Oil prices continued to take their toll this week. First Ryanair announced an 85% drop in profits from last year – something to do with its fuel costs soaring 93%. Then BA (which has also had a dismal year so far) revealed its own solution to the same problem: a possible merger with Spanish operator Iberia.
But there’s always a winner, of course. This week BP reported replacement cost profit of $13.4bn in the first half of the year, up almost a quarter on last year. Although we’re not sure whether the news will have done much to make Robert Dudley feel better – the chief exec of BP’s Russian joint venture TNK-BP has been forced to flee Russia and go into hiding as the row with the four oligarchs rumbles on. Motorists, meanwhile, may feel like giving someone at BP a hiding. And gas users aren’t exactly cheering right now either: British Gas burned many bridges with price hikes of 35%, while parent company Centrica posted profits of nearly £1bn...
Others were getting scalded too. BT reported falling profits and a plunging share price – a real baptism of fire for new boss Ian Livingston, who’s still only two months into the role. Meanwhile Lloyds TSB, the bank that had supposedly weathered the recent economic storm, reported a 70% drop in profits.
Amid all this economic gloom, it’s heartening to see at least some financial woes being self-inflicted. The BBC was hit with a record £400,000 fine for faking phone-ins across eight shows.
And so to the inevitable mention of housing. It’s not pretty. Hometrack announced prices 4.4% lower than this time last year, and a Treasury-backed review said things are unlikely to improve for three years. Its author was Sir James Crosby, former boss of HBOS, whose results were also out this week. The less than earth-shattering news: a massive drop in profits (although not as bad as everyone feared).
Still, not everyone’s succumbing to the gloom. Alliance-Boots owner KKR is planning to float on the NYSE with a price tag of $15bn – a pretty bold move considering the conditions. Clearly the US private equity firm isn’t letting harsh reality get in the way of its dreams. Much like the Miami teen who so wanted to be a bus driver that he fell into the unusual habit of donning a uniform and stealing them – until the cops finally caught up with him this week. We’ve heard of soaring petrol prices forcing drivers to abandon the car and take the bus instead, but that’s ridiculous.