UK market awaits EU trade talks and new lockdown measures, while IAG brings in new boss for British Airways

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“It’s a big week for the UK as trade talks with the EU enter a crucial stage. Sterling nudged up 0.1% against the euro to €1.1044 but was flat against the US dollar, implying that the market is still uncertain as to the likely outcome of the negotiations.

“A 1% decline in Brent Crude oil to $42.40 per barrel weighed on the FTSE 100 with shares in major index constituents BP and Royal Dutch both falling by that amount.

“Consumer-facing stocks will be in focus today with UK Prime Minister Boris Johnson expected to announce tighter lockdown restrictions in parts of the country. Pub, restaurant and leisure activity operators are likely to be affected.

“Stocks in mainland Europe fared better, including a 0.3% gain in the Dax with Daimler the top riser (up 1.8%),” says Russ Mould, Investment Director at AJ Bell.

International Consolidated Airlines / British Airways

“British Airways is going to need a new pair of wings if it is to fly through the pandemic in one piece.

“The airline is now getting new leadership in the form of Sean Doyle, previously chief executive of IAG-owned Aer Lingus who will hope to steer the business out of a major crisis.

“It’s interesting that IAG hasn’t appointed someone from outside its group to lead the British airline subsidiary as that really could have introduced radical thinking.

“By promoting an internal candidate in the form of Doyle, IAG has opened the door to new ideas but also kept the safety blanket of someone who already knows the group inside out and is unlikely rock the boat when it comes to business culture.

“British Airways has historically relied on business travellers for a large part of its revenue and it now faces the prospect of significantly reduced demand from this customer base.

“The fact video conferencing has become second nature to people at work thanks to lockdown means that companies will be taking a hard look at their travel budgets and questioning whether meetings in different cities or countries is worth it.

“Doyle will either have to dramatically drop British Airways’ prices to lure these business travellers back or find a new way to keep its planes full in the sky once the health crisis dies down and economic prospects improve.”

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