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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The chaos caused by the failure of the UK’s air traffic control network in August 2023 cost airlines and consumers as much as £100mn, according to a report that called for the industry to improve how it handles major disruption. 

An independent report commissioned by the Civil Aviation Authority made more than 30 recommendations for changes to how the industry operates, including better communication between airlines and the air traffic controller and beefed up consumer protections. 

The regulator found that 700,000 passengers were hit by delays or cancellations caused by the meltdown, and costs for airlines, passengers and others were in the region of £75mn to £100mn. 

The bank holiday disruption was caused by the inability of IT systems at National Air Traffic Services (Nats) to process flight plan data for a flight from Los Angeles to Paris.

“The aviation sector as a whole should work together more closely to ensure that, if something like this does ever happen again, passengers are better looked after,” said former consumer industries executive Jeff Halliwell, who led the review. 

The report, released on Thursday, found the same set of technical problems were unlikely to recur. But it outlined how chaos spread from the control centre at Nats to airports across the UK, and detailed a series of issues that exacerbated the problems.

These included senior engineers at Nats being on call from home rather than in the office on a public holiday, and its IT systems rejecting one engineer’s password.

Airlines were highly critical of the information they received from Nats, saying there had also been a lack of pre-planning and training across the aviation ecosystem for such disruption, the review found.

Relations between Nats, a public-private partnership owned by a group of airlines, including British Airways and easyJet, pension funds and the UK government, and its airline customers have worsened over the past 18 months. 

Airlines have complained of air traffic control and some staffing shortages at Nats, and easyJet and Ryanair have both called for the dismissal of the Nats chief executive Martin Rolfe. 

Johan Lundgren, chief executive of easyJet, on Wednesday said “airlines and passengers were severely let down by Nats due to its failure of resilience and lack of planning”.

But the report also found instances of apparent failings by airlines, including examples of “poor communication” with stranded passengers and some delays in paying compensation.

It added that its work was hampered by airlines’ refusal to hand over details of impacted customers. 

Ministers should respond to the bank holiday meltdown “as a matter of urgency”, legislating to beef up the consumer protection powers of the Civil Aviation Authority, the report said. 

“My department will look to introduce reforms, when we can, to provide air travellers with the highest level of protection possible,” transport secretary Louise Haigh said. 

Nats said it had “worked hard” to address the lessons from the incident, and “to ensure this particular issue cannot happen again”.

“We will study the independent review report very carefully for any recommendations we have not already addressed and will support their industry-wide recommendations,” it added. 

Burberry Unveils £40M Cost-Cutting Drive Amid Plummeting Sales and Bold Strategy Shift

Luxury fashion house Burberry is embarking on a £40 million cost-cutting initiative and a sweeping strategy overhaul as it battles slumping sales and a battered share price. The historic brand, known for its iconic trench coats and plaid designs, faces mounting pressure after its share price tumbled more than 50% over the past year, compounded by declining sales in key markets, particularly China.

Burberry’s new CEO, Joshua Schulman, appointed in July, has promised a renewed focus on “productivity, simplification, and financial discipline” in an effort to stabilize the struggling brand. As part of this ambitious shift, Schulman announced that Burberry’s turnaround will include improvements to its digital platforms, enhanced in-store productivity, and revised pricing strategies. He emphasized a return to the brand’s heritage, aiming to refocus on signature items like outerwear and better cater to Burberry’s core customer base.

Financial Setbacks and Strategic Course Correction

The luxury retailer swung from a £223 million profit in the first half of last year to a £53 million loss in the same period this year. Revenues dropped by 20% year-on-year to £1.09 billion, leading Burberry to suspend its dividend to shareholders, a move that underscores the brand’s urgent need for financial recovery.

Schulman explained that the company’s recent underperformance was due in part to “inconsistent brand execution” and a “lack of focus on our core outerwear category and core customer segments.” He expressed a sense of urgency: “Today, we are acting with urgency to course-correct, stabilize the business, and position Burberry for a return to sustainable, profitable growth.”

China Sales Decline and Market Challenges

Burberry has been hit hard by a stagnant global luxury market, with its crucial Chinese market experiencing a significant downturn. Sales in mainland China fell 24% in the first half, and this decline worsened in the second quarter. The brand’s restructuring costs for the period, including redundancies, totaled £12 million.

These challenges come amid Burberry’s recent relegation from the FTSE 100 to the FTSE 250 after its share price hit a 14-year low earlier this year. A temporary lift in share prices occurred in recent weeks following speculation that Italian luxury brand Moncler, owner of Stone Island, was interested in a potential takeover. However, Thursday’s results report contained no mention of a buyout, and recent updates suggest a deal is unlikely.

Ambitious Foundations and Industry Reactions

Schulman’s turnaround strategy, dubbed the “Burberry Forward” initiative, has been received with cautious optimism by some investors. Richard Hunter, head of markets at Interactive Investor, commented, “The group’s recently chequered past looks set to continue for now, although the group has laid some ambitious foundations for a new ‘Burberry Forward’ strategy.”

Hunter acknowledged the severe impact on Burberry’s share price, which has plunged by 72% since April 2023, calling the recent small rebound a “small mercy” in a difficult financial landscape.

Kathleen Brooks, research director at investment firm XTB, noted that Burberry “still has a mountain to climb,” particularly with the continuing slump in China, a critical market for luxury brands.

Despite the strategy overhaul and Schulman’s pledges for reform, analysts remain cautious. Market consensus currently rates Burberry as a “sell” due to the lack of measurable progress on the company’s new direction.

Moving Forward: Burberry’s Path to Revival

Burberry’s immediate focus under Schulman is on refocusing its offerings around brand-defining products, like outerwear, while recalibrating its pricing to better fit its product categories. The company also aims to modernize its brand without losing sight of its heritage, recognizing that its emphasis on innovation has at times come “at the expense of celebrating our heritage.”

As Burberry works to recover its footing, it faces formidable challenges: a weakened presence in key markets, the effects of a depressed global luxury sector, and a shaken investor confidence. Whether the “Burberry Forward” strategy can restore the brand’s stature and profitability remains uncertain, but with Schulman at the helm, the luxury fashion giant appears ready to confront these hurdles with renewed focus and resolve.

ONE of the UK’s trendiest seaside towns has revealed new images of its £6.6million attraction set to re-open.

Folkestone’s Leas Lift was forced to close back in 2017.

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However, works are to finally start on the multi-million pound attraction after London-based firm Apex Contractors have been appointed the £5million contract.

The firm will spend the next three months preparing the site for construction.

The Grade-II listed funicular will be fully restored to operate again which will transport passengers from the cliffside to the beach.

Along with this, the waiting room will be renovated along with a new cafe and outdoor terrace.

Chair of the Leas Lift Build Committee Jo Streeter said they were “extremely excited” that works were finally starting.

They added: “We wanted to be absolutely sure that as well as getting value for money – which is vital for our funders and supporters – we selected a company that understands what the Lift means to Folkestone.”

Dan Hollis, managing director at Apex, said: “From the moment we had the opportunity to work on the project, our whole team have been excited about bringing a local landmark with national importance back into public use.”

Along with £4.8million from the National Lottery Heritage Fund, the project is expected to cost £6.6million.

It hopes to open by summer 2025 although some fear this could be delayed.

The 138-year-old lift is one of only three water-balanced funiculars remaining in the UK.

Having opened in 1885, it carried thousands of people on its first day, with 36million passengers by the time it closed.

Folkestone even had two other lifts – The Metropole Lift and the Sandgate Hill Lift – although these no longer exist.

One of the most famous UK funiculars is the Saltburn Cliff Lift which reopened back in September following a fire.

But Folkestone is set to be a popular seaside destination in the UK, taking on other Kent towns such as Margate and Whitstable.

We spoke to a number of locals about Folkestone, who have seen huge changes in recent years.

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Local Simon, who owns the Champagne Bar which is the ‘closest to France in the UK’ said: “We were told we were mad to open in Folkestone 10 years ago – now look at us.”

There is also Burrito Buoy, a Mexican restaurant that launched their own store after huge success on the Harbour Arms.

Run by couple Sammy and Matt, who is from Oregon, they opened because they “couldn’t get food like this anywhere else”.

And beach-side Brewing Brothers, who opened their first Kent bar after success in Sussex, said: “There’s been so much music this year and going to be even bigger next year.”

The Sun’s Deputy Travel Editor on living in Folkestone

The Sun’s Deputy Travel Editor Kara Godfrey explains why Folkestone is a great place to live.

I made the move to Folkestone a few years ago, leaving the busy life of London and have never looked back.

Named one of the Best Places to Live in 2024 study by the Times, it toes the balance of being an exciting place to live, without feeling like a seaside town catered to tourists.

There is the Harbour Arm, with bars, eateries and shops, as well as the multi-coloured shops lining the Creative Quarter.

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You can test your skills at F51, the worlds first multi storey skate park, or pop on the Eurotunnel and be in Calais in 35 minutes.

And often walking past the Leas Lift (where the former cafe did one of the best hot chocolates), I can’t wait for it to be restored.

Make sure to visit the new London & Paris hotel too, one of the only boutique hotels in town.

Even the owner backed Folkestone, saying: “I’ve been to other seaside towns and you don’t get that same community feeling – and the food and drink scene here is fantastic.”

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Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The box office success of Marvel’s Deadpool & Wolverine and a solid profit in Disney’s streaming businesses helped lift the entertainment company’s earnings by 39 per cent from a year earlier, even as income at its theme park business dropped.

The film’s performance, combined with Pixar’s record-setting Inside Out 2, has eased investor concerns that Disney was losing its magic touch at the box office. Bob Iger, Disney chief executive, hailed it as “one of the best quarters in the history of our film studio”. 

The films’ strong showing, combined with $253mn operating profit at the Disney+ and Hulu streaming services, offset sharp declines in its traditional TV business. Including the ESPN+ sports service, total streaming operating income was $321mn, reversing a loss of $387mn a year ago. 

Disney is also expecting a strong holiday season at the box office with the release of Moana 2 and Mufasa: The Lion King. “Creativity is very much back on track for Disney, which is obviously the biggest value creator for us because of the way it plays through the rest of the company,” said Hugh Johnston, Disney’s chief financial officer. 

However, investors have grown concerned about another area of the business that had been Disney’s strongest performer over the past two years: the “experiences” division that includes the company’s theme parks and cruise ships. 

Disney’s theme parks roared back from the pandemic but faced an early summer slowdown as American visitors reined in spending. 

The US business rebounded in the most recent quarter as guests spent more money in theme parks and on cruise ships, but that was offset by weakness at Disneyland Paris and Shanghai Disney. The division had record revenue and operating income for the full year and Disney expects attendance to rise in 2025.  

Disney is investing heavily in its experiences business, with plans to pump $60bn into its theme parks and cruise lines over the next decade. The company expects the division to generate operating income growth of 6 to 8 per cent in the coming year, and “high single-digit growth” in 2026 — thanks to the launch of two new cruise ships that year.

The company earned $1.14 in adjusted earnings per share in the fiscal fourth quarter, beating Wall Street estimates of $1.09. Revenue rose 6 per cent to $22.6bn.  

Iger returned to Disney after a brief retirement two years ago and launched a sweeping cost-cutting and restructuring plan. Since then the shares have risen but are underperforming the broader stock market.

The company plans to repurchase $3bn in shares in 2025 and says its dividend will “grow in line with earnings”.

For several weeks, we’ve been hearing the government talk about “fixing the foundations” of the UK economy.

Speculation has been rife about how chancellor Rachel Reeves would address the £22bn “black hole” in public finances.

Now, with the Budget out of the way, we have a clearer view of the specific plans.

Billed as a Budget to rebuild Britain, there was a strong focus on making difficult decisions on tax and spending to support economic growth and stability.

The general consensus seems to be it could have been worse

As set out in the Labour election manifesto, Reeves maintained the current rates of income tax, employee National Insurance and VAT. However, while keeping core tax rates unchanged for the broader population, the chancellor brought in new measures aimed at “the wealthiest”, including immediate increases in the capital gains tax (CGT) rates and the removal of the inheritance tax (IHT) exemption on pension assets from April 2027.

From the details so far, the general consensus seems to be it could have been worse, even for many advised clients likely to fall within the chancellor’s fairly broad definition of wealthy.

Unfortunately, the problem with so much pre-Budget speculation is that it can undermine trust in the system and discourage long-term financial planning.

Many people are already worried about the size of their pension pot, with nearly three-fifths of UK adults concerned they won’t be able to fund the lifestyle they want in later life, according to research by Unbiased.

Interactive Investor saw a 58% increase in cash withdrawals from Sipps in the first half of September, compared to the same period last year

At the other end of the spectrum, rumours over the last few weeks of a possible reduction in pension tax-free lump sums drove some older consumers to try to pre-empt any reforms. Interactive Investor saw a 58% increase in cash withdrawals from Sipps in the first half of September, compared to the same period last year.

Although the anticipated changes to tax-free cash limits didn’t materialise, for most of those who have already acted, the decision will be irreversible, with lasting implications for the future taxation and investment growth of their pension.

One of the main benefits of taking advice is having professional support on hand to help with informed decision-making in times of uncertainty, whether it’s caused by pre-Budget speculation, market volatility or surging inflation.

Now there is greater clarity on the government’s approach, it’s an opportune time to re-engage clients with their financial plans and check their savings and investments continue to meet their long-term objectives. Technology can make this job much easier.

Giving clients access to a high-level view of their financial position can help them self-serve during times of uncertainty

A business management solution can help you quickly understand which clients are affected by any rule changes and prioritise who to contact. For instance, it should enable you to easily review clients’ portfolio details, tax wrappers, holdings, transaction history and performance, to understand whether CGT may apply, review estate planning and confirm the most tax-efficient income strategy.

It can also help you identify different segments to send more general information about relevant changes, to help inform clients about any future action they may need to consider.

Giving clients access to a high-level view of their financial position can also help them self-serve during times of uncertainty. Using a secure portal allows clients to get up-to-date valuations across their portfolios, see goal progression and amend selected fact-find data at a time that suits them and without needing to contact you.

Client portals can also provide a gateway into cashflow modelling, allowing clients to try out ‘what if’ scenarios, such as retiring earlier or later, or increasing pension contributions, to see how these changes might affect their future finances.

Now the speculation is over, the work begins on understanding the impact of the changes

This encourages deeper financial-planning discussions, which you can support with a detailed cashflow modelling exercise to create a personalised, visual projection of future wealth across various scenarios, including how Budget rule changes could affect the client’s current and future finances.

Linking not only valuations for pensions and investments but also bank accounts via an Open Banking integration to the client portal can give a more detailed view of the client’s entire wealth.

This could highlight additional financial-planning opportunities and make it easier to track income and expenditure for a more accurate picture of outgoings and potentially where savings could be made.

Such tools can help illustrate where small changes now can make a big difference to the size of their retirement funds for those building wealth or the sustainability of income for those in decumulation, calming anxiety about the future with a clear action plan.

Now the speculation is over, the work begins on understanding the impact of the changes. Advice will be central to reassuring clients and guiding them through any adjustments required to make sure their future goals remain on track. Technology can aid the process, helping you demonstrate the value that you’re adding to clients’ financial futures.

Nick Eatock is chief executive at Intelliflo

Donald Trump’s choice of Pete Hegseth to run the Pentagon has brought a backlash in Washington military circles as officials decry a “crazy” move to appoint a “bomb thrower” lacking the clout needed to lead the world’s most powerful defence department.

Trump nominated Hegseth, a Fox News host known for his attacks on “wokeness”, on Tuesday — one of several controversial national security picks by the president-elect in a rapid-fire 24 hours of cabinet nominations that sparked scorn from opponents and alarm from US allies.

Hegseth’s critics described him as unprepared for a pivotal job during a period of global conflict — and a threat to the stability of the US defence establishment. The TV host, who also served in the US military, has proposed firing top military leaders including the chairman of the Joint Chiefs of Staff.

“He is unqualified, and he is the most overtly and extreme political nominee we’ve ever seen. This is a bomb thrower,” said Paul Rieckhoff, founder of Independent Veterans of America, which helps politically independent veterans run for office.

Rieckhoff said the nomination, coming just a week after Trump’s Republican party won the White House and both houses of Congress, showed the president-elect was past caring about the reaction to his radical agenda for the country.

Trump was “pressing a political mandate in a way we have never seen in American history”, Rieckhoff said.

Even before Hegseth’s nomination, Pentagon officials had grown edgy about Trump’s campaign promises to fire “woke generals” and eliminate diversity programmes in the military.

In private, many seethed at the Hegseth news.

The Fox News presenter’s nomination was “crazy”, said one senior defence professional — and baffling even to some Republicans who had been reassured by Trump’s pick of Mike Waltz to be his national security adviser and Marco Rubio as his nominee for secretary of state.

Trump’s critics saw it as more evidence of the president-elect’s volatility.

“Trump picking Pete Hegseth is the most hilariously predictably stupid thing,” said Adam Kinzinger, a former Republican congressman.

Hegseth’s possible elevation has already drawn criticism from US allies, amid concerns that the Trump ally’s positions on Israel, Ukraine or Taiwan are not fully known or consistent.

Trump said Hegseth was “tough, smart and a true believer in America first”, another sign that the president-elect was making loyalty a key requirement of his cabinet appointments.

But former officials warned that Hegseth’s intention to remove top generals, or have Trump fire CQ Brown — who was the first African American to lead a branch of the US Armed Forces — or order the military to take part in mass deportations could spark a significant crisis between service members and the political leadership.

“You’re looking at a potential crisis in civil-military relations here,” said Eric Edelman, vice-chair of the congressionally mandated Commission on National Defense Strategy and a senior Pentagon official during the George W Bush administration.

Hegseth has been a harsh critic of diversity, equity and inclusion initiatives, blaming them for the armed services’ failure to enlist more people, particularly white men.

Military recruiters have connected a drop in white male recruits to growing obesity and poor funding of education, among other factors.

But the DEI issue points to an area of potential conflict if Hegseth takes the helm.

“Any general that was involved . . . in any of the DEI, woke shit, has got to go . . . you have to re-establish that trust by putting in no-nonsense war fighters in those positions who aren’t going to cater to the socially correct garbage,” he said in a podcast interview with Shawn Ryan.

Hegseth must win a majority of votes in the Senate to be confirmed, which could be a challenge even though Republicans hold a 53-seat advantage in the chamber. Some senators appeared uncertain.

“I don’t know anything about him,” said Bill Cassidy, a Republican senator from Louisiana on Wednesday.

Asked about Hegseth’s reputation on Capitol Hill, a senior Republican national security adviser replied: “Who? . . . He wasn’t on the radar until yesterday.”

But none of the party’s members have said they would vote against him. Roger Wicker, the top Republican on the Senate Armed Services Committee, said on Wednesday he had no concerns with Hegseth, telling CNN he was “delighted” at his nomination.

The Fox News star’s biggest challenge could be convincing senators — or military leaders — that he is credible as a Pentagon chief, with the managerial chops to lead the nation’s largest bureaucracy or connect with allies and partners.

“I see no evidence that this person has relationships whatsoever with our overseas partners,” Adam Smith, the top Democrat on the House Armed Services Committee, told reporters. “How is he going to do when working on the various coalitions we have?”

Additional reporting by Demetri Sevastopulo and Alex Rogers