TheChek News Flow

Halfords’ hard pedalling could steer it towards a takeover

Retailer should pop up on dealmakers’ radars for its improved business, yet depressed share price

Fresh spring days encourage even the laziest to get back on their bikes. Shares in UK cycling and motoring retailer Halfords have recently enjoyed a moment in the sun following a better than expected update. Lycra-clad bankers will now be eyeing it as much for its takeover potential as for their next fancy two-wheeled toy.

Last week’s 14 per cent rally was one of Halfords’ best weekly performances since the 2020 pandemic lockdowns sent bike demand, and its stock, soaring. Since the summer of 2021 however, its share price has looked more like the downhills that follow big mountain climbs in the Tour de France, descending by two-thirds for a market capitalisation of about £400mn. 

A turnaround has however been revving up the business by focusing on Halfords’ motoring unit, which accounts for about 80 per cent of sales compared with the 20 per cent from its higher profile bikes. It has launched a new “Fusion” store concept where the casual buyer of, say, wiper blades, is upsold a blade fitting and potentially other car work, all in the same store. On average it boosts sales in those locations by an impressive 50 per cent. A loyalty scheme offering free annual car servicing for its higher tier is helping build a sticky repeat customer base too.

The upside from its efforts however has so far mostly been countered by higher employer taxes. There are other potholes on the road ahead. Bike sales have not yet entirely recovered from their post pandemic trough, while a soft-to-uncertain economic outlook affects discretionary bike purchases and could also prompt customers to delay work on their cars.

An unknown too is new chief executive Henry Birch, announced last week, whose background in general retail and with gambling groups like William Hill seems a long way from the greasy mechanics of car repair. 

Halfords should pop up on dealmakers’ radars for its improved business, yet depressed share price — recent bounce notwithstanding. It reportedly rebuffed an approach from van rental company Redde Northgate in late 2023 as undervaluing it. Then it was trading at about 230p or 17 times pandemic-boosted trailing earnings, versus 141p and 12 times, currently.

There are few close peers for Halfords’ mix of cycling and car garages. That said, the diverse cast of previous owners in its 133-year history include Burmah Oil, private equity firm CVC and high-street healthcare retailer Boots. So there should be someone willing to at least kick the tyres.

Western carmakers plot China comeback with local knowhow

Shanghai auto show will feature smarter models made ‘in China for China’

Western carmakers will fight back against domestic rivals in China this week, launching new software and intelligence capabilities in vehicles produced with local partners as they attempt a comeback in the world’s largest car market.

The country’s annual auto show, held in Shanghai this year, will provide the first real test for overhauled strategies. Volkswagen, Toyota and others have adopted “in China for China” plays to win back consumers who have shifted to more affordable and tech-packed electric vehicles from homegrown brands. 

Mercedes-Benz will launch its electric CLA model in China later this year, with its central “brain” being an operating system developed with its local research and development team. The car will have improved driving range and charging speeds and more advanced autonomous capabilities. 

“We feel very confident about our technology and intelligence right now,” said Magnus Östberg, Mercedes’ chief software officer, in an interview. 

“It’s going to be a battle of the numbers — who has the longest range,” Östberg said. “But I think we are going to stand very, very firm and in the front row in that competition with the CLA.”

Rival BMW will also launch its Neue Klasse electric vehicles, produced in China from next year with the involvement of its local R&D and design teams and local technology partners Alibaba and Huawei. 

“It’s time to find out if [foreign carmakers] have made good enough EVs,” said Li Yanwei, a member of the China Automobile Dealers Association expert committee. 

Their market share in China stood at 31 per cent in the first two months of this year, less than half the 64 per cent they held in 2020, with Geely and BYD overtaking Volkswagen’s long-held position as the best-selling brand, according to Shanghai consultancy Automobility.

Sales of electric vehicles and plug-in hybrids account for 45 per cent of China’s new car sales. 

Some western auto executives have conceded they are unlikely ever to recover their dominance in China but carmakers are keen to rebuild their positions, especially as the escalating economic warfare between Beijing and Washington puts more pressure on the industry.

To do that, many are turning to partnerships with Chinese companies to absorb their technological knowhow and respond more rapidly to Chinese consumers — echoing the strategy Chinese companies took from the 1980s of learning from their western rivals.

Audi, for example, will display its first production model for its new China-only sub-brand, without its iconic four-ring logo. The model uses a vehicle platform co-developed with its Chinese partner SAIC aimed at younger local consumers. The company will also have 18 other models at the trade show. 

“Last year, we took key steps to secure future success in China,” Audi’s chief executive Gernot Döllner said in a statement. “At 2025 Auto Shanghai, we are going to show that Audi delivers in China.” 

Paul Gong, an auto analyst at UBS, said joint ventures between global carmakers and their Chinese partners used to serve as sales channels for models made by foreign carmakers. But now, “there are more and more cases where Chinese carmakers provide a model design”, he said. 

Examples include the Mazda EZ-6, an electric sedan built on its partner Changan’s self-developed power train architecture, and the Toyota bZ3X, a $15,000 electric SUV that was developed using Chinese state-owned GAC’s EV platform and shares more than 40 per cent of its components with GAC’s Aion V model.

Toyota — especially its luxury Lexus brand — has better weathered the tough market conditions, with 1.8mn China sales in 2024, only an 8 per cent decline from its 2021 peak.

Even so, the world’s largest automaker is pivoting towards a new China strategy: handing far more power to its Chinese regional chief engineer, increasing local research and development resources and leaning more on its joint venture partners FAW and GAC.

“Rather than Japanese people making cars for the Chinese, it will be more Chinese people making cars for Chinese people,” chief financial officer Yoichi Miyazaki said in November. “We want to go a step further in that direction. We will have cars like that to show people in about two to three years.”

Before this week’s show, Toyota’s China arm said its Japanese parent would hand it product development authority so it could pursue “Chinese thinking by Chinese minds using Chinese methods”.

One area where Toyota will maintain stronger control in China is through the Lexus brand. In February, it announced plans to build a battery and EV factory in Shanghai to produce Lexus models, which will be only the third site in China to be fully owned by a foreign automaker.

European telecom groups line up deals in hope of looser merger rules

Executives believe new competition chief and bloc’s push for growth will lead to change

European telecoms groups are lining up deals in the hope that the EU’s new competition chief Teresa Ribera will loosen the rules on mergers.

Norway’s Telenor told the Financial Times that it was exploring acquisitions, while Spanish operator Telefónica, which owns stakes in operators across Europe, said at a recent conference that it would be open to options in markets including Spain, Germany and the UK.

Several other deals are in the feasibility assessment phase, lawyers and industry insiders told the Financial Times.

Brussels has in the past been wary of mergers in the industry, citing the risk of higher prices and poorer service for consumers.

The industry argues that the resulting lack of scale and market fragmentation — Europe has 41 mobile operators with more than 500,000 customers and more if smaller companies are included — hinders their ability to invest in technology and infrastructure.

Orange CEO Christel Heydemann recently said: “Our telecom business is a business of scale. If you want to invest, you need scale.”

Telecoms companies are hoping that Mario Draghi’s report on European competitiveness published last September will lead to change.

It made recommendations to encourage growth and help the bloc catch up with the US and China. One of those was that it should be more open to telecoms mergers.

The recommendations in the Draghi report align with long-standing calls from France and Germany to create European champions in strategic sectors, such as aviation and telecoms.

“That narrative was impossible to push under Vestager,” said one lawyer involved in telecom mergers, referring to former EU competition chief Margrethe Vestager. “There is more openness now to discuss consolidation.”

Alessandro Gropelli, director-general of industry body Connect Europe said that “political awareness” of the need for consolidation “had never been higher”. 

He cited research published by the group in January which found that per capita telecoms investment in Europe was €117.9 in 2023, compared to the equivalent of €226.4 in the US. 

One veteran telecoms M&A lawyer commented that: “Once the commission green lights one major deal, we’ll see a wave of consolidation.”

Still, the commission has not yet signalled if and how it will change the competition landscape for the industry. 

Ribera told the Financial Times earlier this year she wants to take more account of innovation, environmental and social goals in merger decisions, but has not publicly given more details.

Meanwhile, Olivier Guersent, the senior civil servant who oversees the bloc’s competition policy, has warned against a radical overhaul. Consumer organisations are also pushing back against a change of approach.

“Less regulation and more mergers that further concentrate the market will not do consumers any favours, it risks leaving them worse off,” said Agustín Reyna of umbrella group the European Consumer Organisation. 

Carles Esteva Mosso, partner at law firm Latham & Watkins and a former senior competition official, said the commission would be smart to look at telecoms M&A on a case-by-case basis “Some of these mergers could definitely lead to more investment. This is what the commission has underestimated a bit so far in their analyses.”

Sir Jonathan Faull, another former senior official who is now at PR firm Brunswick, said the EU faces a chicken and egg dilemma. 

“Some say European telecom mergers will make sense once there is a genuine single market with one spectrum and common rules.

Others will argue that they make sense because they hasten the day when those conditions will prevail. A signal from Brussels would be welcome for those planning investment and deals, as well as nervous consumers.” 

US tariffs on pharmaceuticals risk shortages of lower-cost generic drugs

Vast majority of drugs prescribed in America are off-patent generics made in lower-cost countries

The generic drug industry has warned that US tariffs on pharmaceuticals risk causing shortages of medicines including cancer treatments, and that manufacturers might stop making products that become unprofitable as a result.

Generic medicines, which are cheaper versions of drugs that no longer have patent protection, make up about 90 per cent of US drug supply. The majority are manufactured outside the US, in lower-cost countries such as India. The active ingredients used in the products often come from China.

So far, pharmaceuticals have avoided the wide-ranging new US tariffs. But President Donald Trump has repeatedly said he plans to apply them to the sector, and the US commerce department this week has said it is investigating the national security implications of pharmaceutical imports.

The department has up to nine months to publish its conclusions but commerce secretary Howard Lutnick said tariffs could happen sooner, in the “next month or two”.

John Murphy, chief executive of the Association for Accessible Medicines, a US lobby group, said tariffs would not benefit patients or improve the security of the healthcare system. He said older injectables, such as chemotherapy for cancer, were “particularly vulnerable”. 

“For those generics already sold at a very narrow margin, you could see a situation where it becomes financially infeasible for certain products to be brought to market if they are going to lose money,” he said. 

Murphy said he was lobbying the White House for the industry to be treated differently, arguing that there were other ways to encourage more onshoring of production, and that imposing costs on an industry that was already struggling with capital investment would not work.

“Where does the capital come from to shift production if we’re already at barely the cost of goods? . . . And potentially underwater in the short term because of tariffs,” he added. 

The US healthcare system already struggles with supplies for some particularly low-margin products: the number of active drug shortages hit an all-time high of 323 in the first quarter of last year, according to the American Society of Health-System Pharmacists, the largest association of pharmacy professionals in the US.  

Mark Samuels, chief executive of the British Generic Manufacturers Association, said the costs of tariffs would be difficult to absorb because fierce competition meant prices were already “significantly constrained” and so there would be “potential for more shortages”. 

India would be particularly badly hit by pharmaceutical tariffs. It has a 20 per cent share of the global export of generic drugs and a 60 per cent share in the supply of low-cost vaccines, according to the Indian Pharmaceutical Alliance. 

Some in the industry say US tariffs could drive some Indian manufacturers out of business. 

“Indian pharma products will become more expensive in the US market which may result in substantial loss in market share for our Indian pharma companies,” B Partha Saradhi Reddy, chair of generic company Hetero and an MP in India’s upper house, said in March.  

This could reduce the profit margins for low-cost generic medicines, making them uncompetitive and “not viable” for the companies making them, he said.

Premier, a group purchasing organisation that buys drugs for more than 4,000 US hospitals, said there could be an increase in shortages. But it said its three-year contracts meant generic manufacturers were locked into prices, adding they often include provisions that drugmakers who fail to supply have to cover the cost of buying alternatives. 

Tariffs are also likely to drive up prices for consumers. Dutch bank ING estimates that a 24-week prescription for a generic cancer drug could cost $8,000 to $10,000 more if 25 per cent tariffs are imposed.

Stephen Farrelly, global head of pharma and healthcare at ING, said the people who would be “hardest hit” were those without insurance, who paid for their own drugs, though people with health insurance could face higher premiums down the line.

Prashant Reddy, co-author of The Truth Pill, a book about India’s pharma industry, said the US often had little choice but to buy from India. “A lot of these drugs are not made anywhere else. They are shooting themselves in the foot because it’s just going to raise prices in the US,” he said.

Aston Villa co-owner blames past Conservative governments, not the Labour chancellor, as he redomiciles to Italy and Abu Dhabi

Egyptian billionaire Nassef Sawiris has blamed “years of incompetence” by the Conservatives for tax changes that he says have driven him to leave the UK.

Sawiris, who is Egypt’s richest man and co-owner of English football club Aston Villa, told the Financial Times he recently moved his residency from London to Italy and Abu Dhabi, in an interview at his long-standing office overlooking Mayfair’s Berkeley Square that he has since vacated.

He said the decision to move abroad after 15 years of living in the UK was due to a government crackdown on non-domiciled residents announced by the previous Tory administration.

“You can’t blame Labour,” said Sawiris. “This was all in the making for 10 years of incompetence by the most left-leaning Conservative party in history.”

The changes, announced by Conservative chancellor Jeremy Hunt and confirmed last autumn by his Labour replacement Rachel Reeves, ended a tax regime that allowed UK residents who declared their permanent home was elsewhere to avoid paying tax on foreign income and gains.

Sawiris joins a rush of other wealthy individuals who have left or are considering leaving the UK — such as steel tycoon Lakshmi Mittal — following the tax changes, which came into effect on April 6.

Reeves has taken the brunt of criticism over the series of tax rises meant to address the UK’s dire public finances and help her meet so-called fiscal rules in order to avoid spiralling interest rates on government debt.

“I feel bad for her,” Sawiris said about Reeves. “She’s behaving like Margaret Thatcher on fiscal discipline. Otherwise, the UK would have had a 7 per cent interest rate.”

Yet he cautioned that Reeves should be more accommodating to wealthy businesspeople, given their tax contributions could play a key role in funding government services. He added that it was likely to be difficult persuading many of the leavers to come back.

“High net worth or wealthy entrepreneurs have options. She should treat them like they are her best clients,” he added. “I don’t know any person in my circle who is not moving this April, or next April if [their children] have a school year or something like that.”

Sawiris also confirmed that changes to inheritance tax — which were introduced by Labour — also played a role in his decision to give up his UK residency. Reeves used the October Budget to end the use of offshore trusts to avoid UK inheritance tax at 40 per cent.

The change means that wealthy people will be “risking half your net worth” if they die while staying in the UK, he warned.

“On April 7, if a bus hit me [then] my family is bankrupt because they have to pay 40 some per cent in taxes, because my assets are not liquid. They have to go through a fire sale to pay that bill.”

Sawiris, whose net worth was pegged at $9bn by Forbes, is the youngest son of the late Onsi Sawiris, who founded a construction company in the 1950s and built it over decades into a large multinational corporation now called Orascom Construction.

As the business grew, the family diversified, entering the cement industry and expanding operations from Egypt into other emerging markets.

Sawiris’s family, who are Coptic Christians, were targeted with tax grabs and a travel ban by the Muslim Brotherhood, which swept to power in Egypt in 2012 in the aftermath of the Arab uprisings, although it was later deposed in a coup.

The UK “gave me a home when the Muslim Brotherhood came to Egypt and I will always be in debt”, he said. “I’m keeping my house, I’m growing my investment in Aston Villa, looking at expanding the stadium. And it hasn’t changed my love for this country.”

He said his remarks came out of care for the UK, where three of his four children were born. Sherine, his wife, is a member of the board of trustees of the American School in London, which his children attended.

Exiting UK taxpayers face limits on how much time they can return to spend in the country each year, in many cases 90 days annually, with just 30 days permitted for work.

Sawiris will use some of those days to visit and attend matches of his Birmingham-based football club Aston Villa, which exited the Champions League last week despite a spirited attempted comeback in the second leg of the quarter-final against Qatar-owned Paris Saint-Germain.

He and US billionaire Wes Edens, co-founder of Fortress Investment Group, acquired a 55 per cent stake in the club for £30mn in 2018, rescuing it from financial crisis and returning it to English football’s Premier League, where the team currently sits in seventh place.

Sawiris and his partners have invested heavily into the football club to improve performance. However, the club is not yet profitable and previously sold young players to comply with Premier League financial regulations that limit how much teams are allowed to lose.

Sawiris has complained that the rules are anti-competitive and prevent challenger clubs from closing the gap with the likes of Manchester City and Liverpool.

“The Premier League is under the impression that what makes it great is Manchester United and Liverpool and Chelsea and Arsenal, so they have to cater for these guys. But what makes the Premier League great is that Manchester United get their butts kicked by Brighton.”

Aston Villa will see the capacity of its stadium boosted to more than 50,000 seats from current levels of 42,000, as part of a plan by Sawiris to invest around £100mn more into the team. However, development is pending local officials moving ahead with expanding rail links.

Sawiris redomiciled his NNS Group family office last year from Luxembourg to Abu Dhabi, where he has built close relations with its rulers and has become a rare outsider to have been granted citizenship. He told the FT last year that Abu Dhabi’s advantages include a stable and effective government as well as “English law without English weather”.

Through NNS, Sawiris controls his holdings in Dutch-listed fertiliser company OCI, sportswear group Adidas where he sits on the board of directors, the stake in Aston Villa and as well as others.

Sawiris last year also joined the board of XRG, a company created by Abu Dhabi’s national oil company Adnoc to invest in global energy assets.

Sawiris said his London office, which sits above the Phillips art gallery, was vacated in the past few weeks. He has relocated over 40 employees to Abu Dhabi.

“They [my employees] have to move to a 45 per cent tax saving, so it’s not that tough for them,” he laughs.

Allies start to question the US nuclear umbrella

Lack of coherence in Trump’s policies raises risks of proliferation

Donald Trump has long had a fixation with the horrors of nuclear war — and trying to prevent it. Since retaking office, the US president has said one of his priorities is to hold arms control talks with Russia’s Vladimir Putin and China’s Xi Jinping. His administration has taken the positive step of trying to reach a new agreement to curb Iran’s advancing nuclear programme. Yet contradictions among his policies threaten not to reduce nuclear risk but to lead to a new arms race — on multiple fronts.

The first danger is proliferation. The White House is justified in calling on European allies to shoulder more of their own defence burden — and has given no indication it would withdraw the US nuclear umbrella. But the chill in transatlantic relations and Trump’s embrace of Putin in efforts to end the war in Ukraine have shaken European leaders’ faith in the US commitment to extended deterrence.

Germany and Poland are publicly talking of needing nuclear options for their defence, at least by sharing the French or UK nuclear deterrents — or, in Poland’s case, potentially hosting US bombs on its soil. Emmanuel Macron has invited discussion over whether and how France’s long-independent arsenal could be used as a broader deterrent.

Concerns over US reliability are shared by allies in east Asia, wary of the nuclear threat from China and North Korea — and both countries’ deepening ties to Russia. Support for acquiring nuclear weapons is growing in South Korea, and the long-taboo debate is surfacing even in Japan. In the Middle East, Turkey and Saudi Arabia have signalled they would match Iranian capabilities if Tehran obtained a bomb. Yet despite new US efforts to prevent that, the fact Iran is now so close to its goal is largely due to Trump’s ill-judged first-term withdrawal from the 2015 international nuclear deal with Tehran.

Weapons experts warn that any US ally developing nuclear arms would start a rush by other countries to follow suit. The non-proliferation treaty, which for decades has helped to confine the number of nuclear weapons states to nine, could then be undermined.

A more immediate danger may be increasing weapons numbers among existing states — notably China. The Pentagon estimates that Beijing could double its arsenal to more than 1,000 by 2030. Meanwhile, a five-year extension to the New Start treaty, the last remaining US-Russia arms control agreement that caps the warheads and missiles each can deploy, goes out of force next February. Putin halted implementation of New Start a year after Russia’s full-scale invasion of Ukraine.

Trump dragged his feet on extending New Start during his first term, in part due to his belief that China should be brought into future nuclear agreements — which Beijing fiercely resisted on the grounds that its arsenal was too small. China’s swelling arsenal makes its arguments harder to sustain. But for the US to engage Moscow and Beijing in nuclear talks will require a sophisticated game of three-way chess. Little in the way the Trump team has handled foreign policy so far, including the Ukraine negotiations, suggests it is capable of such diplomatic finesse.

Today’s geopolitical ferment makes Britain’s nuclear deterrent appear far from the costly anachronism that critics have claimed. Though both are dwarfed by Russia’s arsenal, together with more French flexibility around its own arms it might form a European parapluie nucléaire sufficient at least to give Moscow pause and reassure Nato partners. But the Trump White House should keep in mind that any suspicion among allies that its nuclear umbrella is being folded up could trigger more countries to seek weapons. And the more that have them, the greater the danger someone will one day use one.

High-end brands shrug off volatile cocoa prices to enjoy a boom in demand as buyers ‘trade up’

uxury chocolatiers are shrugging off volatile raw material costs to enjoy a boom in demand, saying some consumers are responding to the higher prices and reduced cocoa content in mass-market products by trading up to premium offerings.

Cocoa prices tripled last year as bad weather in the world’s main West African growing region hit harvests, with chocolate companies passing the cost to customers through higher prices.

Hershey’s and Oreo maker Mondelēz both warned on profits in February, after reporting a decline in sales volumes in 2024, while the confectionery division of Nestlé, which owns KitKat, reported a drop in sales last year.

Yet the premium end of the market is proving more resilient, aided by the bigger margins that help to absorb rising costs. High-end confectioners also note a counter trend amid the cost of living crisis, with regular consumers seeking out luxury items despite the higher prices.

“If a Mars bar is much more expensive than it used to be, people think ‘I might as well trade up’,” said Daniele Ferrero, chief executive of privately owned Venchi, whose premium Chocoviar Stracciatella Easter egg costs €44 in Italy, and £54 in the UK.

Giacomo Biviano, the head of Domori, the Italian chocolatier behind the Rococo and Prestat brands, said: “Even the low-quality product [now has] a very high price, so the consumer will choose the best.”

Luxury brands Neuhaus, Jeff de Bruges, Corné Port-Royal and Artista all delivered solid sales growth for Belgian parent Compagnie du Bois Sauvage last year, while Switzerland’s Läderach has doubled the size of its business over five years, said its chief executive Johannes Läderach.

By contrast, Barry Callebaut, the world’s largest chocolate manufacturer that supplies most of the world’s big confectioners, reported a drop in sales volume for the first half of the most recent fiscal year, blaming “unprecedented volatility” in cocoa markets.

Mondelēz chief executive Dirk Van de Put said this year that the company was navigating “unprecedented cocoa cost inflation” while Hershey’s noted in its annual report that it continued “to experience overall declines in consumer demands for our products”. Cocoa futures surpassed a record $12,000 per tonne in December, but have since fallen back below $8,500.

Neuhaus chief executive Isabel Baert said the premium brands “that maintain their quality and craftsmanship are better positioned to weather these market conditions”.

Many mainstream chocolate makers have been quietly reformulating recipes to protect profits from soaring costs, often cutting cocoa content and replacing it with other fats and flavourings.

Andrew Moriarty, an analyst at Mintec, said this should put premium chocolate makers in a “more difficult position” because their products have a higher cocoa content and “they have to stick to those ratios”. 

Yet with luxury chocolatiers largely declining to reduce cocoa content and instead raising prices, customers mostly remained loyal.

“Even if the consumer wouldn’t know,” said Läderach, “it would destroy the premium culture which we want to celebrate. Our business case proves you can have chocolate of the highest standard . . . and get the price for it.”

Venchi’s Ferrero saw further scope for the premium brands to profit from the problems of the wider confectionery industry should cocoa prices remain unpredictable.

“For every consumer that decides to buy super premium chocolate less frequently, hopefully we’ll have two consumers that trade up from mass-market chocolate to premium chocolate,” he said.

“If you were buying a Mars bar, were you actually a chocolate lover anyway?” he asked. “How much chocolate are you getting in a KitKat?”

Nestlé said the recipe for KitKat had not changed, adding that the chocolate bar’s popularity demonstrated “the continuous appeal of well-established brands that offer tasty products.” Mars did not respond to a request for comment.

Airbus Promised a Green Aircraft. That Bet Is Now Unraveling.

Plane maker is pulling the brakes on its hydrogen-jet project after spending more than $1.7 billion, adding to a wider corporate rethink of green plans

Five years ago, Airbus AIR -2.88%decrease; red down pointing triangle made a bold bet: The plane maker would launch a zero-emissions, hydrogen-powered aircraft within 15 years that, if successful, would mark the biggest revolution in aviation technology since the jet engine.

Now, Airbus is pulling the brakes. The company has cut the project’s budget by a quarter, reallocated staff and sent remaining engineers back to the drawing board, delaying its plans by as much as a decade.

Airbus’s reckoning with hydrogen adds to the lineup of companies now recalibrating green efforts that they rushed to embrace in recent years. Oil giant BP recently said it would slash spending on renewable energy and pivot back to fossil fuels. Porsche has similarly scaled back its all-electric ambitions and is investing in new combustion-engine cars, citing lower-than-expected demand from consumers.

Airbus has spent more than $1.7 billion on the project, according to people familiar with the matter, but over the past year concluded that technical challenges and a slow uptake of hydrogen in the wider economy meant the jet wouldn’t be ready by 2035.

The setback is a blow for the dream of clean aviation, which governments, investors and customers have pushed the industry to tackle.

Airbus says the past five years of work and money haven’t been wasted. The company has established that hydrogen is technically feasible and delaying the project will give it more time to fine-tune the technology, executives said.

“Our destination is not changing,” Bruno Fichefeux, Airbus’s head of future programs, said in an interview. “To get there, we need to adjust to reality.”

‘Historic moment’

Airbus first unveiled a trio of proposed hydrogen-powered planes toward the end of 2020. The most ambitious would carry as many as 200 passengers and have a range of up to 2,000 nautical miles—enough to fly from New York to Las Vegas.

“This is a historic moment,” Airbus Chief Executive Guillaume Faury said at the time. “We intend to play a leading role in the most important transition this industry has ever seen.”

Airbus set about laying the groundwork, recruiting a dozen airlines, from Delta to Air New Zealand, and more than 200 airports to explore how hydrogen could be built into their operations.

The plan raised eyebrows. Executives at airlines and suppliers privately questioned whether the 2035 goal was attainable, given hydrogen technology was still in its infancy.

There were a raft of technical challenges, not least the safety concerns exemplified by the 1937 Hindenburg disaster. Engines would need to be reconfigured to run on a different fuel. Aircraft would need to store the hydrogen in liquid form at minus 423 degrees. The heavier fuel load and equipment would weigh on seat capacity and range.

A hydrogen plane would also require a new supply chain to produce the fuel in large-enough quantities, transport it, and safely store it at airports.

Executives at Boeing, which had explored hydrogen for years, were vexed.

“We don’t think hydrogen’s the answer,” then Boeing CEO David Calhoun said at an investor day in late 2022 when asked what the company was doing on the technology.

Despite the skepticism, Faury was determined. An engineer by training, the Frenchman had tried to convince Airbus’s leadership to take hydrogen seriously even before becoming CEO. He mentioned it so often that some executives would roll eyes when he brought it up in meetings, former colleagues said.

Part of Faury’s motivation came from his time as head of research and development at Peugeot, the French carmaker, in the mid-2010s. The auto industry had been caught off guard by the rise of electric vehicles, and Faury was wary that Airbus could face a similar battle, people familiar with his thinking said.

Airbus also had a commitment to a major shareholder—the French state. The company had been a major beneficiary of a Covid-era government support package for the aviation and aerospace sector of 15 billion euros, equivalent to roughly $16.6 billion. The deal required Airbus to spend a portion of the money on bringing green aircraft to market by the 2030s.

The hydrogen project helped Airbus access additional government funding, as well as private green financing. Money was flowing into companies with green credentials, posing a potential risk for the aviation industry, which accounts for between 2% and 3% of global carbon emissions.

The hydrogen plane also helped attract new engineers at a time when green activist Greta Thunberg had helped popularize “flight-shaming” in Europe.

Airbus ultimately assigned the project an annual budget of about €400 million, primarily funded through its own coffers, according to people familiar with its financing arrangements. The company, which doesn’t detail its R&D spending, declined to provide a breakdown of its spending.

Another ‘development loop’

Last year, it started to become clear that Airbus might need to backpedal on the 2035 promise.

The company’s initial 200-seater concept, which relied on feeding hydrogen directly into a regular jet engine, was fundamentally flawed: The combustion would still produce NOx emissions. Engine makers were also hesitant about investing heavily in the project, according to people familiar with it.

Instead, Airbus shifted focus to hydrogen-fuel cells, which use a chemical reaction to generate energy for an electric motor. It would produce only water vapor, but would require a more radical redesign of the airframe and propulsion system. The plane would carry only 100 passengers about 1,000 nautical miles.

Over time, even that proved challenging because of the extra weight of the fuel cells and their limited electricity generation. Instead of a short-haul narrow-body—the workhorse of the aviation industry—at best the aircraft would be more akin to a less appealing regional turboprop.

Meanwhile, Airbus executives watched as broader enthusiasm for hydrogen withered away. BP and Finland’s Neste, for example, are among companies to have pulled plans for new hydrogen plants.

In early February, Airbus told workers that the hydrogen project’s budget was being cut, and its timeline delayed.

Later that month, Faury said the project hadn’t yet led to a commercially viable aircraft that could compete on price and performance. Engineers would start a second “development loop” to figure out what seat capacity and range the hydrogen aircraft might have, he said on an earnings call.

At a company event in March, the CEO compared the project to Concorde, a supersonic jet that was relegated to the annals of aviation history because it was too expensive to operate. “We have come to the conclusion that it would be wrong to be right too early,” Faury said.

Imagine what would happen if America left the IMF

Withdrawal would undermine US international prestige and the privileged role of its financial institutions

Donald Trump has already withdrawn the US from the Paris climate agreement and the World Health Organization. Is the IMF next?

Project 2025, the controversial and radical policy manifesto for a second Trump term issued by the Heritage Foundation think-tank, advocates US withdrawal from the fund. The authors argue that the IMF espouses economic theories and policies that are inimical to the free market and American principles of limited government.

Withdrawing from the fund would be a significant own goal. If it were to do so, the US would lose all influence over the IMF’s policies and operations. More importantly, withdrawal would dramatically diminish the international role of the US dollar.

The vast bulk of the IMF’s operations is conducted in dollars; most IMF borrowers request dollars and make repayments in dollars. If the dollars do not come from the US commitment to the fund, other members provide them from their own reserves.

International demand for funds has declined by 5.6 per cent over the past four years. That trend would accelerate if the US were to withdraw from the fund. The dollar would then be excluded from use by the fund, and what nation would want to hold assets in a currency that cannot be used in IMF transactions issued by a country that has abdicated its international financial responsibilities?

Although today the IMF operates predominantly in dollars, it has a multicurrency structure. The issuers of other major currencies such as China and the EU would be delighted to have those inherit the special status of the dollar.

Consider, for example, the IMF’s special drawing rights, an international reserve asset that supplements the reserves of member countries. The dollar now has the largest weight (43 per cent) in the basket of five currencies that value the SDR. The currency with the next largest weight is the euro, followed by those of China, Japan and the UK. If the US withdrew from the IMF, the dollar would have to be removed from the valuation of the SDR, since it can only include the currencies of members.

If the US abdicated IMF leadership, China would be positioned to challenge the Europeans for the largest weight in the basket. They would be likely to simultaneously move to acquire a disproportionate portion of the current US share of IMF voting power and to shift the fund’s headquarters to China.

The US would not only shed international prestige by withdrawing from the IMF, it would also lose a channel through which to provide financial assistance to countries it wants to support. Whatever critics think about perceived flaws in the policies promoted by the IMF, the US would no longer have any leverage over them.

Withdrawal from the IMF would spell the end of America’s status as the principal reserve provider to the rest of the world, a status that the chair of Trump’s Council of Economic Advisers, Stephen Miran, says he wants to preserve even as he wants other countries to pay for the right to use the dollar in this way.

Most importantly, as the currencies of China, the EU and smaller countries replaced the dollar in official international finance, it would be replaced in private international finance too. As a result, the privileged role of US financial institutions, with their direct and indirect preferential access to dollar support from the Federal Reserve, would be undercut.

The financial dominance of the US and its currency would shrink sharply, and the effectiveness of American financial sanctions would be weakened, perhaps fatally.

In short, withdrawal from the IMF would be an economic, financial and political blunder of gigantic proportions.

DHL suspends some parcel deliveries to US amid trade war

German group is first major commercial logistics company to take action after new tariffs come into force

Logistics group DHL is suspending some parcel deliveries to the US from Monday as it struggles to cope with the extra costs and paperwork from new customs rules.

From April 5, US Customs and Border Protection has required goods worth more than $800 entering the country to undergo more stringent customs checks and be accompanied by additional documentation.

DHL said that it was working to increase its clearance capacity but that, given the “substantial” changes, business-to-consumer parcels worth more than $800 from anywhere in the world to the US may face multi-day delays. Changes are not expected to business-to-business shipments but there could be delays.

“To maintain the high-quality service commitment of DHL Express to its customers, starting Monday, April 21 2025, and until further notice, DHL Express will temporarily suspend [business-to-consumer] shipments to private individuals in the US whose declared value exceeds $800,” the company said in a statement.

Germany’s DHL is the first major commercial logistics company to take action as a result of new US tariffs, many of which came into effect on April 5.

John Manners Bell, chief executive of consultancy TI Insight, said it “could be a sign that the global trading system is starting to break”.

“This could become a major trend as postal offices and commercial carriers struggle to cope with the weight of tariffs and bureaucratic burdens placed on them,” he said. “The changes will have real implications for the international ecommerce industry, affecting many millions of parcels that flow every day to US importers, inevitably raising costs for US consumers.”

DHL’s decision, which was first reported by the Sunday Times, follows the announcement by state-owned Hongkong Post this week that it would stop accepting packages to be sent to the US by sea with immediate effect and stop taking airborne packages from April 27 as a result of the new US requirements. The company accused the US of “bullying and imposing tariffs abusively”.

Manners Bell said: “The tariffs and trade processes involved in the customs clearance process are playing havoc with supply chain strategies and this will inevitably result in additional costs and shortages for American businesses and consumers.”

A trade war between the world’s two largest economies is intensifying, with US President Donald Trump imposing tariffs totalling 145 per cent on China, which has responded with tariffs of 125 per cent on the US.

DHL is one of the world’s biggest courier companies, delivering 1.5bn parcels a year. It employs nearly 600,000 people and operates in 220 countries. Last year, its sales exceeded €84bn.