Singapore Airlines In Virgin Sell-Off Talks

Singapore Airlines (SIA) has confirmed it is in talks to sell its 49% stake in British carrier Virgin Atlantic.

The interested parties have not been named, but Reuters has reported that Delta Air Lines had held recent talks to buy SIA's stake.

Delta, the second-largest US airline by operating revenue, has been looking to acquire a stake in Virgin Atlantic for more than two years in an effort to expand its access to London's Heathrow airport, sources said.

Previous talks broke down over price and other issues, and there is no guarantee that the recent discussions would result in a pact, Reuters quoted the sources as saying.

Delta wants to expand at Heathrow, which operates at close to full capacity

The European Union requires that EU carriers be under European control, meaning Delta would need to involve an EU airline if it sought majority control.

Delta has been considering ways to partner with Air France-KLM, which could take an additional stake in Virgin and allow the carriers to acquire majority ownership. Virgin founder Sir Richard Branson owns 51% of the airline.

Delta has made clear that it would like to expand at Heathrow, a lucrative airport for prized corporate passengers where landing slots are generally hard to acquire.

Virgin is the second-largest carrier at Heathrow after British Airways.

Sir Richard, who set up Virgin Atlantic in 1984, has been weighing the airline's future for some time and two years ago appointed Deutsche Bank to examine offers.

"We are always talking to many airlines on a number of different matters but we never comment on the details of these discussions," a Virgin Atlantic spokeswoman said. Delta declined to comment.

Heathrow, Europe's busiest airport, is operating at close to full capacity after the Government blocked its expansion in 2010.

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Grain Prices: Crop Failures Push Food Cost Up

Consumers are expected to be hit by widespread food price hikes because crop failures have forced Britain to import foreign grain, the cost of which is at an all-time high.

Experts have warned that wheat and barley prices are set to climb even further in the coming months, with knock-on effects hitting many food and drink items.

The Financial Times said analysts have warned that "everything from bread and biscuits to beer to beef" would rise in price.

Britain normally grows more wheat than it consumes but poor harvests this year have forced traders to import, for the first time since 2001.

The head of wheat procurement at the parent company of breadmaker Hovis has also warned of the significance of the grain shortfall.

"The domestic situation is more worrying than in 2007-8 during the global food crisis," Premier Foods' Gary Sharkey said.

"And we are starting to worry about next year's crop because farmers have sown less wheat than expected."

A farmer in Scotland looks at his sodden barley crop

The Home Grown Cereals Authority has forecast that the UK will import more than two million metric tons of wheat in the 2012-13 season.

Numerous countries were hit with protests and riots during the last crisis as the price of flour, a staple for most societies globally, rocketed.

This year, the global grain harvest has been hit by drought in the United States and reduced output from vast fields in the Black Sea region.

In addition to flour production being hit, grain is used by farmers to fatten livestock ahead of slaughter.

Last week, the futures market for feeding wheat reached £227 a metric ton, a rise of 45% since January.

Feed wheat is the benchmark price used for wheat produced for human consumption.

Meanwhile, feeding barley, some of which is used in beer and liquor production, has increased 25% - to £190 - in the same period.

The growth in biofuel has also increased demand as the UK crop was hit by adverse weather in 2012.

The FT said total wheat demand would rise 7% because of ethanol production coming online at the Vivergo plant near Hull and the restarted Ensus plant on Teesside.

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Osborne Faces New Lending Headache

By Mark Kleinman, City Editor

George Osborne faces a fresh headache over Government efforts to stimulate small business lending amid delays to the launch of part of a flagship scheme announced almost a year ago.

I understand that elements of the Business Finance Partnership (BFP), a programme designed to reduce small and medium-sized companies' (SMEs) reliance on bank funding, have been held up by demands from Government officials for additional legal checks on potential private sector partners.

Applicants to join the initative, which are understood to include companies such as Octopus Investments, have been informed in recent days that fresh details of the arm of the BFP scheme which they are applying to join will not be included in the Chancellor's Autumn Statement on Wednesday.

Officials have signalled that funds may not now be made available through the project until next spring.

"This sort of financing arrangement is new, so it is natural that we are conducting additional legal due diligence on the applicants," a Whitehall source said.

The delay may only amount to a matter of weeks, but it is understood to have irritated some senior Treasury figures because the BFP funding tranche affected is designed to assist with supply chain finance and other areas that business groups say they are struggling to access through high street banks.

ING, the Dutch bank, and Royal Bank of Scotland (RBS) have both scaled back their leasing activities, heightening a supply shortage of such finance for SMEs.

The BFP has different strands targeting small and mid-sized companies, with the Department for Business, Innovation and Skills (BIS) responsible for the tranche aimed at smaller firms.

Speaking in May, Vince Cable, the Business Secretary, said the scheme would provide an essential service to bank finance-starved companies:

"As businesses are continuing to struggle to get credit from their banks, developing alternative lending channels so firms are less reliant on banks is essential.

"The Business Finance Partnership will help to develop these channels over the medium term so businesses seeking credit have more options available to them. Our aim is to create a more diverse financial infrastructure which better serves the needs of our small and medium-sized companies."

A BIS spokesman said: "The Business Finance Partnership will help to develop alternative lending channels for small and medium-sized companies. Successful proposals will be announced shortly."

News of the delay to the BFP comes on the day that the Bank of England released data showing that the Government's flagship Funding for Lending Scheme (FLS) has got off to a weak start.

In August and September, banks and building societies accessed more than £4.3bn of funds but increased net lending by just £496m, with Barclays by far the largest net contributor.

Between them, Lloyds Banking Group and RBS, the two banks part-owned by the taxpayer, decreased net lending by more than £3.4bn as they reduce the size of their balance sheets.

The launch of FLS effectively superseded the National Loan Guarantee Scheme, a programme of so-called 'credit easing', which was shunned by major banks including HSBC.

The British Bankers' Association said: "These first FLS figures are a snapshot at the very early stages of the scheme and therefore the full impact is not yet reflected in the net figures. As the scheme embeds in banks, we should continue to see the scheme acting as a driver for competition, benefiting all borrowers and therefore the wider economy.

"There should be no doubt that now is a good time for businesses and households to approach their bank to discuss their investment needs to sustain the economic recovery."

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Executive Pay: UK's Top Bosses 'See 12% Rise'

Executive pay has trebled over the past 10 years, despite the UK's banking crisis and double-dip recession, according to an independent think tank.

Over the last financial year, the chief executives of Britain's top companies have seen pay increase by 12% on average to £4.8m - or 185 times the average wage - the High Pay Centre said in a report.

It blamed the Government's failure to act for the rise, which compares to a pay increase of just 2.8% for most British workers.

New measures that give shareholders the power to veto executive pay increases are "a step in the right direction", the report said, but a vote every three years is "unlikely to achieve significant change".

And over the course of the so-called shareholder spring - when investors had the opportunity to vote against boss' pay packages - only two in the FTSE 100 were rejected, it highlighted.

Deborah Hargreaves, the High Pay Centre's director, said it was crucial to keep the issue in the spotlight.

"It's wrong that Britain's bosses are taking home more and more money as their companies shrink, their employees are squeezed and jobs are being lost," she said.

"Chief executives are hoping that their big bonus and their inflated rewards culture will escape attention, now that the banking crisis has passed."

She added that the pay increases were "damaging to the economy and to the morale of Britons struggling to make a living".

The majority of growth has not been in salaries, the report found, but in bonuses, grants of restricted shares, long-term incentive plans and new pay structures.

The think tank said a "dramatic simplification" of top pay packages was needed, because "in the vast majority of cases, the way leaders are rewarded remains complex and hidden from public scrutiny".

"High pay - with rewards that are out of kilter with results - is having a corrosive impact on our living standards, our economy and our society," Ms Hargreaves added.

"It damages public trust in businesses and it demoralises employees whose rewards for their efforts are tiny in comparison with their bosses."

A Department for Business spokesman said: "We have taken firm action to reform the framework for executive pay, so that shareholders have the right tools to challenge companies when pay is excessive."

Last month, HM Revenue and Customs (HMRC) ordered some JP Morgan workers to pay tax - or face legal action - over allegations the firm transferred salary payments offshore.

HMRC said the money was "disguised remuneration" and not retirement benefits as claimed.

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Tax: Starbucks, Google And Amazon 'Immoral'

By Darren McCaffrey, Sky News Reporter

Starbucks, Google and Amazon have been accused of "immorally" avoiding paying their fair share of tax in the UK, as the Chancellor prepares a blitz on tax dodgers.

MPs on the Public Accounts Committee criticised the companies for the "unconvincing and, in some cases, evasive" evidence they gave on why their corporation tax payments are so low.

Starbucks told the committee it had made a loss for 14 of the 15 years it has operated in the UK, a claim the committee said it found "difficult to believe".

In a report, the MPs added that Amazon's representative left them frustrated because he was "evasive and unprepared to answer legitimate questions".

They also said Google "undermined its own argument" that profits should be taxed in the countries where they are made because it transfers its non-US profits, including from the UK, to Bermuda, which has a more advantageous tax system.

Starbucks says it is reviewing its tax arrangements

Margaret Hodge, who chairs the Public Accounts Committee, said: "Global companies with huge operations in the UK generating significant amounts of income are getting away with paying little or no corporation tax here.

"This is outrageous and an insult to British businesses and individuals who pay their fair share.

"Corporation tax revenues have fallen at a time when securing proper income from taxes is more vital than ever.

"There is little credible information about what is going on. The evidence we took from large corporations was unconvincing and, in some cases, evasive."

Starbucks has now declared that it is preparing to change its tax affairs so that it pays more into Britain's coffers and there is growing pressure on others to follow suit.

The report was published as George Osborne prepares to unveil a £154m crackdown on wealthy companies and rich individuals who dodge tax.

Officials will be ordered to use the cash to draft in an army of investigators to target high earners who aggressively avoid or evade paying tax.

The money will also fund extra staff to speed up work challenging multinationals' transfer pricing arrangements to stop global companies using legal loopholes to shift profits out of the UK.

However, Mr Osborne has warned against pricing Britain out of the world economy.

"If we make our taxes less competitive, that will just mean more companies stay out of Britain," he said.

But Katja Hall, from Confederation of British Industry, told Sky News that tax avoidance is not a widespread problem.

"Companies pay £163bn in tax in the UK every year and the large majority of companies pay the right amount of tax," she said.

The Institute of Directors condemned the "hectoring from Westminster" and called for the tax system to be simplified.

Director general Simon Walker said: "If these firms are immoral to take advantage of tax loopholes, then politicians are surely immoral for creating the loopholes in the first place.

"Taxes should be simpler to cut down on avoidance and relieve the burden our complex tax code puts on companies who do try to do the right thing."

An HMRC spokesman said: "HMRC ensures that multinationals pay the tax due in accordance with UK tax law. We have been very successful in reducing tax avoidance by large businesses in recent years.

"We relentlessly challenge those that persist in avoiding tax and have recovered £29bn additional revenues from large businesses in the last six years, including £4.1bn in the last four years from transfer pricing enquiries alone. These figures speak for themselves."

The latest tax crackdown will be outlined in this week's Autumn Statement, which is also expected to contain bleak news for benefits claimants.

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News International Chief Executive Steps Down

News International's chief executive Tom Mockridge is to quit his role at the end of the month, News Corporation has announced.

Mr Mockridge, who has been in the position since July last year, is leaving the company to "pursue new opportunities".

News Corporation chairman Rupert Murdoch said Mr Mockridge's decision to step down was "entirely his own".

It has since been confirmed that BSkyB chief operating officer Mike Darcey will take over the role.

BSkyB is the parent company of Sky News.

Meanwhile, News Corporation confirmed it will stop publication of its iPad app, The Daily.

The dedicated subscription news feed, which cost between $19 (£11.80) and $39 (£24.20) a month, was launched in February 2011 to maximise interactive capabilities of iPads.

Rupert Murdoch said Mr Mockridge's decision to quit was 'entirely his own'

Mr Murdoch said: "For nearly 22 years, it has been my pleasure to have Tom Mockridge as a colleague.

"Whether it was his early days with our newspaper group in Australia, his incredible work building Sky Italia, or his steadfast leadership of News International, Tom has always been a skilled executive and a trusted friend.

"His decision to step down is absolutely and entirely his own. I am sorry to see him leave us but I know he will be a great success wherever he goes."

Mr Mockridge took over leadership of News International, the publishing arm of News Corporation, from Rebekah Brooks at the height of the phone-hacking scandal.

The ex-newspaper journalist joined News Ltd in Australia in 1991, where he worked with James Murdoch, deputy chief operating officer of News Corporation, at Star TV, before moving to his native country of New Zealand, where he oversaw the company's newspaper and TV operations.

After launching Sky Italia he became chief executive of European Television and served on the boards of BSkyB and Sky Deutschland, and is chair of Fox Turkey.

Last week, Mr Mockridge backed calls for a "tough" new press watchdog but warned that state-backed regulation would put too much power in the hands of politicians.

He said: "As a company we are keen to play our full part, with others in our industry, in creating a new body that commands the confidence of the public.

"We believe that this can be achieved without statutory regulation - and welcome the Prime Minister's rejection of that proposal.

"We accept that a new system should be independent, have a standards code, a means of resolving disputes, the power to demand prominent apologies and the ability to levy heavy fines."

Mr Mockridge said he was "genuinely shocked" about the allegations of phone-hacking at the company.

But he insisted The Sun would not be shut down like its now defunct Sunday sister paper, The News Of The World, if more allegations emerged.

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Banks Slow To Take Up Government's Cheap Loans

The Bank of England has admitted it is too early to assess the impact of its 'real economy' lending programme, despite a drop in financing costs for banks.

The admission comes as the BoE released details of usage and lending data of the Government's Funding for Lending Scheme (FLS), which started in the summer.

BoE executive director for markets Paul Fisher said: "Since the scheme was announced we have seen widespread falls in funding costs across different sources and an equally wide variety of lending rate reductions.

"But it is too early to use these data as a reliable indication of the impact of the FLS on lending volumes."

In the three months to the end of September, net lending of FLS participants was up by £496m, with total FLS from the BoE at £4.4bn.

It said a total of 35 bank and building society groups are now involved in FLS, with more than 80% of the stock of lending going to the real economy.

The scheme was designed to support lenders so they can cut interest rates on loans to residential and small businesses.

Mr Fisher said: "I am confident that the FLS will help the supply of credit.

"The incentives in the scheme are for banks and building societies to cut lending rates and hence lend more to get the cheapest funding."

However, not all banks have taken full advantage of the reduced rate to spur lending.

A number of high street banks and building societies reduced certified total lending in the period, according to BoE figures.

Negative net lending flows for the third quarter included a drop of £3.4bn by Santander, a fall of £2.7bn by Lloyds, a £642m reduction by RBS and a £23m drop by the Clydesdale Bank.

Meanwhile, Virgin Money boosted third-quarter lending by £598m, Nationwide by £1.8bn, and Barclays by more than £3.8bn.

FLS was launched on July 13, with an 18-month drawdown period extending to January 2014.

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Mega Monday To Make Online Sales History

Online retailers in the UK are expecting today to be the busiest shopping day in history.

Recent years have seen online shopping figures consistently peaking on the first Monday in December, dubbed Mega Monday.

Visa Europe predicted £320m will be spent on its cards alone as online transactions top 6.8 million, an increase of 21% on 2011, making December 3 this year the busiest online shopping day in history.

It said: "A combination of pay day for the majority of consumers falling on the last Friday of the month and a weekend spent browsing the shops results in shoppers logging on to buy their gifts online on the subsequent Monday.

"All of these factors will result in consumers spending £222,222 per minute, making 4,722 transactions every 60 seconds."

Amazon expects orders to peak at 9.20pm this Monday

Amazon said it expected today - which also known as Cyber Monday - to be its biggest single day, with orders set to peak at 9.20pm.

Christopher North, managing director of Amazon in the UK, said: "Monday, December 3 could be the busiest day in the history of Amazon.co.uk, and we're preparing for it by hiring more than 10,000 seasonal employees across our eight UK fulfilment centres."

Marks & Spencer also said it is prepared for what it expects to be its busiest day of the year.

Sainsbury's Bank predicted a 1.3% rise in cash withdrawals compared with December last year, to reach a total of £11.1bn - which equates to more than £41,000 per second in the pre-Christmas peak.

December 21 is expected to be the busiest day for cash withdrawals, as it is traditionally when shoppers rush to buy last-minute gifts, while this Monday could give online retailers boosts of up to 70%.

Visa Europe commercial director Dr Steve Perry said: "On Mega Monday, people across the UK will go online and use their Visa cards to make 6.8 million transactions, the most in a single day in UK history.

Black Friday marks the start of Christmas shopping in the US

"That's 21% more than in 2011, signalling that consumers are becoming increasingly accustomed to the advantages of shopping online for everyday purchases and special items, especially in the lead-up to Christmas."

Online analyst Experian expects UK consumers to make 115 million visits to retail websites on Mega Monday, an increase of 36% on last year.

The day comes just over a week after Black Friday - the US phenomenon which sees millions of shoppers flock to stores after Thanksgiving.

But Jon Copestake, retail analyst at the Economist Intelligence Unit, warned this year's Mega Monday might not be as successful as expected. 

"Given double-digit online retail growth and a growing number price sensitive consumers comparing goods online, there is little doubt that 'Mega Monday' will be a key Christmas shopping fixture this year," he said.

"However, this impact could be diluted over time as UK shoppers latch onto promotions during the Black Friday and Cyber Monday sales of last week.

"Equally, online sales are becoming a feature of the entire shopping season and not just specific dates so 'Mega Monday' could ultimately span several days in the same way that Black Friday is beginning to over in the US."

The busiest shopping day on the high street often falls two days before Christmas Day, with the weekend of December 22 and 23 expected to draw peak numbers of shoppers this year.

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Exclusive: Guardian Drives Auto Trader Sale

By Mark Kleinman, City Editor

The publisher of The Guardian newspaper is in talks to sell its stake in Trader Media Group (TMG), one of Britain's biggest classified car advertising businesses, Sky News can reveal.

I understand that Guardian Media Group (GMG) has in recent weeks begun tentative discussions to sell its 50% stake in Trader Media Group (TMG) to Apax Partners, the joint owner of the business.

If it proceeds with a sale to Apax, GMG is expected to deploy the proceeds, which will run into hundreds of millions of pounds, to shield its newspapers from the deepening financial pressures afflicting the industry.

A sale by GMG to Apax, one of Europe's largest private equity groups, is only one of the options being considered by the two parties. Last year, the pair shared a £200m payout from a special dividend at TMG, and a similar refinancing could follow rather than a sale, although that is a less likely outcome, according to bankers.

Under the shareholder agreement struck between Apax and GMG in 2007, either partner has the right to buy out the other if the other wishes to sell its stake.

GMG's exploration of a sale of its stake in TMG reflects a sense within the company that it should not continue to have half of the group's value locked up in a non-core asset such as TMG.

Andrew Miller, who replaced Carolyn McCall as GMG's chief executive when she left to join easyJet, is keen to wrap up the sale talks with Apax as quickly as possible, insiders say.

GMG's sole shareholder is The Scott Trust, which was created in 1936 to safeguard the journalistic freedom of The Guardian (although not its sister paper, The Observer).

The talks between Apax and TMG come as the classifieds publisher continues to search for a new chief executive. In September, John King, TMG's chief executive, stepped down and was replaced on an interim basis by Zillah Byng-Maddick.

Apax acquired a 49.7% stake in TMG in 2007 in a deal which valued the company at more than £1.3bn. It is unclear how much the latest talks are likely to value TMG at, although industry sources speculated that the GMG stake would be worth in the region of between £500m and £600m.

People close to GMG said today that the organisation was under no financial pressure to sell and would not agree a deal with Apax unless the buyout firm met its valuation for the TMG shareholding.

Auto Trader's publisher has performed well and has made the transition from print to digital products more effectively than many of its peers elsewhere in the classified advertising business. In its results to the end of April this year, TMG increased digital revenues by 11% to £202m, with the average number of vehicles listed monthly on its site up 4%.

Guardian News and Media lost £44m in the last financial year, which Mr Miller said should mark a nadir for the newspaper publisher's finances.

Earlier this year, GMG agreed to sell its radio interests to Global Radio Group, the owner of the Capital and Heart commercial networks. It also owns a stake in Top Right Group, the media company formerly called Emap.

Apax and GMG both declined to comment.

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KFC And Pizza Hut Expect Sales Slump In China

By Mark Stone, China Correspondent

The company which owns Pizza Hut and Kentucky Fried Chicken has warned of an unexpected slump in sales in its biggest market.

Yum Brands Inc has projected that sales in its Chinese branches which have been open for at least a year will drop 4% in the fourth quarter of this year compared with a jump of 21% in the same quarter last year.

Nearly half of Yum's worldwide revenue is generated in its China operation. There are 3,701 branches of KFC across China and 764 Pizza Hut restaurants.

"For the fourth quarter, stronger than expected operating performance from Yum! Restaurants International and our US division is offsetting softer sales in China, where we now expect same-store sales to be negative as we overlap 21% same-store sales growth from last year," Yum chief executive David Novak said in a statement.

The reasons for the "softer sales" in China are likely to be numerous.

Broadly, China's economy has slowed in the past few years. The country's gross domestic product (GDP) in the third quarter of this year was the slowest for more than four years.

However, Yum's increased exposure in China is thought to be about more than just economics.

When the company arrived in China in the late 1980s, it entered an empty market. It offered something new and to a consumer that was increasingly keen on Western products.

It tweaked menus to provide a more oriental offering - and the investment in China quickly made it one of the most successful Western companies to operate in the world's second largest economy.

But today, fast food outlets are everywhere in China's cities.

Some are Western but most are Chinese or from elsewhere in Asia. They offer local food and but also pizza and fried chicken too and for a fraction of the price.

McDonald's is also experiencing a Chinese downturn. It announced last month that sales were down in October.

Yum Brand's hiccup will be watched closely by other Western companies who have made the plunge into China or those who are thinking of doing so.

With one fifth of the world's population living in China, Western companies often find that it quickly becomes their most lucrative market.

That's good news while their product is popular with the Chinese, but it is a lot of eggs to put in a single basket that could be becoming a little fragile.

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