Today’s top stories
For up-to-the-minute news updates, visit our live blog
Good evening.
Could the two-year post-pandemic travel boom finally be on the wane?
That’s the lesson investors seemed to be taking this morning after Ryanair reported a sharp fall in profits and warned air fares this summer would be “materially lower” than last year. The budget-carrier’s shares fell 12 per cent in early trading, sparking sell offs in low-cost rivals easyJet and Wizz Air.
It follows warnings from airlines on both sides of the Atlantic in recent weeks. Lufthansa has pointed to “negative market trends”, while Air France-KLM has said that the Paris Olympics were actually putting off international tourists flying to the city. US airlines meanwhile have been forced to cut fares on domestic routes after overestimating the strength of demand.
Faltering consumer demand generally is starting to show up in economic surveys: leisure and tourism businesses for example feature heavily in new data today showing the number of UK companies in “significant financial distress” rising sharply in the second quarter.
The aerospace industry, gathered en masse for the first day of the Farnborough Air Show today, is adding to the turbulence. Carriers are suffering from delays in aircraft deliveries by Airbus and Boeing, forcing them to fly older, less fuel-efficient planes for longer, slowing the industry’s progress on cutting emissions.
The cost of cutting emissions is also adding to upwards pressure on ticket prices, according to British Airways-owner IAG. Lufthansa last month become the first group to pass the cost of new EU emissions rules on to passengers, announcing a surcharge of between €1 and €72 per ticket from next year. Sustainable aviation fuels are the answer, but are still a long way from becoming commercially viable.
One (huge) bright spot for the industry remains: transatlantic travel. Demand on some of the world’s most lucrative routes is still soaring: the number of flights scheduled from April to October is 7 per cent up on last year’s record, with huge demand from US travellers taking advantage of a strong dollar.
The sheer numbers of flights will however test airlines’ operational resilience: they were among the businesses worst affected by last Friday’s global IT outage and are also susceptible to air traffic control restrictions.
Airlines can however take heart from the new UK government’s signal today that it is “open-minded” about airport expansion, as long as plans are compatible with climate targets, meet noise and air pollution objections, and provide economic growth across the country. The clarification has sparked fresh speculation on the thorny issue of a third runway for Heathrow.
In the meantime, while investors may be unhappy at lower air fares, it’s the opposite for travellers. As today’s Lex column (for Premium subscribers) suggests, if you haven’t booked that summer break yet, maybe now’s the time to do it.
Need to know: UK and Europe economy
Wall Street banks are betting that sterling will extend a winning run that has taken it to its strongest level since the 2016 EU referendum. A more stable UK political environment and better than expected growth have led the pound to become the best-performing major developed market currency this year.
New analysis suggest the UK however is set to miss its 2023 clean energy targets. Under current plans, wind and solar power will only be supplying about 44 per cent of Britain’s electricity by the deadline, rather than the 67 per cent required, highlighting the difficulties in transitioning from fossil fuels.
Mysterious buyers with suspected links to Russia have begun amassing dozens of vessels capable of carrying liquefied natural gas, in moves that suggest Moscow is expanding its “dark fleet” of energy tankers.
German diplomats are scrambling to prepare for the possibility of another Donald Trump presidency, a scenario that could have significant political and economic consequences for Berlin. A Big Read explains.
Need to know: Global economy
China unexpectedly cut interest rates in a fresh attempt to boost faltering economic growth.
The US Federal Reserve on the other hand is waiting a bit longer before it begins its rates reduction programme, thanks to the unexpected uptick in inflation.
Indian Prime Minister Narendra Modi faces an early test to his third term in office with a budget tomorrow that must balance the demands of his new coalition partners.
With polls predicting defeat in the presidential election on July 28, fears are mounting in Venezuela that incumbent Nicolás Maduro may resort to vote rigging, writes Latin America editor Michael Stott.
Need to know: business
The fallout from Friday’s global IT outage continues. Cyber security watchdogs have raised the alarm over malicious websites claiming to fix glitches caused by the disruption.
The UK government ruled out financial support for shipbuilder Harland & Wolf, leaving the maker of the Titanic scrambling for a private sector rescue.
The number of small companies quoted on London’s Aim stock market has plunged to its lowest level in more than 20 years due to delistings and flotations drying up, in the latest blow to the UK’s capital markets.
Consumers and businesses are turning to solar power in ever greater numbers but a global supply glut of solar panels has sent prices diving, leaving many manufacturers unprofitable and threatening industry expansion.
Japanese carmakers are “very scared” by the rapid development of Chinese electric vehicles, according to the head of the Sony-Honda joint venture. Yasuhide Mizuno said Japan’s companies needed to change their conservative corporate culture to keep up.
The World of Work
US companies are dropping diversity and environmental targets from bonus plans under pressure from conservative groups such as Strive, the anti-ESG asset manager founded by Donald Trump ally Vivek Ramaswamy.
Executives are turning to “immersive” leadership training sessions that simulate real-world changes and are said to help managers make better decisions under stress.
US employers are ditching internships as they look to cut costs and increase efficiency.
The US presidential race has thrust the debate over whether one can be too elderly for a job back into the spotlight. Some argue that it is unfair for older generations to hoard jobs and wealth.
Some good news
Patients with cancer who are diagnosed in a primary care setting have by far the best survival outcomes compared with any other route. Early results suggest detection rates can be significantly improved with the use of an AI-enabled support tool called C the Signs.
Thanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at disruptedtimes@ft.com. Thank you