Major International Business Headlines Brief::: 18 March 2022

Fri Mar 18 14:41:22 CAT 2022

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Major International Business Headlines Brief::: 18 March 2022 

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ü  Burger King Russia partner 'refuses' to shut shops

ü  Ukraine's restaurants rally to the war effort

ü  Australia sues Facebook over scam ads impersonating celebrities

ü  P&O Ferries faces backlash after firing 800 workers

ü  Airline giant Delta warns oil increases mean higher ticket prices

ü  US central bank raises interest rates for first time since 2018

ü  Travel firms confident they can bounce back in 2022

ü  Lithuania threatens to stop using Russian oil and gas

ü  KFC-owner Yum sales plunge as China Covid cases surge

ü  Ukraine war could hit global growth, OECD warns

ü  Be ready to lose all your money in crypto, EU regulators warn

ü  S&P cuts Russia's ratings to 'CC' on debt default risk

ü  Boeing in talks for landmark Delta MAX order

ü  British fashion chain Ted Baker draws U.S. takeover interest

 <mailto:info at bulls.co.zw> 

Burger King Russia partner 'refuses' to shut shops

The owner of Burger King said the operator of its 800 stores in Russia has "refused" to close the sites despite demands to suspend trading.

Restaurant Brands said it had contacted its local partner, Alexander Kolobov, to shut the shops following Russia's invasion of Ukraine.

But it said "complicated" contracts with overseas partners mean it is unable to "walk away" from these deals.

Many Western firms have shut or suspended their Russian businesses.

However a small number, including Burger King and UK retailer Marks and Spencer (M&S), have been unable to do so because their stores are run by franchise partners under "complex" legal arrangements.

The BBC has contacted a representative for Mr Kolobov for comment.

In a letter to staff, Restaurant Brands International president David Shear said: "We contacted the main operator of the business and demanded the suspension of Burger King restaurant operations in Russia.

"He has refused to do so."

Mr Shear added that making any changes to its local Burger King business "would ultimately require the support of Russian authorities on the ground and we know that will not practically happen anytime soon".

Burger King entered the Russian market 10 years ago. It trades there through a joint venture partnership with Mr Kolobov - who is the main day-to-day operator of the business - as well as with Russia's VTB Capital and a Ukrainian investment firm.

VTB Capital is an affiliate of VTB Bank, Russia's second largest financial institution which has been sanctioned by the US, UK and other European countries.

Mr Shear said Restaurant Brands owns a minority stake of 15% in the Russian joint venture which it is in the process of unwinding.

"While we would like to do this immediately, it is clear that it will take some time to do so based on the terms of our existing joint venture agreement," he said.

In the meantime, Restaurant Brands has stopped supporting the supply chain, operations and marketing for Russia. It will also reject new pitches for investment and expansion in Russia.

Western companies remain under pressure to withdraw from Russia following its attack on Ukraine. On Thursday, a group of four Ukrainian MPs highlighted to UK prime minister Boris Johnson that M&S is still open in Russia.

Honoured to meet Ukrainian MPs @lesiavasylenko, @Aly_shkrum, @mezentseva_dep, and Olena Khomenko in Downing Street today.

Putin’s barbaric invasion of Ukraine is a clear violation of the democracy each of them represent. Ukraine's freedom & independence must be restored 🇺🇦🇬🇧 pic.twitter.com/hprk5KOfPP

MP Alona Shkrum said: "It is very important to put Putin in isolation and for him to know he will not be getting a handshake from the world, he will not be getting a handshake from business, there will be no support for him because he has killed children in Ukraine."

Complex franchise agreements have prevented some Western brands from shutting their stores in Russia. They have, however, publicly shunned the country over its invasion of Ukraine.

Marks & Spencer stores are operated by a Turkish company called FiBA, which has held the rights to sell the retailer's products across Eastern Europe, since 1999.

M&S said it has suspended shipments of its goods to FiBA which runs Marks' 48 stores in Russia.

Meanwhile, German carmaker Audi has warned that the war in Ukraine will cause "tremendous interference" to supply chains.

"We will see tremendous interference with all the supply chains, not just the chip business, but any supply chains internationally," said Audi executive Hildegard Wortmann.-BBC

Ukraine's restaurants rally to the war effort

Kyiv restaurant the Milk Bar used to charge £12 a meal, now it's producing 500 meals a day for free to help feed the citizens of the Ukrainian capital.

The restaurant has not been able to pay its staff since February but it still has 20 people working there.

"We are all just thinking about people and the community right now," bakery owner Anna Kozachenko said.

Hers is just one of the food businesses stepping up to support Ukrainians following the invasion by Russia.

"I'm not even thinking about the financial losses," said Ms Kozachenko.

The staff who have stayed with the firm are now working around the clock to deliver meals to the elderly and refugees from invaded areas outside Kyiv.

Large food suppliers have provided food to the restaurant for free and have promised to do so for "as long as it is needed". The landlord has also suspended rent for the restaurant.

The Milk Bar is one of more than 450 restaurants that have transformed their businesses to help feed anyone who needs it following Russia's invasion of Ukraine - people sheltering in bunkers, the elderly unable to leave their home, and those fighting on the front lines.

'Scarcity of resources'

One larger firm, LaFamiglia Group, which has 14 restaurants, a catering business and 17 food markets, has also now switched to providing shelters, food and medical supplies.

The business, which made tens of millions in dollars in sales last year, is now providing more than 8,000 snacks and sandwiches and more than 5,000 hot meals each day for free.

Owner Mikhail Beylin told the BBC suppliers were providing lots of food for free and the rest was being sold at cost, with them not making a profit from it.

The restaurant is using its own money to cover any additional costs.

Mr Beylin said the war had made getting food to and from the restaurant "complicated" and there are fears that they could run out of supplies.

"Now the supply we get is enough to cover the demand and create a small back-up of products in case we face a scarcity," he added.-BBC

Australia sues Facebook over scam ads impersonating celebrities

Australia has launched legal action against Facebook's parent company Meta, alleging it allowed scam ads to target users with fake celebrity endorsements.

The tech giant had engaged in "false, misleading or deceptive conduct" by knowingly hosting the ads for bogus cryptocurrencies, a regulator said.

The US company could face financial and other penalties.

Meta is yet to comment but has previously said it is committed to keeping scammers off its platforms.

The Australian Competition and Consumer Commission (ACCC) says the ads in question used Facebook's algorithms to target susceptible users and featured bogus quotes by Australian celebrities.

Identities used without permission included former New South Wales Premier Mike Baird, prominent TV host David Koch and millionaire entrepreneur Dick Smith.

"The essence of our case is that Meta is responsible for these ads that it publishes on its platform," ACCC chairman Rod Sims said in a statement on Friday.

The legal action, filed in the Federal Court of Australia, alleges Meta did this knowingly and failed to prevent the scams even after objections were raised by celebrities.

"In one shocking instance, we are aware of a consumer who lost more than A$650,000 (£360,000; $480,000) due to one of these scams being falsely advertised as an investment opportunity on Facebook. This is disgraceful," Mr Sims said.

Last month, Australian billionaire Andrew Forrest launched a criminal case against Meta over fake ads that used his image.

While Dr Forrest accuses the tech giant of breaking anti-money laundering laws, the ACCC's case is about alleged breaches of consumer law or a separate regulatory act.

Meta - which also owns Instagram and Whatsapp - made $115bn in global advertising revenue in 2021.-BBC

P&O Ferries faces backlash after firing 800 workers

A backlash against P&O Ferries is growing after the firm sacked 800 staff without giving them any notice.

The government said it would review its contracts with P&O Ferries after it fired its employees, planning to replace them with cheaper agency staff.

Unions hit out against the dismissal, saying it marked a "dark day" in the shipping industry.

P&O said it was a "tough" decision but it would "not be a viable business" without the changes.

A chorus of cross-party MPs, however, described P&O Ferries' actions as "callous" and "disgraceful".

Nearly a quarter of P&O Ferries' staff were told via a video message on Thursday that it was their "final day of employment".

P&O Ferries sparks outrage by sacking 800 workers

The RMT union said it was one of the "most shameful acts in the history of British industrial relations". There are protests planned on Friday across the ports of Dover, Liverpool, Hull and Larne.

P&O Ferries worker Andrew Smith said he felt "utter dismay" after working for the company for 22 years.

"It's our lives," he said. "It's how our families have grown up, knowing that this is what we do, and it's just been turned on its head within a matter of hours."

Media caption,

Sacked P&O employee Andrew Smith said he felt "utter dismay" at losing his job after 22 years

Mark Dickinson, general secretary of the maritime trade union Nautilus, told the BBC: "It's absolutely ripped the guts out of everybody."

Having worked in the sector for 40 years, he added: "It is a dark day in the shipping industry.

"I've seen some curveballs and some shocking developments over that time... but for a company to treat the legal process in such an underhand and callous way has shocked me."

In addition to taking part in demonstrations on Friday, both the RMT union and Nautilus are seeking legal advice on the dismissal.

Beth Hale, partner at employment law firm CM Murray, said P&O Ferries may well have breached employment law.

She told the BBC's Today programme that it should have consulted with unions and staff about potential dismissals and notified the government that hundreds of jobs were at risk.

"It's potentially an enormous breach, but they purport to be paying their way out of it," she added.

Sacked staff said the video message had referred to a "generous severance package" being offered, but no details were given.

'Assault on workers' rights'

Maritime minister Robert Courts said he was "frankly angry at the way workers have been treated". He told the House of Commons P&O Ferries' actions were "wholly unacceptable".

"Reports of workers being given zero notice and escorted off their ships with immediate effect while being told cheaper alternatives would take up their roles, shows the insensitive nature by which P&O approached this issue," he said.

He added that he did not expect critical goods and services to be hit by the sudden drop in capacity, but travellers "should expect some disruption over the coming days".

The Department for Business has said it is "looking at the situation", but the company has said services are unable to run over the next few days.

In a letter to the prime minister, Labour's Shadow Transport Secretary Louise Haigh described the firing as a "despicable assault on workers' rights".

"But British seafarers do not need meaningless platitudes - they need action," she added, demanding that government suspends any contracts it holds with DP World - P&O Ferries' owner.

Former transport minister Sir John Hayes also criticised the "capricious, careless, callous" decision, and suggested the government should "recover any monies granted to P&O during the pandemic" in a bid to reverse it.

P&O Ferries claimed almost £15m in government grants in 2020, which included furlough payments for its employees.

Sir John added: "Don't let anyone tell me this is the free market. The free market put little girls in factories and boys down mines, and both at risk on the high seas; we thought those dark days had gone - P&O are either too dim to see that or too dastardly to know it."

P&O Ferries said on Thursday that the decision to lay-off 800 workers was "tough" but said the business would not be viable without "making swift and significant changes now".

It said: "We have made a £100m loss year-on-year, which has been covered by our parent DP World. This is not sustainable. Without these changes there is no future for P&O Ferries."

P&O Ferries is one of the UK's leading ferry companies, carrying more than 10 million passengers a year before the pandemic and about 15% of all freight cargo in and out of the UK.

P&O was bought by DP World, the multi-national ports and logistics company based in Dubai in 2019. At the time of purchase, its chairman Sultan Ahmed Bin Sulayem described it as a "strong, recognisable brand".

It paid a £270m dividend to shareholders in 2020.

However, like many transport operators, it saw demand slump in the pandemic.

Just a couple of months after the dividends announcement, it said it would cut 1,100 jobs after a downturn in bookings.-BBC

Airline giant Delta warns oil increases mean higher ticket prices

Higher oil prices are set to lead to a 10% increase in air fares, according to the boss of one of the world's biggest airlines.

Delta Air Lines head Ed Bastian told the BBC the final impact "really depends where fuel prices settle".

Oil prices have reached 14-year highs after Russia's invasion of Ukraine.

Emirates, Japan Airlines and AirAsia are among the big carriers to introduce surcharges on their tickets recently to cover the higher cost of jet fuel.

Before the pandemic, in 2019, 200 million customers flew on Delta, making it the world's second biggest airline by passenger numbers.

Mr Bastian said that on a domestic US flight the rise in fuel prices "is probably about $25 on a ticket, that could be anywhere between 5% to 10% at these high levels of oil... and international [flights] will be a bit higher than that".

Delta is planning to introduce fuel surcharges on the international flights which account for about 35% of its business, and increase US ticket prices.

Jet fuel is one of the biggest costs for airlines. Michael O'Leary, the boss of Europe's biggest carrier Ryanair, said recently that the surge in oil prices would lead to "materially higher" airfares this summer.

Many airlines try to protect themselves from these changes by buying fuel in advance. Easyjet and British Airways both said recently that they had done so for 60% of their fuel needs this year.

This year has seen big fluctuations. At the start of January, Brent crude - the international benchmark for oil - was under $80 a barrel, but it recently reached as high as almost $130 as the US and UK said they would end their use of oil from the world's biggest exporter, Russia.

More price swings are likely in the short-term according to the executive director of the International Energy Agency, Dr Fatih Birol. He told the BBC: "I think the $100 [oil] we are experiencing today may not be the highest level of prices we'll be seeing in the next weeks".

He warns that will be felt across all areas of the global economy, because as well as higher transport costs it will lead to more expensive heating and electricity. That would exacerbate the cost of living crisis many countries are facing.

"Every single dollar for oil going to [the] Russian economy will go back as a tank or as a bullet to Ukrainian people", says IEA Executive Director Dr Fatih Birol

Reports from India suggest it is considering tackling high prices at the petrol pumps by buying discounted Russian oil. Many won't purchase it because of western sanctions, and Dr Birol warned: "One shouldn't forget that every single dollar for oil going to [the] Russian economy will go back as a tank or as a bullet to Ukrainian people. One shouldn't forget this moral aspect in my view".

Instead he wants Middle Eastern countries including Saudi Arabia to increase oil production.

The latest IEA forecast says three million barrels a day of Russian oil could be removed from the market. However, that drop in supply could be offset by a fall in demand from China where Covid has led to new lockdowns.

All this unpredictability means Delta does not try to buy its fuel in advance, Mr Bastian said. "Sometimes you win, and often you lose."

Instead Delta has the protection of owning its oil refinery in Pennsylvania, although it has been unsuccessful in recent efforts to try to sell it.

"We're thrilled that we have it right now" says Mr Bastian.

Delta's ownership of this oil refinery in Trainer, Pennsylvania gives it some protection from volatile prices

The Delta chief is also looking to a future where initiatives to tackle climate change by cutting aviation's carbon emissions mean oil prices are less of a concern.

"The existing fossil fuel and jet fuel technology needs to go, and we need to make those investments for the future towards a sustainable future."

This means moving towards sustainable fuels such as biofuels or synthetic alternatives made through chemical processes.

Mr Bastian says that cost is the big impediment, with the production of such substitutes costing "three to five times what's in the marketplace today".

The difference will need to be made by governments investing in scaling up production.

"Scale will bring costs down over time, and will bring more capital from private sources into exploration and looking for new technology. This next five years is critical that to make sure we get government support, not just in the US but around the world."

Returning to profitability after the losses of the pandemic will also help fund the development of new technologies. According to the International Air Transport Association the industry lost more than $51bn last year with global demand 58.4% down on 2019 levels.

Passengers are returning to the skies as Covid restrictions ease, but Asia is seeing a slower recovery than other regions

As Covid restrictions continue to ease, Delta had two record days of sales last week, leading Mr Bastian to be hopeful about the outlook.

"The world is returning to travel and governments have decided that Covid is done."

"We're seeing some of our largest bookings we've ever had in our history. And it's not just in the US, it's internationally as well." However, he adds that Asia is lagging behind other regions.

Crucially demand for lucrative business class fares is also returning. It is currently at about 60% of pre-pandemic levels, but Mr Bastian expects this to rise to 70% by the summer.

He concedes "there's forms of business travel that will never return, that are more efficient to handle over video technology", but adds that leisure travellers are now showing more willingness to splash out on premium services.

Last year Delta recorded a pre-tax loss of $3.4bn and the disruption caused by coronavirus at the start of this year means Mr Bastian thinks that will be added to at the start of this year.

"We will lose some money primarily because of Omicron, it's not fuel prices. But I do expect starting in the second quarter and beyond that we'll be profitable."

You can watch Ed Bastian and Dr Fatih Birol's full interviews on "Talking Business with Aaron Heslehurst" this weekend.

Viewers in the UK can watch the show at on Saturday and Sunday at 15:30 GMT on the BBC News Channel.-BBC

US central bank raises interest rates for first time since 2018

The US Federal Reserve is raising interest rates for the first time since 2018 in an attempt to bring fast-rising prices under control.

The US central bank said it was lifting its benchmark rate by 0.25 percentage points and signalled plans for further rate rises in the months ahead.

The moves come as the economy faces new uncertainty caused by the Ukraine war and coronavirus outbreaks in China.

They are expected to have widespread global repercussions.

By raising rates, the Fed will make it more expensive for households, businesses and governments to borrow.

It is hoping that will cool demand for goods and services, helping to ease price inflation in the US, which hit a new 40-year high of 7.9% last month.

"The plan is to restore price stability while also maintaining a strong labour market," Federal Reserve Chairman Jerome Powell said. "That is our intention and we believe we can do that but we have to restore price stability." 

"We're not going to let high inflation become entrenched," he said. "The costs of that would be too high."

The bank is trying to pull off a "high-wire act" says Diane Swonk, chief economist at accounting firm Grant Thornton.

Move too slowly and inflation could become entrenched, eroding living standards over time. Move too fast and the Fed risks knocking growth in the US and abroad.

"They want to dampen down the pressures of inflation without derailing the global economy," she says.

Fed policy shift

The plans represent a seismic shift in policy from the bank overseeing the world's largest economy. The Fed moved cautiously to raise interest rates after the financial crisis of 2008 and slashed them again when the coronavirus pandemic hit.

The rate increase announced on Wednesday was expected and will push the target range for the bank's key rates to 0.25% to 0.5%.

Projections released after the Fed's meeting show officials also expect the interest rate to rise to almost 2% by the end of the year - a full percentage point higher than they predicted in December.

In addition to rate rises, the Fed will also be winding down other stimulus, including massive purchases of Treasury securities and other assets that it started to stabilize markets at the beginning of the coronavirus crisis.

And while the bank has certainly raised rates before, it has not faced this kind of inflation in decades.

"It's no longer just raising rates to accommodate stronger growth," Ms Swonk says. "Actually chasing inflation as opposed to pre-empting inflation is a very different concept."

US growth

Fed Chairman Jerome Powell said the US economy was well positioned to handle the increases, dismissing fears that it might tip into recession.

"The probability of a recession in the next year or so is not particularly elevated," he said at a press conference following the Fed meeting. "All signs are that this is a strong economy, one that will be able to flourish, not to say withstand, but certainly flourish as well in the face of less accommodative monetary policy."

Bank officials expect the US economy to grow 2.8% this year, and inflation to subside to around 4.3% by the end of the year.

That is still well above the bank's 2% target, raising fears the Fed is moving too cautiously.

In the UK - where inflation hit 5.5% in January - the Bank of England has already raised rates twice and is expected to do so again on Thursday.

Officials in many other countries, including South Africa, Brazil and South Korea, have also acted.

Emerging market risk

By holding off, the Fed created a situation with more uncertainty about how far the it will have to raise rates and how quickly to get inflation under control, says Maurice Obstfeld, professor of economics at the University of California, Berkeley.

That's a problem - and not just in the US, he says.

"If you're in the UK or a wealthy continental European country, it's not a terribly big deal," he says.

"But if you're in a small emerging market where there have been inflationary prices - which is sort of everywhere outside of Asia - then I think you do have to worry about the repercussions, because you are entering a situation of greater fragility on international capital markets and you're on the front line of that."

When the US raises interest rates, investors often redirect money from riskier economies, deflating the value of local currencies.

That also puts pressure on governments - especially those with large amounts of debt in dollars - at a time when budgets were already under strain from the Covid crisis.

Russia's invasion of Ukraine - which has disrupted global oil and food markets - has made the situation even more delicate.

It's not the Fed's job to focus on spill-over effects, says Professor Obstfeld, who is also a fellow at the Peterson Institute for International Economics.

"The ultimate factor that is destabilizing or potentially destabilizing for global markets is out-of-control US inflation," he says.

Companies have attributed the price increases to higher costs from supply shortages, logistics disruptions and wage increases as they compete for workers in a competitive job market.

Despite the gains, US demand has remained strong, boosted in part by increased government assistance to households during the pandemic.

But the rising cost of basics like food and petrol has still put pressure on President Joe Biden, as inflation outpaces wage gains.

Sheilla Thompson, a manager at a social services organisation in Brooklyn, says she has put off going to the doctor, worried about how the extra bill will fit in amid rapidly rising costs of groceries and other essentials.

"I have to cut back," the 45-year-old says. "All kinds of stuff has gone up."

"The way all these prices are shooting up, can't the government put a stop to it?" she adds.-BBC

Travel firms confident they can bounce back in 2022

Travel firm boss, Lee Thompson, says the possibility of higher airline ticket prices will not stop most people from going abroad on holiday this year.

"The need for human connection, as we've all been isolated for so long... Everyone is desperate to meet other people and have new experiences," says the founder and owner of London-based firm, Flash Pack.

The travel company specialises in group adventure holidays for solo travellers in their 30s and 40s. He says the firm has seen a "massive surge in bookings" in recent months, and that people are so desperate to get away that they won't mind paying more for their flights, if aviation fuel prices rise as a result of the sanctions against Russian oil exports.

"Over the last couple of years we've gone from not being able to travel at all, to spending hundreds of pounds on Covid tests each time we want to leave the country," adds Mr Thompson.

"After all that, I don't think increases to flight prices will stop 'Flashpackers' [or other holidaymakers] from doing something they've been dreaming about."

Within the travel industry, the past two years have been especially difficult for independent firms, as they don't have the deep pockets of the multinationals. Yet those that we spoke to are now confident that the holiday sector is going to strongly recover.

Flash Pack had to go into administration in November 2020 due to the lockdowns. "Ninety five per cent of our revenue just disappeared," says Radha Vyas, who co-owns the business with Mr Thompson, her husband.

"We were left with a big office in central London, 55 staff, big overheads, and no money coming in."

The firm was in administration for a few months before the couple were able to win it back after re-mortgaging their home and paying back customers who had been owned money.

"It's really encouraging to see the business taking off again," adds Mr Thompson. "And we're already on track to hit pre-pandemic levels by 2023. Booking on both sides of the Atlantic is booming, but Covid restrictions remain challenging, and we have had to become experts on them."

Lorne Blyth is the the founder of travel firm Flavours Holidays, which organises cooking, painting, pilates, language and photography classes in Italy and Spain.

"Our customers aren't so concerned about rising costs of flights," she says. "Covid meant that some of them haven't managed to go on holiday abroad for over two years. So, it may cost them a bit more now, but they have the money to spend and want to get away."

Back in 2019, Edinburgh-based Flavours operated 235 Italian and Spanish trips, but then none from March 2020 to September 2020.

To secure an alternative revenue stream the firm started running online classes, so that people from all around the world could learn how to paint, or taste wine, from the comfort of their own home. The firm ended up holding around 80 Zoom classes a month.

"It was a great way to keep a sense of community alive with our guests," says Ms Blyth. "Some formed friendship groups online, and then organised to go on one of our holidays together [when they started up again in limited numbers in the autumn of 2020]."

Ms Blyth adds that her firm's bookings for 2022 are now "getting back to 2019 levels". She adds: "It's clear that after two years people are really keen to travel again. The conversations are much more positive with people accepting testing requirements, and realising that it's just part of travel post-Covid."

New Economy is a new series exploring how businesses, trade, economies and working life are changing fast.

Most people now just want to go on overseas holidays again, says Natalie Bannister, the owner of Cornwall-based, Gutsy Girls, which organises group adventure holidays for women. "Based on the interest in our 2020 holidays I think everyone is just ready for an adventure," she says.

Before the pandemic struck, she was organising 70 trips a year. Then in March 2020 she was in Norway preparing one of her firm's holidays when the country went into lockdown.-BBC

Lithuania threatens to stop using Russian oil and gas

Lithuania's president said the country was willing to stop Russian oil and gas imports, in the latest sign of how some EU nations plan to step up penalties on Moscow for invading Ukraine.

"It would create some problems, but those problems would not be critical," President Gitanas Nauseda said.

Lithuania got about 63% of its oil imports from Russia in 2019.

President Nauseda said that figure had now shrunk after its oil refinery stopped buying Russian crude oil.

Western countries hit Moscow with sanctions late last month over Russia's invasion of Ukraine, and the US has banned imports of Russian energy, while the UK is phasing out Russian oil imports.

The EU, which gets roughly 40% of its gas from Russia, has said it will cut reliance on this fuel source by two thirds within a year.

When it comes to Lithuania, President Nauseda told the BBC: "Of course, it depends on time: How long we would need to adjust [to cutting Russian imports].

"But I would say it in other words: We are better prepared for such a cut from Russian energy resources than many other countries in the EU."

Will Russia be able to pay its debts?

How sanctions have changed everyday life in Russia

On 3 March, the owner of Lithuania's Mazeikiai refinery, Orlen Lietuva, said it had agreed a deal with Saudi Aramco for five additional tankers of the commodity taken out of the North Sea.

That, it said, would ensure alternative supplies for Lithuania, Poland and the Czech Republic.

Four days later, the company said that given the situation in Ukraine, it was "prepared for any scenario, including the complete suspension of supplies from the eastern direction."

The warning from Lithuania's president shows how some countries are willing to put further pressure on Russia's economy.

Aside from oil, Lithuania has worked, over the last decade, to reduce its dependence on Russia for natural gas - including by opening its own LNG terminal called Independence.

Electricity independence, though, is still a work in progress, President Nauseda said.

"We still are connected with the so-called Brell system of the former Soviet Union and this connection does not allow a switch to different [European] systems [at present].

However, he said the process switching Lithuania away from Brell "will be completed in 2025".

"Now we will try to speed up this process to disconnect faster," he added.

President Nauseda also acknowledged ongoing concern, including from Ukraine's president, Volodymyr Zelensky, about whether Baltic nations - including Lithuania - could be the next target for Russian President Vladimir Putin.

"Unfortunately this is true. Since Putin declared that the largest tragedy of the 20th Century was the collapse of the Soviet Union, he had in mind the Baltic countries, because they are a consistent part of the Soviet Union, too.

"So, this is a threat. We never had illusions that we will be forgotten," he said.

But he said the country had increased defence spending including on military equipment. And he believes in the Nato military alliance.

"I really believe in the ability of Nato to work effectively as a collective defence organisation," he said. "I see also, this solidarity in action, with additional deployment and military capabilities on the ground.

"And this is probably the best proof for me that Nato is working," he said.-BBC

KFC-owner Yum sales plunge as China Covid cases surge

The owner of KFC and Pizza Hut said sales plunged by 20% in the first two weeks of March as a surge of new Covid cases spread across China.

Yum China said "the situation has rapidly deteriorated" as regional lockdowns have been put in place to stem the outbreak.

More than 1,100 of its stores are temporarily closed or offering takeaway and sales are "still trending down".

China's lockdowns are among its biggest since the beginning of the pandemic.

They include the Jilin province - home to companies such as carmakers Toyota and Volkswagen - as well as technology hub Shenzhen as the number of new infections of the Omicron variant of Covid rise.

Yum China said: "Entering March, the situation has rapidly deteriorated with the highly transmissible Omicron variant causing outbreaks across China, including economically important regions of Guangdong, Shanghai, Shandong and Jilin."

It added: "Our operations are significantly impacted by the latest outbreaks and the tighter public health measures which resulted in a further reduction of social activities, travelling and consumption."

Toyota, Volkswagen and iPhone-maker Foxconn have been forced to close operations in affected regions due to lockdowns.

Although Foxconn said on Wednesday it was able to restart some production in Shenzhen after putting in place a closed loop system on its campus. It means that Foxconn employees working in the space cannot move outside the group.

Foxconn said: "This process, which can only be done on campuses that include both employee housing and production facilities, adheres to strict industry guidelines and closed-loop management policies issued by the Shenzhen government."

Supply chains

There are concerns the restrictions could have an impact on global supply chains.

But Yum China's chief executive Joey Wat, said: "Our robust supply chain management has shielded us from material business disruptions."

Yum China said it had more than doubled the number of stores it had closed or restricted to take-out services from 500 in January to 1,100 in March.

Ms Wat pledged: "We will keep our restaurants open and provide food services to customers wherever it is possible and safe to do so."

"What you see is a ghost city"

Restaurateur Birol Dincli, who owns three steakhouses in Shenzhen's Futian district, expects the situation to be even worse this time around compared to when the Covid pandemic began in 2020.

All restaurants in the Futian business district have been ordered to close. But they are also barred from offering takeaway or delivery services during the lockdown, said Mr Dincli.

"What you see is a ghost city," he told the BBC. "Everything is shut."

Although the lockdown in Shenzhen is set to end on 20 March, Mr Dincli reckons it will go on for much longer. He has asked some of his 30 employees to return to their hometowns to wait out the surge.

"In 2020, we faced the same problem so they are understanding. We motivate them to just wait and (be on) standby," he said.

"Let's see what will happen and then we will keep going."

All 24 million residents of the north-eastern Jilin province were placed under quarantine orders on Monday. People are banned from moving around and anyone wanting to leave the province must apply for police permission.

In the Jilin city of Changchun, residents must stay at home. Only one person from each household is allowed to leave to buy food and other necessities every two days.

Some 12.5 million people living in Shenzhen - dubbed China's Silicon Valley - are also living under a five-day lockdown.

Businesses in many of the affected regions have closed or are having their employees work from home.-BBC

Ukraine war could hit global growth, OECD warns

The war in Ukraine could cut global economic growth by more than one percentage point in the first year after the invasion, a report suggests.

The Organisation for Economic Development (OECD) said the impact could also cause a "deep recession" in Russia if it is sustained.

It also warned that the conflict could push up prices globally by about 2.5%.

The organisation called for targeted financial support for those on the lowest incomes in response.

Costs were already going up due to increased demand as Covid restrictions ease.

But if the moves in commodity prices and financial markets are sustained, consumers could see the rate of inflation, which tracks how the cost of living changes over time, increase even further, the OECD said.

Prices of oil, gas, metals and chemicals essential to fertiliser production, for example, have jumped as concerns over supplies from the region increase.

Although Russia and Ukraine only make up a small percentage of the global economy, they are huge producers of raw materials.

The OECD assumes in its new research that oil prices will remain elevated by one-third, gas by 85% and wheat by 90%.

Outside Russia and Ukraine, the organisation suggested that most pain would be felt in Europe, with up to 1.4% knocked off the economy.

Europe is more dependent on Russia and Ukraine for supplies of energy as well as food. The countries have, in the past, been described as the "breadbasket" of Europe.

Those countries "that have a common border with either Russia or Ukraine" would feel the impact most, while bearing the brunt of refugee flows from Ukraine, the OECD said. The price shock, however, might be felt more keenly by those in developing countries.

It added that governments could soften the latest blow for household budgets with a "targeted fiscal response".

"Well-designed and carefully targeted fiscal support could reduce the negative impact on growth with only a minor extra impetus to inflation."

It suggested that in some countries this could be funded by a one-off windfall tax on oil and gas companies to help households cope with higher bills.

Spain has already announced something similar, although the UK has so far largely resisted. The government argues that a windfall tax would stop companies investing in the UK.

The group of developed economies also said that central banks should mostly stick to the interest rate plans set out before the conflict broke out.

"Monetary policy should remain focused on ensuring well-anchored inflation expectations," it said.

"Most central banks should continue their pre-war plans, with the exception of the most affected economies, where a pause may be needed to fully assess the consequences of the crisis."

The war has dominated headlines in every corner of the globe - but between them, Ukraine and Russia account for a relatively tiny part of the world's economy, just £1 in every £50.

However, it's what they produce - one-third of the world's wheat exports, one-fifth of its gas and a tenth of its oil, not to mention vital manufacturing ingredients such as nickel and palladium - that means the conflict universally hits prosperity.

If those commodity prices remain at recent elevated levels (and that's not certain), the OECD reckons it will dampen - but not eradicate - what it previously expected to be a "brisk pace" of global growth of 4.5%, delaying a return to the norms of the pre-pandemic era.

It's the pockets of households and businesses, however, that'll suffer most, from a painful and prolonged bout of accelerating price rises of staple goods.

The OECD is urging governments to ease the burden, perhaps using windfall taxes to redistribute funds from energy producers to consumers. Spain is doing just that, but other governments are fully aware that they're more reliant than ever on energy giants to step up and help keep supply plentiful and affordable.

But there's a limited amount even the most eager and well-funded government can do. And it's those in places where the state is least likely, or able, to help which may feel the burden most. They are the very places that were already struggling to cast off the economic shadow of the pandemic.-BBC

Be ready to lose all your money in crypto, EU regulators warn

(Reuters) - Consumers risk losing all their money invested in cryptoassets and could fall prey to scams, the European Union's securities, banking and insurance watchdogs said in a joint statement on Thursday.

"Consumers face the very real possibility of losing all their invested money if they buy these assets," the three EU authorities said in a statement.

It marks a racheting up of direct warnings to consumers about cryptoassets by EU authorities, spelling out that consumers have no protections or recourse to compensation under existing EU financial services law.

Regulators are increasingly worried that more consumers are buying 17,000 different cryptoassets, including bitcoin and ether, which account for 60% of the market, without being fully aware of the risks, the regulators said.

"Consumers should be alert to the risks of misleading advertisements, including via social media and influencers. Consumers should be particularly wary of promised fast or high returns, especially those that look too good to be true," the statement said.

Consumers should also be aware of that energy consumption for producing some cryptoassets is high and the environmental impact this has, the statement said.

The Thomson Reuters Trust Principles.

S&P cuts Russia's ratings to 'CC' on debt default risk

(Reuters) - S&P on Thursday lowered Russia's rating to 'CC' from 'CCC-', as the country reported difficulties meeting debt payments due on its dollar-denominated 2023 and 2043 Eurobonds.

Russia's payment woes stem from international sanctions over Moscow's invasion of Ukraine, the ratings agency said. The sanctions have reduced the country's available foreign exchange reserves and restricted its access to the global financial system.

"Although public statements by the Russian Ministry of Finance suggest to us that the government currently still attempts to transfer the payment to the bondholders, we think that debt service payments on Russia's Eurobonds due in the next few weeks may face similar technical difficulties," the agency said.

Peer agencies Fitch and Moody's had also cited concerns about Russia's ability to meet its debt obligations when cutting the country's rating by several notches earlier in March. read more

Fitch said on Tuesday Russia's ratings would be further lowered to "restricted default" if the coupon payments are not made in U.S. dollars, in line with the original terms, by the end of a 30-day grace period. read more

Russian bonds are hovering at deeply distressed levels in very illiquid trading, with most issues trading less than a handful of times a day, according to Refinitiv data. read more

Adding to Moscow's debt troubles, an exemption that currently allows U.S. citizens or residents to receive Russian debt and equity payments will run out on May 25.

After the sanctions exemption deadline and until year-end, Russia is due to pay nearly $2 billion more on its external sovereign bonds.

Some creditors have received payment, in dollars, of Russian bond coupons which fell due this week, two market sources told Reuters on Thursday. Some other creditors said they are yet to receive their funds but were optimistic they were on the way, according to the report. read more

The Thomson Reuters Trust Principles.

Boeing in talks for landmark Delta MAX order

(Reuters) - Boeing Co (BA.N) is edging towards a landmark order from Delta Air Lines (DAL.N) for up to 100 of its 737 MAX 10 jets, a model it is battling in separate talks to get approved before year-end rule changes, people familiar with the matter said.

The deal, if confirmed, would be the first order from Delta for Boeing's best-selling single-aisle airplane family, and the first major Boeing order for the carrier in a decade.

It comes as Delta - the only major U.S. carrier without a 737 MAX on order - reshapes its fleet in anticipation of a swift recovery from the pandemic. read more

Boeing and Delta, which have had a frayed relationship in past years, are working on details of an order that could consist of 100 aircraft, many or all of which could involve the largest variant, the 737 MAX 10, two of the people said.

If a deal is reached, an announcement could come as soon as next month, one of the people added.

Boeing and Delta declined to comment.

Industry sources cautioned negotiations typically go down to the wire and no final decision had been taken. There has been speculation about a MAX order from Delta in the past, without a deal coming to fruition.

The MAX 10 competes with Airbus' strongest-selling model, the A321neo. Both planes are aimed at the fast-growing segment of the market just above 200 seats.

The A321neo, which leasing company Air Lease (AL.N) described on Wednesday as the "hottest airplanes in the market", has a commanding lead in sales, but Boeing has scored a series of contract wins in the past year.

Airbus also declined to comment.

In September, Airline Weekly quoted Delta Chief Executive Ed Bastian as saying there was a place for the MAX at Delta if the carrier could figure out how to bring them in. read more

Asked about the MAX in London earlier this month, he told reporters Delta was always looking at all airplane models.

CERTIFICATION TALKS

For Boeing, which is entrenched in broader certification and industrial headaches, the deal would cement a major new customer for its cash-cow narrowbody. read more

The planemaker is facing a separate but increasingly high-stakes battle to win certification of the MAX 10 before a new safety standard on cockpit alerts takes effect at year-end.

The deadline for changes was introduced as part of broader regulatory reforms at the Federal Aviation Administration following fatal crashes of a smaller MAX model in 2018 and 2019.

Boeing has held talks with some lawmakers about the potential of asking for more time, but has not formally sought an extension to address a flight deck issue, the people said.

Asked about the possibility, an FAA spokesperson said, "safety dictates the timeline of certification projects".

Only Congress can extend the deadline if the FAA does not certify the MAX before end-year.

Boeing has raised with some lawmakers the potential impact on jobs and production if the 737 MAX 10 is not approved, the people said.

"We continue to work transparently with the FAA to provide the information they need, and we are committed to meeting their expectations to achieve 737-10 certification,” Boeing said in an emailed statement.

It did not comment directly on any talks with lawmakers but said the jet would support "tens of thousands of jobs at Boeing and across our supply chain, including in Washington state".

The issue is also likely to get entangled in the confirmation hearings of the next FAA administrator. Current FAA Administrator Steve Dickson is set to step down March 31.

The Seattle Times this month cited an earlier Boeing submission to the FAA citing an estimated cost of full compliance for the MAX at "more than $10 billion".

The Thomson Reuters Trust Principles.

British fashion chain Ted Baker draws U.S. takeover interest

(Reuters) - Sycamore Partners is in the early stage of making a possible cash offer for fashion retailer Ted Baker (TED.L), the private equity firm said on Friday, in the latest sign of strong U.S. interest in taking over British entities.

New York-based Sycamore, which specialises in deals in the struggling retail sector, has until April 15 to make a firm offer for the London-listed Ted Baker. Sycamore said there was no certainty an offer would be made and did not disclose what the terms might be for any deal.

Ted Baker said it has not received an offer but would evaluate any proposal, although it was confident in its independent prospects.

Shares of the upmarket retailer jumped 20% on Friday but were still trading just above a pound each, compared with the nearly 30 pounds it was worth in 2015, giving it a current market valuation of nearly 220 million pounds ($289.26 million), Refinitiv Eikon data showed.

Takeover interest in British companies, ranging from defence groups to a leading supermarket, is its highest in years, as the pandemic and uncertainties linked to Britain's departure from the European Union have reduced valuations.

Ted Baker is in the middle of three-year turnaround plan under boss Rachel Osborne as it tries to boost its online presence and rebuild its image after profit warnings and accounting issues.

Osborne took charge in 2019 in a management reshuffle that included the exit of former chief executive Ray Kelvin following allegations of inappropriate behaviour. Kelvin has denied the allegations and retains a nearly 12% stake in the company he founded in 1988 in Glasgow.

Ted Baker, which has nearly 400 locations mostly in Europe, North America and the United Kingdom, said in February it was "cautiously optimistic" about outlook for the current year as people slowly return to working in offices. read more

($1 = 0.7606 pounds)

The Thomson Reuters Trust Principles.

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