BA Owner IAG Announces Profits Of £182m

International Airlines Group, the owner of British Airways and Iberia, has announced a half year operating profit of £182m (€230m).

The company says the results are £208m (€230m) better than 2013, when it made a £26m loss.

IAG's chief executive, Willie Walsh, told Sky News the turnaround in Iberia had been "stunning" and said it was buying eight Airbus A350-900 aircraft for the airline, as well as eight A330-200 planes.

Mr Walsh said: "Iberia has taken significant steps to restructure its business and the progress made so far means that we can bring new long haul aircraft into the airline's fleet.

"These orders demonstrate our commitment to make Iberia competitive."

More than 3,000 jobs have been cut at the Spanish airline and nearly 1,600 more losses have been announced.

IAG's second quarter operating profit was £301m (€380m), up some £107m (€135m) on last year, as the lucrative spring and summer seasons deliver a big increase in passenger numbers.

Thousands of jobs have been cut at Spanish carrier Iberia

Mr Walsh also told Sky that BA and Iberia were both taking action over the current outbreak of the ebola virus in some African countries.

"Anyone flying into the areas is provided with a briefing from our health services," he said.

"That's a comprehensive briefing which outlines all the issues that people should be aware of.

"I'm satisfied that the measures at the airports where outbreaks have been identified are working, and are working well."

Mr Walsh also defended baggage handling company Swissport, which has been criticised over problems at Gatwick Airport.

Some passengers have faced long delays collecting their bags, with some told to go home without them.

He said: "I think Swissport is a good company - they provide us with services around the world ... To be fair to them, it's not all their fault because Gatwick was affected by some adverse weather which meant schedules were running well off plan and aircraft were arriving at a time where they did not have resources in place.

"I apologise to any of our customers who've been affected by the services provided to us by Swissport.

"But ... all the handling agencies at Gatwick are working to ensure all that all of our customers, and customers of other airlines can get away on their holidays."

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Lloyds' Libor Fine To Help Armed Forces

Millions of pounds of fines imposed on Lloyds Banking Group for manipulating lending rates will go to military good causes.

The Prime Minister, along with the Chancellor George Osborne, made the announcement on a visit to a Royal Marines base in Poole, Dorset.

"Lloyds bank have been fined £100m for manipulating the market," Mr Osborne said.

"That is a terrible thing to have done but I'm making sure the money is being put to good use.

"It's going to help soldiers returning with injuries, to make sure they get long-term care; it's going to help families while their loved ones are away in the military.

"In other words, people who have demonstrated the worse of values in the City are going to be supporting those who've demonstrated the very best of British values in the Armed Forces."

Lloyds apologised for manipulating the Libor rate

The UK's Financial Conduct Authority (FCA) fined Lloyds £105m, and it was also heavily fined by US regulators, with the overall penalty coming to £218m.

Lloyds manipulated Libor - the interest rate banks charge one another - and also tried to rig fees payable to the Bank of England under a scheme supporting banks during the financial crisis.

The Libor rate - the basis of trillions of dollars of financial transaction - is set daily and is also a reflection of an institution's credit worthiness.

So if it is low, the perception is a bank is a safe bet to deal with.

The implication is that during the 2008 bank crisis the rate may have been manipulated to make some banks look healthier than they were.

Lloyds apologised for the "unacceptable" actions of individuals involved in the conduct and said its previously lax culture was to blame.

It said: "The manipulation of submissions covered by the settlements took place between May 2006 and 2009 and the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings."

More than £2bn has now been paid by banks globally to regulators over alleged manipulation, including £390m by RBS.

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High Street Revival 'Has Shown Little Impact'

By Frazer Maude, Sky News Correspondent

The self-titled "Queen of Shops" has come under fire after her Government-backed bid to revive the High Street has shown little impact.

Wolverhampton was one of 12 town centres chosen to pilot retail guru Mary Portas' High Street revival. It got a £100,000 share of the £1.2m in funding.

That helped finance the opening of five retail outlets. Three of them have been a success, one has diversified, and the fifth went under.

Nick Pitt, manager of the local shopping centre, chaired the Wolverhampton Portas Project. He sees it as a success for the town centre.

"A hundred thousand pounds is good value. And it rallied businesses around to come together in a very selfless way to help people get into business," he told Sky News.

"It was quite a humbling experience. I see people who'd never had the opportunity before to have their own shop and now they have.

"And those people are still helping us now to help other people get into business. And we're determined to do it again."

The celebrity trouble shooter was brought in by the Government two years ago to breathe new life into our struggling High Streets.

But some of her key recommendations, like a reduction in business rates and free parking, were ignored.

Some £1.2m in funding was set aside two years ago to boost business

Labour MP and chair of the Government's Business Select Committee, Adrian Bailey, is critical of the scheme, saying: "Overall, and I would emphasise it time and time again, you will not change the basic problems of the High Street just by putting in these sort of pilots.

"You've got to change the business rates and those obstacles which are deterring people from moving into the High Street in order to provide an imaginative variety of retail offers that people will want to buy into."

Mary Portas was not available for interview, but her CEO David Wood issued a statement to Sky News on her behalf.

It said: "We think there's some justified criticism of the way Government originally implemented the programme and the lack of infrastructure to support the town teams.

"There's also justified criticism of the way the majority of the recommendations were accepted but nothing was done - for example we spoke in the report about parking, business rates, landlords, town-centre-first planning approvals and the like but little was done."

Penny Maudaunt, the newly appointed High Streets Minister, says the scheme has been successful.

"There has been a huge amount of really good work that's gone on locally," she said.

"The pilots have been experiments. There have been a lot of good ideas, some ideas that may not have worked so well, but there are a number of ideas that have worked very well for particular areas and what we have to do is replicate that in other High Streets."

But many businesses say the areas that need tackling are the very ones that Ms Portas highlighted months ago, and which the Government ignored.

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US Shares Tumble Amid Weak Corporate Results

US stocks have tumbled about 2%, in a major sell-off following lacklustre US corporate earnings.

The approaching end of the Federal Reserve's economic stimulus, weak eurozone data and the Argentine debt default were also blamed for the slump.

The Dow Jones Industrial Average tumbled 317.06 points (1.88%) to 16,563.30, erasing all its gains this year.

The S&P 500 sank 39.40 (2.00%) to 1,930.67, a seven-week low.

The Nasdaq, meanwhile, plummeted 93.13 (2.09%) to 4,369.77.

The rout followed anaemic earnings from companies such as Whole Foods Market, Kraft Foods, Nike, ExxonMobil and Chevron.

Shares in tech giants such as Apple, Facebook and Google also took a hit.

The CBOE Volatility index, sometimes referred to as Wall Street's fear gauge, jumped 27.2% to close at 16.95, its highest level since April 11.

European stock exchanges fell earlier on Thursday after eurozone data renewed deflation fears.

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BA Owner Reveals Half Year Profits Of £182m

International Airlines Group, the owner of British Airways and Iberia, has announced half year operating profit of £182m (€230m).

The company says the results are £208m (€230m) better than 2013 when it made a £26m loss.

IAG boss Willie Walsh told Sky News the turnaround in Iberia had been "stunning" and said it was buying eight Airbus A350-900 aircraft for the airline, as well as eight A330-200 planes.

Mr Walsh said: "Iberia has taken significant steps to restructure its business and the progress made so far means that we can bring new longhaul aircraft into the airline's fleet. These orders demonstrate our commitment to make Iberia competitive."

More than 3000 jobs have been cut at the Spanish airline and nearly 1,500 more losses have been annouced.

IAG's second quarter operating profit was £301m (€380m), up some £107m (€135m) on last year, as the lucrative spring and summer seasons deliver a big increase in passenger numbers.

More follows...

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RBS Warns Over 'Adverse Impact' Of Independence

RBS has said Scottish independece could have a "material adverse impact" and "significantly impact its credit ratings".

Sources say it is but a re-statement of the position set out in the bank's full-year results and annual report.

The referendum on Scottish independence takes place next month, on September 18.

The bank - 80% owned by the taxpayer - said earlier this year in its annual report that "uncertainties" of a 'Yes' vote "could also impact the fiscal, monetary, legal and regulatory landscape to which the Group is subject".

The report continued: "Were Scotland to become independent, it may also affect Scotland's status in the EU.

"The occurrence of any of the impacts above could significantly impact the Group's costs and would have a material adverse effect on the Group's business, financial condition, results of operations and prospects."

Sky News understand that at least two UK banks are also said to be discussing internally the prospect of warning over the implications for payments systems and infrastructure if Scotland votes to break away.

Britain's two state-backed banking giants are also stepping up talks with the Bank of England about contingency planning ahead of September's referendum.

As reported last week, some executives at Lloyds Banking Group and Royal Bank of Scotland (RBS) are advocating a scenario under which the central bank would make a public statement ahead of September's vote guaranteeing deposits and liquidity.

Insiders said that Lloyds and RBS, which are 25% and 80%-owned by British taxpayers respectively, have told Bank of England officials at recent meetings that they are keen for it to do so.

Both banks are headquartered in Scotland.

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'Vultures Force' Argentina To Second Default

The failure of negotiations between Argentina and two hedge funds has seen the country default on its debts for the second time in 13 years.

The funds - NML Capital and Aurelius Capital Management - had refused to accept a reduction in what they were owed, preventing a deal being struck.

They had spent the last two days locked in talks in New York with a US court-appointed mediator as they sought a compromise, but a deal was not reached by a Wednesday midnight deadline.

The South American country owes the hedge funds around £1.5bn (£0.9bn) and owes another group of creditors $539m million (£318m).

Argentine economy minister Axel Kicillof held firm to his government's position that it could not accept a deal with hedge fund creditors it described as "vultures."

President Cristina Fernandez de Kirchner calls hedge funds 'vultures'

Argentina previously said it wanted to pay the second group an agreed amount but an American judge blocked the payment unless it also paid the two US hedge funds the full amount it owes them at the same time.

Argentine President Cristina Fernandez de Kirchner had long refused to negotiate with hedge funds because of how they treated the country after the last major default.

Court-appointed mediator Daniel Pollack said a default could hurt bondholders who were not part of the dispute as well as the Argentine economy, which is suffering through a recession, a shortage of dollars and one of the world's highest inflation rates.

"The full consequences of default are not predictable, but they are certainly not positive," Mr Pollack said.

Ratings agency Standard and Poor's had already placed Argentina in "selective default".

Mr Kicillof was described as being furious, and said the money was available but had been frozen as a result of the court order by US District Judge Thomas Griesa.

Argentina's economic woes have prompted protests

"Who believes in the ratings agencies? Who thinks they are impartial referees of the financial system?" he said.

"Argentina paid. It has money. It is going to continue to pay. The one who is responsible for this situation is Judge Griesa."

President Fernandez also described the hedge fund creditors, often calling them "vultures" for picking on the carcass of the country's record $100bn (£60bn) default in 2001.

There was no immediate reaction from the hedge funds.

Analysts said a default would deepen the economic malaise gripping Argentina which has resulted in soaring inflation and increased unemployment.

Its 2001 default, the largest in history at the time, plunged Argentina into an economic and social crisis that it is still battling to overcome.

The default may increase pressure on Ms Kirchner to seek political and economic solutions to Argentina's problems, in a region where the country is in dispute with the UK over the ownership of the Falkland Islands.

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Lloyds Banking Group Takes New £600m PPI Hit

Lloyds Banking Group has revealed it has set aside another £600m provision for mis-selling of payment protection insurance (PPI).

The announcement comes as it released its half-year results, which showed an underlying profit rise of 32% to £3.8bn.

The bank, which is 25% owned by the UK taxpayer, said it had "substantially improved" its performance in the six months to the end of June.

Lloyds has now set aside £10.4bn for PPI mis-selling, with an estimated £2bn of the figure for administrative costs.

The bank now expects expects a slow down in complaints in the future.

Chief executive Antonio Horta-Osorio said: "We continued to successfully execute our strategy, further enhancing our leading cost position and low cost of equity, by investing in the products and services our customers need and further strengthening and de-risking our balance sheet, reducing costs and increasing efficiency."

More follows...

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British Gas Half-Year Profit Squeezed By 26%

The parent company of British Gas has reported a large fall in half-year operating profit, which has been blamed on mild weather and the furore over energy bills.

Centrica said British Gas Residential saw its earnings fall 26% to £265m in the six months to June 30, compared to the same period last year.

The drop comes amid ongoing controversy over bill hikes imposed by the so-called big six energy providers, and mild weather.

Chairman Rick Haythornthwaite said the troubles were down to "weather and reflecting the wider political environment".

He also said there had been an effort to restore customer trust in the firm.

Earlier this month British Gas was forced to compensate thousands of customers for providing inaccurate savings estimates in the latest mis-selling episode to blight the utility sector.

The parent company also suffered a significant earnings drop in the period, with operating profit down 35% to £1.58bn.

However the chief executive of Centrica, Sam Laidlaw, expects the dip in profit to be short-lived.

Mr Laidlaw said: "With challenging trading conditions on both sides of the Atlantic in the first half, earnings will be lower in 2014 than in 2013.

"However, the group is well positioned to return to growth in 2015."

Last month energy regulator Ofgem said it has referred the energy market to a probe by the Competition and Markets Authority.

It said the investigation was the best way to ensure that consumers are receiving the best quality, service and price availability.

The big energy providers have come under increasing scrutiny over profits, rising prices and how their wholesale and retail firms are structured.

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Watchdog To Confirm Bank Bonus Clawback Plan

By Mark Kleinman, City Editor

The UK banking watchdog will confirm on Wednesday that it is introducing the world's toughest rules for clawing back bankers' pay, even as it offers a fig-leaf to the industry by dropping some of its most punitive proposals for reform.

Sky News has learnt that the Bank of England's Prudential Regulation Authority (PRA) will announce that bonuses paid by the biggest banks operating in the City will be subject to a period of clawback lasting for at least seven years from the point of award.

This will allay fears that clawbacks would begin only when three year or five year bonus deferral periods have ended, which would have meant that bankers faced at least a decade before they could be certain that variable pay was not at risk of being reclaimed by their employers.

The PRA will also disclose that it has also abandoned a proposal contained in a consultation paper published in March for the new rules – which come into effect on January 1 next year – to be applied retrospectively.

Under its original plan, the regulator wanted firms to claw back pay awarded prior to next year but with a six-year limit in accordance with a statute of limitations for employment contracts.

A senior lawyer who spoke to Sky News on condition of anonymity said they had been briefed that the draft rules applying to awards made before 2015 would not be included in the final clawback policy statement to be published by the PRA on Wednesday.

Concerns about the legality of the six-year limit had been overcome, allowing the PRA to propose a longer clawback period, the legal source said.

The new framework for clawing back bankers' pay will be the toughest in the global banking industry.

It is expected to trigger claims from London-based international banks that they will be placed at a significant disadvantage in overseas financial centres, where foreign rivals will not be subject to the same stringent rulebook.

However, the PRA's revised plans suggest that it has heeded some of the industry's warnings about the enforceability of its original proposals.

Senior bank executives are also likely to be privately relieved at the reduction in the overall period in which bonuses are at risk, and at the decision to abandon retrospective application.

Sources said the new rules would apply only to so-called code staff – defined by regulators as bank employees who take material risks – and only to level one and two firms, which are the biggest in the sector.

As Sky News revealed earlier on Tuesday firms will be required to amend the employment contracts of affected staff.

The PRA has, though, decided that the circumstances in which clawback must be applied are narrower than those outlined in its consultation paper in March.

Sources familiar with the matter said the final rules would be limited to misconduct or misbehaviour by individuals, and a material failure of risk management by the firm or business unit where the employee worked.

An earlier proposal to also apply clawback where there has been a material downturn in financial performance is understood to have been dropped.

The Bank of England declined to comment on Tuesday.

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