BUSINESS LIVE: Bharti to buy major stake in BT; FTSE 100 CEO pay soars; Heathrow benefits from summer holidays

Profits at Stagecoach have picked up as passengers return to buses, but over-60s have stayed away despite their free travel benefits.

Britain’s biggest bus and coach operator has benefited from government-backed schemes to encourage public transport use after the pandemic, such as free travel for under-22s in Scotland.

A UK-wide £2 fare cap was also introduced in January 2023 to help those struggling with the cost of living crisis and has been extended until the end of this year.

Catherine Mann, an external member of the Bank of England’s Monetary Policy Committee, warned that prices for goods and services will rise again and that wage pressures in the economy could take years to dissipate.

Mann voted against this month’s interest rate cut, telling a Financial Times podcast that he rated his hawkish stance at 7 out of 10, down from 10 out of 10 earlier this year when he voted to raise rates further from their 16-year high of 5.25 percent.

“There is an upward process both in the wage-setting process and in the price process and it may well be structural, having been created during this period of very high inflation over the last two years,” he said.

“That increase will take a long time to disappear,” he added.

CPI returned to the BoE’s 2 percent target in May, but this week’s data is likely to show it has again overshot that to 2.3 percent, and the BoE has forecast it will reach around 2.75 percent later this year as the effect of last year’s fall in energy prices fades.

Mann said he saw upward pressure on wages due to the fact that wages had risen faster for the lowest paid, compressing pay scales and creating potential demand in coming years from higher-paid workers to restore the earnings premium they previously enjoyed.

Richard Hunter, director of markets at Interactive Investor:

‘For the main index, a decent opening was marked by welcome strength in beleaguered Diageo shares after a rare rating upgrade from the broker.

‘Shares have fallen 27% over the past year due to weakness in its Latin American operations and some evidence that consumers are cutting back on premium beverage choices.

‘However, the standout performer was BT, whose shares rose more than 6% at the open following the announcement that Bharti Global had agreed to take a 24.5% stake in the company, adding to BT’s 15% rise over the past year.

‘On the other hand, a downgrade of a broker left JD Sports in the red early on, although the share price move did little to alter a trend that has seen the price rise 21% in the past six months.

‘The FTSE100 has gained 6.3% so far this year and remains on alert as a safe haven investment destination if volatility persists elsewhere.

‘The economic theme will also continue in the UK, with unemployment and inflation data due later in the week.

‘The Bank of England’s recent rate cut is not expected to be repeated this year, and the figures will add some attention to whether the reduction was appropriate at this time.

‘The latest market volatility has pared back some of the gains seen in recent weeks for the FTSE250, although the index is still up 5% year-to-date.’

Heathrow Airport is expecting to see a record 8 million passengers in a single month after the number of travellers increased with the summer holidays and the Paris Olympics.

Passenger numbers rose 4.2 percent year-on-year in July, leaving Britain’s largest airport just 20,000 passengers shy of the 8 million milestone.

Heathrow chief executive Thomas Woldbye said:

‘Team GB’s performance in Paris has been an inspiration to the nation and to Team Heathrow.

‘In July, we broke a passenger record almost every day and we are trying to reach our never-before-seen goal of serving 8 million passengers in a single month.

“I’m proud that while there were some potential challenges that could have tripped us up, our team stayed focused on the goal of making each trip better and got off to a medal-winning start to the summer getaway.”

Top city bosses earned an average of £4.2m last year, while FTSE 100 CEO salaries soared to an all-time high.

Analysis shows that the average pay of CEOs of the largest companies listed on the London Stock Exchange will rise by 2.2 percent in 2023.

And it is expected to rise further this year after top executives at major companies got huge raises.

India’s Bharti Enterprises is set to acquire a 24.5 per cent stake in BT, buying out telecoms giant Patrick Drahi as the group’s largest shareholder.

Bharti said the £3.2bn deal does not indicate an intention to make a bid to acquire all of BT, which Drahi first bought in 2021.

The Indian company said it would acquire an initial stake of 9.99 percent before seeking to acquire the remaining 14.51 percent following regulatory approvals, including voluntary application for authorization under the UK National Security and Investment Act.

BT shares have risen 24 per cent in the past six months as the fruits of its long-term investment plan to build the country’s fibre network begin to materialise.

BT Chief Executive Allison Kirkby said: ‘We welcome investors who recognise the long-term value of our business, and this scale of investment from Bharti Global is a major vote of confidence in the future of BT Group and our strategy.

‘BT has enjoyed a long-standing partnership with Bharti Enterprises and I am pleased that they share our ambition and vision for the future of our business.

“They have a strong track record of success in the industry and I look forward to continuing to work with them positively in the months and years ahead.”