British Airways IT crisis hits IAG shares
Shares in British Airways’ parent company have slumped to the bottom of the London stock market this morning, after a long weekend of disruption.
International Airlines Group’s shares fell by 4% at the start of trading, as investors try to calculate the cost of the IT problems that disrupted hundred of flights.
BA cancelled all its flights from Heathrow and Gatwick (London’s two largest airports) on Saturday, and there were further delays on Sunday as the airline battled to recover the situation.
Experts reckon the compensation bill could hit £100m, but the long-term impact of the crisis is hard to assess.
BA blamed a power supply outage, and denied that a cyberattack was to blame. But unions pointed out that BA has made hundreds of IT staff redundant recently.
Kathleen Brooks, research director at City Index, believes BA’s reputation could be significantly damaged by the crisis:
Even if you give BA the benefit of the doubt it still looks bad, if their systems are not strong enough to withstand a power surge, then this sort of thing could happen again, which could add downward pressure to the IAG stock price.
Although cost cutting has been good for the share price in the last year, it will come back to bite IAG if it stops them from doing what they are supposed to do: fly passengers to their destinations.
French growth revised up to 0.4%
Euro falls as Greek debt fears mount
Growing concerns over Greece’s bailout programme are weighing on the euro this morning.
The European single currency has shed almost 0.5% to $1.113, on concerns that Athens and its creditors may not reach an agreement over its bailout programme in time.
Overnight, finance minister Euclid Tsakalotos warned that Greece’s delicate recovery would be derailed if eurozone finance ministers didn’t agree to release its next loan in June.
Tsakalotos told journalists in Athens that Greece deserves to be given the debt relief promised by its lenders, if it stuck to its austerity programme.
He said it is now vital that a real is reached on June 15, adding:
“We can’t accept a deal which is not what was on the table.
What was on the table was if Greece carried out its reform package then creditors would ensure that there would be a clear runway through clarity for debt.”
Greece had hoped to receive its latest bailout payment this month, but eurozone ministers couldn’t reach an agreement with the International Monetary Fund.
Athens faces €7bn of debt repayments this summer, so there is concern that the eurozone debt crisis could flare up again soon.
Germany’s Bilt newspaper is claiming this morning that it might ‘skip’ this bill, if a deal on debt relief hasn’t been reached. That’s added to the anxiety this morning:
Christophe Barraud
(@C_Barraud)#Greece (3) | May Opt Out of Next Payment Without Debt Deal – Bloomberg (citing Bild) pic.twitter.com/DuKFicoLiY
The euro is also suffering from worries over Italy, where former prime minister Matteo Renzi is pushing for early elections – perhaps in September.