Financial Times Europe - 06.03.2020

Friday6 March 2020 ★ 11

The Financial Times Limited 2020© Week 10

Peugeot-owner PSA and Germany’s

BMW are leading in the race to cut car

emissions in Europe, pulling ahead of

rival Volkswagen. Only two months

into an EU regime forcing carmakers to

lower their average emissions, winners

and losers are already emerging.

Analysisi AGE 14P

BMW and PSA pull ahead

in drive to cut emissions

PAT R I C K M C G E E— SAN FRANCISCO

Anthony Levandowski, the former

head ofUber’s self-driving efforts, has

declared bankruptcy after being

ordered to pay $179m for damages

related to his alleged theft of trade

secretsfromGoogle.

Mr Levandowski was one of the found-

ers and a key engineer for Google’s self-

driving project in 2009, which went on

to becomeWaymo. Shortly after he left

the unit in 2016, he co-foundedOtto, an

autonomous trucking company later

acquired by Uber for a reported $680m.

Just months later Waymo sued, accus-

ingMr Levandowski f absconding witho

trade secrets. When he refused togive

evidence, Uber fired him in May 2017.

The awsuit between Google and Uberl

was settled in 2018, but the stakes for Mr

Levandowskiescalated o a possible 10-t

year prison sentence after federal prose-

cutors charged him in August on 33

counts of theft and attempted theft of

trade secrets from Google.

In December, an arbitration panel

found that Mr Levandowski and his col-

league Lior Ron engaged in unfair com-

petition when they left Google, founded

Otto and sought to hire Google employ-

ees. It found Mr Levandowski liable for

$127m. A San Francisco county court on

Wednesday added interest and attor-

neys’ fees to be paid to Google.

A representative for Ramsey & Ehr-

lich, Mr Levandowski’s lawyers,

declined to comment. The court order

saidMr Levandowski, “evidently fear-

ing potential criminal prosecution for

theft of trade secrets”, asserted hisFifth

Amendmentconstitutionalprivilege

against self-incrimination “from the

very outset of discovery in April 2017”.

Whether Uber pays for Mr Levand-

owski’s fines is subject to a dispute.

In a form 10-K filing to the Securities

and Exchange Commission this week,

the ride-hailing company said the reso-

lution of the matter “could result in a

possible loss of up to $64m or more”.

Court filings said Mr Levandowski

estimates his assets between $50m and

$100m, as well as $100m to $500m in

liabilities. Mr Ron, who remains an Uber

employee, settled with Google for $9.7m

this year.

Google’s trade secrets lawsuit leaves

Uber self-driving ex-chief bankrupt

Companies / Sectors / People

Companies
21st Century Fox........................................ 1
Advent International............................. 13
Air France-KLM....................................... 20
Amazon......................................................... 10
American Airlines................................... 20
Audi................................................................. 14
BMW................................................................ 14
Betaworks....................................................... 1
BlackRock..................................................... 12
Blackstone.................................................... 13
Blackwells Capital.................................... 12
Blue Apron.................................................. 10
CVC.................................................................. 13
Carlyle.......................................................12,
Carnival.........................................................
Cinven............................................................. 13
Citroën........................................................... 14
Clorox............................................................ 20
Clover Biopharmaceuticals.................. 7
Cole Haan.................................................... 19
Colony Capital........................................... 12
Comcast........................................................ 10
Continental...........................................12,

Credit Suisse.............................................. 12

Daimler.......................................................... 14

Databank...................................................... 12

Digital Bridge............................................. 12

Disney............................................................ 10

Dufry.............................................................. 20

easyJet.......................................................... 10

Facebook...................................................... 13

Finnair........................................................... 20

Flybe........................................................10,

General Electric........................................ 12

GlaxoSmithKline......................................... 7

Goldman Sachs...................................10,

Google............................................................. 11

Guggenheim Securities........................ 12

Gunvor........................................................... 19

Harris Associates..................................... 12

HelloFresh............................................10,

Hewlett-Packard...................................... 12

Honeywell.................................................... 19

Hugo Boss.................................................. 20

Instagram..................................................... 13

Inter Milan.................................................... 13

JPMorgan Chase..................................... 10

Johnson & Johnson................................. 7

Juventus........................................................ 13

KDDI................................................................ 10

Kone................................................................ 13

Kroger........................................................... 20

LG Uplus...................................................... 10

Lupa Systems............................................... 1

Marathon Petroleum............................ 20

Mercedes-Benz......................................... 14

Moderna.......................................................... 7

Morgan Stanley........................................ 10

Netflix............................................................. 10

News Corp...................................................... 1

Norwegian Cruise Line....................... 20

Opel................................................................. 14

Otto.................................................................. 11

PSA.............................................................12,

Peugeot......................................................... 14

Pirelli............................................................... 13

Porsche.......................................................... 14

ProSiebenSat.1.......................................... 20

Real Madrid................................................. 13

Relx.................................................................. 19

Royal Caribbean...................................... 20

Ryanair.......................................................... 20

SBI..................................................................... 12

SBI Cards...................................................... 12

SK Telecom................................................ 10

Sanofi................................................................ 7

Seat.................................................................. 14

Seven & i Holdings............................... 20

Sherwin-Williams..................................... 19

SoftBank....................................................... 10

Southwest Airlines................................. 20

Stobart Air.................................................. 10

Suning............................................................ 13

Tata.................................................................. 13

Thyssenkrupp............................................ 13

TikTok............................................................ 13

Trafigura....................................................... 19

Uber.................................................................. 11

United Airlines............................................ 9

Vauxhall........................................................ 14

ViacomCBS.................................................. 10

Vice Media..................................................... 1

Virgin Atlantic Airways....................... 10

Vitol................................................................. 19

Volkswagen...........................................12,

Warner Music............................................. 19

Waymo............................................................ 11

Xerox............................................................... 12

Sectors

Airlines....................................................10,

Automobiles..............................12,13,14,

Banks........................................................10,

Financial Services.................................... 12

Financials...........................................12,13,

Food & Beverage..............................19,

Healthcare............................................7,9,

Industrial Goods.................................12,

Industrials...............................................13,

Media..............................................1,10,19,

Oil & Gas................................................19,

Personal & H’hold Goods............19,

Pharmaceuticals......................................... 7

Retail..................................................13,20,

Support Services...................................... 12

Technology............................................12,

Telecoms...................................................... 10

Travel & Leisure.........................10,13,

People

Aintabi, Jason............................................ 12

Bakish, Bob................................................. 10

Barrack, Tom.............................................. 12

Degenhart, Elmar.................................... 12

Diess, Herbert........................................... 14

Dinstuhl, Volkmar.................................... 13

Ganzi, Marc................................................. 12

Icahn, Carl.................................................... 12

Jindong, Zhang......................................... 13

Kallenius, Ola............................................. 14

Khan, Iqbal................................................... 12

Levandowski, Anthony......................... 11

Lores, Enrique........................................... 12

Merz, Martina............................................. 13

Murdoch, Rupert......................................... 1

Murdoch, James.......................................... 1

Picat, Maxime............................................ 14

Rohner, Urs................................................. 12

Schäfer, Wolfgang................................... 12

Tavares, Carlos......................................... 14

Thiam, Tidjane.......................................... 12

Tornqvist, Torbjorn............................... 19

Visentin, John............................................ 12

Wortmann, Hildegard........................... 14

Zhang, Steven........................................... 13

Zipse, Oliver............................................... 14

Sub-zero conditionsInvestors get ready

for even more radical Fed action— P AGE 19

Supercomputer raceUS and China go

head to head over ‘exaflops’— INSIDE TECH, PAGE 12

Robin

Wigglesworth

Tail

Risk

With the benefit of a little perspective, what should inves-

tors make of the Federal Reserve’semergency cut in inter-

est rates arlier this week? Markets still seem uncertain.e

And it is easy to see why.

After an initial spurt of excitement,markets reacted

badly o the US central bank suddenly trimming rates byt

half a percentage point on Tuesday, with one analyst not-

ing it went down like “broken glass”. The S&P 500 tumbled

another 2.8 per cent, and the 10-year Treasury yield slid

below 1 per cent for the first time in history. That is hardly

the reaction Fed chair Jay Powell would have hoped for.

Investors had expectedaction to counteract theimpact

of thecoronavirus utbreak at the Fed’s scheduled meetingo

on March 18. Yet the decision to act before then— and so

soon after officials had appearedreluctant o taket ction —a

sparked alarm. It raised the question: has the central bank

found a deeper, swifter deterioration than everyone else?

Moreover, the decision to cut unilaterally without co-

ordinating with other central banks looked haphazard,

andreminded investorshow

little firepower these banks

have left. Monetary policy is

near maxed out in Japan and

Europe, and even the Fed is

now just 1 per cent above

zero. Perhaps more worry-

ingly, the cut forced investors

to recognise that despite the

clamour for central banks to

act, easier monetary policy is

a poor antidote to a potentialpandemic. Nonetheless, mar-

kets regained their footing on Wednesday — helped by the

prospect of the moderateJoe Biden eating Bernie Sandersb

to the Democratic presidential nomination. And not every-

one thinks the Fed was wrong to act with such alacrity.

Bob Michele, chief investment officer at JPMorgan Asset

Management, argues the emergency cut was “fair and

appropriate”, given the danger theoutbreak poses. “They

were smart to move now rather than to attempt to keep all

their powder dry and wait for things to escalate,” he said.

“Their policy response removed one very big question to

be answered in an environment where many more exist.”

More stimulus may be forthcoming, with markets now

anticipating the Fed trimming rates again at its regular

meeting in a couple of weeks.Pimco, thebond house, reck-

onsthe central bank has another powerful weapon in its

armoury: ending the reduction of a portfolio of mortgage-

backed securities held since the financial crisis.

The Fed last year reversed its balance sheet shrinkage

and began buying Treasury bills again, but the central

bank’s MBS holdings continue to fall at about $20bn a

month. Putting an end to this “would likely provide an eco-

nomic jolt to the US consumer while simultaneously

increasing savings rates”, Pimco argues.

In other words, markets should not give up on central

banks just yet.

[email protected]

The Fed decision

to cut emindedr

investors how

little firepower

central banks

have left

TA N YA P OW L E Y A N D P H I L I P G E O R G I A D I S
LONDON

The spread of the coronavirus outbreak
could cost global airlines up to $113bn in
lost revenue this year, almost four times
the estimate of just two weeks ago, the
industry’s trade body has warned.
The International Air Transport
Association said yesterday the industry
was in acrisis zonefollowing the rapid
global spread of the virus over the past
week through Europe and the US.
The announcement was made as
Southwest Airlines, the world’s biggest
low-cost carrier, said it expected a
$200m-$300m hit to first-quarter core
sales. Revenue per available seat mile —
a key industry measure — in the first
three months is now set to fall compared
with the same period last year, against
expected growth of at least 3.5 per cent.
The impact on the big US carriers,
which in recent years have been the
most profitable in the world, appears to
be increasing.Delta nda United Airlines
announced further cuts to international
and domestic capacity, reflecting the
sharp drop in passenger demand.
Delta is cutting flights to Japan, while
United is reducing international sched-
ules to Asia and Europe by 20 per cent
and domestic capacity by 10 per cent.
Iata said it expected passenger carri-
ers to lose between $63bn and $113bn in
revenue in 2020, a much worse picture
than it painted justtwo weeks ago, when
it predicted a hit of less than $30bn,
based largely on the reduction in flights
to and from China.
“Since that time, the virus has spread
to over 80 countries and forward book-
ings have been severely impacted on
routes beyond China,” Iata said.
Its new scenarios are dependent on
how bad the outbreak becomes. The
virus helpedpushFlybe, Europe’s larg-
est regional carrier, into administration
yesterday, whileFinnair aid it had can-s
celled 1,100 flights.
Rafael Schvartzman, regional vice-
president at Iata, said Flybe’s demise
was “proof that urgent action is
required across Europe to protect air
connectivity during a period of almost
unprecedented crisis”.
The trade body called on regulators

this week to suspend rules that mean

carriers lose airport landing and take-

off slots if they are not used for 80 per

cent of the time. Widespread cancella-

tions would mean airlines stood to

lose their slots or be forced to run

Airlines stand to lose $113bn as

coronavirus spreads, warns Iata

3 Trade body estimate rises fourfold 3 Passenger numbers slump 3 US carriers take hit

Airborne threat:

staff checks

the details of

a passenger at

Arturo Merino

Benítez Airport

in Santiago,

Chile, this week

Javier Torres AFP/Getty

Airline stocks plummet

Bloomberg World Airlines Index



Oct

 

Dec Feb

Source: Bloomberg

Global passenger revenues

bn

Sources: Bloomberg; IATA



















    

Pre-Covid-

Feb : confined to markets

associated with China

Mar : limted spread worldwide

Mar : extensive spread worldwide

Forecast

empty services to keep their allocations.

“Temporary suspension of slot use

rules and a cut in passenger taxes are

crucial steps governments can take to

help,” said Mr Schvartzman.

Passenger demand plunged sharply at

the weekend, forcing carriers around

the world to freeze recruitment

and slash the number of flights, includ-

ing on lucrative transatlantic routes.

European airlines have stepped up

flight cancellations in recent days, with

British Airways lashing more than 400s

flights this month to countries including

Italy, Germany and the US.Ryanair ash

also cut short-haul flights to Italy by up

to 25 per cent, whileLufthansa nda

easyJet educed capacity last week.r

Airline share prices have fallen nearly

25 per cent since the outbreak began,

some 21 percentage points greater than

the decline during the Sars crisis of 2003.

Iata called ongovernments to help

embattled carriers through the crisis.

“Airlines are doing their best to stay

afloat,” said Alexandre de Juniac, Iata’s

chief executive. “As governments look

to stimulus measures, the airline indus-

try will need consideration for relief on

taxes, charges and slot allocation. These

are extraordinary times.”

Lexpage 10

Fears for oil demand growthpage 19

MARCH 6 2020 Section:2Front Time: 3/20205/ - 18:53 User:andy.puttnam Page Name:2FRONT USA, Part,Page,Edition:EUR, 11, 1