The Times - UK (2022-06-11)

the times | Saturday June 11 2022 53

Business

2014 16 18 20 2022

Easy jet share price

Source: Refinitv

4

8

12

£16

industry sources concede that easyJet

is on the wrong side of a numbers game.

Having long overtaken British Airways,

it is the country’s busiest airline. Across

Europe it may be the second largest

short-haul airline, one third smaller

than Ryanair, but in the UK it is bigger

than the Irish budget carrier.

It has significant positions at four of

the six largest airports: Gatwick,

Manchester, Luton and Edinburgh. It is

easyJet’s dominance at Gatwick that

means that it has had a dispropor-

tionate impact and is costing it the most

reputational damage. On top of all the

other staff shortages, London’s second

airport has been specifically hit by a

shortage of air traffic controllers. When

those on-the-day issues start feeding

delays into the system, that has a

knock-on impact for airlines that find

their rostered crews are coming up

against their legal working hours.

EasyJet has issued a mea culpa about

the “ongoing challenging operating

environment”, but insists that the flight

cancellations are a “small proportion”

of the average 1,700 daily flights it oper-

ates, scheduled to carry about 1.7 mil-

lion passengers a week.

Michael O’Leary, king of the budget

carriers as chief executive of Ryanair,

reckons — undoubtedly mischievously

— that easyJet’s days as an independent

airline are numbered. In a post-pan-

demic consolidation of the airline ind-

ustry, he believes that Lufthansa will

gobble up Wizz Air and its eastern

European interests.

Meanwhile, troublesome post-Brexit

European Union ownership rules will

lead to the break up of International

Consolidated Airlines Group, he says,

with British Airways being spun off

from Iberia and Aer Lingus, and seek-

ing a merger with easyJet.

As for easyJet’s immediate future, if it

is still cancelling flights at the begin-

ning of the real holiday rush in early

July, then serious questions will be

stacking up over its board.

base. The airline is struggling to replace the thousands of staff it laid off during the pandemic as demand for travel returns

as chaos continues

Trafigura profits

soar as Ukraine

war causes chaos

in supply chains

One of the world’s biggest commodities

traders has reported record half-year

profits after capitalising on market vol-

atility caused by the war in Ukraine.

Trafigura’s net profits rose to $2.7 bil-

lion in the six months to the end of

March, from $2.1 billion a year earlier,

as disrupted supplies of oil and other

raw materials pushed up average com-

modities prices and volumes traded.

Revenue rose by 73 per cent to almost

$171 billion as customers tried to “re-

order their supply chains”, it said.

“The Ukraine crisis placed supply

chains under unprecedented strain,

especially in oil, gas and refined petro-

leum products, as buyers

struggled to find alter-

native supply,” Chris-

tophe Salmon, its chief

financial officer, said.

Oil and petro-

leum product vol-

umes increased by

14 per cent com-

pared with the first

half of last year to

an average of

7.3 million barrels

per day and volumes

of non-ferrous metals

grew by 16 per cent and

those of bulk minerals by

13 per cent.

Jeremy Weir, 58, the chief executive,

said he saw “no let-up” in the challeng-

ing commodity market conditions as

global supply chains remained disrup-

ted and the political situation con-

tinued to be turbulent.

Trafigura employs more than 8,500

people and has 80 offices worldwide. It

trades about two billion barrels of oil

and petroleum products each year and

is a leading trader of metals and min-

erals. It has shipping, logistics and

industrial operations.

The prices of both Brent crude and

West Texas intermediate oil have risen

above $120 a barrel this week, with con-

tinued tight supply and the prospect of

heightened demand from China, which

is relaxing lockdown restrictions. Weir

said that although he expected the

strong performance to continue for the

rest of the financial year, headwinds

were growing, stemming from political

tensions, a more challenging economic

outlook in some of its key trading

markets and “dysfunctional commodi-

ties futures markets”.

In the six-month period, extreme

volatility brought elevated margin calls

and tighter position limits that in turn

made hedging activity more expensive

and in some cases constrained access to

commodities futures markets, he said.

The company expanded its credit

lines to record levels to cope with

heightened trading volumes and the

increased costs of buying and selling,

reaching $73 billion, excluding

its Puma Energy division,

from a network of

about 140 financial

institutions, of

which $7 billion

was raised over

the past six

months.

Trafigura has

reduced the en-

tire value of its

investment in

Russia’s Vostok Oil

project in Siberia after

Moscow’s invasion of

Ukraine. The company

aims to divest its 10 per cent

holding in the project, since initially

investing €1.5 billion of its own equity in

2020. The trader has also ceased
      moving crude oil produced by the
      Russian state-owned Rosneft since
      May, though it trades a small amount of
      products to Europe in accordance with
      European Union sanctions.
      The company has been attempting to
      diversify the business by making
      investments in renewables and
      expanding its carbon-trading opera-
      tions. In May, it said that it had taken a
      stake in a British-based mineral proc-
      essing start-up, which is building
      Europe’s first commercial refinery
      capable of producing battery-grade
      lithium for the electric vehicle and
      energy storage industries.

Emma Powell

Bank of London suffers £48,000 loss

The British division of a new clearing

bank that last year said it had achieved

a valuation of more than $1 billion has

suffered a £48,000 annual loss.

The Bank of London Group Limited,

which was incorporated less than two

years ago, this week filed its first set of

accounts at Companies House, which

showed that the business had £100 in

cash as of the end of August.

Its financial statement covers the

period before the business was officially

launched last November, when the

wider group attracted attention by be-

coming only the second new clearing

bank in the UK in more than 250 years.

It said at the time that its latest fund-

ing round had valued it at $1.1 billion,

giving it coveted “unicorn” status. It

clinched the valuation even though by

that stage it had not generated any

revenue. The last set of accounts for its

parent company, called TBOL Limited,

showed that it had net assets of

£21.2 million, including about £13 mil-

lion of cash, at the end of December

2020.

The new business was founded by

Anthony Watson, 45, who is its chief

executive and previously was a techno-

logy executive at Barclays. He has set

out an ambitious plan to “transform the

very fundamentals of banking” using

technology to make it cheaper and

easier to process payments and move

money around.

The group’s backers include Forge-

Light, an American private equity firm,

and it has attracted high-profile figures

to its board. They include Harvey

Schwartz, 58, its chairman who is a

former co-chief operating officer of

Goldman Sachs, the Wall Street invest-

ment bank, and Lord Mandelson, 68,

the former Labour minister.

The Bank of London said that the

accounts showing the £48,000 loss did

not relate to the “wider group business,

which holds our nine technology pat-

ents and was valued at $1.1 billion at

launch” and covered a time before it

secured its UK banking licence.

A spokesman said: “Every single

company that is pre-revenue will make

a loss. If you contrast the £48,000 loss

to that of other UK start-up banks, you

will see they incurred millions of

pounds of losses when building their

banks.”

A unicorn is a privately owned start-

up worth at least $1 billion.

Ben Martin Banking Editor

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date is

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from the Business Editor,

Richard Fletcher, and the

Business News Editor,

Martyn Strydom

Stock markets across the world

remain volatile following

Russia’s invasion of Ukraine.

Oil and gas prices have been

spiralling, while British

companies are scrambling to

cope with the effects of soaring

costs. With the situation

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