FT : IAG and Ryanair bosses slam ‘continuous’ French strikes as ‘impossible’ for

IAG and Ryanair bosses slam ‘continuous’ French strikes as ‘impossible’ for airlines
Luis Gallego and Eddie Wilson say planes should still fly over France when air traffic controllers strike

The head of British Airways owner International Airlines Group and the chief executive of rival Ryanair have both hit out at the progress of attempts to end a long-running dispute with air traffic controllers across Europe, particularly those in France.  

Rules that prevent airlines from flying over France when its air controllers are on strike, even to reach other destinations, have been a source of frustration for airlines for years. 

Luis Gallego, IAG’s chief executive, said that “the strikes of the French continuously” are “impossible” for airlines. 

“I am not happy [with progress of talks] to be honest, it is something we are pushing,” he told the World Aviation Festival in Lisbon on Wednesday. 

“We want protection in France, the protection to fly over France if there is a strike there, but it is going to take more time,” he said.  

Airlines have been particularly frustrated by so-called flyover rules. The issue has often led to flights between the UK and Europe being cancelled because of strikes in France. 

A planned strike this week by France’s main air traffic controller union, SNCTA, was postponed at the last minute, leading to confusion among airlines that had been prepared to cancel flights. Ryanair forecast the strike would have led to 600 cancelled flights a day — even though most were not destined for France. 

The no-frills airline claims that France is responsible for the most cancelled flights across Europe.

“If you’re a French air traffic controller and you want to go on strike, if you want to change the government’s view of things, right, that’s fine [ … ] but it shouldn’t affect things that are not within your territory,” said Eddie Wilson, Ryanair’s chief executive. 

“It's the equivalent of French farmers running sheep down Whitehall to complain about the price of French lamb,” he told the Financial Times, adding that Italy, Greece, Spain and Germany all allow overflying during air traffic control strikes. 

EU officials warned this summer that delays could be at their worst ever, in part because of strikes. Airspace is sovereign. Efforts to set up the Single European Sky — akin to a single market across the bloc for airspace — is still not a reality, despite it first being proposed in 2004. Ministers from the EU’s 27 member states only agreed their initial position on an updated proposal in June.

Willie Walsh, who heads industry lobby group Iata, told the same event in Lisbon that “the reality of being able to overfly France, that should be in place, it’s disgraceful that we’re at this stage. Quite honestly there’s no excuse for it”. 

He said the air traffic situation in Europe was “terrible and continues to be the cause of enormous frustration”. 

The majority of delays are caused by staffing shortages at air traffic control centres, something he said was “just unacceptable”. 

“Despite their performance they still get paid the same amount of money, if they incur additional costs they just add them to the bill [paid by airlines],” he added. “We suffer as an industry, we pay the bill when [air traffic control] doesn’t deliver.” 

FT : PepsiCo chief under pressure as activist Elliott pushes for change

PepsiCo chief under pressure as activist Elliott pushes for change
Ramon Laguarta wrestles with weakening sales and shrinking profit margins in North America

Ramon Laguarta was not widely known when he became PepsiCo’s chief executive in 2018, a veteran operator who had spent most of his career in Europe. His low profile stood in contrast to his former boss Indra Nooyi, one of few immigrant women atop corporate America and a regular at Davos with a keen eye for public relations.

Laguarta is now in the spotlight, willingly or not. Like Nooyi before him, he is staring down an activist investor agitating for a shake-up of the drinks and snacks powerhouse that owns brands such as Gatorade, Doritos and its namesake Pepsi cola.

The 29-year PepsiCo veteran on Thursday will face investors for the first time since hedge fund Elliott Management went public with a $4bn stake in the company last month, one of its biggest investments.

Thursday’s third-quarter results will be scrutinised for signs of how Laguarta will respond to Elliott’s demands. The earnings presentation is expected to be Laguarta’s last before the deadline for Elliott to wage a proxy contest at the end of November. How he rises to the challenge may determine whether the hedge fund takes that path.

The activist’s 75-page slide presentation asserts that weakening sales and profit margins in PepsiCo’s North American businesses and an unwieldy product portfolio have put it at a disadvantage to rival Coca-Cola and other competitors, wiping away more than $40bn in market capitalisation over the past three years.

“I think he’s going to get a real test here on his leadership and his resolve,” said Kevin Grundy, a senior consumer goods analyst at BNP Paribas.

Elliott’s case against PepsiCo is less dramatic than Nelson Peltz’s demands for Nooyi to engineer a full break-up more than a decade ago. Nooyi, who promoted a lofty agenda of “performance with purpose”, resisted those calls, but after a two-year stand-off agreed to give Peltz’s hedge fund Trian Management a board seat in 2015. A few years later, she left the top job.

Whether Laguarta decides to play peace broker or dig in may yet define the tactics that Elliott decides to deploy. Marc Steinberg, the Elliott portfolio manager leading the PepsiCo investment, last year masterminded one of the most conciliatory campaigns in Elliott’s history, reaching a speedy détente with industrials giant Honeywell after taking a $5bn position. The company has since added Steinberg to its board.

Laguarta, a cheerful 61-year-old Catalan, oversaw the company’s international growth before taking the reins at its headquarters in the New York City suburbs. Since he became chief executive, PepsiCo’s revenue has increased by nearly 40 per cent. He has divested poorly performing brands such as Tropicana and Naked Juice while making more than $10bn in acquisitions, according to data from S&P Capital IQ.

But over the course of his tenure he became overly focused on quarterly earnings, according to several former executives. He has struggled to sell colleagues and investors on his vision of how to respond to changing consumer habits, such as the impact of weight-loss drugs on taste preferences, rattling the wider consumer sector, the executives said.


He has rankled some of his senior colleagues, in particular by involving his wife Maria in corporate affairs, including strategy meetings and retreats on several occasions, according to people familiar with the matter. His wife also played a role in promoting PepsiCo’s culinary initiatives, which explained how its products could be used in home recipes.

Laguarta has acknowledged a need for a turnaround and has taken steps that include shuttering two snack manufacturing plants to adjust to shrinking US demand.

“Under Ramon’s leadership, PepsiCo has taken a series of steps to best position the company for the long term,” the company said in a statement, pointing to cost-cutting efforts, investments in core brands such as Gatorade and Walkers crisps and the growth of the international business, which has averaged 10 per cent annual growth over the past five years.

“Maria is passionate about PepsiCo and our products, and is an advocate for the culinary aspects of our portfolio,” the company added.

Elliott expressed its “deep respect for the company and its leaders” in a letter to PepsiCo’s board last month, but said investors were sceptical of the company’s prospects. Charts in Elliott’s presentation show how PepsiCo has been outpaced by rivals Coca-Cola and Procter & Gamble, set roughly over the timeline of Laguarta’s seven-year tenure.

The hedge fund also called for better corporate oversight and accountability, hinting at the appetite for a board refresh. Elliott declined to comment.

The first part of Laguarta’s reign looked good. Consumers binged on PepsiCo’s fizzy drinks and snacks while locked down during the Covid-19 pandemic, and the soaring price inflation that followed drove its market capitalisation to an all-time high of more than $260bn in 2023 — tantalisingly close to surpassing Coca-Cola’s market value.

But by the end of 2023 the momentum came out of the business as snack and drinks sales in North America began to decline, as higher prices finally drove away some consumers.


Now PepsiCo is valued at $90bn less than its rival. Elliott draws brutal comparisons to Coca-Cola, highlighting PepsiCo’s relentless soda sales declines. Elliott pinpoints Coca-Cola’s decision to farm out beverage bottling to independent companies as key to its continued success, and argues PepsiCo should do the same with its mostly in-house North American bottling system.

Elliott also called for PepsiCo to sell off legacy food brands that it contends no longer fit its snack-heavy portfolio, such as Pearl Milling baking mixes and syrups, and breakfast cereals such as Cap’n Crunch. Proceeds could be reinvested in acquisitions of high-end or healthy snacking brands, Elliott added.

PepsiCo added in its statement that Laguarta has “repositioned the portfolio” through acquisitions, including of prebiotic soda company Poppi and healthy tortilla chips brand Siete Foods.

Some PepsiCo investors have endorsed Elliott’s ideas, but questioned whether they differ from changes already under way inside the company. “I appreciate Elliott’s suggestions as they correspond with many of the ideas the current management has,” said Kai Lehmann of Flossbach von Storch, a large PepsiCo shareholder. Still, he said the company “needs a greater sense of urgency as PepsiCo risks falling behind”.

In a statement last month, the company said it was reviewing Elliott’s proposals as it “maintains an active and productive dialogue with our shareholders”. A former executive close to Laguarta said the company’s previous experience with activism may mean it is better prepared this time around. “They didn’t pick an easy target,” said the person.

FT Lex : Paying off angry investors is becoming a profitable trade

Paying off angry investors is becoming a profitable trade
Lawyers are telling boards it is cheaper to purchase forgiveness instead of permission

Spending $1bn to settle a lawsuit sounds like no fun at all. But what if that $1bn is instead regarded as an investment that can unleash tens of billions of dollars in gains? Then it becomes a canny trade.

That’s how companies increasingly see the risk of having to pay off disgruntled investors. A new report from Cornerstone Research shows that merger-related judgments and settlements in Delaware, where most big American companies are incorporated, have exploded in number and value. Between 2022 and 2024, there were on average nearly 20 resolutions annually, four times the rate a decade earlier. Some surpass $100mn.

Disputes often arise because a large, powerful shareholder is seen to have ridden roughshod over smaller ones — for example, in a buyout in which the insider sits on both sides of the table. In part, that reflects the fact that such situations are more common with founder-led companies backed by private equity and venture capital going public.

But lawyers are also telling boards it is cheaper to purchase forgiveness instead of permission. Fielding a lawsuit from shareholders who feel a take-private deal undervalued them may be costly, but still cheaper than raising the purchase price. Most of the merger settlements and judgments across Cornerstone’s 13-year sample added up to less than 5 per cent of the combined deals’ value.

In any case, plenty of lawsuits just get dismissed. And courts will not typically unwind a deal once it has been done. So the probability-weighted possibility of paying a prohibitive penalty in relation to the deal price must seem manageable.

Computer maker Dell is a real-world example. Its buyout of affiliate VMware in 2018 aroused the ire of Elliott Management and other shareholders, who claimed the price was unfair. The $1bn Dell paid to settle the resulting lawsuit now looks tiny next to its $110bn market capitalisation; its share price has increased sixfold since the buyout.


In another example, entertainment group Endeavor — the majority owner of WWE wrestling — agreed a $13bn go-private transaction with its founder Ari Emanuel without letting ordinary shareholders vote. Lawsuits are now flying.

Granted, companies would still rather avoid the courts if they can. The rise in litigiousness has raised the cost of insurance for directors and board members. Some companies are also moving to less shareholder-friendly jurisdictions. Tesla has moved to Texas; video game developer Roblox redomiciled in Nevada. Delaware has since legislated to reduce the ease with which shareholders can file suits.

That is a poor omen. Shareholder litigation may sometimes be frivolous, but it also helps keep companies honest. It’s hardly ideal if powerful insiders see legal settlements as the acceptable cost of giving minority shareholders a rough deal. But it’s better than there being no cost at all.

FT : Should stamp duty be scrapped in the UK?

Should stamp duty be scrapped in the UK?
Conservative party says property tax deters people from moving house and stifles productivity

Kemi Badenoch is proposing to abolish one of the UK’s most unpopular taxes — the stamp duty people pay when buying their main home. 

The Conservative party leader claims that the move, which would chiefly benefit wealthy homeowners and is estimated by the Tories to cost about £9bn, has the support of economists. This is because stamp duty distorts the property market, discouraging people from downsizing or moving to take a new job. 

But experts say Badenoch’s proposal would need more credible measures to fund it and highlights the need for wider reform of property taxation. 

Tim Leunig, a former government adviser, said scrapping stamp duty — while it would boost growth and productivity — would be “a very, very big tax cut for rich people”. He argues that one effect would be to boost house prices, making the main beneficiaries the existing owners of expensive properties in the south-east of England. 

What is the proposal?
The Conservatives said that if they win the next general election they would abolish stamp duty for the purchase of primary residences in England and Northern Ireland. The tax is currently charged at different rates on different portions of a property price on residential properties costing more than £125,000, unless you are a first-time buyer.

Scotland and Wales have different systems and the Conservatives said it would be for the devolved administrations to decide whether to follow suit.  

Badenoch said stamp duty was a “bad tax, an un-Conservative tax”, and that abolishing it would “unlock a fairer and more aspirational society” while boosting economic activity as more people moved homes.

Tory officials said the policy would be implemented early in a Conservative government to avoid “forestalling” in the property market while people waited for the tax to be axed.

How much money does stamp duty raise?
The Office for Budget Responsibility expects stamp duty on residential property to bring in revenues of £10.1bn in 2024-25. This is due to rise to £19.3bn by 2029-2030, partly because the threshold at which the duty becomes payable will not rise with inflation, and partly because the OBR expects the government’s planning reforms to lead to more house sales. 

About half of this represents tax paid by people buying their primary residence, rather than a second home, the Conservatives say.

The opposition party claims the Labour government’s current plans for stamp duty represent a “stealth tax”, because the £125,000 threshold at which 2 per cent stamp duty is payable was set in 2014. 

More than half of all homebuyers paid the 5 per cent rate on part of their purchase in 2023-24, the Conservatives noted, compared with just one in four in 2013-14. 

Should stamp duty be reformed?
Economists have long argued for the tax to be abolished because it deters people from moving house — preventing them downsizing to smaller properties as they get older, making it harder for workers to move to better jobs, and adding to the UK’s acute problems with housing affordability. 

“From an economist’s perspective, stamp duty is certainly among the most damaging mainstream taxes and overdue for reform,” said Thomas Pugh, chief economist at the audit firm RSM UK, adding that it drags down productivity and means “spare bedrooms sit unused while families squeeze into homes that are too small”. 

“It isn’t a well-designed tax. Getting rid of it is a good idea,” said Arun Advani, economics professor at Warwick university and a research fellow for the Institute for Fiscal Studies, adding that abolition should eventually lead to productivity gains through better job mobility. 

Leunig, who has backed broader reform of stamp duty and council tax in a paper for the centre-right think-tank Onward, also believes scrapping stamp duty would boost economic activity in the short term as more people sped money on renovations and new furniture as part of moving house. 

Is scrapping stamp duty affordable?
The main argument against the Conservatives’ proposal is its estimated £9bn price tag. 

Funding it would require “spending cuts that are well defined and that you can deliver, or an alternative tax from which one can raise the money”, Advani said.

But few economists believe the Conservatives can deliver its promise of £23bn of savings from welfare, or succeed in squeezing £8bn from cutting the UK civil service back down to its pre-Brexit size.

A separate concern is that scrapping stamp duty would be likely to fuel house prices — to the benefit of rich homeowners — as it did during a temporary stamp duty holiday instigated by then chancellor Rishi Sunak in the immediate aftermath of Covid-19 lockdowns. 

Advani and others argue that broader reform, also overhauling the current system of council tax, could address both these concerns, as stamp duty revenues could be replaced by higher taxes on the owners of high-priced properties. 

One reason successive governments had failed to tackle the outdated system of council tax, Advani said, was because of the potential to create large numbers of losers who would see the value of their house fall. Tackling both reforms in tandem could avoid “giant crazy gyrations” in property prices and would “feel more manageable”. 

Marc von Grundherr, director of estate agent Benham and Reeves, said Badenoch’s pledge was “nothing but political hot air designed to win votes”.

“There’s absolutely no chance the Conservatives would give up such a considerable tax haul, especially in these uncertain economic times.”

FT : Italian MPs from Meloni’s party call for ban on Islamic face coverings

Italian MPs from Meloni’s party call for ban on Islamic face coverings
Lawmakers from Brothers of Italy aim to combat ‘religious radicalisation’ with wide-ranging proposals

Italian Prime Minister Giorgia Meloni’s party has called for a ban on face coverings such as the burka and niqab in public spaces, part of a wide-ranging proposal intended to combat what it described as “Islamic separatism”.

The draft law — presented to parliament on Wednesday by a trio of lawmakers from Meloni’s Brothers of Italy party — would also tighten scrutiny of funding for mosques and other Islamic educational and cultural activities by imposing strict financial reporting requirements.

“The spread of Islamic fundamentalism . . . undeniably constitutes the breeding ground for Islamist terrorism,” an introduction to the draft legislation said, citing the need to combat “religious radicalisation and religious hatred”. 

Galeazzo Bignami, leader of the rightwing Brothers of Italy in parliament and one of the bill’s backers, said the measures were intended to defend Italy from “all forms of extremism and any attempt to create parallel societies on Italian soil”. 

Sara Kelany, a co-sponsor of the proposal, said Italy could not tolerate the “creation of enclaves where sharia law prevails over Italian law”, but would promote “a model of society based on integration, legality and the defence of western values”. 

The proposals come amid growing tensions over the increasingly visible presence of the Islamic faith in Italy, as well as outcries over recent cases involving young Muslim women raised in Italy by migrant families who then tried to force them back to their parents’ countries for arranged marriages. 

The draft proposes a prohibition on the use of any full-face Islamic veils in public places such as educational institutions, commercial establishments and offices, with proposed fines of between €300 and €3,000 for violators.

It would also impose heavy fines on Muslim organisations that are found to have accepted donations from individuals or entities deemed to be “active in the propaganda of principles that conflict with the protection of fundamental freedoms and state security”.

The draft also cites the need to combat “cultural crimes” against vulnerable women by toughening existing laws against non-consensual arranged marriages, which would be punishable by prison sentences of four to 10 years, and a new ban on so-called virginity tests. 

Italy’s national statistics agency, Istat, maintains no records of the religious affiliation of Italian citizens or the country’s foreign residents. 

However, the country’s Islamic associations estimate that around 2mn Muslims live in Italy — many of them foreign workers and their families — while the US-based Pew Research Center estimated five years ago that Italy was home to nearly 3mn Muslims, around 5 per cent of the population.

Muslim groups said the Brothers of Italy’s punitive approach to Islamic veils would not promote religious harmony and instead risked alienating Muslims.

“Freedom of choice is a fundamental principle in a democratic society — no state should dictate how a woman should dress,” Yassine Lafram, president of the Union of Islamic Communities of Italy, said after the draft legislation was announced. 

“Any legislative measures that impose blanket bans risk creating social tensions and discrimination rather than fostering integration and dialogue,” Lafram added.

The European Court of Human Rights has repeatedly upheld the legitimacy of national curbs on Islamic veils — the so-called burka bans in countries such as France, Belgium and Austria — ruling that a ban on face coverings was justified on the grounds of social harmony.

FT : First Brands creditor warns as much as $2.3bn has ‘simply vanished’

First Brands creditor warns as much as $2.3bn has ‘simply vanished’
Raistone claim highlights scale of losses lenders fear they could be dealt as part of the auto supplier’s collapse

One of First Brands’ largest creditors has alleged that as much as $2.3bn “simply vanished” before the bankrupt auto supplier failed, as it called for an independent examiner to probe its downfall.

The claim from Raistone, a technology group that helped arrange a significant portion of First Brands’ off-balance sheet financing, highlights the scale of the losses lenders fear they could be dealt as part of the collapse.

“Under these circumstances — with up to $2.3bn in assets . . . unaccounted for — the appointment of an examiner to conduct an independent investigation is both mandatory and is critical to maximising recovery for creditors,” Raistone said in its motion in a Texas bankruptcy court.

First Brands declined to comment.

>>> US After Hours Summary: AZZ -4.7% lower on earnings; AZO +0.5% ticking highe

After Hours Summary: AZZ -4.7% lower on earnings; AZO +0.5% ticking higher on increase to share repurchase program

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RELL +21.6%, RGP +4%

Companies trading higher in after hours in reaction to news: DOMO +5.2% (launches on AWS Asia-Pacific region), CTEV +4.1% (strategic relationship with iO health), TTAM +2.8% (earns Miami-Dade approvals), ANGX +2% (partners with 2521 Entertainment to acquire DAVID franchise), COST +1.7% (reports September comps), CNS +1.1% (reports preliminary AUM for September), GMRE +0.9% (enters into amended and restated credit facility), ALTS +0.8% (issues letter to stockholders), CHDN +0.7% (Everi announces 7-year agreement with CHDN), AZO +0.5% ($1.5 bln increase to share repurchase program; also Executive Chair transition), BKD +0.4% (reports September occupancy), ZBIO +0.4% (mixed securities shelf offering; also enters open market sales agreement up to $200 mln common stock), FDS +0.3% (disclosure of insider purchase by CFO), AVNT +0.1% (increases dividend)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AZZ -4.7%, BSET -2.1%

Companies trading lower in after hours in reaction to news: APGE -10% (public offering of common stock), VUZI -2% (stock offering by selling shareholders), DBI -1.9% (CFO to resign), ASND -1.5% (submits Marketing Authorization Application for TransCon CNP)