Business

LONDON — Last week's deadly attack in Nice and attempted coup in Turkey have created fresh turmoil for European airlines already grappling with the fallout of "Brexit", with easyJet saying it was unable to give an earnings forecast and Lufthansa warning on profit.

EasyJet, Europe's No. 2 low-cost carrier behind Ryanair, has in the past given a forecast profit range for the 12 months ended September 30 at this time of the year, but said on Thursday security worries, weaker consumer confidence and currency volatility were all dragging on its peak summer season.

Lufthansa said late Wednesday its core earnings for 2016 would be below last year's, downgrading its previous forecast.

The German airline blamed repeated attacks in Europe which have dampened advance bookings for long-haul travel to the continent, plus what it called greater political and economic uncertainty since March.

Shares in Lufthansa slumped 7.5 per cent on Thursday, while those of Britain-based easyJet were down 6 per cent.

While Lufthansa did not refer to specifics, easyJet said last week's truck attack in Nice, France, that killed 84 people, and a failed coup in Turkey, would affect its fiscal fourth quarter, though it couldn't say by how much.

Asked whether this was the most difficult operating environment easyJet had faced since she took the helm in 2010, Chief Executive Carolyn McCall said: "Definitely. I think that will be true for all airlines over the last ten years. The reason for it is there are so many different things."

She also cited Britain's vote last month to leave the European Union, plus easyJet's high level of cancelled flights due to air traffic strikes in France.

The "Brexit" vote has caused the value of the pound to fall by about 10 per cent, making it more expensive for Britons to travel abroad, and prompted consumer uncertainty. Britain is easyJet's biggest single market.

Turbulent times 

Many European airlines have seen a hit to demand from a string of deadly attacks in Europe, including one last November that killed 130 people in Paris, as well as attacks in popular holiday destinations for Europeans such as Tunisia and Egypt.

In June, after the Brexit vote, British Airways-owner IAG also warned on profit.

Analysts currently expect easyJet's pretax profit for the year ending September 30 will drop 14 per cent to £592 million, according to the average of forecasts.

The company's bigger rival, Ryanair has this year also seen bookings dampened by security concerns, but at its last update in May, it was still expecting profit growth of 13 per cent for the year ending March 2017.

Ryanair has proportionately less exposure than easyJet to both France and Britain.

EasyJet also faces longer term concerns over its reliance on the EU set-up to fly the routes it does, whereas Ryanair is based in Ireland, which remains part of the EU.

Ryanair will report first-quarter earnings on July 25.

Since the Brexit vote on June 23, easyJet shares have lost a third of their value, while Ryanair's are down 17 per cent.

Delta Air Lines Inc.'s decision to sell fewer seats from the United Kingdom this winter also highlights the threat Brexit and new airline competition pose to US airlines, which have raked in cash from transatlantic flights.

The HAGUE — Dutch retail giant Ahold said Thursday it expected a mega-merger with Belgian rival Delhaize to be completed by Saturday, pending approval from US regulatory authorities.

“Ahold and Delhaize announce that they expect to complete their intended merger on July 23, 2016, if regulatory clearance has been obtained from the United States Federal Trade Commission by that date,” Ahold said in a statement.

“Subject to the completion of the merger... Ahold Delhaize is expected to start trading on Euronext Amsterdam on Monday, July 25,” it added.

Based in Zaandam just outside Amsterdam, Ahold announced in June last year it was merging with Delhaize to create one of the world’s largest retail companies with a turnover of more than 54 billion euros ($59 billion).

It agreed last week to sell 86 US-based stores to receive approval from competition authorities.

Analysts have said the merger with Delhaize will give rise to the fifth-largest distributor in the fiercely contested US market and the fourth-largest in Europe.

The two groups see themselves as complementary in the US market, where Ahold present mostly the northeast with its Stop&Shop, while Delhaize’s Food Lion is prevalent in the southeast.

In Europe, the two companies seldom overlap in the Netherlands and Belgium.

DUBAI, United Arab Emirates — State-owned Saudi Aramco says it has signed a deal for a new gas project that will be worth more than 50 billion Saudi riyals ($13.3 billion) when complete in 2019, aimed at meeting the kingdom's growing domestic demand for energy.

The company on Wednesday said the project will help lessen dependence on oil for power generation and will accommodate 4,500 training, temporary and permanent jobs for Saudis. The Fadhili project will process gas from onshore and offshore fields.

Highlighting the deal, Saudi Aramco President and CEO Amin Nasser said: “Saudi Aramco’s multi-billion dollar investment in Fadhili will considerably increase the share of gas in the Kingdom’s energy mix and fits in with our long term strategy to lower emissions,” according to the company’s website.  

A training centre is expected to be established at the project’s area, in collaboration with governmental agencies focused on human resource development. Al Fadhili training programme, to be set up in partnership with project contractors, will provide Saudi nationals with opportunities to gain work experience and technical skills. 

The Fadhili project will increase Saudi Arabia’s natural gas production to 17 billion standard cubic feet per day by 2020, in line with the country's National Transformation Plan, according to the company’s website.

The plan, released in June, aims to wean the Saudi economy off its dependence on oil, according to the Saudi government.  

Its goals include creating more than 450,000 jobs outside the government sector by 2020, having the private sector fund 40 per cent of projects during the period, so as reduce the financial pressure on the state

It also seeks to increase goods and services produced locally so as to reduce imports and create more job opportunities. 

 The company said the deal was signed on Wednesday with India's Larsen & Toubro, Saudi KAD, Saudi Electricity Company and France's Engie.

Saudi Aramco is also exploring future opportunities of environmental significance at Fadhili, which may include a helium recovery plant and a CO2 recovery unit to reduce emissions.

GENEVA — The United States is worried that China is retreating from pledges to open its economy to market forces as it tries to cope with a slowdown in growth, US trade diplomat Chris Wilson told the World Trade Organisation (WTO) on Tuesday.

China is undergoing a regular two-yearly review of its trade policies at the WTO this week, in which the body's other 162 members get to quiz its officials and critique its policies.

Wilson, the deputy chief of the US mission to the WTO, said China's leaders had endorsed a number of far-reaching reform pronouncements, including that the market would be "decisive" in allocating resources, and it was clear that serious efforts were being made.

"Over the past year, however, as growth in China's economy has slowed, the United States has sensed an increasing reluctance among China's economic planners to pursue further reforms," he said, according to a published transcript.

"In addition, more and more US enterprises have been expressing concern about a less welcoming business and regulatory environment for foreign enterprises."

The United States hoped the developments were temporary and China would aim for a more transparent, predictable and welcoming regulatory environment, but that this would be impossible as long as the state supported and favoured domestic industries, Wilson said.

China's support for its bloated steel and aluminium industries clearly showed that state intervention would never be as efficient as the market, he said.

Other US concerns included quotas and duties on China's raw material exports, manipulated value-added tax rebates on exports, thin agricultural imports despite strong demand, and prohibitions on foreign investment in China's movie market, the world's second-biggest.

Wilson was speaking less than a week after the United States launched a WTO complaint to challenge China's export duties on key metals and minerals.

That complaint was expanded on Monday when the European Union joined the legal action against China.

Washington and Brussels have also clashed with Beijing over China's demand to be treated as a market economy at the WTO, which would make it harder to challenge China's cheap exports.

Another concern cited by Wilson was the "Made in China 2025" initiative, which aims to ensure Chinese-made components and materials account for 70 per cent of China's manufacturing inputs by 2025.

So-called "local content requirements" have become a hot issue at the WTO, where they are closely scrutinised in case they are used to illegally promote domestic firms at the expense of foreign suppliers. 

JAKARTA — Rising temperatures caused by climate change may cost the world economy over $2 trillion in lost productivity by 2030 as hot weather makes it unbearable to work in some parts of the world, according to UN research published on Tuesday.

It showed that in Southeast Asia alone, up to 20 per cent of annual work hours may already be lost in jobs with exposure to extreme heat with the figures set to double by 2050 as the effects of climate change deepen.

Across the globe, 43 countries will see a fall in their gross domestic product (GDP) due to reduced productivity, the majority of them in Asia including Indonesia, Malaysia, China, India and Bangladesh, researcher Tord Kjellstrom said.

Indonesia and Thailand could see their GDP reduced by 6 per cent in 2030, while in China GDP could be reduced by 0.8 per cent and in India by 3.2 per cent.

"Current climate conditions in tropical and subtropical parts of the world are already so hot during the hot seasons that occupational health effects occur and work capacity for many people is affected," said Kjellstrom, a director at the New Zealand-based Health and Environment International Trust.

He said the increasing need for rest "is likely to become a significant problem" as climate change makes the hottest days hotter and leads to longer periods of excessively hot days.

Kjellstrom authored one of six papers on the impact of climate change on health that were put together by the United Nations University's International Institute for Global Health in Kuala Lumpur and published in the Asia Pacific Journal of Public Health.

Kjellstrom warned that the lowest-paid workers — those in heavy labour, agricultural and manufacturing — were most at risk of exposure to extreme heat.

He urged countries to take "decisive action" to tackle global warming.

"Failure will cause the frequency and intensity of disasters to worsen dramatically beyond 2050, and the situation at the end of this century will be especially alarming for the world's poorest people," the researcher said.

The other papers in the series showed around 2.1 million people worldwide died between 1980 and 2012 due to nearly 21,000 natural catastrophes such as floods, mudslides, extreme heat, drought, high winds or fires.

In Asia Pacific, 1.2 billon people have been affected by 1,215 disasters — mostly flood, cyclones and landslides — since 2000.

In April, 175 countries signed a Paris climate deal to restrain the global rise in temperatures to "well below" 2oC above pre-industrial levels.

The first three months of 2016 have broken temperature records and 2015 was the planet's warmest year since records began in the 19th century.

DUBAI — The International Monetary Fund (IMF) on Tuesday raised its 2016 growth forecast for the Middle East and North Africa after a rebound in oil prices, but maintained its cautious outlook for Saudi Arabia.

The region, along with Afghanistan and Pakistan, is set to see economic growth of 3.4 per cent this year, better than a previous projection of 3.1 per cent, the IMF said.

At the same time it cut the growth forecast for 2017 to 3.3 per cent, down from 3.5 per cent in April, citing fallouts from "terrorism" and geopolitical tensions in its World Economic Outlook Update.

The region includes major oil exporters like the Gulf Arab states, Iraq, Iran and Algeria, as well as oil importers such as Egypt, Morocco and others.

Following the lifting of international sanctions in January, Iran's oil exports have reached more than 2 million barrels per day, close to their pre-sanction levels.

"In the Middle East, oil exporters are benefiting from the recent modest recovery in oil prices while continuing fiscal consolidation in response to structurally lower oil revenues," the IMF said.

"Geopolitical tensions, domestic armed strife, and terrorism are also taking a heavy toll on the outlook in several economies, especially in the Middle East, with further cross-border ramifications," it said.

The IMF maintained its growth projections for Saudi Arabia, the world's top crude oil exporter, at 1.2 per cent for this year and raised it slightly to 2.0 per cent for 2017.

The economies of the kingdom and its oil-exporting peers in the Gulf Cooperation Council (GCC) countries have been hit hard by the slide in oil prices which began more than two years ago.

They have lost hundreds of billions of dollars in revenues, prompting them to take austerity measures and resort to borrowing to plug the huge budget deficits.

The IMF has praised the reform measures while insisting that more needs to be done.

In a report last month, the IMF said the value of oil and natural gas exports in the GCC states and Algeria was projected to fall by almost $450 billion this year compared with 2014.

It also estimated that their cumulative budget shortfalls would hit $900 billion as a whole by 2021. The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

FRANKFURT — German container shipping giant Hapag-Lloyd announced Monday it is teaming up with United Arab Shipping Company to become one of the world's top five shipping companies as consolidation in the sector continues apace.

"Hapag-Lloyd AG and United Arab Shipping Company (UASC) have signed a Business Combination Agreement to merge both companies, subject to the necessary regulatory and contractual approvals," the firm said in a statement.

The combined companies would become the world's fifth-largest container firm with an annual turnover of around $12 billion (10.8 billion euros).

No financial details were disclosed.

"This strategic merger makes a lot of sense for both carriers — as we are able to combine UASC's emerging global presence and young and highly efficient fleet with Hapag-Lloyd's broad, diversified market coverage and strong customer base," said the German firm's chief executive Habben Jansen.

Once UASC's ships are integrated into the fleet, Hapag-Lloyd will have 237 ships afloat with a total capacity of 1.6 million TEU (twenty-foot equivalent units, which is the standard measure of a container), expected to transport around 10 million TEU to destinations around the world each year.

The combined firm will remain listed on the German stock exchange and retain Hapag-Lloyd's headquarters in the northern port city Hamburg.

UASC's majority shareholders, Qatar Holding LLC. and the Public Investment Fund of Saudi Arabia, will take stakes of 14 per cent and 10 per cent in the merged company.

Shareholder Approval

All of UASC's shareholders unanimously approved the deal at an extraordinary general meeting.

Hapag-Lloyd's shareholders are scheduled to vote on the merger at their annual meeting in August.

CSAV, the city of Hamburg and Kuehne Maritime will remain the largest shareholders in Hapag-Lloyd.

The merger is expected to be completed by the end of 2016. 

Hapag-Lloyd comes to the UASC deal off the back of a successful purchase of Chilean firm CSAV's container shipping arm and its own stock market flotation, both in 2015.

With global demand for logistics services slipping, firms active in the sector have found themselves with too much capacity on their hands.

That has made for an environment friendly to mergers — including Hapag-Lloyd's own takeover of CSAV's shipping arm in exchange for a 30 per cent stake in the merged company.

Hapag-Lloyd also recently inked an alliance deal with five Asian maritime shipping groups that will come in to force in early 2017.

Together representing 18 per cent of the global container fleet, the THE alliance hopes to lure clients as a one-stop shop for a wider range of services and destinations.

Shares in Hapag-Lloyd were showing a loss of 8.4 per cent at 17.20 euros on the Frankfurt stock exchange in late morning trade on Monday.

AMMAN — Jordan Investment Commission (JIC) has started issuing a five-year- licence for economic activities launched at development and free trade zones, a JIC statement said on Monday.

Previous licences are also renewed for a term of five years, JIC President Thabet Al Wir said in the statement, noting that the move seeks to provide a more favourable investment environment in the Kingdom.

TAIPEI — Police in Taiwan said on Sunday they had arrested three out of 16 foreign suspects they believe hacked into the cash machines of a major local bank, withdrawing more than $2 million.

They are accused of targeting First Bank's ATMs last week, using malware to withdraw more than T$80 million ($2.5 million) from dozens of machines.

A policeman recognised one of the suspects, a Latvian, while he was eating in a restaurant in the northeastern city of Yilan.

Police arrested him later, an official of the Taipei City Police Department told a news briefing.

Two other suspects, who are from Romania, were arrested in Taipei, police said, adding they had found more than T$50 million of the stolen money in a hotel room.

"This is the first time that an international team of ATM thieves has committed a crime in Taiwan," Lee Wen-chang, chief commander of the Criminal Investigation Division, told reporters.

Authorities are still investigating exactly how the crime was carried out, he said.

The remaining 13 suspects, including two from Russia, have left Taiwan, police said, adding they had alerted authorities overseas.

The suspects may have used a cellphone to target 41 First Bank ATMs, investigators said on Wednesday.

In May, a gang stole $13 million from Japanese ATMs in a three-hour spree.

Since discovering the Taiwan theft last Monday, Taiwan's major state-run banks have frozen withdrawals from nearly 1,000 ATMs of the kind targeted in the heist, which are supplied by Germany's Wincor Nixdorf.

About 4 per cent of Taiwan's national ATM network of 27,200 machines are affected.

Investigators have identified three different malware programmes that were used to trigger withdrawals.

BERLIN — Google CEO Sundar Pichai hit back Sunday at accusations that the global internet giant failed to pay enough taxes in Europe, and warned of the potential fallout from Britain leaving the EU.

As Google faces a raft of fiscal probes across the continent, Pichai told Germany's Welt am Sonntag newspaper that the US company invested "very heavily" in Europe and employed 14,000 people there.

"As a global company, we find ourselves between the conflicting priorities of international tax law," he said, in remarks published in German.

"Based on the structure of existing tax law, most companies pay the bulk of their taxes in their home countries."

He said that Google respected the laws on the books, and that governments would have to take action if they wanted to ensure more revenues stayed at home.

"Only the further development of the global tax system by politicians can lead to better results," he said.

Asked about a Brexit or British exit from the EU following last month's watershed referendum, Pichai underlined the importance to Google of a "unified digital market" in Europe. 

He said it was a "challenge" for a multinational company "to come to terms with different laws and regulations in each country".

"This complexity makes greater engagement difficult, which also plays out in investment," he said, stressing however that large companies were better able to deal with such issues than small firms. 

European officials have raised questions about the tax liabilities of companies including Google, Amazon and Apple. Some firms have taken advantage of tax breaks offered from Ireland, Belgium and Luxembourg.

Google's offices in Madrid were searched in a tax probe in late June, just over a month after police raided the Internet giant in Paris in a similar investigation.

The European Union also filed new anti-trust charges against Google last week, piling pressure on the company over the alleged abuse of its market dominance.

Pichai said Google's Android mobile phone operating system was "among the most open computer systems ever invented" and insisted that most Android phones "have several apps that aren't from Google".