Airline chaos as 200 pilots call in sick

The airline, which filed for insolvency last month and is only still operating because of a German government bridging loan, said Tuesday’s apparent strike threatened its existence and hurt its chances of saving jobs.

The pilots’ union, Vereinigung Cockpit, said it had not called the action – adding it was surprised that 200 pilots had failed to report for duty.

Air Berlin, which is Germany’s second-largest carrier, said most of those off work were plane captains.

It has been in financial trouble for years, and industrial relations are at breaking point.

In an internal memo to staff, seen by the Reuters news agency, chief operations officer Oliver Iffert wrote: “No company could possibly be seen in a worse light than Air Berlin today.

“We must return to stable operations. That is crucial in order to bring talks with investors to a successful conclusion.”

Air Berlin filed for insolvency after a major shareholder, Abu Dhabi-based carrier Etihad, refused to extend its cash lifeline.

The subsequent €150m (£135m) loan from the authorities allows Air Berlin to continue flying for three months as rivals circle above – hunting an opportunity to capitalise ahead of a Friday deadline for bids.

Ryanair is expected to be in the mix.

It has accused the German government of wanting the country’s biggest carrier, Lufthansa, to take control of Air Berlin’s viable operations.

German media has reported Lufthansa wants to take up to half its 140 planes and 3,000 crew for its Eurowings budget airline.

Eurowings currently leases 38 aircraft from Air Berlin – and because of this, it too has had to cancel flights because of the pilots’ walkout.

Why this is the most unApple iPhone launch ever

Some think that spells the end of its dominance – but it could ensure its survival.

Alongside the next iteration of the iPhone, the iPhone 8 (because this is the eighth generation), we’re getting an iPhone X to mark 10 years of the smartphone.

We’ve abandoned ‘nine’, apparently, and with it the neat logic that had named iPhones to date. Other handset makers like Samsung offered a charcuterie of devices with different names; Apple was, until now, always cleaner.

Even worse, we were told pretty much everything about the iPhone X ahead of launch thanks to internal leaks – galling for one of the most instinctively secretive technology companies around.

An invite being sent for the launch event
Image:Apple sent out these exclusive invites to its launch event in Cupertino

Then there’s the phone itself. It’s got facial recognition, a very big screen and perhaps wireless charging. And animated emojis. Features that have been seen elsewhere, thrown at a wall in a Cupertino meeting room and packaged into a glass slab that it is rumoured will cost you more than $1000 (£753).

Thus the lament: where’s the innovation? Where is the single-minded focus and discipline that characterised Apple under Steve Jobs?

Jobs was the visionary who gave people something they didn’t know they wanted – a supercomputer in their pocket.

He was often compared to Henry Ford and he encouraged the comparison.

Ford was supposed to have said: “If I had asked people what they wanted, they would have said faster horses.”

Jobs’ version was this: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

Steve Jobs was a lot more like Henry Ford than Tim Cook is. But that’s a good thing for Apple now.

Apple has said revenue in the third quarter was up 7%

Video:Details of new Apple iPhone X ‘leaked’

Ford was hugely innovative and hugely successful as a result. In 1908, Ford Motor Company made 10,000 Model T cars. Ten years later, it was nearly a million (Ford didn’t call it a Model X, though).

At that point, though, Ford started losing ground. Its focus on the assembly-line and mass manufacture ‘froze’ its automobile design, according to Patrick Vlaskovits, the author of The Lean Entrepreneur.

General Motors, under CEO Alfred Sloan, took a different approach, offering lots of different models. Their phrase was “a car for every purse and purpose” – rather different from Ford’s “any colour, so long as it’s black”.

Ford went from selling 2/3 of all US-built cars in 1921 to just 15% in 1927.

We’re at a similar inflection point for smartphones.

Jobs created the mass-smartphone market, as Ford did for cars. But technological improvements 10 years on are merely incremental. People are holding onto phones longer as a result.

With the X, Apple will offer eight phones in three different form factors (the X, the 7 and 6s if they keep it, and the SE). $1000 is expensive but people will certainly pay (and why shouldn’t they – how many other possessions do you use every hour of every day?). That’s a phone for every purse and purpose.

Tim Cook is more like Alfred Sloan, and so Apple is becoming more like GM. Managing the transition is undoubtedly tricky but it will mean a new era of dominance for Apple. Maybe even another 10 years.

Was your T-shirt made in North Korea?

North Korea’s textile industry is the latest to come under UN sanctions – so how big a sector is it?

The BBC’s Karishma Vaswani takes a look.

Video produced by Simon Atkinson.

US hurricanes to drive demand, says Ashtead
Damage froim Hurricane IrmaImage copyrightGetty Images
Image caption Hurricane Irma has wreaked damage across Florida

Shares in Ashtead have jumped 6% after the industrial equipment rental firm said clean-up efforts for hurricanes Harvey and Irma would boost its trade.

Ashtead said it was too soon to say exactly how the storms would affect its results.

But it has already seen a “significant” rise in demand for its diggers and tools as it supports relief efforts.

In Texas and Florida the storms are thought to have caused $150bn-$200bn of damage.

Ashtead’s comments came as it reported a 16% rise in revenue to £880m for the three months to 31 July, with pre-tax profits up 19% to £229m.

The firm said it had seen strong growth in the period, enhanced by the weakness of the pound, which boosts the value of profits earned overseas.

It added that the impact of hurricanes Irma and Harvey was likely to increase trade in the US, where it is the country’s second largest equipment rental business.

Chief executive Geoff Drabble said: “It is too early to attempt to quantify the impact of Hurricanes Harvey and Irma accurately on our business.

“However, it is evident that it will result in an increase in demand for our fleet and we will provide an update at the end of the second quarter.”

He added: “Looking forward, as a minimum, we expect that the impact will help to underpin the current market assumptions in our 2021 plan and therefore the board continues to look to the medium term with confidence.”

Cost of fashion pushes inflation to 2.9%

According to figures from the Office for National Statistics (ONS), fashion costs rose at an annual rate of 4.6% in August.

It attributed the increase to the fall in the value of the pound since the EU referendum which has forced up prices for imported goods – costs which are evidently being passed on to shoppers at a time they can least afford them.

Mike Prestwood, head of inflation at the ONS, said: “Clothing prices rising faster than last year, along with a hike in the cost of petrol, helped nudge inflation upwards.

“Conversely, these effects were partially offset by airfares, which rose more slowly than during last year’s summer holidays.”

:: Ian King – Will inflation rise see interest rates go up?

The headline inflation figure of 2.9% represented an increase from 2.6% in the previous month and was higher than most forecasters had predicted.

The data helped sterling to its highest level against the dollar for almost a year – trading at $1.3267 – while it also surged against the euro.

The strengthening of the pound can be explained by greater market expectations of an interest rate rise to tackle higher inflation.

A number of policymakers at the Bank of England have declared concerns in recent months about the impact of rising prices on the economy.

The Bank’s monetary policy committee (MPC) is due to make its latest decision on rates following a meeting on Thursday.

Members will also have taken note of separate figures from the ONS about factory gate costs, which give a future indicator of inflation.

They showed an annual rate of 3.4% – their first increase since February – while prices paid by factories for materials and energy were up 7.4%.

Commenting on the figures, Neil Wilson, senior market analyst at ETX Capital, said: “The inflation data builds a stronger case for the Bank of England to look at hiking rates but it is not yet strong enough for the MPC to act this week.

“Andy Haldane may now choose to vote for a hike, suggesting a 6-3 split on the MPC is now more likely than before with confirmed hawks Ian McCafferty and Michael Saunders likely to vote for a hike.”

There was political reaction too.

TUC general secretary Frances O’Grady said: “The cost of living squeeze continues, with rising inflation outpacing wages.

“The Government needs to get a grip and get pay rising across the economy. A good start would be to scrap the pay cap for all public sector workers.

“Our dedicated public servants are a team. A pick and mix approach, that rewards some and not others, would be cynical and plain unfair.”

Lego builder makes models worth thousands of pounds

A man from Hampshire has turned playing with Lego into a successful business.

Duncan Titmarsh, from Bordon, runs one of 16 companies that are officially certified to use Lego.

Some projects cost hundreds of thousands of pounds to build.

Cashing out
Senobar Johnsen
Image caption Senobar Johnsen says it’s “visibly noticeable” that Swedes prefer cards to cash these days

Sweden is the most cashless society on the planet, with barely 1% of the value of all payments made using coins or notes last year. So how did the Nordic nation get so far ahead of the rest of us?

Warm cinnamon buns are stacked next to mounds of freshly-baked sourdough bread at a neighbourhood coffee shop in Kungsholmen, just west of Stockholm city centre.

Amongst the other typically Scandinavian touches – minimalist white tiles and exposed filament light bulbs – is another increasingly common sight in the Swedish capital: a “We don’t accept cash” sign.

“We wanted to minimise the risk of robberies and it’s quicker with the customers when they pay by card,” says Victoria Nilsson, who manages two of the bakery chain’s 16 stores across the city.

“It’s been mainly positive reactions. We love to use our cards here in Stockholm.”

Across the country, cash is now used in less than 20% of transactions in stores – half the number five years ago, according to the Riksbank, Sweden’s central bank.

Coins and banknotes have been banned on buses for several years after unions raised concerns over drivers’ safety.

Even tourist attractions have started to gamble on taking plastic-only payments, including Stockholm’s Pop House Hotel and The Abba Museum.

Image caption Bjorn Ulvaeus (left) back in his Abba heyday. Now he’s a keen supporter of a cashless Sweden.

The iconic band’s Bjorn Ulvaeus is, in fact, one of the nation’s most vocal supporters of Sweden’s cash-free trend, after his son lost cash in an apartment burglary.

Smaller retailers are jumping on the bandwagon, too, making use of home-grown technologies such as iZettle, the Swedish start-up behind Europe’s first mobile credit card reader.

Such portable technologies have enabled market traders – and even homeless people promoting charity magazines – to take card payments easily.

“I took my kids to the funfair and there was a guy selling balloons and he had a card machine with him,” remarks Senobar Johnsen, one of the Swedish customers back at the bakery.

Currently living in Portsmouth in southern England, she’s visiting Sweden for the first time in a year and says it’s “visibly noticeable” that people are paying more with cards.

“It’s not like the UK where there’s often a minimum spend when you go to a kiosk or you’re in the middle of nowhere. I think it’s great”.

Swish, a smartphone payment system, is another popular Swedish innovation used by more than half the country’s 10 million strong population.

Image caption Signs like this are becoming increasingly common in Sweden

Backed by the major banks, it allows customers to send money securely to anyone else with the app, just by using their mobile number.

A staple at flea markets and school fetes, it’s also a popular way to transfer money instantly between friends: Swedes can no longer get away with delaying their share of a restaurant bill using the excuse that they’re short on cash.

“In general, consumers are very interested in new technologies, so we’re quite early to adopt [them],” explains Niklas Arvidsson, a professor at Stockholm’s Royal Institute of Technology.

This is partly down to infrastructure (Sweden is among the most connected counties in the EU); a relatively small population that is an ideal test-bed for innovations; and the country’s historically low corruption levels, he argues.

“Swedes tend to trust banks, we trust institutions… people are not afraid of the sort-of ‘Big Brother’ issues or fraud connected to electronic payment.”

Somewhat paradoxically, Sweden’s decision to update its coins and banknotes, a move announced by the Riksbank in 2010 and fully implemented this year, actually boosted cashless transactions, explains Prof Arvidsson.

More Technology of Business

Image copyrightGetty Images

“You would have thought that a new kind of cash would have created an interest, but the reaction seems to have been the opposite,” he says.

“Some retailers thought it’s easier not to accept these new forms of cash because there’s learning to be done, maybe investment in cash registration machines and so-on.”

There has also been a “ripple effect”, he says, with more shops signing up to the cashless idea as it becomes increasingly socially acceptable.

Riksbank figures reveal that the average value of Swedish krona in circulation fell from around 106 billion (£10bn) in 2009 to 65 billion (£6bn) in 2016.

Barely 1% of the value of all payments were made using coins or notes last year, compared to around 7% across the EU and in the US.

Prof Arvidsson predicts that the use of cash will most likely be reduced to “a very marginal payment form” by 2020.

Retailers seem to agree. A survey – not yet published – of almost 800 small retailers carried out by his research team found that two thirds of respondents said they anticipated phasing out cash payments completely by 2030.

Image caption Former Interpol president Bjorn Eriksson is worried about a cashless future

But the trend is not to everyone’s liking, as Bjorn Eriksson, formerly national police commissioner and president of Interpol, explains from the suburb of Alvik.

Here, his local coffee shop still accepts old-fashioned money, but several of the banks no longer offer cash deposits or over-the-counter withdrawals.

“I like cards. I’m just angry because about a million people can’t cope with cards: the elderly, former convicts, tourists, immigrants. The banks don’t care because [these groups] are not profitable,” he argues.

The 71-year-old is the face of a national movement called Kontantupproret (Cash Rebellion), which is also concerned about identity theft, rising consumer debt and cyber-attacks.

“This system could easily be disturbed or manipulated. Why invade us when it’s so easy? Just cut off the payment system and we’re completely helpless,” says Mr Eriksson.

His arguments haven’t escaped the notice of politicians in Sweden, where debates about security are increasingly making their way onto the agenda in the wake of a government agency data leak that almost brought down the ruling coalition in July.

Meanwhile, the backdrop of an increasingly divided electorate suggests that rural and elderly voters could prove crucial in the Nordic country’s next general election, scheduled for September 2018.

Back at Stockholm’s Royal Institute of Technology, Prof Arvidsson points out that while most Swedes have embraced the nation’s cash-free innovations, two thirds don’t want to get rid of notes and coins completely.

“There’s a very strong emotional connection to cash among Swedes, even though they do not use it,” he says.

Sweden may leading the global trend towards a cashless future, but it’s tech-savvy population also appears to be guided by another, more traditional Swedish trait: caution.

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Northern Rock
Obafemi Martins of Newcastle scores a goal from the penalty spot during the Premier League match between Newcastle United and Birmingham at St James' Park on December 08, 2007 in Newcastle, EnglandImage copyrightGetty Images
Image caption Northern Rock was a key sponsor for Newcastle United

In the summer of 2007, Newcastle had much to look forward to. The Toon – Newcastle United – had a new owner, the billionaire retail tycoon Mike Ashley, and much was expected under the management of Sam Allardyce.

The performance of the team’s shirt sponsor, Northern Rock, was a source of pride; after decades of hard times following the end of shipbuilding and mining, the North East had a new economic champion, one that was giving the financial services giants of the South a real run for their money.

The former building society had demutualised and scaled the heights of the FTSE 100, the elite club of Britain’s biggest quoted companies, and in the process had become the fourth biggest bank in the UK by share of lending.

The chairman, Matt Ridley, summed it up in the annual report, lauding “another excellent year” and said “our strategy of using growth, cost efficiency and credit quality to reward both shareholders and customers continues to run well.”

Toxic fuel

A few months later, Northern Rock’s empire was in ruins. The fuel it had used to grow so quickly turned out to be toxic.

Image copyrightGetty Images
Image caption Northern Rock had borrowed heavily on the international money markets

Rather than using customer deposits as the source of funds to lend out to homeowners, it borrowed in the international money markets.

When the sub-prime crisis hit America, those markets took fright, and stopped lending to anything that looked like it might be over-exposed to the housing market. Northern Rock was an obvious first casualty.

The BBC broke the news that it needed Bank of England support 10 years ago tomorrow, and the day after there were queues outside branches, the first run on a British bank in 150 years. After limping on for a few more months, Northern Rock was nationalised in February 2008.

Regional shock

Councillor Nick Forbes, leader of Newcastle City Council, remembers walking out of the civic offices to nearby Newgate Street where Northern Rock had its main city centre branch. “There was a queue outside going right down the street. That really was the first sign that something was wrong. No-one really saw it coming.”

Image copyrightGetty Images
Image caption Customers queued for hours to take out their savings

Northern Rock’s demise – it was split into “bad” and “good” sets of assets and operations, with Virgin Money buying the latter – was a shock to the region’s economy, as was the banking crisis that followed.

“We were early into recession and late out,” said Mr Forbes. “It’s only now really that we have recaptured that lost ground.”

About 2,500 jobs were lost. There was another heavy blow, little understood outside the North East – the loss of the Northern Rock Foundation, a charitable trust which received 5% of the bank’s profits each year.

Image copyrightGetty Images
Image caption Many who lost their savings want the government to change its mind on compensation

It had given £235m to good causes before the bank was nationalised and broken up. Mr Forbes is now pressing the Treasury to give back some of the profits it expects to make from its intervention on Northern Rock to make up for the loss of the foundation.

Northern Rock shareholders are also making a claim on the potential profits, which independent experts think could eventually reach about £8bn.

An association of small shareholders, many of whom lost their life savings when the bank was nationalised, has asked the chancellor to think again on compensation, which has been denied before.

Image copyrightGetty Images
Image caption Any surplus from Northern Rock’s privatisation should go to taxpayers, says the Treasury

Jon Wood, a fund manager who was a big Northern Rock shareholder and has been severely critical of the Bank of England’s action, is also thought be to considering fresh legal action. The Treasury has said that any surplus from the Northern Rock nationalisation should compensate taxpayers for the amounts risked in the rescue.

Lessons learned

A decade on, important strands of “the run on the Rock” story are only now being uncovered. In an interview with the BBC Gary Hoffman, who was parachuted in as chief executive after privatisation, said he found an organisation with an unquestioning – and unhappy – culture.

“The management had completely lost touch with the coal face, and did not know what was happening. There was an attitude that you did not question what was going on, which was a tragedy because there were extremely good people at the bank.”

Hoffman reveals that the Treasury had considered all options for the future of the bank when he was in charge – not just a sale to a banking rival, but also a refloating of the bank as an independent business, and its complete run-down and closure.

Image copyrightGetty Images
Image caption The collapse was the first sign in Britain of the coming global financial crisis

Other senior banking sources have told the BBC that the last option – closure – was the favourite right up until Christmas Eve 2008, when the bank’s leadership was able to convince the Treasury it could be sold as a going concern.

Mr Hoffman says that the UK’s banking sector is now safer than in the run-up to the crisis, with greater capital reserves at the big institutions. Others disagree, however, saying the increases have been largely illusory.

Kevin Dowd, professor of finance and economics at the University of Durham, says changes in bank regulations have not greatly improved banks’ resilience.

“The Bank of England looks at the book value of bank assets – the value that they themselves put on their assets. But if you look at the stock market, investors don’t believe it because most of our big banks have stock market values less than their book values.”

Consumers ‘in the dark’ over broadband costs
Computer keyboardImage copyrightPA

Consumers are “in the dark” over their broadband costs, a price comparison website has said.

Six out of 10 people surveyed by Comparethemarket said they had never been told by their provider that their contract was coming to an end.

When a contract expires, computer users can shop around for a cheaper deal without the risk of any exit fees.

The survey comes as regulator Ofcom has been gathering views on ways to help people secure a better deal.

The regulator has no rules in place at present to ensure a provider alerts a customer that their contract is close to finishing. Other sectors, such as car and home insurance, see prompts sent to customers.

Peter Earl, head of energy and utilities at Comparethemarket, suggested people were “in the dark” over the conditions of their broadband packages at a time when prices were rising.

This included three-quarters of those asked in the survey only having a “fairly vague” idea or “no idea” of their broadband speed requirements.

“Whilst price is clearly viewed as the deciding factor when it comes to choosing a broadband package, our research findings suggest that many customers may not actually have a view on whether what they pay is appropriate,” he said.

Ofcom has said that switching “engagement levels could be improved by providing consumers with reminders about their contract term and prompts to consider engaging at particular points in time”.

This was within a publication earlier this year aimed at improving people’s ability to shop around. It set a deadline for the end of this week for views to be submitted, but any subsequent proposals will require consultation before customers started seeing actual changes.

In the meantime, the regulator has launched a broadband and mobile checker app – to allow householders to check speeds and performance, a review of the broadband speeds code of practice, and plans for automatic compensation for customers whose broadband connection is lost or delayed.

Are rented micro-homes the future for young singles?
Richard Upton, deputy chief executive of U+I
Image caption Richard Upton of U+I shows off one of the flats with the bed placed above the cupboards

Are you young-ish, single and thoroughly fed up with paying a high level of rent for a room in a house, miles away from where you work?

Perhaps you would prefer instead to spend up to £1,100 a month to rent a very small studio flat in a city centre?

By very small, we mean either 19 sq m of floor space, or maybe a bit more at 24 sq m.

And how small is that then? Less than the average budget hotel room.

However, that is the offer being planned by a property development company called U+I.

It thinks there is a clear demand for small rented homes like this in city centres, especially London.

That, it feels, is where more young, single people would like to live, closer to where they work and socialise, but without the hassle and expense of commuting.

Richard Upton, deputy chief executive of U+I, says it is a partial solution to a housing crisis that is not being dealt with.

“With the pace of change in London in particular, we are concerned that if the crisis goes over a tipping point it will lead to London being highly dysfunctional and hollowed out, with areas that are either unaffordable or inaccessible,” he says.

“If a city is not inclusive, and not supporting its entire workforce properly, it won’t be a living city.”

Image caption The L-shaped room

Despite the small size, quite a lot has been skilfully crammed into two show flats currently being shown off by the firm.

The flats combine the bedroom, living room and kitchen area into one space, with a shower room and toilet en-suite, and enough cupboard room to hold a washing machine as well as shoes and clothes.

So what is the problem?

Currently planning guidelines, such as those from the Mayor of London, suggest that flats should provide much more space, 37 sq m in fact.

So U+I is on something of a charm offensive as it tries to persuade five local authorities in London to let it build blocks of its “compact living town flats” (as it calls them), on brown field sites that the councils own.

The blocks would contain about 200 flats each and provide roof top gardens and work spaces too.

Image copyrightU+I
Image caption A room with a view

The big idea here is that any developer, in return for planning permission, would be committed to letting the flats to single tenants for the long-term, at rents linked to a set proportion of income – one third for instance.

And as the floor space is low, the monthly rent would necessarily be cheaper than for larger rented accommodation.

Mr Upton thinks this will be particularly attractive to members of the “squeezed middle”, young, single, people with jobs and decent salaries (£35,000 to £65,000 per year he suggests) but who simply have no chance of saving to buy a home because so much of their income is absorbed by rent.

Living in small spaces is not a novel idea of course.

The Japanese have long been famed for living in small apartments, even as families.

Similar ideas for small studio flats have taken off in New York.

And micro-flats in London are already being sold to buyers by developers such as Pocket Living.

Steve Turner, of the Home Builders Federation, said: “We need to be looking at a range of solutions to solve the acute housing crisis.

“We need to be building more of all types of housing – including retirement homes and social housing.”

Image caption OK for Saturday night and Sunday morning

Homes in the UK already have a reputation for being smaller than those in any other European country.

Isn’t the idea of offering more studio flats just moving in the wrong direction?

Mr Upton says we should ditch the old thinking, where some of the most desirable homes are thought to be houses in suburbs with gardens and garages.

“Our cities have become vastly more dense, they have been transformed in the last 20 years and our lives have been transformed too, from having an awful lot of stuff to now being transient, and not needing to own a car, and having our life on a laptop and a phone,” he says.

“If we fight for larger space standards we will achieve nothing, we need a city that works,” he adds.

Will all this take off?

That remains to be seen, but U+I hopes to obtain planning permission for at least one or two projects in central London by next year.