EasyJet to cut 30pc of workforce, Stagecoach liquidity improves
London open
The FTSE 100 is expected to open 70 points higher on Thursday, having closed up 1.26% at 6,144.25 on Wednesday.
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Bus operator Stagecoach said it expected full year adjusted earnings per share of between 12.5p and 14p as it reported an increase in available liquidity to deal with the coronavirus impact. The company on Thursday said available liquidity of £814m was £308m higher than reported on April 3 after it issued £300m of commercial paper under the Bank of England's Covid-19 corporate financing facility.
EasyJet plans to cut about 4,500 jobs, or 30% of its workforce, as the airline prepares to restart flying with a smaller fleet and reduced demand as a result of the Covid-19 crisis. The company said it expected to fly about 30% of capacity in its fiscal fourth quarter compared with 2019. Its fleet size at the end of the 2021 year will be about 302 aircraft - 51 planes lower than expected. EasyJet said demand for air travel was unlikely to reach 2019 levels until 2023. Booking trends on resumed flights are encouraging, the company said. Demand for summer is increasing from a low base and winter bookings are well ahead of a year earlier, including customers rebooking cancelled flights.
Cineworld said on Thursday that its lenders have agreed to waive the leverage covenant on its credit facility for the June testing date, and increased its leverage covenant to 9.0x net debt-to-EBITDA for the December testing date. The FTSE 250 company said it also agreed the terms of $110m (£89.73m) of additional liquidity through an increase in its revolving credit facility. It said it had secured credit committee approval to apply for an additional $45m through the Coronavirus Large Business Interruption Loan Scheme in the UK, and was expecting to shortly begin the process to access $25m through the US government CARES Act.
Newspaper round-up
A property development company behind some of London’s most prestigious developments has told staff they could be asked to return to the office, even if they can do their job from home. Galliard Homes, which describes itself as London’s leading property developer, sent a memo to staff outlining the conditions under which it intends to resume operations as lockdown restrictions begin to ease. – Guardian
More than one in six young people worldwide have lost their jobs due to the havoc wreaked by coronavirus - raising fears of a “lockdown generation” whose financial prospects are blighted for decades to come. Under-30s have been hit particularly hard as the outbreak ravaged jobs in industries such as hospitality and insecure work in the so-called gig economy, the International Labour Organisation (ILO) warned. Young women are expected to have lost out the most. – Telegraph
As many as one million hotel, pub and restaurant jobs could be saved if the two-metre social distancing limit is halved, industry chiefs have said. Hospitality bosses welcomed comments from Boris Johnson on Wednesday revealing he has instructed the Government’s Scientific Advisory Group for Emergencies (SAGE) to review the guidelines. – Telegraph
As many as 70 percent of homeowners who have taken mortgage holidays do not need to extend their payment breaks, Britain’s banking industry claimed as it raised concerns about plans to prolong the scheme. UK Finance, the industry body for more than 250 firms, has written to the Financial Conduct Authority to warn that proposals to allow borrowers to extend a three-month holiday on repayments to up to six months imposes a blanket approach that is not in the best interest of homeowners. – The Times
The UK has lost its crown as Europe’s top destination for foreign investment for the first time in more than two decades after being overtaken by France. However, it attracted almost a third of all overseas digital technology investments across Europe last year, more than France and Germany combined, as the country’s status as a hub for innovation generated a “spectacular” surge in activity. The United States superseded the European Union last year as the UK’s biggest source of foreign investment, as Brexit transforms global economic ties, according to EY’s annual attractiveness survey. – The Times
US close
US stocks finished in the green on Wednesday, as optimism regarding the reopening of the economy and a potential Covid-19 vaccine offset fears around a heightening of tensions between the world's two largest economies.
The Dow Jones Industrial Average ended the session up 2.21% at 25,548,27, the S&P 500 added 1.48% to 3,036.13, and the Nasdaq Composite was ahead 0.77% at 9,412.36.
At the open, the Dow has gained 256.07 points, following on from gains seen in the previous session as investors returned from the Memorial Day long weekend to news that pharmaceutical firm Novavax had begun trials on a Covid-19 vaccine in Australia.
While vaccine hopes drove Tuesday’s rally, news that the White House was considering sanctions on Chinese firms and officials due to the nation's new laws granting it executive powers in autonomous Hong Kong knocked stocks off their session highs.
Donald Trump also vowed to provide an update on the government's response to the matter by the end of the week.