He said one lessor, when asked the price of two Rolls Royce engines, had “thrown the aircraft in for free”.First Choice reported pre-tax profits in the year to October of £45.5m, down 18 per cent on the previous year following goodwill payments of £21.4m and restructuring costs of £5.7m. Underlying profit was down 9 per cent at £72.5m, in line with City expectations.Analysts said First Choice, which aims to generate half its turnover from mainstream package holidays and half from specialist activities, had proved the resilience of its business model.. Hollinger International, publisher of The Daily Telegraph, has seen its credit rating downgraded by Moody’s, which also warned about a potential $260m (£165m) tax liability. Debt now stands at about $560m, which Moody’s said was relatively high for a company of its size. The company sold a large chunk of its portfolio with the divestment of its local Canadian titles, leaving it focused on the Telegraph and the Chicago Sun-Times.Christina Padgett, a vice-president at Moody’s, said: “There’s no question about the quality of its assets. This is about the amount of debt, the risk to investors.”No one at Hollinger, in London or New York, was available for comment. The company is suing the Sunday Express, saying it was “grossly libelled” by a report on its refinancing.

Hollinger recently said its debt “is not excessive” and it has “substantial” cash in hand.. Tim Bowdler, the chief executive of Johnston Press, the publisher of the Yorkshire Post and dozens of other local papers, insisted the Government must relax its powers to intervene in newspaper takeovers. It allows ministers to intervene in proposed acquisitions, in order to protect editorial independence. Such a clause only applies to newspapers and the defence industry.He said newspaper owners wanted a “level playing field” with other industries and that competition law alone ought to be applied to newspaper deals but, if the Government is determined to keep the power, at least smaller deals should be excluded.

Mr Bowdler has lobbied the Department of Trade and Industry for local weekly titles to be exempted from the rule.”We need a degree of certainty when we look at potential acquisitions…. We want to see a loosening of the special interest test,” Mr Bowdler, who is also president of the Newspaper Society, said.In 1990, similar powers were used to block an attempt by David Sullivan, a publisher of pornography, from buying the Bristol Evening Post, a daily newspaper. It is thought that despite depoliticising merger decisions in other sectors, ministers want to be able to block pornographers, political extremists and other “undesirables” from buying newspapers.Mr Bowdler’s comments accompanied an upbeat trading statement from Johnston, which reported 2.8 per cent growth in advertising revenues for continuing businesses in the five months to 30 November, up from 1.2 per cent in the first half.The company said the market should expect full-year 2002 profits to come in at the top end of City expectations, pointing to a figure of about £97m.. Investors in the water sector breathed a sigh of relief yesterday after Severn Trent, the UK’s biggest quoted water company, said it would not be cutting its dividend. This is when the current regulatory price control period ends.Shares in Severn Trent, the worst-performing water company this year, rose 4 per cent in response to close 26.5p higher at 659p. The shares are on a dividend yield of 7.3 per cent.The re-assurance on the payout came as Severn Trent reported half-year results at the top end of analysts’ expectations.

Profit before goodwill, amortisation and exceptional items in the six months to the end of September rose 1.2 per cent to £131.8m. Even allowing for an additional £4m of profit made in the first half because of the way Severn phases water charges for big industrial customers, underlying profits were still comfortably ahead of the mid-range forecast of £120m.Robert Walker, the chief executive, said that Severn Trent had once again outperformed its regulatory targets and added that the group’s Biffa waste business and its services division, which is 80 per cent-based in the US, had performed well in difficult trading conditions.. Britain’s financial regulators yesterday moved swiftly to dampen fears that the UK’s banking system was vulnerable to a crash in the housing market. It said banks were “vulnerable” to rising prices, mounting debt levels and the impact of the stock market crash on insurance companies and household wealth.”The debt service burden of mortgage borrowers, even at the current low interest rates, is beginning to reach uncomfortably high levels, particularly with respect to those in the Greater London area,” it said. “S&P is particularly concerned with the vulnerability of lenders to a hard landing in the rapidly expanding specialised mortgage market.” The UK was ranked as a potential risk alongside the United States, Ireland, the Netherlands, Panama, Portugal and Spain. Countries “already under stress” included Brazil, China and Egypt.But the Bank, which publishes its twice-yearly financial stability review today, played down fears the housing market could trigger a full-blown financial crisis. Alastair Clark, executive director for financial stability, said: “The UK banking sector remains strong and well capitalised.