Travel firm TUI puts plans in place to avoid Brexit disruption

Above, a Greek Taverna is seen in Sandanski, Bulgaria, a few kilometers away from the Bulgarian-Greek borders. TUI had already increased hotel space in places such as Bulgaria in case of a fall in the British currency. (Reuters)
Updated 13 December 2017
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Travel firm TUI puts plans in place to avoid Brexit disruption

BERLIN: European tourism group TUI is putting contingency plans in place for Britain’s exit from the EU, it said on Wednesday, aiming to address potential problem areas such as flying rights, visa requirements and changes in demand.
“Whilst we are not able to control the outcome of these (Brexit) negotiations, we are putting contingency plans in place in order to manage potential disruption to our operations,” it said.
CEO Fritz Joussen said if certain destinations became more expensive for Britons due to a fall in sterling then demand could shift to cheaper countries, and the group had already increased hotel space in places such as Bulgaria and Croatia.
He said UK customers typically spent around £1,000 (SR5,005) on their holidays and TUI had seen a slight weakening of demand for long-haul destinations.
It is not yet clear what flying rights will apply to carriers once Britain leaves the bloc, though airlines have said they need clarity by October next year at the latest.
TUI urged negotiators to come up with a “workable solution” for airlines, including extending current agreements until such a solution is agreed.
Joussen said, though, that TUI did not need to follow the example of easyJet, which has received an Austrian license to protect intra-EU flying, because it already had five operating licenses.
The comments came after TUI reported a 12 percent rise in underlying profit for its 2017 financial year and said winter trading was in line with expectations, with Turkey picking up.
Its shares were up 1.3 percent in early deals, among the top FTSE risers.
TUI said, however, that it took a €15 million hit from the insolvency of Air Berlin, previously Germany’s second largest carrier, due to the need to renegotiate a lease agreement it had with the airline.
Seven of the planes that used to fly for Air Berlin are now flying for Lufthansa and its Eurowings unit and Joussen said this would not change even if the EU blocked Lufthansa’s plans to acquire parts of Air Berlin.
TUI reported underlying earnings before interest, tax and amortization (EBITA) up 12 percent at constant currency to €1.2 billion, having earlier predicted an increase of at least 10 percent.


Philippine central bank considering ‘strong monetary action’ to tame price pressures

Updated 20 July 2018
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Philippine central bank considering ‘strong monetary action’ to tame price pressures

MANILA: The Philippine central bank is considering “strong monetary action” at its meeting next month to tame inflation and foreign exchange volatility, its governor said on Friday, signaling a third interest rate rise this year.
Inflation rose to 5.2 percent in July, the highest level in more than five years and above the central bank’s 2-4 percent target rate. It is expected to quicken in July to 5.3 percent due to higher food, fuel and utility costs, Department of Finance Chief Economist Gil Beltran said.
At the same time, the peso is hovering near a 12-year low against the dollar and is one of the worst performing currencies in Asia.
“The Monetary Board is considering strong monetary action to deal with persistent elevated inflation risks as well as our concern on the volatility in the foreign exchange market,” Bangko Sentral ng Pilipinas Governor Nestor Espenilla told a media briefing.
The central bank’s next scheduled meeting is on August 9, the same day that the government is due to release second-quarter GDP figures and two days after July inflation data is scheduled for publication.
Espenilla said the peso’s weakness is contributing to higher inflation expectations and “developments that may disanchor those expectations warrant a strong response.”
The currency has weakened in recent years as US interest rates started to rise and more recently as global trade tensions mounted.
The BSP raised interest rates last month for the second time in six weeks, becoming the second central bank regionally after Indonesia’s to deliver two increases in a short period of time.
Like other Asian economies with external deficits, the Philippines faces pressure to follow the US Federal Reserve in shifting away from low interest rate settings or risk capital flight as investors seek higher-yielding assets
The Philippines’ key rate, after two hikes of 25 basis points each, is 3.50 percent.
HSBC Economist Noelan Arbis said in a market note he expects the central bank to respond more forcefully next month, with a 50-basis points rate increase to tame inflation.