Uber-Grab deal hits speed bump in Singapore

New Uber chief executive Dara Khosrowshahi is seeking to stem huge losses and move past a series of scandals. (AFP)
Updated 13 April 2018
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Uber-Grab deal hits speed bump in Singapore

SINGAPORE: Singapore on Friday imposed restrictions on ride-hailing firm Grab’s acquisition of Uber’s Southeast Asian business until it concludes a probe into whether the sale may have infringed competition rules.
Grab, which is headquartered in Singapore, last month agreed to buy Uber’s food- and ride-hailing operations in the region, ending a battle between the companies and marking the US firm’s latest retreat from international markets.
But Singapore’s competition watchdog has raised concerns about the deal and Friday issued interim measures while it continues an investigation.
There is growing regulatory scrutiny of the deal across the region, with the Philippines and Malaysia also saying they are looking into whether it hinders competition.
Under the rules issued in Singapore, which take effect immediately, Grab and Uber will not be allowed to integrate operations in the city-state until the probe is concluded.
They will have to maintain separate pricing and cannot obtain confidential information from each other like costing or customer and driver details.
Both companies would also have to maintain pricing from before the deal, with drivers allowed to drive for either company without penalty, the Competition and Consumer Commission of Singapore said.
The Uber app will continue working until May 7 to facilitate a smoother transition for drivers and customers, it said.
Grab, which operates in eight Southeast Asian countries, said it would work with the government.
But head of Grab Singapore Lim Kell Jay added: “The interim measures should not have the unintended effect of hampering competition and restricting businesses that have already been investing in the country over the years.”
In return for selling its Southeast Asian ride-hailing and food operations, California-headquartered Uber is set to receive a 27.5 percent stake in Grab.
The sale is Uber’s latest withdrawal from a market where it had faced tough competition, as new chief executive Dara Khosrowshahi seeks to stem huge losses and move past a series of scandals.


Lufthansa profit warning spooks European airline sector

Updated 17 June 2019
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Lufthansa profit warning spooks European airline sector

  • Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called ‘attritional fare wars’

FRANKFURT: Germany’s Lufthansa sent shockwaves through the European airline sector on Monday as it cut its full-year profit forecast, with lower prices and higher fuel costs compounding the effect of losses at its budget subsidiary Eurowings.
The warning follows gloomy comments last month from Irish budget airline Ryanair, which vies with Lufthansa for top spot in Europe in terms of passengers carried. Air France-KLM also reported a widening quarterly loss last month.
In a statement issued late on Sunday, Lufthansa forecast annual EBIT of between €2 billion and €2.4 billion, down from the previously targeted €2.4 billion to €3 billion.
“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.
European airlines are locked in a battle for supremacy, with a surfeit of seats holding down revenues and higher fuel costs adding to the pressure. A number of smaller airlines have collapsed over the past two years.
Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning.
“The group expects the European market to remain challenging at least for the remainder of 2019,” it said.
It also pointed to high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.
Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called “attritional fare wars” and said four or five European airlines were likely to emerge as the winners in the sector.
“No signs that anyone is prepared to reduce capacity, therefore we would anticipate the wave of consolidation in European short haul is not over,” said analyst Neil Wilson, analyst at London-based broker market.com.
Earlier this month global airlines slashed a widely watched industry profit forecast by 21 percent as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.
Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations, especially on transatlantic and Asian routes.
Eurowings management is due to implement turnaround measures to be presented shortly, Lufthansa said, adding that efforts to reduce costs had so far been slower than expected.
Lufthansa’s adjusted margin for earnings before interest and tax (EBIT) was forecast between 5.5 percent and 6.5 percent, down from 6.5 percent to 8 percent previously, it said in a statement.
Lufthansa also said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.