PRESS DIGEST - Financial Times - June 23

The Financial Times

PAY DEALS THREATEN INFLATION TARGETS

Research by IDS Pay Databank has found that pay settlements are rising at a rate which could threaten the government's inflation target. Many companies which previously negotiated long-term pay deals in the expectation of continued low inflation are now having to renegotiate awards in light of rising consumer prices. Such companies include Drax Power (DRX.L), which in April agreed a seven per cent pay rise for 600 workers and Barclays (BARC.L), which recently implemented a five percent increase for 55,000 workers as the first part of a three-year, RPI-linked deal. This contrasts with the stance of Chancellor Alistair Darling, who recently called for pay awards in both the private and public sectors "to be consistent with our inflation target of two per cent".

HOUSE-SELLERS OUTNUMBER PURCHASERS BY 15 TO 1

There are 15 times more homes for sale than people willing to buy them, according to figures released by Rightmove (RMV.L). The online property group said that over a million properties in Britain remain unsold due to purchasers finding it increasingly hard to obtain mortgage finance. "Lenders are trying not to lend right now and are just cherry picking for profit. For most sellers that will mean whatever they thought of asking for their property at the peak of the boom, they need to take at least 10 per cent off", said Miles Shipman, Rightmove's commercial director.

BUSINESSES URGED NOT TO RESIST CRACKDOWN ON PRICE-FIXING

The Office of Fair Trading has warned that it will increase the number of prosecutions that it brings against companies and executives suspected of price-fixing. Simon Williams, the OFT's head of cartels, said that there are some "pockets of resistance in the business community to the mindset that cartel activity is just inherently wrong. We want to change that mindset. I want to us to get to a stage where it is seen as nothing more than a species of simple fraud." Mr Williams said that the regulator will bring greater numbers of criminal charges for "hardcore" instances of manipulation, and make greater use of director disqualification in less serious cases.

BA PREMIUM PASSENGERS TO PAY HIGHER FUEL SURCHARGES

Barely more than two weeks after raising fuel surcharges for the third time this year, British Airways (BAY.L) has decided to increase the fuel levy it charges its business and first-class passengers. Chief executive Willie Walsh justified the move by arguing that the fuel surcharge was being restructured to reflect the fact that "among those passengers travelling in cabins with fewer seats, using more space and benefiting from larger baggage allowances, we burn more fuel per passenger to fly them." The surcharge for premium customers now stands at 133 pounds for one-way flights of more than nine hours.

BBC OFFERS ITV HELP IN CUTTING COSTS

ITV (ITV.L) is expected to tell regulators that it is radically cutting the cost of its public service broadcasting commitments, and may receive help from the BBC in doing so. The listed broadcaster believes its public service commitments will soon cost more to produce than it receives in return, and that the shortfall will worsen as a result of the analogue switch-off, an argument accepted by the government and media regulator Ofcom. The BBC is expected to offer ITV and other private broadcasters assistance with technology and newsgathering in a bid to prevent its annual licence fee being trimmed.

EXPRO SPELLS OUT WHY IT REBUFFED HALLIBURTON

Oilfield services company Expro International EXR.L EXR.L has said that it spurned a takeover bid from US giant Halliburton due to concerns over potential delays and risks associated with the deal. Expro, which backed a lower offer from Umbrellastream, a consortium led by private equity house Candover (CDI.L), said that Halliburton's 10 pence per share premium did not fully compensate for negative aspects of the proposed tie-up. Umbrellastream's 16.15 pound per share bid values Expro at 1.81 billion pounds.

'NO ACTION' BY FSA AFTER ABUSE PROBE

The Financial Services Authority has failed to find sufficient evidence of market abuse prior to the collapse of HBOS'HBOS.L share price in March to bring action against any firms or individuals. The FSA has finalised its report into trading in the bank's shares on the morning of March 18, when its shares fell by nearly 20 per cent amid rumours of a funding crisis. Although it is believed to have found evidence of market abuse, the regulator cannot pinpoint any single trade which could lead to legal action.

COMPLAINT MAY HIT BARCLAYS' SWF PLAN

Barclays' (BARC.L) attempts to raise four billion pounds in funding from sovereign wealth funds face a potential setback after a member of the Qatari royal family publicly criticised the bank's handing of an alleged 50 million pound fraud in Spain. Sheikh Abdul Aziz bin Kahalifa Al-Thani has written to the bank's board claiming that he is still owed around 42 million euros as a result of the affair, and is believed to have hinted that unless the matter is resolved, it may affect the bank's negotiations with the Qatari Investment Authority, which is run by the emirate's ruling family.

PROBE INTO BP ALASKA LEAK

US regulators are investigating a leak at BP's (BP.L) Prudhoe Bay facility in Alaska which occurred during work to replace 22 miles of corroded pipelines. BP said that the leak only consisted of fresh water and anti-corrosion chemicals, and that the pipeline was being tested at a higher pressure than it will see once it is put back into operation. The oil company said that the engineering difficulties will not affect its schedule to have a new pipeline in service by the end of the year.

CHEAPFLIGHTS GROUNDS FLOTATION

Price comparison website Cheapflights has shelved its planned flotation, with its founding shareholders likely to maintain their investments in the firm for the foreseeable future. A strategic review launched by the company has concluded that the current state of the financial markets means that a successful public offering is unlikely. Chief executive Chris Cuddy said that the abandonment of the float "in no way changes the strategy of the company," and that the firm will go public at a later date. Cheapflights was founded in 1996, employs 125 staff and had revenues of 26 million pounds in 2006.

Prepared for Reuters by Durrants.