during the feasibility process, which took place in the summer, concentrated on jobs that could be saved as being part of a European aerospace and defence champion. The group would have a workforce of 220,000 and work in complimentary markets that would help both companies secure additional work even in a global downturn.

Over the past five years, BAE has shed about 20,000 jobs, many of which have been in Britain, and former defence secretary Lord Reid pointed out on Friday that remaining a standalone company was likely to see this trend continue.

This puts pressure on the UK Government to push through a deal, as BAE’s 35,000 workforce is not sustainable with defence budgets being cut globally. Closures would probably include Portsmouth dockyard, where 3,000 people work on the £5bn warship programme. Previous BAE cuts have been politically charged, such as when it announced 3,000 job losses in Lancashire and Yorkshire during last year’s party conference season.

The coalition has a “golden share” in BAE, allowing it to veto any deal that results in 15 per cent or more of the company going into foreign ownership. EADS is effectively controlled by the French and German governments. Under the terms of the proposal, which seem to be set in concrete as negotiations were kept quiet for months until they eventually leaked last Wednesday, EADS would own 60 per cent of the combined group and BAE the balance.

A source close to BAE said: “David Cameron and Angela Merkel do not want to be attacked on unemployment. Preserving jobs has been a planning topic for both sets of advisers and has been carefully considered in the briefing papers.”

The coalition is thought to broadly support the deal, although analysts warn being part of a pan-European group would mean any job losses would inevitably occur in the UK, as Germany, France and Spain have more stringent labour laws. Due to national security concerns the Government is demanding the defence division is run from the UK with a British boss.

A source close to Airbus’s British operations added the new group would have the strength to grow in Asia and Latin America. He said: “UK Ltd has got to break free from a sterling, dollar or even euro economy.”

BAE shareholders are concerned that their generous dividend payouts will be slashed after the merger.

From submarines to satellites

BAE boss Ian King and Tom Enders, the former German paratrooper who was about to become EADS’ chief, shared a problem. Early this year, their joint venture project, the Eurofighter, missed out on the biggest ever fighter jet contract in India. Talking through the failure, Mr King and Mr Enders started to reach the same conclusion: BAE’s defence work and US strength would fit nicely with EADS’s civil aviation and European focus. Projects Elm (EADS) and Birch (BAE) were born.

In July, Enders, who had now succeeded Louis Gallois to the top job, met French defence and finance ministers who gave tacit approval for him to look further into a tie-up that would create a £60bn revenue European satellites-to-submarines behemoth based out of Toulouse and Farnborough.

OFT probe into sale of failed JJB’s shops

The Office of Fair Trading is expected to investigate any attempt by Sports Direct to snap up the 180 stores owned by JJB Sports, which is expected to file for administration later this week.

Mike Ashley’s sportswear giant is thought to be the favourite to acquire the remnants of JJB, though the Newcastle United owner is interested in fewer than 50 of the stores.

Even with additional interest from JD Sports Fashion, it is considered likely that more than 100 shops will close, resulting in the loss of at least 2,000 jobs. JD has been interested in taking over JJB since at least early last year, when the parties were in early-stage takeover talks that came to nothing.

JJB is almost certain to appoint administrators this week in a pre-pack deal, which will allow a new owner to buy it out of technical insolvency with fewer shops and far less debt. Over the past four years, investors have pumped more than £225m into the business, which has struggled badly as families tightened their wallets.

The OFT has previously looked into Sports Direct’s interests in JJB, including store sales. Sports Direct also owned a stake in JJB, though this was sold three years ago.

If, as expected, JJB files its notice of intention to appoint administrators this week, there will be 10 working days to secure a rescue deal.

Olympics blamed for sales decline

Gloomy figures outlining the Olympic sales slump crushing the high street will emerge this week as retailers count the cost of shoppers engrossed by Team GB’s record medal haul.

Official numbers for August are likely to reveal an outright fall in retail sales volumes after slowing to a crawl in July, economists warn. The figures follow disappointing snapshots from the Confederation of British Industry and the British Retail Consortium for the month, and downbeat updates from the likes of fashion chain Next.

The BRC reported its worst month for sales this year due to a slump in non-food purchases, partly a result of many shoppers staying away from London high streets due to concerns over potential transport chaos. Usually resilient online sales also managed growth of just 4.8 per cent, the worst since the BRC began collecting data four years ago.

The CBI also fuelled worries over the health of the high street as retailers reported flat sales and braced themselves for a difficult autumn. Next, the UK’s second-biggest retailer, added that sales had been “disappointing” in August and early September. John Lewis partnership was more upbeat when it reported half-year figures last week.

Investec’s chief economist, Philip Shaw, who is pencilling in a 0.7 per cent slide in sales, said: “Next’s comments on the outlook were worrying in that it said August and September were pretty quiet.

“You can blame the Olympic effect but once you get past that you have to blame something else. What this number won’t tell us is whether it is down to the Games or whether there is potentially something more fundamental in play.”

The difficult conditions for retailers are likely to have prompted further discounts during the month, feeding into another fall in the Bank of England’s Consumer Prices Index benchmark. Analysts expect the CPI to edge down from 2.6 per cent to 2.5 per cent on the month – despite petrol prices heading back towards record levels – as the contrast with rising gas and electricity bills a year earlier flatters the figures.

An ING economist, James Knightley, who forecasts a steeper fall in the CPI to 2.4 per cent, said: “The return of higher petrol prices is not good news for retailers when consumers are already under such pressure.”

The latest jobs figures underlined the extent of the wage pain still hitting British households, with average salaries growing by just 1.5 per cent in the year to July – effectively a real-terms pay cut as they trail more than one percentage point behind the cost of living.

The lingering squeeze on consumer wallets and faltering recovery in household spending is almost certain to force the Government’s fiscal watchdog, the Office for Budget Responsibility, into a downgrade of its current 0.8 per cent growth forecast this year.

Fined bank seeks to reassure investors

In webcast presentations from the emerging markets bank’s London headquarters, the finance director, Richard Meddings, and key executives will seek to reassure investors that clients have remained loyal despite the fine.

Standard Chartered shares have recovered much of the 22 per cent crash they suffered after the shock of last month’s clampdown by the New York State Department of Financial Services. They dropped from 1,567p to just 1,228.5p in just 48 hours. They have recovered to around 1,500p.

Tomorrow’s long-standing investor day will not, however, address the outstanding US regulatory issues. The bank is expected to reach a settlement with the US Treasury, Department of Justice and Manhattan District Attorney over the Iran sanctions which is likely to be considerably less than the $340m it paid to the DFS.

Standard Chartered has yet to sign the final details with the DFS, although it is understood that the $340m payment also covers any infringements of sanctions against Libya, Myanmar and Sudan as well as the original Iran breaches.

Steve Bertamini, the head of consumer banking, will say that the bank expects to have reached 100 branches in both China and India by the time it publishes its full-year results in early 2013. He will also detail the speeding up of expansion in Africa, which is the least banked continent in the world but has one of the fastest-growing middle-class populations.

Simon Williams, a banking analyst at Daniel Stewart, said: “We expect the key message to underline Standard Chartered’s continuing strong performance in its major markets.” He has a share price target of 1,900p.

The six men behind Black Wednesday

They didn’t: the pound could not stay within the lower boundary of the carefully fixed European exchange-rate mechanism (ERM). Betting against sterling’s survival, George Soros made a name for himself by making more than $1bn out of the UK’s embarrassment. It was Black Wednesday.

The UK was forced to withdraw from the ERM. The Government announced a rise in the base interest rate from 10 to 12 per cent, promising later the same day to raise the base rate again to 15 per cent. But dealers kept selling sterling, unconvinced that the Government would keep its promise. By the next day rates were back at 10 per cent but the damage was done.

Estimates have placed the cost to the taxpayer of that one day at as much as £27bn, though Treasury documents released in 2005 suggest it may only have been £3.3bn. That was the year that David Cameron became leader of the Conservatives, a good example of how some of the key figures involved that day didn’t suffer permanent damage to their careers.

The foremost political figures, John Major and Norman Lamont, never recovered politically. Similarly, Gordon Brown struggled to recover from the run on Northern Rock, five years ago last week.

September is a blasted month for the economy. Four years ago, Lehman Brothers collapsed, which eventually sent the UK into recession.

Mr Brown has been fairly quiet since he was dumped from office two years ago as a result of those economic disasters. Perhaps, though, two decades from now, he will have recast his image as successfully as some of the major protagonists of Black Wednesday.

Ironically, what appeared to be the darkest episode in the UK’s economic history was being rebranded last week as the moment that saved the economy. Arch-Eurosceptics last week suggested it should be renamed “Bright Wednesday”. Six of the key players are unlikely to see it that way. Here we consider where they are now and how they look back on that day.

Where are they now?

George Soros

At 82, Soros remains one of the world’s most respected speculators. “Black Wednesday has contributed to my personal fortune and therefore has increased my ability to do philanthropic work,” he said in 1992.

Jacques Delors

The former French finance minister had been head of the European Commission for eight years by Black Wednesday. He had pinned much of his hope for a borderless Europe on the ERM. Now 87, Delors still pushes for a more integrated Europe and argues that speculators must be controlled. “We should have an international agreement to establish rules for the game,” he said in 1993.

David Cameron

Arguably the most academically gifted PM since Harold Wilson. Footage shows him at 25 with Lamont on the day. He said in 2005: “We will never again take risks with people’s mortgages…by putting economic stability at risk”

Norman Lamont

Now 70, and Lord Lamont of Lerwick, he was gradually rehabilitated, and is now president of the Economic Research Council. He said this year: “I don’t agree that [that Wednesday] was entirely Black … we joined [the ERM] to get inflation down, and … succeeded in that.”

Eddie George

At the time, George was deputy governor of the Bank of England. Later a life peer, he died in 2009, aged 70. The day before Black Wednesday he famously suggested the worst was over: “It’s been a bit of a battering but we’re still in there with our troops intact.”

John Major

Now Sir John. Just months before Black Wednesday Major won a majority at the general election. After losing in 1997, he became president of Surrey Cricket Club and earned a small fortune advising private-equity giant Carlyle Group. Major is now president of the right-leaning Bow Group think-tank. He said this year: “There are more myths about Black Wednesday than the Greeks ever created.”

Al Qaeda urges Muslims to kill more US diplomats

The Yemen-based branch of al Qaeda urged Muslims to step up protests and kill more US diplomats in Muslim countries after a US-made film mocking the Prophet Mohammad which it said was another chapter in the “crusader wars” against Islam.

“Whoever comes across America’s ambassadors or emissaries should follow the example of Omar al-Mukhtar’s descendants ( L ibyans), who killed the American ambassador,” the group said, referring to Tuesday’s attack on the US consulate in the Libyan city of Benghazi.

“Let the step of kicking out the embassies be a step towards liberating Muslim countries from the American hegemony,” a statement posted on an Al Qaeda in the Arabian Peninsula (AQAP) website on Saturday said.

Fury about the film swept across the Middle East after Friday prayers, with protesters attacking US embassies and in protests that killed at least seven people and prompted Washington to send troops to bolster security at its missions.


“The film published in America which insults our Prophet Mohammad, peace be upon him, comes as part of the continuing crusader wars against Islam,” AQAP’s statement said, referring to European wars in the region some 1,000 years ago.

“The incident is so huge that the resources of the nation should be pooled together to kick out the embassies of America from Muslim lands,” it said.

AQAP, mostly militants mainly from Yemen and Saudi Arabia, is regarded by the United States as the most dangerous branch of the network founded by Osama bin Laden.

The group has used Yemen, a key regional US ally, to plot attacks on the United States. Washington has backed a Yemeni army campaign that drove al Qaeda and its allies from their southern stronghold this year.

Muslims have blamed the US government for the amateurish film of obscure origin. Washington has condemned the film and said it does not condone any insult to any religion.

Praising the attacks by angry demonstrators in Libya, Egypt, Yemen and Sudan on US and other Western missions as “natural responses to a huge insult”, the statement said that American embassies should be burned and diplomats killed.

It said defending the Prophet’s honour was a “religious duty and obligation to the Muslim nation, each according to his ability”.

The group also said that Muslims living in the West have an extra duty to be involved in attacks on key targets.

“They are more capable of doing harm and reaching the enemy is easier for them,” it said.

Impoverished Yemen is struggling against challenges on many fronts since mass protests forced president Ali Abdullah Saleh to step down last year after decades in power.

The United States, eager to help the country recover from the upheaval that has pushed it to the brink of collapse, has said it would provide $345m in security, humanitarian and development aid this year, more than double last year.

Abu Dhabi eyes increase in Russian tourists

A 16-strong delegation from Abu Dhabi’s tourism industry is heading to Russia next week as the UAE capital looks to build on rising hotel guest arrivals from eastern Europe.

The Leisure Moscow delegation, headed by Abu Dhabi Tourism Culture Authority, includes hotels and resorts, Etihad Airways, inbound tour operators and destination management companies.

The delegation will mount a co-ordinated promotional push of Abu Dhabi as latest figures show a significant rise in the number of Russians staying in the emirate.

In the first seven months of this year, some 10,061 Russians checked into Abu Dhabi’s hotels and resorts, a 38 percent rise on the same period last year.


Together they accounted for some 58,114 guest nights, a rise of 42 percent over the same comparative period.

“Russia is an increasingly important market for Abu Dhabi with the country now entered our Top 20 ranking of our most productive overseas sources,” said Mubarak Al Nuaimi, international promotions manager, TCA Abu Dhabi.

“An increasing number of MICE and business travel companies are including more UAE possibilities in their brochures and packages – our aim is to ensure Abu Dhabi features among them.”

Russians’ air access to Abu Dhabi has improved during the last seven months with Etihad Airways flying daily from Moscow and the country’s first private carrier, TransAero initiating twice-weekly, non-stop flights for tour operator bookings to Abu Dhabi.

The visit is among a number of initiatives TCA Abu Dhabi is undertaking this month to stimulate increased response from the Russian and CIS markets. Others include roadshows taking in Kiev in the Ukraine and Almaty, Kazakhstan.

UAE’s First Gulf Bank hires banks for $800m loan

Abu Dhabi-based First Gulf Bank said on Saturday it has hired a number of banks to arrange a $800m loan.

The UAE’s second largest lender said in a statement that it has mandated The Bank of Tokyo-Mitsubishi, Citibank, Commerzbank Aktiengesellschaft Deutsche Bank, HSBC, Mizuho Corporate Bank, National Bank of Abu Dhabi and Standard Chartered Bank to arrange the three year loan facility.

Andre Sayegh, CEO of First Gulf Bank, said: “In line with its continuous efforts to efficiently manage its balance sheet, and maintain its consistently strong performance, FGB is arranging for this loan facility to support its growth and expansion in the local and targeted international markets.

“The facility adds diversification to the sources of funds and improves the funding maturity profile on FGB’s balance sheet.”


As well as a wide network of branches across the UAE, FGB has branches in Singapore and Qatar, a representative office in India and a subsidiary in Libya.

The bank said the loan will be used for general financing purposes.

First Gulf Bank in July reported a 14 percent year-on-year rise in second quarter net profit.

The lender, which is part-owned by Abu Dhabi’s ruling family, made a net profit of AED1.017bn ($276m) between April and June 2012, compared with AED890m in the same period the year before.

Saadiyat Island plots on sale for $2.17m upwards

Abu Dhabi’s Tourism Development and Investment Company (TDIC) is offering land plots for luxury homes on Saadiyat Island, with prices starting at AED8m ($2.17m).

The master developer of major tourism, cultural and residential destinations said it has announced a limited number of land plots for sale on the island.

The land plots, which make up the Saadiyat Beach Golf Views, are situated in the heart of the Saadiyat Beach Golf Course – the Arabian Gulf’s first beachfront championship course designed by golfing legend Gary Player.

Surrounded by Saadiyat’s high-end residential community, comprising The Residences at The St. Regis Saadiyat Island Resort and Saadiyat Beach Villas, the Views will consist of 29 villas in one of Abu Dhabi’s most prestigious addresses.


The land plots range in size between 2,100 sq m and 5,100 sq m, while pricing starts from about AED8m.

TDIC said it has set specific guidelines for potential homeowners to abide by, such as a three-year duration to complete the construction of the property from the initial date of purchase.

Buyers have the option to choose their own architectural firms and interior designers, or assign TDIC to develop their properties.

Ahmed Al Fahim, executive director of marketing, communications, sales and leasing at TDIC, said: “Following the incredible success of residents who have made Saadiyat their new home as well as the increasing demand from prospective homeowners who wish to build their own dream home in an exceptional way on the island, we felt the need to offer land plots for sales in a most exclusive setting.

“We expect there will be immediate demand on these land plots and we have introduced incentives to lure in an ideal calibre of distinguished end-users who wholeheartedly want to make this privileged community their home.”

In November 2011, TDIC opened the St Regis Saadiyat Island Resort, Abu Dhabi while Park Hyatt Abu Dhabi Hotel and Villas, developed by Abu Dhabi National Hotels company (ADNH), have also opened.

The $27bn Saadiyat Island is also set to have local branches of New York University and the Louvre and Guggenheim Museums, among other prominent projects.

Multi-faith Lebanon should be MidEast model

Pope Benedict urged multi-faith Lebanon on Saturday to be a model of peace and religious coexistence for the Middle East, which he called a turbulent region that “seems to endure interminable birth pangs”.

The pope, on the second day of a visit clouded by war in neighbouring Syria and protests across the Muslim world, told a gathering of Lebanese political, religious and cultural leaders that religious freedom was a basic right for all people.

Christianity and Islam have lived together in Lebanon for centuries, he said, sometimes within one family. “If this is possible within the same family, why should it not be possible at the level of the whole of society?” he asked.

“Lebanon is called, now more than ever, to be an example,” he said, inviting his audience “to testify with courage, in season and out of season, wherever you find yourselves, that God wants peace, that God entrusts peace to us”.


Lebanon – torn apart by a 1975-1990 sectarian civil war – is a religious mosaic of over four million people whose Muslim majority includes Sunnis, Shi’ites and Alawites. Christians, over one-third of the population, are divided into more than a dozen churches, six of them linked to the Vatican.

The German-born pontiff, 85, delivered his speech in French at the presidential palace after meeting President Michel Suleiman, a Maronite Christian, Sunni Prime Minister Najib Mikati and parliamentary speaker Nabih Berri, a Shi’ite.

Outside the palace, a Muslim onlooker named Amira Chabchoul said: “We came to support the pope and also get support from him, because our experience has been that when we listen to him, we are touched and we are helped in our lives.”

On Friday hundreds of protesters against an anti-Islam film dodged gunfire and teargas to hurl stones at security forces in Lebanon’s Tripoli where one demonstrator was killed and two injured. Protesters chanted “We don’t want the pope” and “No more insults (to Islam)”.

In his remarks, Suleiman said the Syrian people should be able to “attain what they desire in terms of reform, freedom, democracy … through the appropriate dialogue and political means, away from any form of violence and coercion”.

Benedict began his visit on Friday with a call for an end to all arms supplies to Syria, where the tiny Christian minority fears reprisals if Islamists come to power at the end of the bloody insurgency against President Bashar al-Assad.

He also described the Arab Spring movement as a “cry for freedom” that was a positive development as long as it ensured tolerance for all religions.

Coptic Christians, about 10 percent of Egypt’s population, have come under repeated attack by Islamists since the overthrow of former President Hosni Mubarak. They worry the new government will strengthen Islamic law in the new constitution.

In Egypt, Libya and Tunisia, hardline Salafis have brought a new religious intolerance against fellow Muslims such as Sufis, whose shrines they are destroying as heretical.

Benedict avoided mentioning specific cases, but spelled out clearly the moral reasoning against violence and radicalism.

“If we want peace, let us defend life,” he said. “This approach leads us to reject not only war and terrorism, but every assault on innocent human life.”

Before his speech, Benedict held a private meeting with leaders of the Sunni, Shi’ite and Alawite Muslim communities and of the Druze, an offshoot of Shi’ism with other influences.

All main religious groups, including the militant Shi’ite Hezbollah movement, assured the Vatican in advance of their support for the trip and their representatives have attended several of the pope’s events with other faith leaders.

The pope angered Muslims in 2006 with a similar speech that implied Islam was violent and irrational, leading to protests around the Islamic world similar to the current wave of violence against a U.S.-made film that mocks the Prophet Mohammad.

In subsequent dialogue with Muslim scholars known as the Common Word group, he adopted their argument that both faiths actually had much in common, especially sharing the two main commandments to love God and neighbour.

He included that view in his Beirut speech when he warned the devil used human beings to spread evil in the world.

“Having broken the first commandment, love of God, it goes on to distort the second, love of neighbour. Love of neighbour disappears, yielding to falsehood, envy, hatred and death.”

Chief Mufti Mohammad Rashid Qabbani praised the pope for visiting “in these fateful circumstances that Lebanon and the region are living through” and stressed the common goals of both faiths, “not just in Lebanon but in the whole Arab world”.

“The flight of Christians hurts us Muslims because it means we cannot live with others. We value the Christian presence in Lebanon and the Arab region and the partnership in the national unity in Lebanon,” he said.

In an appeal to the region he issued on Friday, Benedict called for more Muslim-Christian dialogue and urged Christians not to leave the region where their faith was born.

Emigration, wars and a low birth rate have cut Christian ranks to about five percent of the Middle Eastern population compared to 20 percent a century ago.

After the speech, Benedict rode through southern Beirut in his popemobile, flanked by mounted guards of honour and cheered on by crowds waving Lebanese and Vatican flags.