Closing summary: Ryanair boss says new Boeing leaders can turn around factory problems
Boeing boss Dave Calhoun will see out 2024 as chief executive, but the judgments on his tenure are already coming in.
Calhoun was shifted from chair to chief executive after the resignation of Dennis Muilenberg, who oversaw the 737 Max crisis. Calhoun had one of the biggest corporate turnaround jobs ever: the reviews so far are mixed.
Michael O’Leary, the combative chief executive of Irish airline Ryanair, has been strongly critical of delays to deliveries under Dave Calhoun. In a video on Ryanair’s website, O’Leary said:
Stan Deal has done a great sales job for Boeing for many years, but he’s not the person to turn around the operation in Seattle, and that’s where most of the problems have been in recent years.
We welcome and look forward to working with Stephanie Pope […] to eliminate Boeing’s delivery delays both for summer 2024 and in the autumn of 2024. So hopefully we’ll have no delivery delays for summer 2025.
Timothy Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business, said Calhoun’s departure was “a long time coming”. He said:
The embattled leader has struggled to rebuild confidence in Boeing’s products following years of design and manufacturing issues. This is an industry that cannot tolerate mistakes. Boeing is in deep need of a change in culture around safety and quality. These changes take time, but can be accelerated by new leadership.
Justin Green, partner at Kreindler & Kreindler, a law firm representing 34 families who lost relatives on Ethiopian Flight 302, said it was positive that Calhoun has stepped down:
The next CEO must know that his or her role will be to prioritize safety, not just profit. While we are pleased to see that serious and immediate personnel changes are being made at Boeing in the wake of recent and troubling safety issues, Boeing must be fully transparent in every change it plans to make with regard to its manufacturing and quality control processes. For too long, Boeing has been avoiding public accountability and these leadership changes open a window for the company to do so.
In other business news:
Apple, Google’s parent company and Meta are being investigated by the EU for potential breaches of the bloc’s new laws designed to police anti-competitive behaviour by big technology companies.
The former chief executive of Chelsea, once described as “the most powerful woman in football”, is facing questions about what she knew of secret payments made under the club’s former owner Roman Abramovich, amid an ongoing investigation into alleged breaches of football spending rules.
Nissan is planning to cut the costs of manufacturing electric vehicles by nearly a third by 2030, as it seeks to compete with Chinese rivals.
The owner of Legoland, Alton Towers and Madame Tussauds is planning to introduce budget airline-style surge pricing, so families will pay more on peak summer weekends than rainy weekdays, as visitor numbers have fallen since the pandemic.
You can continue to follow our live coverage from around the world:
In our coverage of the Israel-Gaza crisis, the UN security council passes resolution calling for immediate ceasefire, as US abstains
In UK politics, Sunak insists the UK has ‘very strong’ capabilities to resist cyber-attacks after government urged to end China ‘naivety’
In our coverage of the Russia-Ukraine war, Macron tells Russia it would be ‘cynical’ to use Moscow concert hall attack to turn people against Ukraine
In US politics, Donald Trump is in court for hush money hearing as deadline looms to pay $454m fraud trial bond
Thank you for reading today, and please do join us for more live coverage of business, economics and financial markets tomorrow. JJ
Updated
Worrying news in the week before Easter: cocoa prices are soaring.
The price of a ton of cocoa topped $9,000 on futures markets. Bloomberg News points out that that is more than a ton of copper – for the first time since 2003.
Bloomberg reports:
Poor harvests on the back of bad weather and crop disease in West African growers, where most of the world’s cocoa is grown, and little sign of production relief elsewhere have left the industry in a bind.
The price increase is too late to affect this year’s Easter eggs, but it will affect chocolate prices over the course of the year.
But prices are already high. The Guardian’s intrepid money editor, Hillary Osborne, found that Lindt’s gold-wrapped bunny is the priciest Easter treat – with rising cocoa costs an important factor.
Cocoa has become something of a speculative asset: it has outperformed bitcoin in the last 12 months.
The race continues...#Bitcoin is up a 'modest' 237% in the last 12 months.#Cocoa is up 310% and #NVIDIA 350%.
— Sean Gibson (@seaninfinance) March 25, 2024
Source: Bloomberg, Jeroen Blokland pic.twitter.com/6dPlEg9qPq
Bidders for Telegraph newspaper group given more time by government
The UAE-backed consortium making a £600mn bid for the Telegraph group has been given extra time to come back to the UK government with solutions to ease concerns about its bid.
Lucy Frazer, culture secretary, had originally given a deadline of Monday morning for RedBird IMI, a partnership backed by Sheikh Mansour bin Zayed al-Nahyan, the UAE’s vice-president and the US investment firm RedBird Capital Partners, to come back to her with proposals to ease concerns that the Telegraph bid would harm the public interest and restrict press freedom.
If RedBird failed to come back with possible solutions Fraser said she would refer the deal to a detailed so-called phase 2 investigation by the Competition and Markets Authority (CMA), the anti-trust regulator.
On Monday Lucy Frazer said in a letter she would give RedBird a further week until next Tuesday to make representations or she would refer the deal for a competition probe.
The UK government last week published proposed legislation which will block foreign states or state officials from owning newspaper assets in the UK.
The new laws could be on the statute book by next month, effectively scuppering the RedBird IMI bid in its current form and meaning the partnership is now looking at all options including restructuring its existing bid with new capital or a sale of the Telegraph newspapers.
The UK government is also expected to set out this week what stake sovereign wealth funds can hold in newspaper assets as a passive investment.
If RedBird was to sell its interest in the Telegraph then potential bidders could include DMGT, which owns the Daily Mail, and Paul Marshall, the hedge fund founder and backer of GB News. Rupert Murdoch-owned News UK has shown interest in the Spectator magazine.
The planned takeover of the Telegraph, widely seen as the house journal of the Conservative party, has been fiercely opposed by many Tory MPs and peers who have raised concerns about free speech given the UAE, which provides the financial backing for 75 % of RedBird IMI, has been criticised in the past for breaches of media freedom.
Updated
The UK’s energy regulator is considering bringing in a lower price cap for vulnerable people and charging less at less busy times of day, among other possible changes mooted in a newly published paper.
The energy price cap has become a hugely important part of the UK’s energy policy in recent years, after the global energy shock prompted by Russia’s war on Ukraine. The steep increase in prices has meant that almost every household is paying the same rate for their energy, at the maximum allowed by Ofgem, the regulator.
Ofgem on Monday said it would consider a “more dynamic cap” to “encourage consumer flexibility” and reward them for using energy at less busy times. Energy companies are excited about the possibilities for balancing the grid better by shifting the time of some activities – such as putting on the washing machine during the day.
Tim Jarvis, Ofgem’s director general of retail and markets, said:
While the price cap played an important role in protecting consumers from the loyalty penalty that existed before its introduction, the energy market is changing as we move to net zero, and we recognise the systems we have in place may need to change too.
We’re looking in detail at the elements of the price cap that have worked well and the challenges we’ve identified in recent years, while also considering how a wide range of future consumers will use and pay for energy, to make sure we develop the right measures that will protect and benefit consumers across the board.
You can read more here:
Boeing chief executive Dave Calhoun also lavished special praise on one of his key lieutenants. Stephanie Pope was recently promoted to chief operating officer, and will now be promoted further to head of the commercial planes division.
Pope is expected to be in the mix to succeed Calhoun. If that does turn out to be the case, she would become the first woman to lead Boeing in its 107-year history.
Calhoun wrote:
Stephanie knows our company inside and out and has a proven track record of superb leadership, including an innate talent for listening and responding to our people. Stephanie is a third-generation Boeing employee.
She is deeply committed to our company, to our employees and to our shared future; and she is the perfect person to take on the leadership of our commercial airplanes business at this moment.
Dave Calhoun’s time at Boeing has been dominated by crisis from the start. As he wrote in a letter to employees on Monday, he switched from chair to chief executive because of “unprecedented circumstances”.
Most of his time in the first few years consisted of dealing with those “circumstances”: two fatal crashes of the company’s bestselling 737 Max model, after a design flaw left the plane vulnerable to a single faulty sensor.
Calhoun did not name the 737 Max in his farewell letter, but he did acknowledge that Boeing is still struggling with the effects of that crisis, which forced the company to ground its key product for 20 months. Calhoun said:
It has been the greatest privilege of my life to serve in both roles and I will only feel the journey has been properly completed when we finish the job that we need to do. We are going to fix what isn’t working, and we are going to get our company back on the track towards recovery and stability.
The 737 Max crisis happened to coincide with the coronavirus pandemic, which wiped out revenues for most of Boeing’s airline customers, forcing it to rely on heavy bond market support from the US Federal Reserve.
More recently, Calhoun has had to contend with yet another safety issue. This time, thankfully, nobody was seriously injured when a door plug blew out in mid-air on an Alaska Airlines flight.
The latest safety scandal has put Boeing on the back foot once more, just as it was hoping to persuade airline customers and passengers that it has improved its culture.
Boeing chief executive Dave Calhoun to step down amid leadership shake-up
Boeing chief executive Dave Calhoun will step down at the end of 2024 as part of sweeping changes at the troubled US planemaker.
The company is a US manufacturing titan, but its status has suffered after a series of accidents. Calhoun was made chief executive after his predecessor resigned in the wake of two deadly crashes caused by faulty designs.
Board chair Larry Kellner will also not seek re-election, and will be replaced by Steve Mollenkopf.
The head of the commercial planes division, Stan Deal, will also retire, to be replaced by Stephanie Pope, who has long been seen as a serious contender to take on the top job.
After opening the day about flat, European stock markets have taken on a reddish hue at the start of this Easter-shortened week.
The FTSE 100 is down by 0.5%, while France’s Cac 40 is down 0.4%. Only Italy’s FTSE MIB and Germany’s Dax have edged into positive territory.
Margrethe Vestager says the big tech companies may not be meeting their new obligations.
She said:
These are serious cases. Had we been able to solve that with merely a discussion it would have been solved by now.
"These are serious cases", says the EU's @vestager as she announces probes into Meta, Google, and Apple under the Digital Markets Act pic.twitter.com/3WeOYtqUfc
— Max Ramsay (@maxramsay) March 25, 2024
You can now read the full story here:
Microsoft has managed to avoid scrutiny so far, making it and ByteDance the only “gatekeepers” that do not – so far – face the prospect of an intense year of investigation.
Microsoft is the only Big Tech company that the EU isn't investigating for DMA non-compliance. The EU just announced active investigations into Apple, Google, and Meta, alongside "investigatory steps" into Amazon's store https://t.co/hA1W8X0sZy
— Tom Warren (@tomwarren) March 25, 2024
The European Commission has said that the investigation will be concluded within 12 months – a quick turnaround in the usually glacial proceedings of technology policy.
If found to be non-compliant, the big tech companies could face fines of up to 10% of worldwide turnover, or 20% if they continue to violate the law.
The commission can also force the companies to sell off parts of their business, or ban acquisitions.
Asked if the Commission was rushing the process, EU industry chief Thierry Breton said the investigations should not be a surprise, according to Reuters. He told a press conference on Monday:
The law is the law. We can’t just sit around and wait.
The big tech “gatekeepers” are not showing any sign of backing down in response to today’s news of a full-scale investigation into their compliance with the EU’s digital markets act.
The companies may well have expected the action. The huge policy teams at the big tech companies will have carefully considered every word of the new law to try to work out where they might be under threat – and where the EU’s European Commission might take action.
A Meta spokesperson said the company was endeavouring to comply with the act’s guidance. Meta was criticised over offering customers the ability to pay upfront to avoid being tracked. A Meta spokesperson said:
Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA.
Google, which said it has made significant changes to its services, said it “will continue to defend our approach in the coming months”.
Apple said it was “confident” its plan complied with the DMA and that it would work with the Commission.
The government’s shareholding in NatWest Group has fallen below 30% for the first time since 2008, the bank has confirmed.
The public’s stake in the group was last reported at 30.98% on 15 March.
While it doesn’t trigger any material changes in terms of the bank’s relationship with the state, there are some technical consequences: namely that the government no longer is classed as a “controlling shareholder” in relation to UK listing rules. That means at AGM season, it will no longer have to hold two separate votes to approve director appointments (one for the government to say yes or no; and one for other “independent shareholders” to give the greenlight).
The government appears to have accelerated its sell-off of NatWest stock in recent weeks, and taken advantage of a rise in the lender’s share price after it reported the biggest annual profit last year since the 2007 financial crisis. (It was that crisis that led to the bank’s £46bn taxpayer bailout in 2008, when it was still known as Royal Bank of Scotland.)
The government is hoping to return NatWest to private ownership by 2025-26, and is now teeing up a campaign that could see a chunk of its stake sold directly to retail customers as early as this summer.
Commenting on the latest stakeholding, a NatWest spokesperson said:
We welcome the government’s continued commitment to returning NatWest Group to private ownership. With the government shareholding now below 30%, we have been pleased with the recent momentum to achieving this shared ambition, which we believe is in the best interests of the bank and our shareholders.
UK retail sales rose marginally in the year to March, ending a run of 10 months of declines as the cost of living crisis bit, according to a long-running survey.
The Confederation of British Industry’s measure of retail sales showed that on balance more retailers reported higher sales over the last 12 months – ending a run of negative balances running back to April. The balance of firms is weighted by their size.
Martin Sartorius, the CBI’s principal economist, said:
The stabilisation of retail sales in March should give some hope that the sector’s downturn is bottoming out. The earlier timing of Easter will likely mean weaker year-on-year sales in April, but easing inflation should support retail spending going forward.
However, retailers are not out of the woods yet. Internet sales declined in the year to March after growing in February, the survey found.
The EU designated six big tech companies – five American and one Chinese – as “gatekeepers” in its digital markets act. That means those companies have special responsibilities because of their dominance of key mobile technologies.
Their “position can grant them the power to create a bottleneck in the digital economy”, the EU said.
The gatekeepers are Google owner Alphabet, retailer Amazon, iPhone maker Apple, TikTok owner ByteDance, Facebook owner Meta and computing giant Microsoft. They had until 7 March 2024 to comply with the law.
The European Commission suspects that Apple and Alphabet, which also runs the Android operating system, may not be allowing developers to steer users away from the big tech systems. For years, companies such as music streamer Spotify and Fortnite maker Epic Games complained that they were blocked from allowing customers to pay via their own systems.
The companies have made changes to try to get around the new laws, but “Alphabet’s and Apple’s measures may not be fully compliant as they impose various restrictions and limitations”, the commission said.
The commission is also looking into:
Whether Google search results give preference to its own services, such as Google Flights and Google Shopping.
Whether Apple is preventing users from uninstalling pre-loaded apps, and failing to offer choice for software such as web browsers.
Whether Meta is not giving users a real choice over the use of personal data after it introduced a “pay or consent” model – which means users must pay to avoid having their data shared across platforms.
The commission is gathering information – the step before a full investigation – into:
Whether Amazon is favouring own-brand products on its marketplace.
Whether Apple fees for alternative app stores are blocking competition.
Updated
EU opens new investigations into Apple, Meta and Alphabet over app stores
The EU has opened investigations into Apple, Facebook owner Meta and Google owner Alphabet over their app stores, in the latest sign of the growing regulatory scrutiny on the power of big tech companies.
The European Commission will examine whether the big tech companies are preventing developers from steering customers away from their tightly controlled app stores, which could be anti-competitive.
The investigations will come under powers introduced in the digital markets act, a landmark piece of legislation aimed at curbing big tech’s power.
The commission is also looking at Apple’s fees for alternative app stores, and Amazon’s rankings for sellers on its marketplace.
Margrethe Vestager, executive vice-president in charge of competition policy, said:
Today, the commission opens five non-compliance investigations under the Digital Markets Act (DMA). They concern Alphabet’s rules on steering in Google Play and self-preferencing in Google Search, Apple’s rules on steering in the App Store and on choosing browsers and changing defaults, and Meta’s ‘pay or consent model’. We suspect that the suggested solutions put forward by the three companies do not fully comply with the DMA.
Thierry Breton, the commissioner for internal market, said:
We are not convinced that the solutions by Alphabet, Apple and Meta respect their obligations for a fairer and more open digital space for European citizens and businesses. Should our investigation conclude that there is lack of full compliance with the DMA, gatekeepers could face heavy fines.
UK housing affordability improves - but only because of London price dip
British housing became more affordable during 2023, according to new analysis by the Office for National Statistics – but only because some of the air came out of inflated London prices.
In 2023, full-time employees in England could expect to spend about 8.3 times their annual earnings buying a home, compared with 8.5 times in 2022. The equivalent figure in Wales is 6.1 times their annual earnings.
There might be an improvement in those figures, but that will be cold comfort to many who in previous generations would have been likely home owners. Mortgage lenders tend to cap home loans at less than five times annual earnings, meaning potential first-time buyers have to either save for years, or else rely on inherited wealth.
Only 7% of local authorities – 23 of them – had homes bought for less than five times workers’ earnings which count as affordable. This is more than in 2022 and similar to numbers before the pandemic.
But the improvement in the overall affordability picture was driven by London: local authorities in or bordering the capital filled the top 10 biggest improvements in affordability, but “they remain some of the least affordable areas”, the ONS said.
Take, for example, Kensington and Chelsea. It is the country’s least affordable local authority, according to the ONS. An average worker will have to work 34 years to afford a house. That is down by five years from 2022, but hardly a cause for celebration.
Burnley is the most affordable place in the UK, with prices in the Lancashire town only 3.73 times average earnings, the ONS said – although that is in part a sign of the struggling economy.
Updated
Legoland and Madame Tussauds may introduce surge pricing this summer, meaning customers will pay more for that and other well-known attractions at peak times.
Surge pricing is an obvious response to standard economic theories: when demand is higher, prices are higher. It is also hated by almost everyone.
Everyone except company executives, that is. Scott O’Neil, the chief executive of Merlin Entertainments, which owns the attractions, said changing prices to reflect higher demand was “very intuitive”, in an interview in the Financial Times. He said:
If [an attraction] is in the UK, it’s August peak holiday season, sunny and a Saturday, you would expect to pay more than if it was a rainy Tuesday in March.
Airlines have pushed up prices when demand peaks for decades, but the promise of newly “dynamic” prices can still cause uproar, such as when fast food chain Wendy’s last month said it would introduce the practice for burgers. The chain insisted that its plans were “misconstrued”, and that its new digital menu boards would only be used to offer discounts or change the menu at different times of day.
Merlin was previously a member of the UK’s FTSE 100 index before it was taken private in 2019 – just before the coronavirus pandemic caused a huge depression for theme parks.
The FT reported that Merlin made record revenues of £2.1bn in 2023, but that visitor numbers are still below pre-pandemic levels. Its other attractions include Sea Life, the London Dungeons, the London Eye, Alton Towers and Sydney Zoo.
Kingfisher’s share price has taken a further step down since the early trades: it is now the biggest faller on the FTSE 100. It is down 2.1%.
Insurer Direct Line is another notable mover: its shares, listed on the FTSE 250 index of mid-sized companies, are down 12% after Belgian company Ageas on Friday said it would not make any offer after its initial approaches were rejected.
Nissan plans to cut costs of producing electric cars
Nissan has said it will try to cut the cost of producing electric cars by as much as 30% as the Japanese carmaker seeks to compete with Chinese rivals and sell 1m more cars a year.
The Leaf electric car was a global pioneer, but since then Nissan has failed to keep up with rivals such as America’s Tesla or China’s BYD. It is BYD and its Chinese rivals in particular that are keeping up executives in traditional carmaking economies like Germany and Japan, with a wave of cheap models that are rapidly gaining market share.
Nissan is hoping to push sales up by 1m cars per year, while also trying to make them more profitable, it said on Monday.
Makoto Uchida, Nissan’s chief executive, said the company would release 30 new models by the end of its 2026 financial year – although only 16 will be “electrified”, which includes hybrids as well as pure battery electric models.
The cost of producing battery cars has been a problem for traditional carmakers, who want to keep selling their most profitable petrol and diesel vehicles. However, Nissan said it expected “cost parity” by 2030, meaning battery and petrol cars will cost the same to make.
It is a fairly quiet open on European stock markets on Monday morning.
On the FTSE 100 Kingfisher is one of the bigger fallers, but even so it is only down by 0.6%.
Here are the opening snaps via Reuters:
EUROPE’S STOXX 600 FLAT
BRITAIN’S FTSE 100 FLAT
FRANCE’S CAC 40 FLAT, SPAIN’S IBEX DIPS 0.2%
EURO STOXX INDEX AND EURO ZONE BLUE CHIPS FLAT
GERMANY’S DAX UP 0.1%
B&Q owner Kingfisher warns of weak 2024
Good morning, and welcome to our live coverage of business, economics and financial markets.
The owner of B&Q has said it expects lower profits than expected by analysts, as it waits for a housing market turnaround to spur a pickup in DIY demand.
Kingfisher, which also owns Screwfix and France’s Castorama, said on Monday that sales dropped by 1.8% for the year to the end of January, with particular weakness during the November-to-January period, when sales dropped by 4.3%.
DIY went through a big boom during the coronavirus pandemic lockdowns – remember when DIY stores were one of the few retailers allowed to open in the UK because of their role in essential maintence. Huge sales from locked down customers prompted excited talk of a “new generation of DIYers”, but that does not appear to have materialised financially: Kingfisher shares are only marginally above where they were when the pandemic started.
Thierry Garnier, the company’s chief executive, said that in France “the market has been impacted by low consumer confidence”, and the company has been forced to cut costs, including a new plan to cut floorspace in Castorama stores.
But the big problem is housing markets in its main countries: the biggest spur to DIY is buying a new house. Garnier said:
Looking forward, we remain confident in the attractive growth prospects of the home improvement industry and our ability to grow ahead of our markets. In the short term, while repairs, maintenance and renovation activity on existing homes continue to support resilient demand, we are cautious on the overall market outlook for 2024 due to the lag between housing demand and home improvement demand.
Oil prices gain as investor look at supply risks
Oil prices have risen by 0.6% on Monday, pushing back towards the four-month high hit last week amid concerns over supply.
Brent crude oil futures – the global benchmark – rose by 0.5% following the weekend market pause to peak above $86 per barrel, while the North American benchmark, West Texas Intermediate, rose 0.5% above $81.
Russia’s full-scale invasion of Ukraine in 2022 prompted one of the biggest global energy market shocks in decades, and Israel’s bombardment of Gaza in the months since Hamas’s attack on 7 October has translated into months of concerns that fighting could spill over into the rest of the Middle East and affect oil producers.
Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, said (via Reuters):
Escalating geopolitical tension, coupled with a rise in attacks on energy facilities in Russia and Ukraine, alongside receding ceasefire hopes in the Middle East, raised concern over global oil supply.
The agenda
9:30am GMT: UK consumer card spending analysis
11am GMT: UK Confederation of British Industry retail survey (March; previous: -7 points)
