BA owner hits spot of turbulence as traders fear cost of third runway
ATHIRD runway at Heathrowwas given the green light by MPs late last night but the news provided little cheer for investors in International Consolidated Airways Group today.
The Government won a vote on the third runway in the Commons by 415 votes to 119 — a majority of 296.
But the British Airways owner’s stock fell 8.6p to 689.2p this session as shareholders worried that Heathrow will raise landing charges to pay for the new runway — increasing the costs of using the airport.
“Parliament has approved Heathrow’s expansion without any idea of how much it will cost,” IAG chief executive Willie Walsh said in a statement. “We have zero confidence in Heathrow management’s ability to deliver this project while keeping airport charges flat.”
The building of a third runway will also expose IAG to greater competition from low-cost rivals easyJet and Ryanair who have had to fly out of Stansted and Luton.
EasyJet confirmed this session that it would be interested in setting up a base in Heathrow and its shares climbed 8p to 1731.5p.
A spokesman said: “Expansion would also provide a unique opportunity for easyJet and other budget carriers to bring low-cost operations to Heathrow for the first time.”
The FTSE 100 staged a mini come- back, up 44.37 points at 7554.21, recovering after yesterday’s heavy losses when the index fell 172.4 points.
Notable risers included cruise company Carnival, up 182p at 4393p, after its shares plunged during the previous session on a cut in its profit targets. But there were plenty of fallers again, including oilfield services firm Petrofac which lost 2p to 534p, despite it reporting a 5.9% increase in new order intake and stating that it is trading in line with expectations.
Analysts said the firm still has to prove itself after a tough 2017 when it had to suspend its chief operating officer Marwan Chedid amid a Serious Fraud Office investigation into the activities of the business on suspicion of “bribery, corruption and money laundering”.
But it was a better session for the UK’s largest commercial vehicle rental provider Northgate which posted full-year profits of £52.7 million.
The company also appointed Philip Vincent from SABMiller as its permanent chief financial officer on an annual salary of £330,000.
Shares gained 4.2p to 403.2p.