Drax has plans to build 3 biomass power plants in Britain by teaming up with Siemens and using its turbines in a £2bn project. Drax, the operator of the biggest power station in Britain is responding to new green regulations and high environmental targets.
Drax’s coal-fired power station in Yorkshire produces 4,000 megawatts of electricity which is 7% of the UK’s total supply. The proposed three biomass-fuelled power plants would generate 300 megawatts each.
Well known German engineering company Siemens will build these plants for Drax. Construction is slated to begin in 2010 while plants would start generating power from 2014. Drax, which would own 60%, is confident of getting attractive returns from the project that is estimated to cost £2bn.
Two of the three plants will be in Hull and Immingham, Yorkshire. Location of a third plant though not decided yet is likely to be next to Drax’s existing plant in Yorkshire.
The existing Drax power station has already introduced biomass technology to benefit from the lower cost of materials such as forestry residue, sunflower seed, straw, and peanut husks which are required to be imported on bigger scale.
Siemens’ turbine technology would be deployed in generation of power.
The move by Drax comes in the wake of UK’s plans to generate 10% of electricity from renewable resources by 2010. The UK is one of the biggest polluters of environment and is targeting to reduce carbon emissions by 80%.
Aviation industry’s woes deepened further as the air traffic touched its lowest in five years and Ryanair announced withdrawal from Spanish base over a dispute on costs.
Airline industry heralded global downturn after soaring oil prices led 30 airlines to bankruptcy. The latest traffic data from the International Air Transport Association (IATA) indicated that global downturn was turning heat on the industry.
Global traffic dropped 2.9% in September. According to IATA chief executive Giovanni Bisignani, alarmingly widespread and fast paced fall in traffic could lead to a bigger loss than £3.3bn deficit forecast this year.
A number of UK based carriers such as Zoom and Silverjet were grounded due to crippling fuel costs. Global recession was now posing a greater threat to the biggest airlines as passenger demand was falling sharply. The world’s highest revenue generating airline Air France-KLM also admitted that it would be very difficult for it to achieve its target of €1bn operating profit.
Bisignani warned that worst was still to come and the industry had a very difficult year ahead. He added that the increasing global economy crisis was deepening the industry’s crisis as well.
IATA informed that a proportion of sold seats per flight fell from 78.8% to 74.8%, confirming analysts’ apprehension that air lines were operating too many flights for too less passengers.
According to the chairman of CTAIRA consultancy, Chris Tarry, falling load factors were indication of excess capacity, the real issue for industry was how it could cut capacity speedily to keep up fares against market downturn.
The airport operator BAA will be putting Gatwick airport up for sale in November, hoping to get £3bn from the deal. An information memorandum is due to be sent to interested bidders before November 15.
BAA is under pressure from the Competition Commission to sell off Gatwick. A source close to BAA disclosed that this process would take a minimum of one year for completion. HSBC and Royal Bank of England are acting as advisers to BAA on the deal.
BAA is not inclined in lowering the price it is expecting from the deal with belief that a potential investor could strike deal with an aye on the rewards it may gain from Gatwicks acquisition over 20 to 30 years.
The source claimed that owning the UK’s number two airport was a rare thing and BAA would strive to ensure that it got reflected in the price.
The Competition Commission believes that BAA has acquired monopoly in South-East by owning Gatwick, Heathrow and Stansted and three airports in Scotland. It wants to prevent abuse of monopoly by BAA.
Two London airports and one more in Scotland are likely to be recommended for sale by the Competition Commission after completion of investigation into BAA in 2009. BAA, on the basis of preliminary findings, opted for sale of Gatwick.
All the supermarkets have set ambitious targets to also cut emissions from vehicles, the distance goods travel, waste and other harmful byproducts of their business. One key driver has been shooting business electricity bills that account for nearly 40% of store costs and about 60% of their direct emissions.
The other reason is customers. Though evidence to prove that shoppers are actually lobbying for ‘greener goods’ is hard to find. But supermarkets see new green values as a means of winning or retaining customer loyalty, stated the news editor of The Grocer industry magazine, Ronan Hegarty.
He added: “It is a bit of a trump card to say ‘who is the greenest’?”
And at the same time, retail bosses are seeing the opportunity to employ the cost savings to target more customer base by bringing down product prices, explained, head of Asda’s corporate policy for sustainability and ethics, Julian Walker-Palin, who added:
“Anything a supermarket does, we do (it) for our customers. For 17 million people who visit and shop in Asda each week, the majority does not understand carbon and climate change, and they do not want to. But they understand there is this issue that we need to do something about”
A combined effort in reducing both the business electricity and product prices should help to make vital savings in this tough economic period.
Home Retail Group has slumped to a big loss of £437m in the first-half of the current year. The Group controls DIY chain Homebase and Argos catalogue shops which saw a big plunge in sales in recent weeks.
The retailer had written off more than £500,000 from the value of Homebase, which is an indication that Home Retail Group paid more than what the underperforming retailer deserved when it bought Homebase for £900m from equity group Permira in 2002.
Profits of the Group for the first two quarters to the end of August were very much down even before write-off, falling 22% to £106m, with a profit plunge of 37% at Homebase and 14% at Argos.
Chief executive, Terry Duddy, stated that trading conditions had gone from bad to worse in recent weeks.
Argos and Homebase like-for-like sales were down by 9% compared to 2007 levels. Duddy warned that if sales did not improve in the crucial trading period of Christmas, profits would touch £327m which is the bottom of City expectations, as against £426m last year.
Duddy informed that Argos’ like-for-like sales were at negative levels which the retailer had never seen before. He saw a depressing outlook for retailers and remarked that there was never so much lack of clarity in the past that made advance planning so much difficult.
Home Retail group is curbing costs by putting opening of new stores on hold and cutting staff working hours by 20%.
GlaxoSmithKline registered growth in revenues and earnings per share beyond prediction courtesy of the weak pound.
According to the company release its third quarter turnover increased by 7% to £5.88bn and the gain in earnings per share was 6% to 25.2p. But the company saw 3% decline in overall sales on constant exchange rate terms. The fall in sales in US was 13% since many of Glaxo’s products had reached ‘generic cliff’, which is the period when patent runs out and other companies get entitled to produce similar products. The company is predicting full year mid-single digit range loss in sales.
Another big pharmaceutical company Merck is cutting 7,200 jobs, around 12% of current strength, under its restructuring programme. Merck’s 3rd quarter profits fell 28% due to flat sales and generic competition.
Another pharmaceutical giant Pfizer reported 13% fall in US consumption of its best-selling cholesterol drug Lipitor, raising concerns that even stable sectors were unable to escape turmoil in the US retail market.
Andrew Witty, Glaxo’s CEO stated that company would require close monitoring of the impact of global economy changes on the product demand, and would have to look for diversification to overcome risks.
According to Glaxo’s spokeswoman, company’s core business was only marginally affected by the financial crisis. She reported that its asthma drug Advair sales were up 5% in the US and 7% overall.
Aga Rangemaster, makers of the Aga cooker are being hit hard by the consumer chill as the slump in the housing market took heavy toll on trading.
Aga Rangemaster, which manufactures must-have product, said that its recent orders fell 15% below last year level and profits were most likely to suffer. It added that market itself was affected by the fall in order levels and housing transactions, although company registered increase in market share.
These unfavourable conditions were going to affect second-half operating profits much below £9 million, made in first quarter of 2008.
Fall of 15% is pointing towards worsening slowdown which was predicted 2 months ago when summer sales dropped by 5%.
Sales of items such as cookers, fridge freezers, washing machines were severely down as declining home sales reduced demand. Major retailers such as DSG International, the owners of PC World and Currys, were under tremendous pressure.
Sales of Aga’s cast-iron cooker had slowed because of cautious approach of the consumer, although existing customers were showing interest in better models. Slaes of Rayburn model, which is dual purpose that cooks as well as heats homes, were flat, but the company is confident that model’s low running costs and savings on heating bills would attract more consumers.
Aga’s wood-burning cookers and stoves had strong sales as the sky rocketing gas and energy bills made user to look for savings.
British Airways finally fell in line with rival airlines following a steep fall in fuel prices BA announced levy cuts for economy class passengers on long-haul flights, leaving business class charges unchanged.
The surcharge on return flights with a travel duration of more than 9 hours- say to New Delhi and Cape Town - will drop from £218 to £192 per ticket for those travelling in the airplane’s back coach. It would reduce from £156 per return flight to £136 for less than 9 hours long journeys in case of long-haul economy class, for example Heathrow to Montreal or New York.
The premium economy passengers would pay £166, down from £176 for long haul return flights under 9 hours. The surcharge is reduced to £222 from £229 for more than 9 hours long return flights.
There is no change in surcharge for business class passengers and short-haul flights.
BA was criticised by Ryanair for keeping fuel surcharges unchanged in spite of drop in oil costs from $147 a barrel to $80 a barrel now. It accused BA of disproportionate charging for safeguarding profits during slowdown. BA had defended saying that gains of lower oil price were wiped out by the strong dollar value.
According to Douglas McNeill, BlueOar Securities’s analyst, when rival airlines announced cut in surcharges there was no option left for BA than to respond positively to keep fares competitive.
Ryanair has alleged that Air BP was profiteering by misusing its monopoly as the sole supplier of fuel. Ryanair chief Michael O’Leary revealed that the matter has been referred to the Office of Fair Trading for investigating a 50% hike in fuel charges at Prestwick and Belfast City airports.
O’Leary claimed that BP was pushing prices at a rate much higher than the rate of inflation. Air BP is determined to abuse its monopoly and since no rational explanation has been given by them, OFT has been asked to inspect BP, added O’Leary.
He further blamed Air BP for gouging airlines and passengers by imposing a 50% rise on delivery charges at Glasgow and Belfast City.
According to O’Leary, delivery charges were already high and he did not accept Air BP’s explanation that the increase was inevitable due to business downslide.
He disagreed with the statement and reasoned that Belfast was the fastest growing airport in the UK and traffic at Belfast City was up 28%
O’Leary declared that at a time when consumer confidence was collapsing, blatant abuse of monopoly by the hugely profitable oil company was totally unacceptable.
BP spokesman denied indulging in profiteering and claimed that prices were mutually negotiated between airlines and fuel suppliers reflecting the current market and costs.
To celebrate Ryanair’s success of Belfast airports on 4 routes, O’Leary announced the release of one million £10 all inclusive seats for November to January travel.
Supermarkets finally took initiative in reducing petrol prices long after the fall of global oil market prices. This was followed by a reduction in fuel surcharges by Virgin Atlantic and British Airways.
Asda and Morrisons reduced unleaded petrol’s price to 99.9p a litre, which brought the cost of one litre below £1 for the first time since December 2007. The overall fall in petrol price at Asda is 5p although diesel remained expensive with price falling to 110.9p from 116.9p. Asda termed the reduction as a welcome boost for customers.
While global oil prices fell from a high of $147 to less than $80 a barrel now, unleaded petrol and diesel were being sold at 120p and 130p a litre respectively at the peak of inflation this year.
According to AA president, Edmund King, lower petrol prices could be expected this winter and commented that supermarket’s lead paved the way for getting more realistic pump price which would help ease inflation pressure.
He added that three quarters of motorists had curtailed their spending or driving due to soaring oil prices; the cuts will be a boost for the economy.
According to analyst Damien Cox at the energy advisers John Hall Associates, the global economy has not seen the bottom yet and is likely to deteriorate further with more falls in oil prices.
Tesco set off the momentum for petrol price cuts by shaving 3p per litre joined by BP and Total in making similar cuts.