Flight Cost Fear As Russia Considers Airspace

Russian prime minister Dmitry Medvedev says the government must discuss possible measures of retaliation after the European Union (EU) imposed sanctions on one of the nation's low-cost airlines.

The response to sanctions over the crisis in Ukraine could mean restrictions on European airlines using trans-Siberian routes.

The move would see the cost of flights to Asia increase and could effect major carriers such as British Airways, Lufthansa and Air France.

It has been reported that those airlines could stand to lose up to £1bn over a period of three months.

The restrictions would lead to longer flights and higher fuel usage, pushing ticket prices up for European airlines and putting them at a competitive disadvantage to Asian rivals.

Russian firms have been hit by sanctions imposed after the MH17 disaster

It comes after more than 27,000 Russian tourists were left stranded abroad after a tour operator collapsed at the weekend.

Labirint announced it was halting operations on Saturday, with the Tourhelp service attempting to find seats on flights chartered by other travel companies for stranded passengers.

Tourhelp said: "All the tourists are abroad without return tickets."

Labirint is the fourth Russian travel company to go bust in the past three weeks as the Ukraine crisis was blamed for a slump in bookings for Russians wanting to travel abroad.

A drop in the value of the ruble has also affected tour operators - it has fallen by 11% against the dollar since September last year.

In a statement, Labirint said: "The negative political and economic situation has influenced the number of bookings."

A spokeswoman for Russia's Federal Tourism Agency told Echo of Moscow radio: "We worry that this is only the beginning and that there will be a domino effect."

Russia's federal investigative service said on Monday it was examining the closure of Labirint and another tour operator which failed last month - Neva - over allegations of fraud.

EU sanctions have forced Aeroflot's low-cost airline Dobrolet to suspend operations due to its flights to Crimea.

Western leasing companies cancelled contracts for the carrier's Boeing aircraft after the airline operated flights to the annexed peninsula.

Last month, Crimean Minister of Resorts and Tourism Yelena Yurchenko said more than one million tourists have visited the peninsula this year.

Russia annexed the mainly Russian-speaking Crimea in March, sparking sanctions from the EU and the US which have been stepped up since the shooting down of Malaysia Airlines flight MH17 on July 17.

All 298 people on board were killed when the plane came down over rebel-held territory in eastern Ukraine.

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Chancellor Backs £15bn Northern Transport Plan

George Osborne has backed a £15bn plan to create a "northern global powerhouse" which will rebalance the country's economy.

The vision to connect five cities will see improvements in transport across the north of England, including a 125mph transpennine rail link dubbed "HS3" or the "Crossrail of the North".

The Chancellor was presented with the One North plan, drawn up by the cities of Leeds, Liverpool, Manchester, Sheffield and Newcastle upon Tyne, in Manchester where he was speaking.

Mr Osborne said: "Of course £15bn is a lot of money - it's about the size of the Crossrail project in London.

"It's a project over a number of years, out to 2030. We have got a £100bn capital budget to the end of the decade.

"I think this kind of proposal is affordable."

He added: "I'm prepared to roll up my sleeves and get it done, so let's get on with it."

The plan could mean up to 150% additional capacity on roads and as much as 55% quicker journey times on a faster, more frequent interconnected rail network.

The One North plan looks ahead to the next 15 years.

Cutting travel times across the Pennines would be worth billions

Speaking about the proposals to the Yorkshire Evening Post, Leeds City Council leader Keith Wakefield, said: "Getting the right investment in our transport systems would deliver unprecedented change to better connect people and jobs, which is crucial if we also want to rebalance the national economy.

"This report demonstrates once again that only through tackling our out-dated transport system will the North be able to fulfil its true economic potential, benefiting our own local communities and the country as a whole."

Speaking on the BBC's Today programme, Labour Mayor of Liverpool Joe Anderson said the Government could not forget the North if it was serious about rebalancing the economy.

He said: "When we talk about economic powerhouses, Manchester and Liverpool, if you just take those two cities in the North together, of course we are one economic powerhouse, it is just we haven't got the connectivity."

Mr Osborne told the programme: "If the North of England's GDP grew at the rate of the average GDP of the UK, we would add over £50bn to our economy to 2030. That is a massive benefit to the people living in the north of England, over £1,600 per person but is also of huge benefit to our country."

The North will play a significant part come the 2015 General Election as both Labour and UKIP could deliver a significant blow in the region so Mr Osborne will be keen to be seen to be backing development.

Shadow Treasury minister Shabana Mahmood said: "We welcome this report and the city regions of the north of England working together to strategically plan to deliver the growth and jobs we need.

"But only Labour will properly back our city and county regions with ambitious plans to devolve more funding and economic power to them."

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Scotland's Future Up For Debate In TV Contest

By James Matthews, Scotland Correspondent

The two men leading the fight for Scotland's future will go head to head in a TV debate tonight.

First Minister of Scotland Alex Salmond will face Alistair Darling MP, leader of the Better Together campaign, with just over six weeks to go until the September 18 referendum on independence.

Broadcast by STV, it is the first such encounter between the pair during the campaign and kicks off its closing stages. 

Alex Salmond had initially refused to face Mr Darling, instead insisting he would only take on David Cameron. The Prime Minister has consistently refused the offer. 

Tonight's two-hour debate will take place at the Royal Conservatoire of Scotland in Glasgow and the men will cross-examine each other, as well as take audience questions.

Alex Salmond (L) will go head-to-head with Alistair Darling

Alistair Darling's Better Together campaign has consistently been ahead in the polls and he is expected to press the First Minister for answers on independence.

Blair McDougall, his campaign director, said: "Voters in Scotland have been listening to the independence debate for over two years now.

"Surely if Alex Salmond had convincing answers on the details of separation, we would have heard them by now.

"Scots tuning in deserve to finally get straight answers from Mr Salmond to the questions they have been asking. What would separation mean for our pound, pensions and public services?

"Unlike the leaders' debates in the 2010 General Election, this debate isn't a job interview between candidates.

"Instead, it is a discussion about what separation would mean for our children and grandchildren's futures."

The big vote on Scotland's future is little more than a month away

For Alex Salmond, the TV debate and similar events that are expected to follow present an opportunity to strive for the game-changing moment that his campaign needs to turn the polls around.

Blair Jenkins, chief executive of the Yes campaign, said: "Independence is the opportunity of a lifetime for the people of Scotland, and the Yes campaign are looking forward immensely to the debate.

"We know that Scotland is one of the richest countries in the world, wealthier than the UK, France and Japan, and only the powers offered by a Yes vote will enable us to make this wealth work better for everyone in Scotland.

"Viewers will get the chance to hear why decisions made on Scotland's future should be taken here in Scotland.

"Our experience is that most undecided voters choose Yes when they hear both sides of the debate, and therefore we believe the mass TV audience will benefit our positive campaign.

"We also believe that the No campaign have a problem with both the negativity of their message and the unpopularity of their messengers."

On the morning of the debate, the three main UK party leaders announced they had signed a pledge to increase the powers of the Scottish Parliament. 

David Cameron, Ed Miliband and Nick Clegg all put their name to a declaration made earlier this year by their parties' Scottish leaders to guarantee an increase in Scotland's powers under devolution.

It is a pre-debate move to bolster Alistair Darling before the big event and protect "their man" against accusations that increased devolution is an empty promise that won't be delivered.

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Ex-William Hill Chief Backs Scottish Yes Vote

By Mark Kleinman, City Editor

The former boss of Britain's biggest bookmaker will declare his support on Tuesday for an independent Scotland, arguing that pro-union campaigners have been guilty of "political posturing" whose arguments lack economic logic.

Sky News has learnt that Ralph Topping, who stepped down as chief executive of William Hill last week, is to become one of the most prominent business leaders so far to back a 'Yes' vote in next month's referendum.

Sources said that Mr Topping, who commuted to William Hill's head office from his home in Scotland until he stepped down on July 31, would disclose his support for secession in an opinion piece for a national newspaper.

He is understood to argue in the article that Scotland's largest financial institutions would be unlikely to move their headquarters south of the border if there was a vote in favour of independence.

Mr Topping is also expected to make a case for the "business sense" of a currency union and criticise the "political posturing" of George Osborne, the Chancellor, who has insisted that Scotland would forfeit the right to have sterling as its currency.

"Statistics show that Scotland is fiscally stronger, and investment flows are stronger, even without North Sea oil. We are not talking about South Sudan here and that's what he wants to argue," a friend of Mr Topping told Sky News.

His support will come ahead of Tuesday's inaugural televised debate between Alex Salmond, the Scottish First Minister, and Alastair Darling, the former Chancellor, who is spearheading the Better Together campaign.

The encounter is being depicted as a crucial staging-post in the pre-referendum battle, with the latest opinion polls showing support for the 'Yes' campaign at around 40% and opponents at approximately 46%.

Mr Topping, who began his career at a Glasgow bookie in 1970, had been with William Hill for 29 years, including six as chief executive.

His declaration of support for Scottish independence will be made in a personal capacity, with his former employer maintaining a steadfastly neutral position on the vote, which will take place on September 18.

Mr Topping, who is also a director of the Scottish Football Association, is understood not to be a member of any political party.

William Hill operates hundreds of outlets in Scotland, accounting for a significant proportion of its UK-wide estate of roughly 2400 betting shops.

The company is understood to have been keen for Mr Topping to delay making his views public until after his retirement.

Few leaders of major British companies with operations on both sides of the border have hinted at personal views about the independence vote.

However, some businesses - including Royal Bank of Scotland (RBS) and Standard Life - have used annual reports or results statements to flag potential risks, particularly in the absence of confirmation that a currency union would exist on day one in the life of an independent Scotland.

On Monday, Sir George Mathewson, the former RBS chief executive, wrote in the Financial Times that warnings that the size of Scotland's banking system would make independence impossible were "unionist scaremongering".

The emergence of Mr Topping's support for the 'Yes' campaign comes weeks after William Hill took a £400,000 bet from a customer on a 'No' vote at odds of 1/4.

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HP Suing Autonomy Bosses Over Alleged Fraud

Hewlett-Packard (HP) is to set to sue the former chief executive of Autonomy.

HP has accused Michael Lynch of fraud as an on-going row grows over its troubled purchase of the British software company three years ago.

The US technology giant is also suing Autonomy's former chief financial officer Sushovan Hussain, who tried to intervene in three shareholder lawsuits earlier this year.

After HP settled the case with shareholders over billions of pounds lost in its acquisition of Autonomy, Mr Hussain tried to block the settlement blaming the company for failures.

HP bought Autonomy in 2011 for $11.1bn (£6.6bn), but had to write down $8.8bn (£5.2bn) of the company's value a year later.

It went on to accuse the executives of accounting fraud and now has the backing of shareholders to launch lawsuits against them.

Filling the case at a court on Monday, HP said: "The shareholder plaintiffs who originally sued HP's directors and officers now agree that Hussain, along with Autonomy's founder and CEO, Michael Lynch, should be held accountable for this fraud."

It added: "The notion that (Hussain) should be permitted to intervene and challenge the substance of a settlement designed to protect the interests of the company he defrauded is ludicrous."

Mr Lynch and Mr Hussain have denied any wrongdoing.

The former Autonomy bosses responded: "This breathless ranting from HP is the sort of personal smear we've come to expect.

"As the emotional outbursts go up, the access to facts seems to go down.

"Meg Whitman (HP's CEO) is buying off a bunch of lawyers so she doesn't have to answer charges of incompetence and misdirection in front of a judge and jury."

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Co-op Sells Farming Business To Wellcome Trust

The Co-operative Group is to sell its farming business to the Wellcome Trust for £249m.

The net proceeds of the sale will be used to reduce the group's debt and invest in the Co-op's core retail and consumer services divisions.

It leaves the Co-op to focus on its food shops, funeralcare and insurance businesses.

As part of the deal 15 farms spanning 40,000 acres of land will be sold, bringing the Co-operative's 118 years in farming to an end.

Co-op's Interim Group chief executive Richard Pennycook said: "In the Wellcome Trust we have a buyer whose values are closely aligned to those of The Co-operative. 

"They have a proven track record in managing a sustainable investment portfolio, the proceeds of which are used to fund improvements in biomedical science and learning."

He added: "The Wellcome Trust has acquired an excellent farming business characterised by the quality and professionalism of colleagues and high levels of customer service.

"I expect the farming business to continue to thrive under their committed long-term ownership."

Charitable body the Wellcome Trust owns property valued at around £1.8bn.

The organisation's chief investment officer Danny Truell said: "The Trust's philosophy is to provide long-term investment for the businesses and property we hold in good times and in bad.

"We will take this approach to running Farmcare Trading as a going concern, giving a business that is already strong and successful the support and resources it needs to grow, to the benefit of employees, tenants, partners and local communities."

Co-op's latest sale comes after the group sold its pharmacy stores to Bestway for £620m last month.

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HSBC Sees Pre-Tax Profit Drop 12% To £7.3bn

HSBC's pre-tax profit dropped by 12% to £7.3bn in the first half of the year.

For the same period in 2013, the bank made £8.3bn.

It comes as HSBC said it has increased its provision for payment protection insurance (PPI) compensation by £115m.

Last week Lloyds Banking Group and Barclays upped their compensation pots for the mis-selling of PPI.

In the six months to June 30, HSBC also saw underlying revenue fall by 4% to £18.6bn.

Group chief executive Stuart Gulliver said: "There are indications that interest rates could start to rise as early as the fourth quarter of 2014 in the UK and the first half of 2015 in the US, which given the size of our commercial surplus has positive implications for our revenues."

Looking ahead, he said: "We remain broadly positive about the economic outlook for the majority of our home and priority markets.

"The UK in particular should maintain a firm recovery."

On Sunday Sky News revealed that HSBC is urging a delay in ring-fencing amid a probe into the industry by the Competition and Markets Authority.

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Standard Life Profit Rises 12% To £339m

Standard Life has reported a 12% rise in its operating profit for the first half of the year.

The insurance and pension group's operating profit before tax rose to £339m as more UK workers were automatically enrolled in company pension schemes.

The group said it expects to add more than 300,000 new auto-enrolled customers this year.

Chief executive, David Nish said: "We have an excellent track record of succeeding in evolving markets and we are well placed to deal with the far-reaching reforms to the savings and retirement income rules, announced earlier this year by the UK Government."

It comes as the Scottish company reiterated its position on the upcoming referendum, saying there is still no clarity on the economic and financial concerns raised by it.

The company, which was one of the first to lay out contingency plans in the case of a 'yes' vote for Scottish independence, said it maintains its position.

In May, Standard Life said it would be prepared to move some of its operations out of Scotland if the nation voted in favour of a split from the United Kingdom.

The company said relocating parts of its business to England in the event of a 'yes' vote would be a measure taken to protect its market position.

Any relocation could put some 5,000 Scottish jobs at risk.

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German Court Ends F1 Boss's Bribery Trial

A German court has ruled that Formula One boss Bernie Ecclestone can pay a £60m ($100m) settlement to end his trial on bribery charges.

"The proceedings will be temporarily suspended with the agreement of the prosecution and the accused," pending payment of the ... settlement, presiding judge Peter Noll said.

Mr Ecclestone, 83, went on trial in Munich in April over allegations that he bribed a former German banker as part of the sale of a major stake in the motor sport business eight years ago.

The state prosecutor told the court on Tuesday Mr Ecclestone's age and other circumstances supported the acceptance of a settlement.

The British billionaire could have faced up to 10 years in jail and would have had to relinquish control of a business he has built up over the past four decades.

Under German law, judges, prosecutors and the defence can agree to dismiss a case or settle it with a light punishment, although terms for such an agreement are strictly defined.   

Mr Ecclestone has previously admitted making the payment to Gerhard Gribkowsky, who is now serving a jail sentence, but denied all charges of bribery.

"Gribkowsky did not tell the truth at crucial points," Mr Ecclestone told the court at the start of his trial in April.

His words were in a 100-page statement read out in German on his behalf by his lawyer Sven Thomas.

Mr Ecclestone maintains he was the victim of coercion by Gribkowsky and that the ex-banker was threatening to make damaging claims about his tax affairs that could have cost him and his family much of their fortune.

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Profits Fall At Intercontinental Hotels Group

Intercontinental Hotels Group has seen its profit slide by 18% amid political and economic uncertainty in some of its key markets.

In the first half of the year, the owner of Holiday Inn posted a pre-tax profit of £224m, down from £274m for the same period in 2013.

But the company was upbeat about its prospects, with chief executive Richard Solomons saying he is "encouraged by current trading trends".

Headquartered in Denham, Buckinghamshire, IHG owns 4732 hotels across the world with 693,072 rooms.

The key industry measure of revenue per room was up 5.8% in the half year for IHG – its growth in Europe was led by the UK, which reported an 8.7% boost.

There was a 47% surge in people booking their holidays using mobile devices compared to 2013.

Despite analysts welcoming a 9% increase in dividend paid out per share, the markets have reacted negatively to Tuesday's results, with IHG's share price down over 3% in lunchtime trading.

The hotel group owns 16 hotels in Thailand, where it expects political instability to have a £1.2m impact on managed operating profit in the second half of the year.

It also owns 14 hotels in Russia and two in Ukraine.

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