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French appeals court overturns previous decision not to press charges over incident that killed 228 people in 2009

Air France and Airbus are set to stand trial over an air crash in 2009 that killed all 228 people on board after a French appeals court overturned a previous decision not to push ahead with charges.

Air France flight 447, a twin-engined Airbus A330, crashed into the Atlantic en route from Rio de Janeiro to Paris on June 1 2009 after the jet stalled during a thunderstorm. It was the deadliest crash in the history of Air France, killing 216 passengers and 12 crew members.

On Wednesday, French judges, said the two groups should stand trial for “involuntary manslaughter”, according to a spokesperson for the appeals court. A date for the trial has not yet been set, said the same person.

Air France and Airbus, one of the world’s largest aeroplane manufacturers, had been put under formal investigation in 2011 for the same charge.

Wednesday’s decision overturns a 2019 ruling against a trial, with the judges at the time blaming human error for the crash, saying the “accident is evidently due to a conjunction of elements that had never occurred before, and thus highlighted dangers that could not have been perceived before this accident”. In 2019, prosecutors had only recommended putting Air France on trial. 

“It is an immense satisfaction to have the feeling of having finally been heard by the courts,” said Danièle Lamy, the president of Entraide et Solidarité AF447, the main organisation for relatives of the victims.

“We regret, however, that it took twelve long years to get there,” she added.

Both Airbus and Air France, which is part of group Air France-KLM and 28 per cent owned by the French state, said they would appeal Wednesday’s ruling. 

Air France said in a statement that it had “taken note of the decision” and it “maintains that it did not commit any criminal fault in this accident, tragic as it was”.

Airbus said: “The court decision that has been announced does not reflect in any way the conclusions of the investigation that led to the dismissal of the case.”

The long-running case has revolved around how Air France pilots responded to the loss of speed readings after pitot probes, sensors that sit outside the body of the plane, were blocked with ice, which meant the autopilot stopped flying the plane and the pilots took manual control.

Prosecutors have put the blame on Air France for inadequate training of its pilots and Airbus for having “underestimated the seriousness of the failures” of the pitot speed probes, according to Reuters. 

A 2012 civil investigation by the BEA, the French air accident investigation office, put emphasis on failure of the pitot probes, the “crew’s failure to diagnose the stall situation and consequently a lack of inputs that would have made it possible to recover from it”, a lack of a clear display of the speed problem in the cockpit and a lack of training.

CBDCs could boost government coffers, displace costlier taxation and improve the efficiency of payments

The Chinese are trialling it. The UK Treasury and the Bank of England have a task force on it. So, after years of talk, central bank digital currency has suddenly become serious business.

Think of CBDC as the digital equivalent of banknotes. In the early 19th-century, private banknotes were used in shops. With numerous banks issuing different notes, it was complex and confusing — and bank failure could render your notes worthless.

But, since the 1844 Bank Charter Act, things have been streamlined by the Bank of England issuing its own retail banknotes. That also levelled the playing field. The banks had always had access to a risk-free payments system between themselves via their own Bank of England accounts. But with banknotes — Bank of England IOUs — something similar was available to all.

However, the Bank of England retained its “wholesaler only” role in other services with commercial banks “retailing” cheque payment services via their local networks.

But, by the turn of this century, the internet made it technically straightforward for everyone to have an online Bank of England account. After all, wholesalers everywhere were disintermediating their own retailers over the internet — so you can buy your flight from a travel agent or online direct from the airline.

However, central banking for all online would have been classic “disruptive innovation” and that’s not usually prosecuted by large incumbent systems, to say nothing of the political obstacles it would have encountered. Now, with private digital currencies nibbling at the payments system, the CBDC sits smiling up at us from the in-tray, raising all these issues again.

A Bank of England issued digital currency would enable anyone to hold the Bank’s IOUs in their digital wallet for transfer to anyone else as easily as we transfer credit from our credit cards and phones. But, being central bank money, it would be cheaper, and risk free.

Moreover, Bank of England notes generate so-called seigniorage profits — the difference between the amount central banks receive on issuing money and the much lower cost of printing it. As owner of the Bank of England, this ultimately goes to the government.

A CBDC would do something similar but on a much grander scale — handily for a Covid-ravaged Budget. Currently, 97 per cent of the money in circulation is created by commercial banks when they lend. It’s nice work if you can get it, generating them large rents.

With money being the core economic public good, governments muscling in on the banks’ near monopoly on money creation would see banks’ profits fall just as telecoms companies had to find the cash to purchase spectrum at auction that had previously been gifted to them.

This raises two further questions. First, CBDC in your digital wallet can substitute for your deposit in a bank. To prevent a wholesale run from bank deposits into CBDC in a panic, the issuance of the digital currency could be capped

Modelling by Bank of England research staff looked at issuance equivalent to 30 per cent of GDP. This would make a major contribution to government coffers, displace costlier taxation and improve the efficiency of payments. All this would expand the economy by a hefty £90bn.

Second, falling bank deposits could reduce bank credit creation. In addition to the usual economic adjustments — for instance involving deleveraging and the expansion of equity funding — the central bank could lend back to banks or, as I’ve previously suggested, it could lend to others pledging super-safe collateral.

Of course, one might argue that, if it ain’t broke don’t fix it. But the more money creation is tied to bank debt, the more broke and unstable it is. As Mervyn King said as Bank of England governor in 2010, “of all the many ways of organising banking, the worst is the one we have today”.

Of course, adopting a CBDC would be “courageous”. Then again, these are not normal times. At another extraordinary time — 1943 — John Maynard Keynes was advising his government and reflected to a colleague on how things had changed since he’d done the same in the first world war. 

“Here I am back in the Treasury like a recurring decimal,” he said. But where previously “most people’s only idea was to get back to pre-1914. No one today feels like that about 1939. That will make an enormous difference when we get down to it.” And so it did. But that was a pandemic, a depression and another world war later.

So far, we’ve had the depression and the pandemic. How many more crises might it take to face our demons? How many might we avert by facing them now?

Delivery Hero to return to Germany as food delivery fight intensifies

Relaunch comes two years after group sold operations in its home country to Just Eat Takeaway.com

Delivery Hero is relaunching in Germany, two years after selling its operations in its home country, in what is rapidly shifting from a food-delivery monopoly to one of Europe’s most competitive markets.

The Berlin-based company’s launch of restaurant and grocery delivery services this summer will put further pressure on what has historically been a lucrative source of profits for Just Eat Takeaway.com. The Amsterdam-based Just Eat group had, until recently, the market largely to itself after agreeing to buy Delivery Hero’s German business in late 2018.

“It’s a big market and we still feel like the [food delivery] service is sub-par,” said Niklas Ostberg, Delivery Hero’s chief executive.

Last month, Uber said it would roll out its Eats delivery service in Germany, after Finland’s Wolt arrived there earlier this year.

At the same time, Berlin has — alongside London — become a nexus of competition for several fast-growing start-ups offering rapid grocery delivery. Gorillas and Flink are both based in Berlin while Istanbul-based Getir, the largest European operator of rapid grocery apps, is planning to begin deliveries in Berlin this summer.

Delivery Hero has already deployed hundreds of its own “Dmarts” — small local warehouses dedicated to delivering groceries and other convenience items in as little as seven minutes — across the Middle East and Asia. “We don’t see anyone [else] combining that into one experience,” said Ostberg, by offering instant grocery delivery and restaurant food from within the same app.

He plans to use Berlin as a test bed, including trialling new restaurant concepts and so-called “cloud kitchens”, which prepare meals specifically for delivery.

After a “soft launch” in Berlin starting in June, Delivery Hero will begin to roll out across Germany under its Foodpanda brand from August.

Ostberg said the decision to relaunch in Germany was made only last month, following the expiry of a two-year non-compete agreement that was part of the €930m deal with Takeaway.com in 2018, and as other competitors were arriving.

“We don’t see necessarily that we are going to go in and win the market in the next year or so,” said Ostberg. “This is a 10-year game.” But, he added: “Of course we will definitely make sure we put in enough money to be the clear number two, the clear challenger [to Just Eat Takeaway.com].”

Online used-clothing marketplace raises €250m as pre-owned fashion booms

Online second-hand clothing marketplace Vinted has raised €250m in a funding round led by Sweden’s EQT that valued the Lithuanian group at €3.5bn, underscoring growing investor interest in sustainable fashion.

The company, whose app allows users to buy and sell used garments, last raised funds in November 2019 at a valuation of €1.1bn. Thomas Plantenga, chief executive, said the jump reflected Vinted’s entry into new markets and the growth of sales on its app, along with a “very favourable” investment climate.

“When we did the last round, we were operating in France and Belgium and were off to a good start in Spain,” he said. “Now we are also running in markets like the UK and Italy and we’ve shown that we can enter new markets more quickly than before.”

He declined to give figures for the value of product sold on the app — the last available is €1.3bn for 2019 — or the revenue that the company makes from sellers’ fees and added-value services.

But he said that the proceeds will be used to enter new markets and further improve services such as payments and shipping. Previous investors including Accel, Burda, Insight Partners, Lightspeed and Sprints will also participate in the round.

Vinted is one of several ventures looking to bring used clothing into the mainstream, as younger consumers in particular become increasingly motivated by sustainability concerns over low prices.

Others include Depop, backed by investors including General Atlantic, and Vestiare Collective, in which French luxury group Kering owns a minority stake. US operator ThredUp floated on Nasdaq in March; its shares have since risen by 34 per cent.

Although the Covid-19 pandemic caused disruption in the clothing industry, especially in its early stages, it also led to a worldwide decluttering of wardrobes as people looked to recoup funds by selling their old clothes, bringing a wave of new sellers to online platforms.

Research by Boston Consulting Group last year suggested that the global pre-owned apparel market is worth up to $40bn a year, or about 2 per cent of the total, and that figure could grow by 15-20 per cent per year for the next five years. It also expects the “share of closet” taken by second-hand clothes to increase to more than a quarter by 2023.

Mainstream retailers such as Sweden’s H&M, online operators Asos and Zalando, and even UK supermarket chain Asda have also begun to experiment with second-hand fashion.

But Plantenga said that in the long-term pre-owned clothing could yet account for half of the overall fashion market, and that he was unconcerned by the entry of much bigger players.

“We are in the early stages of this second-hand game . . . we are very happy to see the overall market get bigger”.

In April, luxury brands went crazy for collaborations while some of Italy’s fashion titans more openly embraced the idea of an Italian luxury champion to rival LVMH and Kering, writes Pierre Mallevays in this month’s Market Pulse.

From Hermès’ Apple AirTags to ‘Gucciaga,’ luxury brand collaborations were everywhere last month. So, when does the formula work best?

Brand collaborations pairing hot designers with volume retailers to produce eye-catching, limited-edition collections at affordable prices have long served to generate media impressions and drive traffic to stores, creating powerful touchpoints with fashion customers. The model was pioneered by US supermarket chain Target when it teamed up with Isaac Mizrahi in 1999 but perfected by Swedish fast-fashion giant H&M, which has launched successful collaborations with Karl Lagerfeld, Lanvin, Stella McCartney, Cavalli, Versace and others.

Today, these retailer-designer collaborations continue, although consumers are showing signs of fatigue with the formula and retailers may be running out of compelling names with whom to partner. Alongside the approach, however, a new genre of brand-on-brand collaborations has taken the market by storm, aimed at generating novelty and cross-pollinating customers.

Hermès generated terrific levels of attention this month when it unveiled a selection of key rings, bag charms and luggage tags with specially branded versions of Apple’s object-tracking AirTags. The French luxury brand also offers an iPhone case that uses Apple’s MagSafe technology and special versions of Apple’s Watch. Here, both brands win: Apple is strengthening its credentials as a luxury brand, while Hermès is engaging its customers where they are increasingly spending money: in the technology category more broadly and with Apple specifically.

Luxury labels have also used brand collaborations to go after streetwear-obsessed Gen-Zers. Dior’s Nike Air Jordan 1 High OG sneakers were one of the hottest collaborations of 2020. Five million people registered on a dedicated microsite created by Dior for the launch of the shoes, which were sold for around $2,000. (You could have made a ten-fold return on your investment on the resale market if you were one of the lucky few to have secured a pair of Air Dior at launch). The product was authentically streetwear whilst being uncompromisingly luxurious, generating a halo effect on Dior’s wider offering and recruiting younger customers to the brand.

But the rationale is less clear when luxury brands come together to collaborate with each other. What to think of Rolls Royce’s recent collaboration with Hermès to produce a custom Phantom for Japanese billionaire Yusaku Maezawa? To be sure, the client is always right, and rightly so. But it’s hard to imagine the tie-up having much strategic value. Then, there’s Bulgari collaboration with Dom Perignon on bespoke champagne bottles. Was this truly worthy of headlines?

Last but not least, last month Gucci designer Alessandro Michele “hacked” Kering stablemate Balenciaga, resulting in “mutual contamination” of logos and design codes from both brands. “Gucciaga,” as some dubbed it, certainly drove eyeballs, but beyond short-term media impressions, it was hard to see the logic.

Nonetheless, the luxury sector is clearly on a roll, with Hermès announcing spectacular first-quarter results and sales exceeding pre-pandemic levels; Kering beating analyst estimates for the quarter thanks to a strong rebound by Gucci; and LVMH’s market cap surpassing €300 billion as it, too, beat expectations for the quarter with sales shooting ahead of 2019 levels.

The Savigny Luxury Index (“SLI”) gained over nine percent in March on the back of very strong quarterly results, outperforming the MSCI by almost eight percentage points.

• Prada was the only stock to lose ground this month and did so by a whisker. The stock was given an average rating of “Hold” by analysts this month.

Last month, Dolce & Gabbana put to rest rumours of a tie-up with Kering but did not rule out being part of a “broader Italian project” putting together several Italian brands under one umbrella. The sentiment was echoed by Giorgio Armani who, in an interview with Vogue, said that he was open to an alliance with another Italian group and in the same breath dashed any hopes of a takeover by one of the French giants. Will Italy finally manage to create a luxury champion to rival LVMH and Kering? Moncler has pitched its tent as a consolidator with the acquisition of Stone Island, while OTB president Renzo Rosso, who recently acquired Jil Sander, has been advocating for stronger alliances between Italian brands.