Gulf Daily News Saturday, 8th November 2014 19 Jet Airways’ gains hit $11.3 million n Industry and Commerce Minister Dr Hassan Fakhro received Huma Fakhar, who is currently preparing a study to assess developments of the free trade agreement with the US in the framework of Bahrain Trade Capacity Development Project in collaboration with UNDP. NEW DELHI: Struggling Jet Airways, one of India’s biggest carriers, reported yesterday a quarterly profit for the first time in two years, boosted by a one-off gain from the sale of a frequent-flyer scheme. The Indian carrier, in which fast-growing Gulf airline Etihad Airways has bought a 24 per cent stake, remained in the red when the sale proceeds were stripped out, but the airline still improved its operating performance markedly. Jet announced a 698 million rupee ($11.3m) net profit for the second financial quarter to September in contrast with a 8.9 billion rupee net loss in the same year-ago period. “I am extremely pleased by the progress that is evident across several areas,” Jet Airways chief executive Cramer Ball, known as a turnaround specialist, said. The publicly traded airline, which last reported a quarterly profit in 2012, has been seeking to pilot its way back to profitability in India’s congested skies. While India’s passenger aviation market is one of the fastest-growing globally, cut-throat fare wars and too many carriers mean most of the country’s airlines are losing money, analysts say. Stripping out the 3.05 billion rupee earnings from the sale of its frequent flyer scheme, Jet lost 2.35bn rupees, said the statement. But this was still a vast improvement from its year-earlier loss. “This is in keeping with our three-year turnaround plan,” Ball said. Key jobs data reflects resilient US economy WASHINGTON: US job growth increased at a fairly brisk clip in October and the unemployment rate fell to a fresh six-year low of 5.8 per cent, underscoring the economy’s resilience in the face of slowing global demand. Despite the strengthening labour market picture, wage growth remained tepid, suggesting the Federal Reserve would be in no hurry to start lifting interest rates. Employers added 214,000 new jobs to their payrolls last month, the Labour Department said yesterday. The unemployment rate fell from 5.9pc, even as more people entered the labour force, a sign of strength in the jobs market. Data for August and September were revised to show 31,000 more jobs created than previously reported. “Today’s jobs report confirms that the US remains the bright spot in a global economic picture filling with clouds,” said Michael Griffin, managing director at CEB in Arlington, Virginia. Economists polled by Reuters had forecast 231,000 new jobs last month and for the unemployment rate to hold steady. Monthly job growth has exceeded 200,000 for nine straight months, the longest stretch since 1994, sufficient strength to keep the economy on a higher growth path after it expanded at a 3.5pc pace in the third quarter. The Fed last month struck a fairly upbeat tune on the jobs picture as n A worker unloads grocery goods in Washington ... data boost it ended its bond buying programme, dropping its characterisation of labour market slack as “significant” and replacing it with “gradually diminishing.” However, sturdy job gains on their own will probably not be enough to convince the US central bank to start raising interest rates before the second half of 2015, given a still low level of inflation. Wage growth is the missing piece of the jobs recovery and without significant increases, most economists say the Fed will be in no rush to lift benchmark lending rates that it has kept near zero since December 2008. The employment report showed that average hourly earnings rose only three cents last month, leaving the year-onyear change at 2pc, the range it’s been in for the last few years. But other data have begun to show wage growth picking up. Details of the October employment report were fairly upbeat. The labour force participation rate and the ranks of the long-term unemployed both improved. These metrics are on Fed chair Janet Yellen’s so-called dashboard and are being watched for clues on the timing of the first rate increase. The participation rate, or the share of working-age Americans who are employed or at least looking for a job, increased by one-tenth of percentage point to 62.8pc, bouncing back after two straight months of declines. The employment-to-population ratio increased to 59.2, the highest level since July 2009. Swiss Re net profit surges to $1.2bn ZURICH: A stronger than expected profit rise at Swiss Re boosted hopes yesterday that the reinsurance group will join the slew of insurers sharply raising their dividend payouts. Swiss Re’s third-quarter net profit of $1.2 billion, reflecting lower disaster payouts compared with the prior-year period. Analysts had expected a net profit of $891 million Major European insurers are offering shareholders a bigger share of their earnings in dividends this year, as a low level of payouts for damage claims has allowed them to build up large cash piles. Swiss Re’s rival Munich Re for instance has been returning surplus capital to shareholders by buying back its own shares and raising its dividend. Swiss Re chief financial officer David Cole said it was too early to comment on a special dividend on its 2014 results and the issue would be addressed in February, when the reinsurer reports full-year earnings. “Our shareholders should expect us to approach this with the same discipline and the same philosophy that we have demonstrated over the last several years,” Cole said yesterday after Swiss Re posted a 14 per cent rise in net profit in the third quarter. However, investors saw potential for an increased payout after the results. “Solvency levels remain at record high and together with another very solid cash-generating quarter, dividend prospects have further improved,” said Vontobel analyst Stefan Schuermann. “Barring major losses in the fourth quarter we clearly expect a special dividend to be paid for the full-year 2014.” Swiss Re said it sees reinsurance prices stabilising in some areas as the sector tries to ride out competition from institutional investors such as pension funds venturing into the market. It expects to book an aftertax loss of less than $200m in the fourth quarter after the sale of US life insurance arm Aurora National Life Assurance Company. IAG plans maiden dividend LONDON: British Airways owner IAG laid out plans to pay a maiden dividend, coming of age three years after it was created in a merger between BA and Spain’s Iberia. International Airlines Group said it was confident of increasing profit by more than 10 per cent a year between 2016 and 2020, on top of significant growth this year and next. As a result it said it anticipated announcing next year that it would start paying shareholders. “We remain confident in meeting our 2015 financial targets which we see as the trigger to introducing a dividend,” it said ahead of an investor day yesterday. BA and Iberia sealed an $8 billion merger in 2011, a move which helped both stem huge losses following the worst industry downturn in decades. Years of tough restructuring followed – with thousands of job cuts and salary and capacity reductions. Before the 2011 tie-up, neither BA nor Iberia had paid a dividend since 2008. The dividend due to be introduced next year would be based on a payout ratio of 25pc of the company’s underlying profit after tax, IAG said. The restructuring plus the introduction of new, more fuel efficient planes has put IAG on a strong footing, leaving its European rivals fighting to keep up in the face of competition from short-haul budget airlines and long-haul Gulf carriers. It has outperformed Air FranceKLM and Lufthansa, which have a history of stormy relations with their powerful unions and have been hit by strikes. Also helping IAG’s profits are the healthier economic growth in the British and US economies – to which it has more exposure due to its strong trans-Atlantic business – compared with the French and German economies on which the rival airlines are more reliant. And while Lufthansa and Air France try to expand their discount operations and reduce costs to compete with budget carriers like Ryanair and easyJet, IAG has already been benefiting from its acquisition of Spanish no-frills airline Vueling in 2013. Looking to the 2016 to 2020 period, IAG said it would target average earnings per share growth of over 10pc a year and an operating profit margin of 10 to 14pc.
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