Outlook: Little harmony as Corus becomes a marriage made in hell

If the consequences were not so serious, it would almost be laughable. "The Board of Corus regrets to announce ... that the supervisory board of Corus Nederland has decided to reject the management board's recommendation to proceed with the sale [of the company's aluminium interests]". In Britain we don't generally have supervisory boards, and now we know why.

That sale, it turns out, is crucial to group plans to restructure the UK steel interests. The idea was to use the £543m proceeds to pay for any necessary closures, which most likely would involve the complete mothballing of one of British Steel's three remaining integrated steel plants. Unfortunately, Leo Berndsen, chairman of the Dutch supervisory board, has taken umbrage. Backed by the worker representatives who make up a majority of the board, he wants the British losses stemmed, sure enough, but he also wants the money spent in Holland, not in Britain.

Mr Berndsen's intervention may, and indeed should, be overturned in court, but in the meantime he has succeeded in piling on the agony for a share price already deep in the doldrums, and a British workforce now so punch drunk with layoffs and closures they must begin to wonder whether this time the company can even afford the redundancy cheques. After yesterday's collapse to just penny stock status, Corus shares are little more than an option on the company not going bust.

This was not the way it was meant to be. When British Steel merged with Hoogovens of Holland four years ago, it seemed if not quite a marriage made in heaven at least a relatively satisfactory marriage of convenience. The Dutch and British have a history of working well together with a number of successful Anglo-Dutch companies to point to by way of reassuring precedents. It seemed the right approach to the challenge of the French and German steel goliaths being created out of national consolidation.

But in truth the two have been quarrelling ever since, with the partnership staggering from one crisis to the next. Sir Brian Moffat, that old war horse of a British Steel boss, seemed briefly to reimpose his authority on the sparring pair, but he hadn't reckoned with the supervisory board, which though it is meant to act in the interests of the company as a whole appears intent only on protecting the rights and privileges of the group's Dutch workforce.

As it turns out, the Brazilians would have been preferable to the Dutch, or perhaps even the South Koreans, whom Sir Brian briefly thought about merging with too. On second thoughts, perhaps not. If the Koreans had got their way, there wouldn't have been any steel plants left in the UK at all by now. There may not be much of a future for steel making in the UK anyway. When British Steel closed Llanwern two years ago, it famously said that a line had been drawn in the sand, that it had brought UK productive capacity into line with UK demand, and as a consequence would not need to reduce its capacity any further.

No such luck. The relentless decline of British manufacturing industry means that demand has continued to fall since then while the strength of the pound against the euro has intensified the problem of cheap Eastern European imports. The recent reversal of currency movements doesn't seem to have brought much relief.

Already the talk is of divorce or perhaps worse. One of the company's main banking facilities, for €1.4bn (£960m), expires next January and, with Corus still haemorrhaging cash, there's some possibility it won't be extended. Steel is an incredibly cyclical industry, and I guess there is some possibility that as in the past the British bit of Corus will again rise phoenix like from the blast furnace as soon as the necessary restructuring is complete. Ever since I've been in financial journalism, British Steel has moved from crisis to renaissance and then back to crisis again. For that reason alone, it's hard to believe this latest malaise is the final denouement, but another renaissance for British Steel? Somehow that doesn't seem likely.

Low-cost airlines

Here's a cautionary tale about low cost airlines. Quite recently I embarked on the tedious task of finding low-cost flights for me and my family to somewhere in central Italy for our summer hols. After several hours surfing the net for the best deal, I eventually settled on Ryanair to Bologna, at a total return cost after taxes and various other add ons of £136 per passenger. Not bad, you might have thought, for Saturday flights in the middle of summer.

Imagine my irritation then, when browsing the net the other day I discovered that Ryanair had introduced a second flight on the same route at a time which would have been much more convenient to me but at a price which equated to about £44 per passenger return. Tough luck, says Ryanair. That's just the way we operate as a low cost airline. It's the same as you buying a suit and then finding it had been knocked down to a third of the price in the sales. You've bought certainty and peace of mind over the possibility of getting a bargain.

As far as I'm concerned Michael O'Leary, Ryanair's chief executive, can take his his explanation and stick it up his proverbial. I would boycott any store that did that to me, and I don't intend to fly Ryanair again until I'm of pensionable age and have the time to get my money back by taking him up on his £1 bargain basement offers. I'm not in the business of subsidising other passengers, and nor, I imagine, are a growing number of others like me.

Still, I shouldn't complain, for no one can quarrel with the proposition that the low-cost operators have in general enormously improved the lot of the travelling public. For every discounter that gets taken over or goes bust, another seems to pop up, witness the launch yesterday of Now, which seems to answer my particular complaint by promising that it will charge the same for every seat on a first come, first served basis even if the flight is largely empty.

At least Ryanair has stayed loyal to the low-cost model. The same thing cannot really be said of Easyjet, which has mixed its fleet, started flying from mainstream airports, given itself the management headache of integrating Go, and started charging prices which at popular times and destinations are routinely more than those offered by the full service airlines. The next thing is it will be offering free coffee, plastic meals and flying out of Heathrow. Bring back Stelios is what I say.

On the "if you cannot beat them join them principle", the full service airlines have meanwhile tailored their flights to meet the low-cost operators head on in the discount market for air travel. One look at the Easyjet share price, which has underperformed Ryanair by about 40 per cent since the Go takeover, tells you all you need to know about what the market thinks of the way the two pioneers of low-cost travel are being positioned.

Carlton/Granada

Office of Fair Trading director-generals tend to fall into two categories when it comes to mergers – when in doubt clear, and when in doubt refer. The present incumbent, John Vickers, seems to fall into the latter category, but the length of time it has taken him to recommend reference of Carlton's merger with Granada was beginning to make the City believe otherwise.

Can it really take so long to decide on what on the face of it would seem a complete no brainer? ITV is sinking fast, and it desperately needs this merger to happen. Little purpose is served by a Competition Commission investigation which merely imposes the same conditions as the OFT could have come up with itself. If Mr Vickers was thinking in these terms, he plainly thought better of it. Opposition from advertisers and rival broadcasters is still high, and they must have their say. But if it is going to be done at all, for goodness sake let's get on with it.

jeremy.warner@independent.co.uk