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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Heathrow asks airlines to cancel 10% of flights, as easyJet cuts summer schedule – as it happened

IG Recession United States Carine Mann Jonathan Haskel Bank of England Christopher Waller Janet Yellen MPC US Federal Reserve
Lines of passenger luggage arranged outside Terminal 2 at Heathrow Airport yesterday
Lines of passenger luggage arranged outside Terminal 2 at Heathrow Airport yesterday Photograph: Henry Nicholls/Reuters

Summary

Time for a quick recap

UK passengers continued to be hit by travel chaos today as Heathrow asked airlines to cut flights due to a pile-up of baggage and easyJet slashed its summer schedule.....with a massive rail strike just hours away.

Heathrow requested that airlines flying from Terminals 2 and 3 cut 10% of capacity, as it tries to get to grips with a mountain of luggage.

A spokeswoman for Heathrow said:

“We apologise unreservedly for the disruption passengers have faced over the course of this weekend.

“The technical issues affecting baggage systems have led to us making the decision to request airlines operating in Terminals 2 and 3 to consolidate their schedules on Monday June 20.

“This will enable us to minimise ongoing impact and we ask that all passengers check with their airlines for the latest information.”

Around 30 flights carrying up to 5,000 passengers have been cancelled at Heathrow Airport in response.

Some easyJet passengers will learn that their summer flights have been cancelled, as the budget airline cuts capacity in an attempt to avoid more last-minute cancellations.

EasyJet plans to only operate 90% of its 2019 capacity over the next three months, down from a previous target of 97% of pre-Covid flights, which suggests around 11,000 flights could be cut.

The move follows heavy disruption in recent weeks, due to staff shortages that have led London Gatwick and Amsterdam’s Schiphol to cap flights.

EasyJet said it expected most customers to be able to rebook on to alternative flights, many of which would be on the same day as they originally planned to travel, and pledged to notify customers as soon as possible.

There has also been disruption in Brussels, where flights were cancelled today as security staff joined in a cost of living strike.

Motorists face yet more pain at the pumps, as the cost of diesel and petrol jumped to new record highs over the weekend.

The UK faces its biggest rail strikes since the 1990s, starting tomorrow, after last-minute talks fail to resolve the dispute over pay, jobs and conditions.

Passengers have been warned to expect widespread disruption, as 40,000 RMT members, including signallers, maintenance and train staff, hold their first 24-hour walkouts on Tuesday

Walkouts are also planned on Thursday and Saturday, as part of an ongoing dispute over pay and pensions.

Just one in five trains will run on strike days, with services halted altogether in much of northern and south-west England, Wales and Scotland, meaning millions of people facing a week of cancelled trains.

No 10 accepted that the rail strike would make life “extremely difficult” for commuters this week. The PM’s spokesperson said:

For those that have no choice but to come in it will be extremely difficult tomorrow and I think the public will understandably want to know why they are being put in this position.

We believe we are seeking to offer a fair and reasonable pay rise and modernise the railway services for the long term, and we need to get rid of some of these outdated rules and procedures, some of which have not been updated for decades and which don’t serve the public.

Here’s the latest:

In the financial markets, fears of a global recession pushed the copper price to its lowest level this year.

But European stock markets have managed a rebound, with the FTSE 100 index now up 90 points or 1.3%, recovering from last Friday’s three-month low.

But the pound is only slightly higher against the US dollar, at $1.2244.

Bank of England policymakjer Catherine Mann has called for interest rates to rise faster, warning that a weaker pound could add to inflationary pressures.

In Germany, factories have hiked their prices at the fastest rate on record, going back to 1949, led by sharp jumps in the cost of energy, fertiliser, industrial gas and other commodities.

British manufacturers have called on the Treasury to urgently provide more support amid a poor economic outlook, as they face rising prices and struggle to hire staff.

House prices in Great Britain are likely to start falling during the next few months as five interest rate rises and a worsening cost of living crisis finally start to put the brakes on the property market’s record-breaking run, according to Rightmove.

The Bank of England has ditched rules originally designed to avoid another 2007-style credit crunch, saying today that lenders will no longer have to check whether homeowners could afford mortgage payments.

The UK energy regulator has announced new measures to better protect customers’ money and stop energy suppliers using some of their cash “like an interest-free company credit card” .

And retailer Primark is finally making a significant move into online shopping, with plans to trial a click-and-collect service in the UK. Prices rises are also on the way.

Reminder, the latest rail strike news is here:

We’ll be back with the latest news from business, economics and the financial markets tomorrow....

Updated

The UK’s biggest rail strike in 30 years is to go ahead from tomorrow, after last ditch talks failed to resolve a dispute over pay, jobs and conditions, the RMT union said (via PA Media).

John Leach, assistant general secretary of the RMT rail union, warned this morning that its members have ‘grit and determination’ for a long dispute if necessary.

Our Politics Liveblog has the details:

Updated

British union BALPA says its pilots have voted to accept airline Ryanair’s revised offer on post-COVID pay restoration, following negotiations.

BALPA reports that:

“Following the intense negotiations Ryanair put forward a revised offer. BALPA members were balloted and voted to accept the offer,”

Ryanair has managed to escape much of the disruption experienced by the likes of EasyJet and BA. However, Spanish based cabin crew employed by Ryanair have voted to hold two three-day walkouts -- from 24 June to 26 June and 30 June to 2 July.

That could add to travel disruption, as the Spanish unions push for salary increases following cuts during the coronavirus pandemic.

Bank of England policymaker Mann says weak pound boosts case for rate hikes

Back on financial matters....Bank of England policymaker Catherine Mann has called for interest rates to be raised more rapidly to prevent the weak pound driving up inflation.

Mann argues that the weakness of the UK currency is adding to inflationary pressures, by making imports pricier.

And with the US and eurozone central banks likely to increase borrowing costs in the next few months, the pound would face additional depreciation pressure without a ‘robust’ move higher, she says.

Mann is one of three policymakers who voted to raise interest rates to from 1% to 1.5% last week, but were outvoted in favour of a smaller rise to 1.25%.

Speaking at a Market News International Connect event, Mann explains that UK borrowing costs should be raised to support the pound, and could then be lowered to support the economy as inflation pressures faded:

Shee says:

I voted for a 50 basis point increase at the last MPC meeting. In my view, a more robust policy move, based on both domestic conjuncture and commensurate with the global factor, reduces the risk that domestic inflation already embedded is further boosted by inflation imported via a Sterling depreciation.

I open the door to a policy rate reversal in the medium term when the domestic supports to demand fade and when weakness in external sources of demand bite. In my view this monetary policy path supports an inflation-output combination superior to that of the historical reaction.

The pound hit its lowest level against the US dollar in over two years last week, and a one-year low against the euro. That has pushed up the cost of holidaying abroad, as well as imported goods and services.

Around 30 flights carrying up to 5,000 passengers have been cancelled at Heathrow Airport due to the technical issues affecting baggage, the BBC reports.

British Airways, which operates from terminals three and five, told the BBC it had made a “small number of cancellations” as a result of the airport’s request.

It understood BA will be able to re-accommodate the vast majority of customers onto new flights. More here.

Updated

Full story: easyJet scrapping thousands of flights

Although easyJet said it could not provide an exact number of the flights it now intends to cancel this summer, it willl probably run about 90% of the 160,000 it offered in summer 2019.

It having previously hoped to reach 97% of pre-Covid flight capacity between July and September.

That suggests about 10,000 easyJet flights could be scrapped over the coming months.

That is despite an increase in demand, with the number of travellers in April and May this year having risen to seven times the level in 2021.

Here’s the full story:

Updated

Heathrow has warned passengers that this week’s rail strikes will cause disruption getting to the airport, with Heathrow Express running fewer services to and from Paddington.

A 24-hour strike on the London Underground on Tuesday will also cause disruption (Heathrow is on the Piccadilly Line).

EasyJet’s CEO has cited Brexit as a factor causing the staff shortages which forced it to cut flights this summer.

Johan Lundgren told reporters the airline had received a “huge amount” of applications, but could not accommodate all the EU workers it had before the pandemic.

My colleague Kalyeena Makortoff explains:

The airline’s executives assured that they did not intend to raise prices as a result of the cancelled flights – likely to result in higher demand for fewer seats.

They also said that while the airline was not struggling to hire staff, it had recently turned down about 8,000 applications from EU nationals who were no longer eligible to work for the company in the UK due to Brexit.

“Pre-pandemic we turned down probably about 2% of people for for nationality reasons … and that number is [now] about 35-40%. So, of course the pool is smaller,” Lundgren said.

EasyJet has also reported that recruits were waiting an extra month to receive their official crew identification cards; That means a process that usually took 10 weeks was now taking 14 weeks.

Lundgren says:

“They’re fully trained, just basically waiting for the IDs to come through.

So it’s more that they’ve been slow to get people into the system, and not so much the fact that we’ve been struggling to recruit. And that has continued to be an ongoing challenge.”

Rory Boland, editor of consumer magazine Which? Travel, says easyJet must play by the rules as it cancels flights this summer:

“EasyJet has caused chaos and distress for passengers over several weeks with a constant stream of last-minute cancellations.

“While reducing the number of flights it operates may be the most sensible option in delivering a more reliable service over the summer, it yet again leaves passengers panicking about whether their flight or holiday will be cancelled or delayed.

“The summer holidays are just around the corner, so easyJet must immediately provide clarity on which flights are being cut.

“Crucially, it needs to start playing by the rules and rerouting its customers, including on flights with other carriers.

“That’s the legal requirement and the very least the airline can do for customers it has left in a mess.”

MPs on the BEIS committee heard last week that some customers had been put in an “awful situation” in the travel chaos, and seen their rights “blatantly flouted” by airlines.

UK petrol prices at new record

Drivers who turn to their cars to escape this week’s UK rail strike face paying record prices to fill up at the pumps.

The average price of a litre of petrol hit 188.7p on Sunday, extending a run spurred by surging oil prices after the Ukraine war began.

Diesel also hit a fresh high of 196.1p a litre, heading towards an average of £2.

It means filling up a 55-litre family car with petrol now costs nearly £104 while the diesel equivalent is almost £108, the RAC explains.

Last week, motoring bodies pointed out that the wholesale price of petrol had stopped rising -- which ought to feed through to retail prices.

RAC fuel spokesman Simon Williams said:

“This is yet more bad news for drivers, particularly with this week’s rail strikes leaving many people with no choice but to use their cars. But looking at the wholesale cost of petrol, which has settled due the oil price falling, petrol pump prices really should not continue to rise, if anything they ought to begin reducing. Sadly though, diesel looks destined to head rapidly towards an average of £2 a litre which would make a full tank £110.

“We strongly hope the extent of the rises seen in both fuels will finally force the Government to take action to ease the burden on drivers by further cutting duty or lessening the punishing impact of VAT which currently accounts for 31p a litre on petrol – 6p more than it was before the Ukraine war began.”

Updated

This video clip shows how luggage has been piling up at Heathrow, following a problem with its baggage handling systems at the weekend.

Some 90 flights are expected to be affected today after airlines flying from Terminals 2 and 3 at Heathrow were asked to scale back their schedules, according to travel journalist Simon Calder.

He writes:

The grounded departures range from a Loganair ATR72 commuter aircraft serving the Isle of Man to an Emirates Airbus A380 seating almost 500 passengers to Dubai.

Virgin Atlantic has cancelled at least three transatlantic flights, including departures to New York and Los Angeles.

British Airways, which operates some flights from Terminal 3 as well as its main hub at Terminal 5, said it had made “a small number of cancellations”.

All three departures that BA had originally planned to Toulouse are grounded, along with two of the four Marseille flights.

More here: Heathrow Airport: 15,000 passengers face cancelled flights on Monday amid baggage handling meltdown.

Updated

Heathrow asks airlines to cancel 10% of flights today amid baggage backlog

Airport workers stand next to lines of passenger luggage arranged outside Terminal 2 at Heathrow Airport yesterday
Airport workers stand next to lines of passenger luggage arranged outside Terminal 2 at Heathrow Airport yesterday Photograph: Henry Nicholls/Reuters

Heathrow has asked airlines operating at Terminals 2 and 3 to cancel 10% of their flights today as it tries to work its way through a huge backlog of luggage, Sky News reports.

It comes after hundreds of passengers were left waiting for over three hours during the weekend to retrieve their luggage with no explanation from staff.

Airlines have been given the option of consolidating their flights at Heathrow - meaning that instead of cancelling 10% of services they could move passengers on to other flights to ensure they get away.

Lines of passenger luggage lie arranged outside Terminal 2 .
Lines of passenger luggage lie arranged outside Terminal 2 . Photograph: Henry Nicholls/Reuters

It is only a request at this stage so it is up to carriers to decide whether they will comply.

More here: Heathrow asks airlines to cancel 10% of flights today as airport faces baggage backlog

A Heathrow spokesperson says cancelling some flights should help reduce the disruption:

“We apologise unreservedly for the disruption passengers have faced over the course of this weekend.

“The technical issues affecting baggage systems have led to us making the decision to request airlines operating in Terminals 2 and 3 to consolidate their schedules on Monday 20th June.

Updated

A flight information board shows cancelled flights at the Brussels airport as passenger planes will not take off due to a security guards strike.
A flight information board shows cancelled flights at the Brussels airport as passenger planes will not take off due to a security guards strike. Photograph: Anadolu Agency/Getty Images

A day of strikes in Belgium over the cost of living forced Brussels Airport to cancel all departing flights on Monday and halted many bus services across the country.

Unions said they expected tens of thousands of people to attend a protest in Brussels.

Brussels Airport said it could not allow passenger flights to depart because security personnel were taking part in the industrial action.

The demonstration itself is expected to heavily disrupt traffic in and around Brussels, but will also impact public transport in the city - while railway operator SNCB is scheduling extra trains to Brussels.

Inflation hit 9% in June in Belgium, as Russia’s invasion of Ukraine drove up costs of energy and food.

Prime minister Alexander De Croo said Belgian workers were better protected than counterparts in most other European Union countries because wages were indexed to inflation.

He told public broadcaster RTBF the government had extended measures to reduce sales tax on gas, electricity and fuel until the end of the year.

Updated

Activity across the eurozone’s construction sector shrunk, adding to concerns over the strength of the recovery.

Production across the eurozone’s construction sector decreased by 1.1% in April, compared with March, data from Eurostat shows.

Civil engineering work dropped most sharply (decreasing by 5.5%), while building construction increased by 0.1%.

Updated

Stock markets in emerging economies have hit their lowest level in over five weeks, on concerns that higher interest rates could trigger recessions.

The MSCI’s index for emerging market equities has dropped 0.4%, led by losses in Asia-Pacific bourses.

Higher rates in the developed world negatively impact emerging market assets, while a stronger US dollar makes it harder to repay debt issued in dollars.

Emerging market stocks have lost over 18% so far in 2022, and are down around 7% since the start of June.

Housebuilders' shares drop in London

In the City, the blue-chip FTSE 100 share index has gained 40 points to 7057, despite global recession worries.

That lifts the Footsie by 0.6% from Friday night’s three-month lows. Banks, oil companies and travel companies are among the risers.

But UK housebuilders are leading the fallers, with Barratt (-4%) and Persimmon (-3.6%), amid speculation that rising interest rates could puncture the housing bubble.

Rightmove has predicted that prices are likely to start falling from their record highs during the next few months as five interest rate rises and a worsening cost of living crisis hit.

Mining companies are lower too, on concerns that slow growth means less demand for commodities.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, explains:

Investors sense there is trouble ahead for the world economy, given that the priority of the powerful US Federal Reserve is to stamp out the flames of inflation even if that means extinguishing growth.

Although US Treasury Secretary Janet Yellen said yesterday a recession is not at all inevitable, she cautioned that the economy would slow, indicating that the price spiral will take time to reverse, given that inflation’s causes were global.

Uncertainty about the global outlook is also weighing on miners and commodity firms with Rio Tinto, Anglo American, Antofagasta and Glencore among the fallers in early trade on the FTSE 100.

EasyJet has not said how many flights will be scrapped under the new cancellations announced this morning

CEO Johan Lundgren told reporters he could not provide a figure for the number or proportion of flights that will be cancelled as “we need to work this through”.

“I can’t tell you how many flights will be impacted.”

“It would be misleading for me to give any numbers today because we simply don’t know.”

Simon Clarke, chief secretary to the Treasury, has also declared that workers can’t expect pay rises that will match inflation.

Stressing that this was a message for people in the private sector as well as in public sector, Clarke told the Today programme:

In the current landscape of inflation at 9, bordering 10%, it is not a sustainable expectation that inflation can be matched in pay offers.

That is not something that’s going to be seen - across, frankly, the private sector as well as the public sector.

We cannot get into a world where we are chasing inflation expectations in that way because that is the surest way I can think of to bake in the repeat of the 1970s which this government is determined to prevent.

My colleague Andy Sparrow has more details:

Back in February, the governor of the Bank of England was rebuked by 10 Downing Street for suggesting workers should not ask for big pay rises to help control inflation.

Four months on, that call for wage restraint now appears to be government policy.....

Train strikes could carry on into the autumn

Unions have warned that the train strikes could stretch into the autumn, adding to the UK’s transport chaos.

Mick Lynch, general secretary of the Rail, Maritime and Transport union (RMT), told the i newspaper that the public may have to accept disruption stretching beyond the summer.

Lynch warned that there “doesn’t seem to be much evidence at the moment that it’s going to go any other way”.

“The TSSA [union], which represents about 6000 Network Rail staff is balloting, Aslef, which along with us organises train drivers has about six or seven ballots being returned on July 11 – just a few weeks away.

If there’s no settlement I can only see this escalating.”

UK faces biggest rail strike in 30 years

Passengers board a train at Hunts Cross Station, Liverpool.
Passengers board a train at Hunts Cross Station, Liverpool. Photograph: Peter Byrne/PA

Britain is hours away from its biggest rail strikes in three decades, with widespread disrution expected for most of this week as trains are cancelled across the country.

Passengers are being warned that disruption will start tonight, ahead of the first of three 24-hour walkouts by 40,000 RMT members, including signallers, maintenance and train staff, on Tuesday.

Walkouts are also planned on Thursday and Saturday, as part of an ongoing dispute over pay and pensions.

Last-minute talks between union chiefs and rail operators were set to get underway today, but unless there is a dramtic breakthough, the rail network will see its biggest industrial action since the mid-1990s.

Just one in five trains will run on strike days, with services halted altogether in much of northern and south-west England, Wales and Scotland, meaning millions of people facing a week of cancelled trains.

There will also be disruption on the days between strikes, as our transport correspondent Gwyn Topham explains:

The strikes, over pay and attempts to reform the rail industry with post-Covid work patterns hitting commuter revenues, will cause six days of disruption, with trains limited to one an hour between 7.30am and 6.30pm on major intercity and urban routes. Services will start later and be reduced on subsequent days.

The action is being taken by Network Rail employees and onboard and station staff working for 13 train operators in England. The RMT said thousands of jobs were at risk in maintenance roles and that ticket office closures were planned, on top of pay freezes during a time of high inflation.

The walkout by signallers will have most impact, particularly in rural areas, leading to line closures in places such as Wales, where there is no direct dispute with the train operator. Most operators have told passengers to travel only if necessary on strike days. Northern Rail has advised passengers not to travel for the whole week.

The strikes will affect a number of events including school exams and the first Glastonbury Festival for three years, as well as meaning heavy disruption for commuters.

The government has been criticised for not joining last-ditch talks, but Labour demanded ministers drop their boycott of talks, while the Trades Union Congress (TUC) also called on the government to adopt a positive role in the rail dispute instead of “inflaming tensions”.

Frances O’Grady, the TUC general secretary, said:

“The government has the power to help end this dispute.”

But Treasury chief secretary Simon Clarke said the Government’s involvement in talks over the rail dispute would “confuse things” as he called for industry reforms.

He told BBC Radio 4’s Today programme this morning:

“Ultimately, it will only confuse things if we add a third party to these negotiations.

“The train operating companies and Network Rail are working to deliver a sensible programme of reform and a sensible and fair pay deal with the trade unions.”

Inflationary pressures in Germany are continuing to hit the roof.

German manufacturers and other produers hiked their prices by a startling 33.6% in May, compared with the previous year, as they passed on soaring commodity prices, and rising costs from supply chain disruption.

That’s the highest increase in producer prices on record, going back to 1949.

Prices rose 1.6% in May alone.

Statistics body Destatis reports that German energy prices were 87.1% higher than a year ago, while metal prices jumped 38.1% (including a 51% jump in pig iron, steel and ferro-alloys).

But prices rises went much further. Fertilizers and nitrogen compounds more than doubled over the last year, costing 110.9% more, while livestock feed prices increased by 48.7% -- all bad news for farmers. And that’s pushing up food prices, with cereal flour prices were 44.8% higher than in May 2021.

The report also shows how industrial costs have jumped; industrial gas prices are up 68.8% more a year, packaging made of wood was up 67.4%, while softwood lumber was 41.9% more expensive.

Global airlines to narrow losses as outlook improves

You might not expect it, given easyJet’s flight cancellations today, but the outlook for global airlines is improving.

Industry body IATA has predicted that airline losses will narrow this year thanks to a rebound in demand for air travel, as it upgrades its forecasts.

Global airlines are now expected to post a $9.7bn loss in 2022, much better than the $42.1bn loss racked up in 2021, and almost $2bn better than previously forecast.

And the industry could return to profit next year.

IATA director general Willie Walsh told the gathering of airline chiefs that the industry was “leaner, tougher, and nimbler”, declaring:

“Industry-wide profit should be on the horizon in 2023”

“We are rebounding. By next year, most markets should see traffic reach or exceed pre-pandemic levels.”

In an interview with Reuters, Walsh played down concerns of a so-called ‘demand cliff’ that would spell a short-lived recovery.

“I don’t think it’s a flash in the pan. I think there is some pent-up demand being fulfilled at the moment, but you’ve got to remember we’re still well below where we were in 2019.

“So I think there’s still a lot of ground to make up before we can get into the debate as to whether we’ll see that taper off.”

A worker at the Codelco Ventanas copper smelter in Ventanas, Chile
A worker at the Codelco Ventanas copper smelter in Ventanas, Chile Photograph: Rodrigo Garrido/Reuters

Back in the markets, recession fears have dragged copper down to its lowest level this year.

Copper, seen as a barometer of economic health dipped to $8,955 a tonne in London trading, after hitting its lowest since early October.

Economic slowdown fears are hitting metal prices, on concerns that demand will weaken -- especially if Covid-19 lockdown in China keep hitting factory operations.

ANZ commodity strategists said in a note.

“This comes amid uncertainty around the demand outlook in China. Renewed outbreaks of COVID-19 have cast doubt on the recovery from lockdowns that have slowed down industrial activity.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, says:

“This year’s summer season was meant to be a festival of resilience for airlines, a chance to show off their strength at getting through the pandemic, and successfully ferrying customers on their seriously long-awaited holidays.

Instead, the industry has been hit by a PR firestorm, as scaled back workforces buckle under the weight of returning demand, leading to last minute cancellations. easyJet has now announced plans to consolidate its planned departure list, with hopes most customers will be able to rebook without changing their leaving date.

From a financial perspective, these plans are going to prolong total recovery for easyJet. The costs that come with ramping operations back up are huge. So while it’s a customer apology being dolled out today, any deviation from the new plan will mean the same courtesy would be due to shareholders.

Underneath all the noise, trends are positive. Crucially, demand for travel is there. Not being able to service that demand fully is a crying shame, but it does bode well for the future.”

Shares in easyJet have dropped 3.3% in early trading, to the bottom of the FTSE 250 index of medium-sized companies traded in London.

It told the City this morning that costs will be higher than previously guided, due to travel disruption and the ‘enhanced resilience’ it is putting into place.

People waiting in lines at Schiphol Airport in Amsterdam, Netherlands, last week.
People waiting in lines at Schiphol Airport in Amsterdam, Netherlands, last week. Photograph: Piroschka van de Wouw/Reuters

Easyjet intends to cut an unspecified number of flights at Amsterdam’s Schiphol airport this summer, Dutch news agency ANP is reporting, citing a spokesperson.

Easyjet is one of the larger customers at the airport, behind the Dutch arm of Air France-KLM.

The move follows a decision last week by Schiphol to cap the number of passengers allowed at the airport during peak season, leading to a 16% reduction in planned flights, due to a lack of security and other workers at the airport (via Reuters).

EasyJet: We're sorry some customers didn't get service expected

Johan Lundgren, easyJet Chief Executive, says cutting flights will ‘increase resilience’ over the summer, after the airline fell short for some passengers.

“Delivering a safe and reliable operation for our customers in this challenging environment is easyJet’s highest priority and we are sorry that for some customers we have not been able to deliver the service they have come to expect from us.

“While in recent weeks the action we have taken to build in further resilience has seen us continue to operate up to 1700 flights and carry up to a quarter of a million customers a day, the ongoing challenging operating environment has unfortunately continued to have an impact which has resulted in cancellations.

“Coupled with airport caps, we are taking pre-emptive actions to increase resilience over the balance of summer, including a range of further flight consolidations in the affected airports, giving advance notice to customers and we expect the vast majority to be rebooked on alternative flights within 24 hours.

“We believe this is the right action for us to take so we can deliver for all of our customers over the peak summer period in this challenging environment.”

EasyJet cuts flights until end of September

Budget airline easyJet is cutting more flights in an attempt to avoid a repeat of the travel chaos suffered by passengers in recent months.

EasyJet has announced it is reducing capacity until the end of September, after flight caps were announced at London Gatwick and Amsterdam.

The airline -- one of the worst hit by recent disruption -- is “proactively consolidating” a number of flights across affected airports. This will give customers advance notice and the potential to rebook onto alternative flights, it says.

EasyJet points to problems such as air traffic control delays and staff shortages in ground handling and at airports, shortages of staff including cabin crew, and delays getting IDs approved so new hires can start.

These problems have prompted flight caps at Gatwick and Schiphol in the last few days.

EasyJet says expects to to rebook the majority of customers on alternative flights, with “many” being on the same day as originally booked for.

The cuts mean EasyJet will run at around 90% of its pre-pandemic flights (2019) in July to September, down from a previous target of 97% of pre-Covid flights.

Capacity in April-June will be around 87% of pre-Covid levels, below the 90% previously expected.

Updated

Introduction: Markets fear global recession

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

Fears of a possible global recession weigh over global stock markets today, as economic data sours and inflation continued to climb.

Last week, stock markets posted their biggest percentage decline in two years, as investors worry that global central banks will push economies into recession as they try to subdue rising prices.

And there’s no argument that economies are losing pace.

Joe Biden’s treasury secretary Janet Yellen says she expects “the economy to slow” but continued insisting that a full-blown recession is not “at all inevitable”.

Yellen told ABC’s This Week host George Stephanopoulous that her financial outlook results from how the economy has “been growing at a very rapid rate, as the economy, as the labor market, has recovered and we have reached full employment”.

“It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”

Some Asia-Pacific markets are racking up further losses today, with Japan’s Nikkei dropping another 1% and South Korea’s KOSPI tumbling 2.4%.

That takes global markets further into a bear market (more than 20% off their recent peak).

Hebe Chen, market analyst at IG, says that everyone is talking about a recession now, but the official definition of ‘two consecutive quarters of decline’ may sound pale and dry:

Chen explains:

The market last week just painted a typical recession picture that ticked almost all the boxes: inflation is flying to the roof, interest rates are non-stop rising, two major US stock indices [S&P 500 and Nasdaq] are trapped in the bear market (with the 3rd one on the way) and investors are selling shares of the best companies.

Last but not least, commodity prices start to drop.

Stocks slumped last week as the US Federal Reserve announced its biggest interest rate rise in 15 years, the Bank of England raised rates to a 15-year high, and Switzerland made a surprise rate hike.

Despite this market turbulence, central bankers continue to signal that they will squeeze price pressures out of their economies.

Federal Reserve Governor Christopher Waller on Saturday vowed to pursue a whatever-it-takes approach to fighting inflation, signalling that the Fed could repeat last week’s three-quarter-point rate hike next month.

“If the data comes in as I expect, I will support a similar-sized move at our July meeting,” Waller told a Society for Computational Economics conference in Dallas.

“The Fed is ‘all in’ on re-establishing price stability.”

The crypto crash continued over the weekend, with Bitcoin tumbling below $20,000 on Saturday before a Sunday rebound., which still left it 70% down from its record highs

Also coming up today:

Wall Street will be closed as America celebrates Juneteenth National Independence Day.

We’ll hear from Bank of England policymaker Catherine Mann, when she gives a speech on ‘Monetary Policy in the Global Context’ to an event run by MNI Market News.

Fellow Monetary Policy Committee member Jonathan Haskel is giving the keynote speech at TechUK Policy Leadership Conference.

Mann and Haskel both wanted to raise UK interest rates from 1% to 1.5% last week, while the majority of MPC members pushed for a smaller rise to 1.25%. With other central banks also tightening policy hard, some economists think the BoE could plump for a 50bp hike in August.

The agenda

  • 7am BST: German PPI index of producer prices for May
  • 9am BST: MPC member Jonathan Haskel speech: ‘Restarting the future: how to fix the intangible economy’.
  • 10am BST: Eurozone construction output report for April
  • 11am BST: German Bundesbank’s monthly report
  • 2pm BST: MPC member Catherine Mann speech: ‘Monetary Policy in the Global Context’
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