Betfair Official Blog

Backing British Firms To Fail

RULE Britannia.

Well, you would rule the country, or at least own a sizeable chunk of it had you backed some of the nation's biggest companies to fall this year.

Alliance & Leicester has been hit by the credit crunch. It has then been reversed over by the credit crunch and left, if not for dead, then at least bleeding heavily.

As reported, profits in the country's seventh-biggest bank, in the first six months of the year, have fallen by...99%. Profits of £290m have been slashed to £2m.

One year ago, A&L shares were trading at 1,032.00. Last night, they closed at 340.5. A spread betting sell on A&L shares on Tradefair over the last year would have bought big rewards.

That's a difference of 691.5 points. A sell at £1 a full point would have earned a punter £691.5. And for minimal risk.

Two years ago, Credit Agricole of France thought about paying almost £6bn for A&L. Now A&L has accepted a £1.26bn takeover by Spanish bank Santander, who already own Abbey.

Someone wins. Someone loses.

And what of BT? Have its number been outsourced to India?

BT shares are at four-year low. Yesterday, BT shares fell 12 per cent, or 11.99 per cent, if we are dealing in precise numbers.

BT profits fell 7 per cent from £658million in the first quarter of 2008 to £618million for period April to June 30 2008.

So yesterday the shares in BT fell by 23.7p to 173.9p.

Dear, Tradefair punter, how we can smile.

A sell yesterday morning of just 10p percentage point would have earned the savvy punter £23.70. Small fry? Not a fortune, for certain.

But surely better then owning a BT share and taking a hit? And what of you had bet £1 a percentage point? What then?

Completing our triumvirate of gloom is BA?

Says Willie Walsh, chief executive of BA: "We are in the worst trading environment the industry has ever faced. The combination of unprecedented oil prices, economic slowdown and weaker consumer confidence has led to substantially lower first-quarter profits."

He's not wrong.

BA said its fuel costs in the first quarter from April to June had £233m to £706m. It forecast a rise of £1bn to more than £3bn for the financial year to the end of March.

So BA puts fares up. But passengers have less money to spend. Seats on flights are unsold. BA has to put its fares up some more...

And could you profit from BA's misfortunes? One year ago, a share in BA would have cost you 386.25p. Today, that same share is going for 255.25p. A sell one year ago and you'd be flying high.

Not all of Britain is losing...