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LONDON — The pound fell to a five-day low on Tuesday, reflecting wariness among investors about a parliamentary debate under way on amendments to Britain’s EU withdrawal bill.

Prime Minister Theresa May faces a showdown with lawmakers who want power to force her government to go back to the negotiating table if they reject a Brexit deal, testing her plans for leaving the European Union.

A minister long critical of the government’s handling of Brexit resigned earlier in protest at what he called its “wish to limit” the role of lawmakers in the process.

At 13:45 GMT, the pound was down 0.2 per cent against the dollar at $1.3359, close to a five-day low, and declined 0.3 per cent versus the euro to 88.29 pence. 

Two days of Brexit talks this week and a flurry of economic data may determine whether sterling’s two-month losing streak continues.

“The pound is likely to weaken if the government is defeated in key amendment votes at least initially as concerns over political stability will heighten,” MUFG analysts said.

“However, the amendments, if approved, could ultimately help to soften the final Brexit outcome which would be more favourable for the pound.”

Earlier on Tuesday markets shrugged off weaker-than-expected wage growth data, the latest sign of protracted weakness in the British economy.

Several companies have announced store closures and job cuts, while poor industrial production output numbers published on Monday hit sterling.

Those developments are likely to cut expectations of a Bank of England rate rise in August, given the central bank has said it wants to see more wage pressures before it hikes rates. 

Money markets currently price in a 44 per cent chance of a 25 basis point hike in August.

NEW YORK — The euro rose to a near two-week high on Monday after assurances from Italy that it would not leave the European Union calmed investors’ nerves before the European Central Bank (ECB) policy meeting on Thursday.

Italy’s Economy Minister Giovanni Tria said on Sunday his new coalition government would not leave the euro or issue securities to pay off companies owed money by the state, a plan investors viewed as a first step toward exiting the bloc. 

Tria’s promise sent Italian borrowing costs down sharply on Monday as the euro inched up 0.1 per cent to $1.1782 towards a two-week high of $1.1840 touched on Thursday, Reuters data showed.

“The Italy comments calmed fears but let’s wait for the government’s policy actions this summer. That will decide the market’s direction,” said MUFG currency strategist Lee Hardman.

Investors are raising their bets that the ECB will signal at a policy meeting later

this week a tapering down of its 2.55 trillion euro bond-buying programme as early as September, following a flurry of hawkish comments by officials last week.

The euro bounced despite heightened worries about a global trade war following a spat at the G-7 summit in Canada between US President Donald Trump and other leaders over automobile tariffs and other issues. Trump lashed out at Canada and Europe over the US trade deficit after he arrived in Singapore, where he is due to hold a critical meeting with North Korean leader Kim Jong-un on Tuesday.

The Mexican peso and Canadian dollar slid on fears that Trump may scrap the North American Free Trade Agreement. 

The Canadian dollar fell 0.5 per cent to C$1.2993, while the Mexican peso shed 1.1 per cent at 20.522 peso per US dollar. 

Analysts said the fairly muted reaction in currencies reflected the low expectations markets had for the G-7 summit, despite the fact that the euro is sensitive to the threat of US tariffs on cars.

“Trade tensions are dominating in the aftermath of the G-7 summit and headline risk is set to remain elevated in the absence of any significant domestic releases,” ScotiaBank analysts wrote in a research note.

Before the ECB meeting, the US Federal Reserve is almost unanimously expected to raise interest rates for the second time this year on Wednesday. The market’s focus will be on the Fed’s projection on the path of future interest rates.

Futures market implied traders expect the Fed to raise overnight borrowing at least one more time in 2018 after a possible rate increase on Wednesday, according to CME Group’s FedWatch programme.

The dollar index was steady at 93.597, rising further from a three-week low set last Thursday.

LA MALBAIE, Quebec — US President Donald Trump on Saturday threw the G7’s efforts to show a united front into disarray after he became angry with Canadian Prime Minister Justin Trudeau, and said he might double down on import tariffs by hitting the sensitive auto industry.

Trump’s bombshell announcement that he was backing out of the Group of Seven communique, made after he left the summit in Canada early, torpedoed what appeared to be a fragile consensus on the trade dispute between Washington and its top allies.

“PM Justin Trudeau of Canada acted so meek and mild during our @G-7 meetings only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around.’ …Our Tariffs are in response to his of 270 per cent on dairy!” the US president Tweeted.

In his press conference, Trudeau had spoken of retaliatory measures that Canada would take next month in response to Trump’s decision to slap tariffs on steel and aluminum imports from Canada, Mexico and the European Union.

“Canadians, we’re polite, we’re reasonable but we also will not be pushed around,” Trudeau, the host of the two-day summit in La Malbaie, Quebec, told reporters.

Reacting to Trump’s tweets, Trudeau’s office said: “We are focused on everything we accomplished here at the summit. The prime minister said nothing he hasn’t said before — both in public, and in private conversations with the president.”

In Paris, a French presidency official said France and Europe stood by the G-7 communique and anyone departing from the commitments made at the summit would be showing their “incoherence and inconsistency”.

“International cooperation cannot depend on being angry and on sound bites. Let’s be serious,” the official, speaking on condition of anonymity, told Reuters.

Trump’s salvo capped a dizzying two days of controversies that began with his suggestion Russia be readmitted to the G-7, then what a French official described as a “rant” full of “recriminations” against US trading partners, followed by Trump’s denial of any contention with leaders at the summit and his description of their relationship as a “10”. 

By ordering his representatives to back out of the communique, Trump appeared to be asserting his oft-stated aim of upsetting the status quo whether by pulling out of the global climate accord or the international nuclear deal with Iran or threats to scrap the North American Free Trade Agreement (NAFTA).

The communique, which appeared to have papered over the cracks that have surfaced in the G-7, said the leaders of the United States, Canada, Britain, France, Italy, Germany and Japan agreed on the need for “free, fair, and mutually beneficial trade” and the importance of fighting protectionism.

“We strive to reduce tariff barriers, non-tariff barriers and subsidies,” the statement said.

Trump’s reversal, announced while he was en route to Singapore for a meeting with North Korean leader Kim Jong-un, sent his G-7 partners scrambling. 

Trump’s counterparts in the G-7 had sought this week to find some semblance of consensus with Washington on trade and the other key issues that have formed the basis of the 42-year-old grouping of industrialised nations.

French President Emmanuel Macron had labelled the summit a success before Trump’s Twitter posts, saying there was relief within the G-7 that an escalation of the trade dispute had been avoided.

“The nature of the debate we had was rather appeasement and it stopped the escalation in terms of behaviour,” Macron, who had exchanged terse Twitter messages with Trump in the run-up to the summit, told reporters.

“It allowed a dialogue, where for weeks there were uncoordinated unilateral actions and non-cooperation.”

Nervous investors 

Trump says his tariffs are meant to protect US industry and workers from unfair international competition as part of his “America First” agenda.

The prospect that he could be moving toward an even greater protectionist trade policy is likely to chill financial markets worried about tit-for-tat escalation that could lead to a full-blown global trade war.

Trump has announced tariffs of up to $150 billion on Chinese goods over US complaints of Beijing’s trade practices and its alleged theft of US technology. China has vowed to retaliate in equal measure. 

Canada, Mexico and the EU also are moving ahead with their own levies on US goods.

But tariffs on US imports of cars and auto parts would devastate the Canadian auto industry, which is highly integrated with the US sector. They could also damage Japan and Germany.

The Trump administration announced two weeks ago that it would investigate whether auto imports hurt US national security, the first step toward tariffs similar to the ones he imposed on steel and aluminum imports last week.

Earlier on Saturday, Trump told reporters it would be “very easy” to make the case for tariffs on auto imports using the rationale that they threaten national security.

“It’s economic. It’s the balance sheet. To have a great military, you need a great balance sheet,” he said.

Such a move could make it nearly impossible to renegotiate the terms of the 1994 NAFTA pact between the United States, Canada and Mexico.

On Saturday, Trump repeated his desire to have a sunset clause in an updated NAFTA deal, a demand Trudeau rejected again.

LA MALBAIE, Canada — President Donald Trump quit the G-7 summit in Quebec early Saturday having made no concessions to his allies' anger at his imposition of tariffs designed, in his eyes, to rebalance world trade.

In fact, the US leader instead boasted he had made progress in convincing his counterparts from the world's richest democracies of the need to change the rules of the game in America's favour.

Trump left the summit for Singapore and his historic nuclear summit with Kim Jong-un in much the same position as he had come in — alone in the face of the six other G-7 members working together to defend multilateral trade rules.

An official from French President Emmanuel Macron's office said there was still hope a joint communique would be signed, with Washington opting out of clauses on climate and the environment, but that US negotiators are opposing language on strengthening international trade oversight.

The French side still expect the text to signal support for "rules-based" multilateral cooperation rather than for Trump's preference for bilateral deals with American partners designed to reduce US trade deficits. 

Trump was upbeat, however, arguing that he could tell from the smiles of European leaders around the table that they knew that "the gig is up" and that they would be obliged to negotiate terms with Washington. 

"They can't believe they got away with it," he declared, repeating his mantra that G-7 members have been taking advantage of the naivety of his predecessors for decades.

"We want and expect other nations to provide fair market access to American exports and... we will take whatever steps are necessary to protect industry and workers from unfair practices, of which there are many. 

"But we're getting them worked out, slowly but surely."

The text of the annual G-7 joint communique is usually all but final before the leaders meet for two days of glad-handing and group photo opportunities, but this year officials were negotiating even as Trump headed for his plane.

If the G-7 fails to agree a final communique — or if it is watered down too far for the sake of appeasing the "America First" economic agenda — Canada's G-7 will be remembered mainly for fierce disagreements over Trump's tariffs and his surprise request to return Russia to the fold. 

While diplomats wrangled in private, summit host Prime Minister Justin Trudeau gathered the other leaders for a breakfast session on women's equality. Trump arrived 17 minutes after the planned 8:00am start time and after Trudeau's opening remarks. He was seated next to a luminary of the multilateral system, IMF Director Christine Lagarde.

Even before he flew out of Washington on Friday to hook up with the rest of the group, Trump managed to rile his counterparts by declaring that it was time that Russia be brought back into the G-7. The idea was swiftly shot down.

With his wife Melania back home in Washington, Trump cut a lonely figure on arrival at the golf resort in rural Quebec as he posed with his host Trudeau and his wife Sophie and other first couples.

He was then confronted with a litany of complaints over his decision to impose tariffs on imports of steel and aluminum when the leaders held roundtable talks chaired by Trudeau.

A member of Macron's team characterised the talks as "frank and robust", with Trump first repeating his lengthy diatribe about what he regards as unfair trade restrictions — before the Europeans responded with facts and figures they felt would blunt his argument.

 Quest for a

 joint statement 

Trudeau told Trump that it was "unacceptable" to cite national security when targeting a military ally like Canada with tariffs. 

"The Prime Minister pressed the President to reconsider the US tariffs imposed on Canadian steel and aluminum, and encouraged him to work with Canada to address unfair trade," Trudeau's office said.

The summit was wrapping up just as Chinese President Xi Jinping begins hosting the leaders of Russia and Iran at a two-day regional security meeting in a symbol of the power-play between East and West.

ZURICH — Supporters of a radical scheme to upend Switzerland’s financial system have made an 11th hour appeal to voters to approve a proposal to strip banks of the power to create new money through lending.

Postal voting, which accounts for the majority of participation in Swiss referenda, is under way in the so-called Sovereign Money initiative, with the polls closing on Sunday.

Contrary to common belief, most money in the world is not produced by central banks, but is instead created by commercial lenders when they lend beyond the deposits they hold for savers.

This arrangement, underpinned by the belief that most debts will be repaid, has been a cornerstone of the global capitalist system, but opponents say it is unstable because the new money created exceeds economic growth. 

Swiss campaigners want to replace this approach, where banks regularly roll over their financing of loans, with a system of “Vollgeld” — which can be translated to “real money”. 

“A large majority of people in Switzerland don’t want commercial banks to produce money out of nothing and believe only the SNB should have the right to create money in Switzerland — this is their chance to make this happen,” said Raffael Wuethrich, one of the campaign’s leaders said.

The Sovereign Money initiative would allow banks only to give credit to customers using funds they have from long term customer deposits, the Swiss National Bank (SNB) or money markets.

“Our opponents have tried to make people afraid and insecure about our plans, but when people find these fears are unfounded they are coming over to our side,” said Wuethrich.

If the Swiss vote “yes”, the law introducing “real money” would be written into the country’s constitution. It would then fall to the government to work out how to introduce it within three years. The referendum is in part the result of growing frustration in traditionally banker-friendly Switzerland with the financial sector, after the government bailed out the country’s biggest lender UBS in 2008.

This, along with rock bottom interest rates for savers and sky-high pay packets for finance executives, has opened the way for a vote which could turn back the clock 100 years to when the SNB created most of the money used in the country.

“The banks have too much influence in Switzerland,” said Julian Baecker, a post-graduate student. “They have a lot of power without responsibilities. For example, the taxpayer had to pay for their mistakes during the financial crisis.

“I think the Swiss people are more critical about banks than they used to be and something needs to change.”

One sovereign money supporter questioned why banks have the right to create money. “This kind of privilege often promotes riskier business models,” said Marti Alder.

If voters back the campaign, Switzerland would become the world’s first country to adopt a sovereign money system, where the SNB will be the only authority allowed to create money in the country and banks will be barred from creating money when they make loans.

One early poll had shown 44 per cent of voters backing the initiative but support has slipped to 34 per cent ahead of the vote. 

Sovereign money is full-value legal tender which is created and brought into circulation by public institutions, typically a central bank, rather than commercial banks. 

Currently, coins and banknotes are the only forms of sovereign money available to the public, although the term also applies to deposits held on site by the commercial banks with the central bank. 

Only around ten per cent of the Swiss money supply is created by the SNB at present, compared with 90 per cent created electronically by the commercial banks, the campaigners say.

Their proposal aims to guard against bank runs by giving customers access to “full money” accounts — which will be off the commercial banks’ balance sheets and backed with central bank money.

Opponents have said the plan could lead to higher bank charges, strangle access to credit and weigh on Switzerland’s economic growth. 

The initiative has been opposed by the Swiss government and the SNB, which has described the plan as an “unnecessary and dangerous experiment”.

The fact that a referendum is taking place has unnerved some investors. 

“It will be a catastrophe on every level,” said Marie Owens Thomsen, global head of economic research at Indosuez Wealth Management, commenting on the possibility of a “yes” vote.

But campaigners remain undeterred.

“Of course the banks and financial institutions are against changing the system because they benefit overwhelmingly from it at present,” the campaign’s Wuethrich told Reuters.

“We hope that people can see through the scaremongering and decide to have real money in their accounts instead of a token from the banks,” he said.

Investors have been buying up insurance against swings in the Swiss franc and the shares of the biggest Swiss lenders to hedge against turbulence if the vote is approved.

“Switzerland would be hit by a monetary revolution. We talk about banks, but the real concern is the whole economy,” the Swiss Bankers Association Chief Economist Martin Hess said. 

Ratings agency S&P Global said a win for sovereign money scheme could result in uncertainty among banks and investors.

“If we see increasing funding risk or investors questioning banks’ ability to adapt to a potential new regime, a transition to a sovereign money system could have an immediate effect on outstanding Swiss bank ratings,” it said in a report published this week.

“In the long term, the introduction of a sovereign money system could weaken Swiss banks’ profitability and raise questions about their future business model.”

WASHINGTON — Washington and Beijing have reached a deal to ease sanctions that brought Chinese smartphone maker ZTE to the brink of collapse, the US Commerce Department announced on Thursday.

The agreement also follows a reported offer by Beijing to ramp up purchases of American goods and thereby drive down the yawning trade deficit between the world’s two largest economies — moving part-way towards meeting a key demand of US President Donald Trump in ongoing trade talks.

ZTE will pay a $1 billion penalty, and put another $400 million in escrow to cover possible future violations before being stricken from a sanctions list.

Under the deal, the Chinese giant will also have to change its entire board of directors and retain outside legal compliance specialists who will report to the Commerce Department for ten years.

Total US penalties imposed on ZTE now amount to $2.3 billion, according to the US Commerce Department.

In April, the Chinese group was cut off from US technology products for violating US sanctions against North Korea and Iran — measures which threatened to put ZTE out of business.

Washington lawmakers were indignant last month after Trump offered to rescue ZTE as a personal favor to Chinese President Xi Jinping — even though the company is widely considered a liability for US national cybersecurity.

‘A pretty strict settlement’ 

Democrat and Republican senators denounced Trump’s offer to ease the ZTE sanctions as an offer that imposed punitive measures the company had already disregarded once before, while garnering no true concessions from China.

Commerce Secretary Wilbur Ross told CNBC on Thursday the deal was tough and would keep ZTE on a short leash.

“This is a pretty strict settlement. The strictest and largest settlement fine that has ever been brought by the Commerce Department against any violator of export controls.”

Several US lawmakers have warned against easing sanctions on ZTE, citing national security concerns.

The news comes as Trump presses ahead with plans to impose as much as $50 billion in tariffs on Chinese imports to punish Beijing for its alleged theft of American technology and know-how.

Washington and Beijing have pursued a halting series of trade talks, with Trump demanding a $200 billion reduction in its yawning trade deficit with China.

Ross told CNBC the ZTE deal was an enforcement matter that was unrelated to the trade talks, which he has led. 

But it came shortly after Chinese officials offered to buy an additional $70 billion in US goods to cut the trade deficit, moving towards meeting one of Trump’s central demands on trade.

CAIRO —  While Egypt's economy is displaying the green shoots of recovery, citizens are enduring relentless price rises covering everything from water to metro tickets.

At Cairo's El Zahraa metro station, nestled among red-brick apartment blocks in a middle income neighbourhood, 46-year-old Omm Mohamed laments the government's economic overhaul.

"The burden has become too heavy, it has become unbearable," she said, dressed in a black full-length dress with her hair covered.

Standing alongside her teenage son, Mohamed said she was especially worried about her daughter who takes the metro to work at a private hospital.

"The rise in ticket prices has hit her especially, with her modest salary," she said.

On top of the metro fare, Mohamed's daughter is one of many Cairo residents who has to take tuk-tuks and microbuses to work. 

On May 11 a uniform two-pound ($0.11) metro ticket was replaced with fares ranging from three to seven pounds. Barely a year ago, fares cost just one pound.

The latest fare rises brought street protests last month.

Around 30 people were arrested in the May protest, with some later freed.

'The burden will double' 

Egypt's austerity policies are tied to $12 billion in loans from the International Monetary Fund, secured by Cairo to ease a fiscal crisis that saw its deficit balloon to 12.5 per cent of GDP in 2015/16.

On Saturday, the government announced a hike in drinking water prices that in some cases exceed 45 per cent.

Further measures are to come, with energy prices due to rise in July.

"The burden will double," said Mohamed.

Seeking to cut the country's deficit, authorities have also introduced a value-added tax, cut fuel subsidies and increased electricity prices.

Officials are repeatedly warning of more electricity price hikes and a reduction in fuel subsidies, prompting media outlets to prepare the public for the changes.

Last week state-run Al Ahram newspaper ran a front page about the price of oil, stating fuel subsidies cost the public purse 104 billion pounds annually. 

The government has yet to announce the scale of the next price increase and cut in subsidies.

But Alia El Mahdi, an economics professor at Cairo University, said the metro protest set off "alarm bells".

"The Egyptian people have suffered many shocks in the last two years in consecutive price increases," she said.

The metro ticket change alone saw transport costs jump from five or six per cent of poor Egyptians' total spending to 20 per cent, Mahdi explained.

'Sacrifices' required 

The rising costs come against a backdrop of economic recovery, with GDP growth increasing in the past year from 4.2 per cent to 5.2 per cent. 

Meanwhile, inflation eased to 12.9 per cent in April, after reaching a peak of 34.2 per cent last July.

The unemployment rate dropped to 10.6 per cent in the first three months of 2018, against 12 per cent a year earlier, according to the government's statistics bureau.

Despite the positive figures for the national economy, price rises have disproportionately affected low earners according to Omar Adly from the American University in Cairo.

"There are other means to reduce the budget deficit which could reduce the pressures on the poor and lower middle income-class," such as tax rises, said Adly, a development professor.

But the IMF contends that the bitter reform medicine will benefit everyone.

"While the process has required sacrifices in the short-term, the reforms were critical to stabilise the economy," the lender said on May 17.

Such an economic overhaul will "lay the foundation for strong and sustained growth that will improve living standards for all Egyptians", the IMF added.

LONDON — Britain’s government on Tuesday gave the go-ahead to building a third runway at London Heathrow, Europe’s biggest airport by passenger numbers, a long-awaited decision that has stoked decades of division and debate.

“The time for action is now,” Transport Secretary Chris Grayling said after a Cabinet meeting, as he laid out the controversial plan in parliament, which will vote on it in the coming weeks.

“This is a decision taken in the national interest,” he added.

The expansion project is highly contested, mainly over environmental and noise level concerns for a large area of west London around Heathrow.

“We’ve considered these issues very carefully,” Grayling told lawmakers under questioning. “But the other thing we have to take into account is the potential for our economy.”

Foreign Secretary Boris Johnson, who represents a nearby constituency, has previously opposed the plan, once pledging to lie in front of bulldozers to stop building.

It is unclear whether he and other lawmakers from the ruling Conservative Party will be allowed a free vote on the project.

Conservative former transport secretary Justine Greening insisted she would vote against the expansion — and urged the government to allow lawmakers to vote freely on the issue.

“These are local MPs who need to represent our local communities,” she told the BBC.

Although other Conservative MPs are also against the expansion, some opposition Labour lawmakers vocally backed the move in parliament.

Shadow transport secretary Andy McDonald said Labour will consider the proposal against four tests, including if environmental issues can be fully addressed and growth across the country is supported.

The parliamentary vote must take place by July 11, according to the Department for Transport.

‘Air pollution crisis’ 

Greenpeace UK Executive Director John Sauven said: “Green-lighting a new runway at Heathrow on World Environment Day is like handing out free cigarettes on World Health Day.

“This airstrip alone will load the atmosphere with as much extra carbon as some entire countries pump out. It would make Londoners’ air more dangerous to breathe, contributing to an air pollution crisis that’s already cutting short thousands of lives.

“It’s time the UK government took seriously its commitment to protect the environment by building a low-carbon economy.”

But the Confederation of British Industry (CBI), Britain’s big business lobby, voiced strong support for the project.

CBI Deputy Director-General Josh Hardie said: “It’s fantastic that the new runway at Heathrow is getting closer to take-off. All the more so as the United Kingdom has waited for nearly half a century for this decision.

“Expanding our aviation capacity, and creating new flight routes to rapidly growing markets, is mission critical to ensuring Britain can compete on the post-Brexit world stage.

“Our aviation capacity is set to run out as early as 2025, so it’s crucial we get spades in the ground as soon as possible,” he said.

Grayling said the government’s decision was “an important milestone in building a global Britain”.

“As we leave the EU, the UK must remain one of the world’s best-connected and outward-looking countries and a third runway at Heathrow is the best option to deliver this,” he said.

British Airways owner IAG, whose Chief Executive Willie Walsh told a parliamentary inquiry in February he had “zero” confidence that Heathrow could deliver the project on time and on budget, called the decision a “missed opportunity”.

“Today Heathrow is the most expensive hub airport in the world,” it said in a statement. 

“The government has missed an opportunity to provide the UK with the airport it needs at a price it can afford.”

SYDNEY, Australia — Middle Eastern airlines are witnessing recovery and their net profit is forecast to reach $1.3 billion in 2018, up from $1 billion in 2017, according to the International Air Transport Association (IATA). 

At its 74th Annual General Meeting held in Sydney this week, IATA said it expected airlines to achieve a collective net profit of $33.8 billion. 

The June 3-5 meeting brings together over 1,000 industry and media people, reflecting its importance to the aviation industry.

Speaking at the plenary meeting, IATA Director General and CEO Alexandre de Juniac said the future of aviation “overflows” with opportunities, but it is becoming more difficult to make predictions about the direction global affairs evolve in.

Globalisation has had an undeniable positive impact, he said, as 1.1 billion people have been lifted from poverty, the world is growing richer and trade, empowered by connectivity, is a leading force in development. 

Also, there are aspects that may negatively impact the industry, in addition to world developments, such as stronger protectionism, sanctions, tariffs, geopolitical conflicts, migration and immigration debates and the spectre of a trade war in an environment of an increasingly fragile trust among nations, he added.

Still, “aviation has created immense value by bringing people, products and businesses together. And ultimately, I believe that the enormous benefits of globalisation will guide us forward”, said de Juniac.

At least for now, the industry seems to indeed be going forward.

Despite rising costs, primarily of fuel and labour, and the upturn in the interest rate cycle, airlines are still expected to make over $33 billion this year, said the IATA chief, citing the 2018 IATA economic performance of the airline industry mid-year report. 

“Our nine-year run of profitability began in 2010. And return on invested capital will exceed the cost of capital for four years in a row. At long last, normal profits are becoming normal,” said de Juniac.

Return on invested capital is expected to be 8.5 per cent (down from 9 per cent in 2017); that will still exceed the average cost of capital, which rose to 7.7 per cent on higher bond yields, from 7.1 per cent in 2017, and is critical to attracting “the substantial capital needed by the industry to expand its fleet and services”.

There are challenges, of course, said de Juniac, mentioning high taxes, costly and “ill-conceived” regulation, infrastructure capacity constraints, market shifts and labour demands.

Added to these is also competition from low-cost airlines and protectionism, which “could derail successful international joint ventures”, besides jet fuel prices, which are expected to be up 25 per cent over last year’s.

Still, airlines continued to “create value for investors in 2017, in most regions”, according to Brian Pearce, IATA chief economist, in his mid-2018 update on the economic performance of the airline industry, and for the third year running, the return on capital for the industry was above the cost of capital.

Performance was strong in North America and Europe. Latin American and Asian airlines were generating returns above the industry average cost of capital, but Middle Eastern airlines were lagging behind the rest of the industry.

It is not necessarily the case with Royal Jordanian.

 Its President/CEO Stephan Pichler said: “We had a very good performance in the Q2 and Q3” of last year, which saw the airline register gains.

The company, which set a five-year turnaround plan, cut some of its costs, saving about JD6 million. It cancelled some non-viable flights, and achieved an equal amount of saving, and had good revenues, which could help it boast “a much better commercial performance” and has “allowed us to stabilise in the last year”, he noted.

In the first quarter of this year the trend continues, according to Pichler.

So far, the company recorded 18 per cent more revenue “while we offered only 4 per cent more seats”, RJ’s CEO told The Jordan Times.

“As far as we see, in the second quarter the trend continues. We hope to have a good 2018.”