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Alitalia is bankrupt again. This time perhaps it’s terminal

Wed, 26 Apr 2017 16:02:57 GMT

WHEN employees of Alitalia were offered the chance on April 25th to vote for pay cuts and redundancies to save the troubled airline, they spurned the opportunity. In some ways it is difficult to blame them. After all, in the past they have been able to rely on the Italian government to come to the rescue of the country's flag carrier. 

That may not happen this time. Alitalia has lost billions of euros over the past decade. (Indeed, over its 70-year history its accountants have barely had need for a black pen.) The firm had pinned its hopes on a €2bn ($2.2bn) capatilisation plan. But that had been dependent on workers accepting cuts that were negotiated by the government and recommended by trade unions. With the workers’ no vote, that cash is now off the table.

Alitalia has been here many times before. In 2008 it was placed into bankruptcy after plans for a sell-off were blocked. In 2014, with the airline on the verge of failing yet again, the government helped broker a deal with Etihad, a Middle Eastern superconnector, which took a 49% stake. A plan to make Alitalia Continue reading

Podcast: How will France's election affect business?

Wed, 26 Apr 2017 10:35:40 GMT

As the presidential race narrows to two strongly contrasting candidates, we explore what a victory for each would mean for businesses. The digital revolution is making measuring GDP a bit trickier. Also, how a website that crowdsources algorithms for quantitative finance could disrupt the industry

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Small flying “cars” come a bit closer to reality

Wed, 26 Apr 2017 14:33:58 GMT

“YOU may smile, but it will come,” said Henry Ford in 1940, predicting the arrival of a machine that was part-automobile and part-aeroplane. For decades flying cars have obsessed technologists but eluded their mastery. Finally there is reason to believe. Several firms have offered hope that flying people in small pods for short trips might become a reality in the next decade. These are not cars, as most are not fit to drive on land, but rather small vehicles, which can rise and land vertically, like quiet helicopters.

A prototype of a small electric plane capable of flying up to 300 kilometres per hour, made by Lilium, a German startup, completed a successful test over Bavaria on April 20th. Lilium is starting work on a five-seat vehicle and hopes to offer a ride-hailing service. Another German firm, e-volo, has been testing a flying vehicle for several years. It recently showed off the second version of its electric Volocopter (pictured), which could be certified for flight as soon as next year.

There are at least a dozen firms experimenting with making small flying vehicles in different guises, including Airbus, an aerospace giant, in partnership with...Continue reading

Podcast: How will France's election affect business?

Tue, 25 Apr 2017 17:40:44 GMT

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Reducing rates for “pass-through” businesses will be tough to justify

Tue, 25 Apr 2017 13:17:26 GMT

THERE are two main reasons for a country to paw around in its tax code: to create more economic growth, or to repair a structural deficit. Any politician who wishes to quietly give money to friends or kill a troublesome programme will supply one of them. He will either say “businesses need tax certainty to grow” (meaning: “certainty that they will like the tax code”), or “we don’t have the money”. So as the Trump administration releases its tax plan on April 26th, there are only two questions to ask: whether it will speed up America’s current economic recovery, and whether it will begin to fill in the country’s long-term deficits. If the early leaks from the White House are any guide, it will do neither.

According to the Wall Street Journal, the White House wants to reduce the top tax rate on pass-through businesses to 15%. “Pass through” means the business itself has no...Continue reading

Reports of populism’s death are premature

Tue, 25 Apr 2017 11:19:25 GMT

MONDAY April 24th was a day when, in the latest jargon, the markets went “risk on”. Equities rose, the spread between the yields of French and German bonds narrowed and the euro rebounded. The reason was the first round of the French presidential election. As the results emerged on Sunday night, it was clear that a) the nightmare of a second round between Marine Le Pen and Jean-Luc Mélenchon had been avoided and b) Ms Le Pen’s vote was no better than her poll rating, indicating there was no reservoir of shy, far-right voters. The centrist Emmanuel Marcon (pictured) topped the poll and is predicted to get more than 60% of the vote in the second round, far outside the pollsters’ margin of error.

So France will almost certainly not follow America and Britain down the path that led to the election of Donald Trump and the Brexit referendum. But it is way too early to say, as some do, that populism is in retreat. First, France has a much greater...Continue reading

An air marshal leaves her loaded gun in a plane toilet

Mon, 24 Apr 2017 15:22:17 GMT

PEOPLE often enter a public toilet with a sense of trepidation; after all, who knows what horror might await behind the cubicle door. Even so, a passenger on a service between Manchester, Britain, and New York got a nasty surprise. 

Earlier this month an American air marshal accidentally left her loaded gun in the loo of a Delta Air Lines plane bound for JFK. According to the New York Times, the weapon was found by a passenger, who handed it over to the flight’s crew. The crew then returned it to the officer. The Times says that the air marshal did not report her oversight to authorities for several days, as is required, and had been assigned to other planes in the meantime. Using unimpeachable logic, one former air marshal explained to the paper: “You can’t have inept people leaving weapons in a lavatory. If someone with ill intent gets hold of that weapon on an aircraft, they are now armed.”

The idea of placing armed air marshals on commercial flights is a divisive one. We have discussed the issue on this blog several...Continue reading

Another debate about net neutrality in America

Thu, 20 Apr 2017 14:49:06 GMT

THE details around network neutrality, the principle that internet-service providers (ISPs) must treat all sorts of web traffic equally, can be mind-numbingly abstruse. But they fuel passion, nonetheless. After Tom Wheeler, a former chairman of America’s Federal Communications Commission (FCC), proposed unpopular net-neutrality rules in late 2014, for instance, protesters blocked his driveway, forcing him to walk to work. Their action was meant to illustrate the threat of big ISPs erecting toll-booths and other choke-points that would relegate less well-off consumers to digital slow lanes.

Now it is the turn of Ajit Pai (pictured), Mr Wheeler’s successor, to stir the hornets’ nest. In the coming days Mr Pai is expected to unveil a proposal for new rules on net neutrality. His plan is anticipated to be a testament both to his deregulatory agenda and to the big ISPs’ lobbying power. It would essentially take the FCC out of the equation when it comes to policing the smooth running of the internet.

Because of the protests in 2014 and because of a court decision that year suggesting that the FCC needed the jurisdiction to be able to mandate net-neutrality...Continue reading

Japanese fast-food chains feel a squeeze

Thu, 20 Apr 2017 14:49:06 GMT

Three-star service

SHIMMERING spreads of raw fish sashimi, succulent beef from massaged cows, and, for a decade, the capital with the most Michelin-starred restaurants: few nations rival Japan for fine dining. Its fast-food scene has also thrived for centuries. From the 1700s bowls of cold soba noodles, made from buckwheat, were cycled to wealthy clients on towering trays. Sushi began to glide past customers in 1958, when the first conveyor belt was installed. In 1970 its first homegrown hamburger chain opened, a year before McDonald’s entered the market.

Fast-food chains continued to be a rare bright spot for Japan during its two-decade-long economic slump. Since 2008 the size of the market has increased from $35bn to $45bn (those figures include convenience stores, or konbini); that of restaurants has declined every year in that period. But fast food is now being squeezed: by a combination of higher wages and still-tepid consumption, and by foreign rivals winning over more Japanese stomachs.

Tomoaki Ikeda, president of Yudetaro, a soba chain in the greater Tokyo...Continue reading

AkzoNobel, under siege, makes unrealistic promises about growth

Thu, 20 Apr 2017 14:49:06 GMT

THE future for AkzoNobel is dazzling—if you believe Ton Büchner, its chief executive. The boss of the Dutch paint-and-coatings firm reported a solid set of quarterly earnings on April 19th, then promised a new era of rapid growth and investments. Shareholders are to get lavish dividends this year. The firm will break up its ungainly conglomerate structure. A speciality-chemicals part of the business will be sold or listed separately next year.

Mr Büchner has no choice but to talk things up, if he is to justify rebuffing two recent takeover offers from a similar-sized American rival, PPG. Its latest bid, of €22.5bn ($24bn) in cash and shares, represented a 40% premium over Akzo’s market value before the first bid. An activist fund, Elliott Management, which has a 3% stake in Akzo, is pushing other shareholders to demand discussion of the bid.

Akzo’s promises were welcome. But like a newly opened tin of paint, they made some heads spin. After years of eking out smallish gains mostly through cost-cutting, the firm is suddenly to boom. Akzo had previously forecast that returns on sales would be 11% by 2018, already well over its average of less than 9%...Continue reading

How Donald Trump affects America’s tourist business

Thu, 20 Apr 2017 14:49:06 GMT

TRUMP Tower, in midtown Manhattan, has become a modern-day Mount Vernon. Tourists have long visited George Washington’s homestead. Now they venture through Trump Tower’s brass doors to ogle the decor—“it’s so gold,” said a German teenager standing near the lobby’s waterfall on a recent afternoon—or buy souvenirs. The Choi family, visiting from South Korea, wandered the marble expanse with their new “Make America Great” hats (three for $50).

The question for America’s hoteliers and airlines is whether such visitors are just anomalies. A strong dollar is one reason for foreigners to avoid visiting America. Donald Trump may prove another, suggests a growing collection of data. Yet measuring the precise impact of Mr Trump’s presidency on travel is difficult. In addition to the currency effect, many trips currently being taken to America were booked before his election. Marriott, a big hotel company, reported an overall increase, compared with a year earlier, in foreign bookings in America in February.

But Arne Sorenson, Marriott’s boss, has voiced concern about a potential slump in tourism. In February, ForwardKeys, a travel-data...Continue reading

How and when to use private money in infrastructure projects

Thu, 20 Apr 2017 14:49:01 GMT

WHEN the Indiana Toll Road was opened in 1956, there were eight pairs of travel plazas, or rest stops, along the 156-mile (250km) stretch linking Chicago to Ohio and points eastward. As cars became faster and less thirsty, travellers had less reason to stop regularly for petrol or snacks. Three of the travel plazas closed in the 1970s. Restaurants shuttered, even if offered free rent. The remaining plazas, dwindling in number, fell into disrepair. The abiding memory some road users had of Indiana was of grubby toilets along the toll road.

Those rest-stops are at last getting a makeover. IFM, an Australian infrastructure fund, is investing $34m in the toll-road’s plazas, part of a $200m-plus upgrade. Half of the road’s length, with 57 bridges, is being resurfaced, using a treatment known as “crack-and-feed”, which lasts longer than simply patching the top. IFM, which acquired a 66-year lease on the road in a $5.8bn deal in 2015, says a private-sector operator has the right incentives to invest for the long term. Fewer tyre blowouts mean less gridlock, more road users and more revenue.

Politicians across the spectrum agree on the need to upgrade America’s...Continue reading

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