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Is the board of British Airways about to buy a one-way ticket to Madrid? That was the story doing the rounds in the Square Mile this morning amid claims that the proposed merger with Spanish carrier Iberia could be completed by the second quarter of next year.
Reports in the Spanish press today say that BA's board will meet tomorrow to discuss whether to press ahead and reach an initial merger agreement with Iberia.
If BA boss Willie Walsh gives the go-ahead, then the whole deal could be rushed through and completed by the second quarter of next year with Iberia naming the chairman of the enlarged company and BA the managing director.
Shareholders of BA would control 55% of the new company, whose headquarters would then be based in Madrid. The Dow Jones newswire reported overnight that Iberia has already hired the US investment bank JP Morgan to help it close a planned merger with BA.
Back home, BA lurches from one crisis to another. It now faces legal action by one trade union over a dispute with 14,000 cabin crew. The airline wants to cut costs in order to stem continuing losses, but the unions are opposing such moves. The group is also struggling to cope with rising fuel costs and is looking to hedge against future increases. The shares shed a further 2¾p to 188¾p.
The volatile performance of the market continued apace with shares slamming into reverse today as investors rushed to take profits following yesterday's gains. The FTSE 100 Index was left nursing a loss of 36.17 at 5071.72.
Property developer Grainger fell 14¾p to 258¼p after announcing plans to raise £250 million by way of a heavily discounted two-for-one rights issue at 90p. The issue has been fully underwritten by JP Morgan, Barclays, RBS Hoare Govett and Lloyds TSB. Grainger wants the money to strengthen its balance sheet. It has already taken steps to improve its financial by refinancing its debts, and increasing the level of investment sales of properties.
Nomura has raised its target on Marks & Spencer from 380p to 420p in the wake of yesterday's better than expected half year profits. UBS has also jacked-up its target for the retailer from 355p to 380p while Deutsche Bank has raised its rating from hold to buy. The price added a further ½p to 362p.
Oil explorer Soco International dipped 1p to 1347p despite Bank of America Merrill Lynch repeating its buy rating and 1630p target. The broker says that the latest trading update from the company shows that the Soco story is steadily coming together. “Initial seismic re-interpretation results on the Vietnamese portfolio appear encouraging and the testing of the Viodo, offshore of Congo, appraisal has been successful”.
Among the miners India-based Vedanta Resources dropped 95p to 2199p after posting a 44% fall in first half earnings which it blamed on weaker metal prices. But the group was upbeat about prospects
The Federal Reserve's decision to keep interest rates unchanged was broadly welcomed by investors on Wall Street overnight and allowed share prices to regain some of the previous day's losses. The Dow Jones ended the session 30.23 higher at 9802.14. But investors were not getting carried away ahead of tomorrow jobless numbers.
The healthcare sector led the market higher after Republicans captured two state governorships. Investors take the view that opposition victories will see President Obama's healthcare reforms suffer a setback. United Healthcare, the country's largest healthcare insurer, was marked 4.4% higher at $20.08.
The volatile performance of Asian markets continued apace this morning with shares beating a retreat and giving back some of yesterday's gains. In Tokyo, leading shares slumped to their lowest close in a month, with Sony Corporation and other exporters slipping as cautious investors locked in profits ahead of US jobs data.
Dealers said share prices were also dragged lower by hedge funds selling. The benchmark Nikkei 225 shed 126.87 points to 9717.44, its lowest finish since 6 October.
In Hong Kong shares fell sharply as the losses in other Asian markets prompted investors to pocket gains. The benchmark Hang Seng index had shed 196.46 points to 21,418.31 by midday, retreating from a 1.76% gain in the previous session.
