- In AIR TRAVEL NEWS, the Asia-Pacific region mulls international travel, Brussels clashes with US over Airbus, Qantas cuts jobs, Easyjet raises money and Swissport halves its UK workforce
- In RETAILER/CONSUMER GOODS NEWS, UK shoppers return, pubs and restaurants push for VAT cut and retailers withhold rents while Naked Wines and Premier Foods benefit from lockdown drinking and home baking
- In INDIVIDUAL COMPANY NEWS, Facebook faces an ad backlash, Amazon’s Deliveroo investment gets the OK and Olympus cuts out cameras
- AND FINALLY, I bring you the world’s oldest golden retriever…
AIR TRAVEL NEWS
So Asia considers air travel, Brussels and the US clash over Airbus, Qantas cuts jobs, Easyjet raises money and Swissport cuts half of its UK staff…
Asia-Pacific makes a tentative return to international travel (Financial Times, Robin Harding, John Reed and Jamie Smyth) shows that the Asia-Pacific region is trying to restart the return to international travel as 440 Japanese business people are due to take “exceptional” flights to Vietnam over the next three days. Countries including Thailand, Vietnam, Japan, Australia and New Zealand are still in talks over how to allow travel whilst also protecting their respective populations. Plan for travel corridors with Europe to be given priority (Financial Times, Jim Pickard and Tanya Powley) shows that similar negotiations are going on in Europe as well. The main issues being faced by all these countries are that they don’t want to import new cases, testing capacity is variable and they have to have protocols in place to reimpose stricter controls if there is another spike in cases. Still, they are all having to make tricky decisions between risk and economic disaster.
Meanwhile, Brussels warns new US tariff threat over Airbus will harm both sides (Financial Times, Jim Brunsden and Aime Williams) shows that the Trump administration’s announcement on Tuesday that it would impose tariffs on $3.1bn of European products isn’t going down well at the European Commission. The EC said that this will just pile on even more uncertainty and put even more pressure on businesses at a time when they need more support. Last year, the World Trade Organisation gave the US the right to impose tariffs of up to 100% on $7.5bn of European goods because it deemed the support given to Airbus to be illegal. Thus far the US has not exercised the right fully, but it could just go ahead. Interestingly, the US is
at an advantage because a similar case going the other way (about the US “over-helping” Boeing) has yet to be concluded. The decision was meant to be made in July, but many believe that this won’t now happen until September. * SO WHAT? * This comes at a rather delicate time for both sides and it seems to me that this is just another example of Trump trying to burnish his tough negotiator image to appeal to his (potential) voter base in the lead-in to the presidential elections. A lot of this negotiation stuff is noise, but unfortunately, negotiator posturing is likely to result in a lot of needless business failure.
Elsewhere, Qantas slashes jobs and taps shareholders for survival plan (Financial Times, Jamie Smyth) highlights the dramatic actions announced by Australia’s flag-carrier that it will cut 6,000 jobs, ground 100 of its aircraft for at least one year and raise A$1.9bn in equity to get it through the pandemic and beyond as part of a three-year plan. Easyjet bolsters finances with £450m share issue (The Times, Robert Miller) gives yet another example of an airline trying to boost its coffers in order to survive as it surprised the market yesterday by publishing its (rather disastrous) half-year results. All of the nightmares that the airlines are experiencing at the moment continue to have knock-on effects as per Swissport halves UK workforce in face of pandemic turbulence (Daily Telegraph, Simon Foy) as the airport baggage handling company had to react to a 50% fall in revenues this year. The company said that it had to make big cuts in order to get access to emergency funding from lenders and investors. * SO WHAT? * Times are obviously tough for anyone involved in the air travel industry, whether it is the companies who make the planes, airlines who transport everyone between destinations or the people who sort out the luggage. Drastic measures are being taken but no-one really knows how long this lack of air travel is going to go on for. Once again, a cure/vaccine for the coronavirus can’t come quick enough – and as I have said before, if/when it does, I expect confidence to skyrocket almost overnight. It IS going to happen at some point – let’s hope it’s soon 👍
RETAILER/CONSUMER GOODS NEWS
UK shoppers return – but all is not cosy on the high street – and it seems that lockdown has turned us all into drinkers and bakers…
In English shoppers return – but economy faces long road to recovery (The Guardian, Richard Partington) we see that the latest figures from Springboard say that footfall, in the week commencing 15th June, was up by 45% versus the previous week (don’t get too excited, though – the shops weren’t open last week 😂) but overall numbers were unsurprisingly way down on what the were in the same week last year. The next thing they’ll tell us is that bears 💩 in the woods 😂. Actually this article does a really good snapshot of lots of areas – I recommend that you read it.
Although this is mildly good news, Hospitality sector calls for VAT cut to ease burden of social distancing (Daily Telegraph, Hannah Uttley) shows that embattled hotels, pubs and restaurants are calling for a reduction in VAT to 5% to help them out and attract customers and Retailers withhold quarterly rent after landlords standoff worsens (The Times, Louisa Clarence-Smith and Ashley Armstrong) shows that landlords’ worst fears were realised yesterday when quarterly rent became due as William Hill, JD Sports, Primark, Boots and Stonegate Pubs were among the
companies to refuse to pay. * SO WHAT? * All this twiddling around the edges is fine, but the MAIN thing is NOT the numbers on the high street – it’s WHETHER THEY SPEND (a lot) that’s important. I suspect that some people may feel the need to “do their bit” and support local shops by spending, but when wallets get tightened over the next few months by rising unemployment and a tailing off of furlough, things really will get tricky.
Meanwhile, Naked Wines’ sales fizzing 81pc higher in lockdown (Daily Telegraph, Hannah Uttley) highlights something to toast for the online wine merchant as it experienced an 81% hike in sales in April and May as we all turned into a nation of drunkards (just kidding – a nation of “home tipplers”, maybe) and booze hoarders. Things got so crazy that it had to stop orders from new customers in the UK last month! Talking of crazy, Britain going crazy for baking, says Premier Foods (Daily Telegraph, Hannah Uttley) shows that Premier Foods, which owns brands like Angel Delight, Homepride sauces and Bisto gravy among others, saw “astronomical” demand for its flour brands McDougalls and Be-Ro during lockdown. The company said that there had been huge demand for flour and baking mixes. Premier Foods’ share price hit its highest level for six years as it shot up by 15% in trading yesterday. * SO WHAT? * As always, it’s great to see “winners” emerging from this terrible situation. It will be interesting to see, however, whether demand just falls off a cliff as people flee headlong into the high street, drunk with new-found freedom (and their latest order from Naked Wines) and whether their new “love” of baking continues beyond watching re-runs of The Great British Bake-Off.
INDIVIDUAL COMPANY NEWS
Facebook to be hit by its largest ever advertising boycott over racism (The Guardian, Alex Hern) shows that the #StopHateforProfit campaign I mentioned this week has gathered further momentum as more companies have committed to pull advertising from the platform in protest over its policing of hate speech. Facebook just reiterated its ongoing efforts to remove hate speech but didn’t commit to anything more than that.
In other “well-I-never” developments, UK competition watchdog in U-turn on Deliveroo-Amazon deal (Financial Times, Tim Bradshaw, Kate Beioley and Javier Espinoza)
highlights the Competition and Markets Authority announcement yesterday that it would provisionally approve Amazon’s multi-million dollar purchase of 16% of Deliveroo, reversing its previous assessment that it would adversely affect customers. This signals the end of a year-long investigation. What a waste of time that was! The CMA did add, though, that if Amazon bought an even higher stake, it might lead into another investigation.
Then Olympus calls time on camera business after 84 years (Financial Times, Kana Inagaki) heralds the end of an era as the Japanese company said that it would sell the camera division to Japan Industrial Partners, a private equity group that also owns the Vaio brand – remember them?? The company has been associated with cameras for 84 years, but the fact of the matter is that these days the group makes about 80% of its sales from medical devices as smartphones have essentially killed off the camera business.
…in other news…
I thought I’d end today on a high with ‘World’s oldest’ golden retriever named Augie celebrates her 20th birthday (The Mirror, Luke Matthews https://tinyurl.com/y8h4pynz). What an amazing achievement!
Some of today’s market, commodity & currency moves (as at 0752hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
|FTSE 100 *||Dow Jones *||S&P 500 *||Nasdaq*||DAX *||CAC-40 *||Nikkei **||Shanghai **|
|Oil (WTI) p/b||Oil (Brent) p/b||Gold Per t/oz||£/$||€/$||$/¥||£/€||$/₿|
(markets with an * are at yesterday’s close, ** are at today’s close)