Financial Times UK - 03.03.2020

Tuesday 3 March 2020 ★ 13

© The Financial Times Limited 2020 Week 10

Companies / Sectors / People

B E T H A N STATO N A N D SA R A H P R OVA N

British Airways andRyanaircancelled

hundreds of flights yesterday as the air-

lines industry body warned that the

coronavirus outbreak had caused a col-

lapse in passenger numbers.

BA announced that it would cancel

more than 200 flights to countries

including Italy, Germany and the US, “to

match reduced demand due to the con-

tinuing coronavirus issue”.

Ryanair said it was cutting flights to

Italy by up to 25 per cent, mostly on

routes to the north of the country.

The cancellations follow similar

moves byLufthansa andeasyJet. The

schedule changes amplified a warning

from the International Air Transport

Association, which said that coronavi-

rus had resulted in “serious declines in

demand”, with airlines responding by

imposing unpaid leave, freezing pay and

grounding aircraft.

One airline reported that bookings for

flights to Italy had dropped to zero while

refunds were growing; another cited a

26 per cent reduction across its entire

market compared to last year.

Some told Iata that 50 per cent of pas-

sengers were not showing up to fly on

some routes.

Given the “extraordinary circum-

stances” of the outbreak, Iata called on

regulators to suspend rules that mean

carriers lose airport landing and take-

off slots if they do not use them for 80

per cent of the time. Widespread can-

cellations mean airlines would be forced

to run empty services to keep their allo-

cations, the body said.

Alexandre de Juniac, Iata director-

general, said: “It’s essential that the reg-

ulatory community work with us to

ensure airlines are able to operate in the

most sustainable manner, to alleviate

the worst impacts of the crisis.”

Airports Coordination Limited, which

oversees slot allocation for the UK, said

it would relax the rules on flights to and

from mainland China and Hong Kong.

Some airlines have warned that the

sharp drop in demand is likely to hit

earnings. Ryanair said it did not expect

cancellations to have a material impact

in the current year.

Editorial Commentpage 10

Airline body warns of deepening virus

crisis as passenger numbers collapse

Companies
Adient...............................................................
Advent .........................................................
Air France-KLM.......................................
Alcatel-Lucent......................................12,
Alitalia............................................................
Alphabet.......................................................
Alstom............................................................
Amazon................................................6,17,
American Airlines...................................
Apollo.............................................................
Apple.................................................6,7,23,
Array BioPharma.....................................
BP.....................................................................
Bain & Company.....................................
Bank of America........................................
Barclays...........................................9,14,14,
Best Buy.........................................................
BlackRock..................................................7,
Blackstone................................................9,
Boeing..............................................................
BrightGene..................................................
Bristol-Myers Squibb............................
British Airways..........................................
Carlyle............................................................
Carnival.........................................................
Celgene..........................................................
Centerview.....................................................
Cinven............................................................
Cisco................................................................
Clorox.............................................................
Cochan Holdings.....................................
Columbia Sportswear..............................

Control Risks..............................................

Costco............................................................

Credit Suisse................................................

Crocs.................................................................

Deliveroo.......................................................

Deutsche Bank.................................9,17,

Devon Energy...........................................

Drax.................................................................

Dufry..............................................................

EasyJet...........................................................

Eli Lilly...........................................................

Elliott Management.........................12,

Equinor..........................................................

Ericsson....................................................12,

Facebook.............................................6,12,

Farelogix.......................................................

Fiat Chrysler.................................................

Finablr............................................................

Finablr,............................................................

Florida Pest Control..............................

Footasylum..................................................

Fortum......................................................12,

Forty Seven................................................

Foursquare....................................................

General Electric......................................1,

Gilead...................................................10,12,

GlaxoSmithKline.......................................

Goldman Sachs...........................................

Google.....................................................6,7,

HSBC.................................................9,14,17,

HarbourVest...............................................

Harley-Davidson.......................................

Hiscox.............................................................

Honeywell ..................................................

Huawei......................................................12,

Immofinanz.................................................

Investec.........................................................

Ithmar Capital............................................

J Sainsbury.................................................

JD Sports......................................................

JPMorgan..................................................9,

Jaguar Land Rover.................................

John Deere....................................................

Konecranes ................................................

Lekoil...............................................................

Lloyds.............................................................

London Stock Exchange....................

Lufthansa...............................................13,

Luminous Cruising.................................

M&G.................................................................

MTU Aero Engines................................

Makani............................................................

Metro Bank..................................................

Micro Focus................................................

Microsoft..............................................7,15,

Morgan Stanley..........................................

NMC Health................................................

Netflix...............................................................

Ninety One..................................................

Nissan...............................................................

Nokia..........................................................12,

Norton Rose Fulbright.........................

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

Peabody Energy......................................

Pfizer...............................................................

Plymouth Industrial.................................

Prudential.....................................................

Puma Energy.............................................

PwC....................................................................

Qatar Investment Authority.............

Refinitiv........................................................

Rentokil.........................................................

Rolls-Royce..................................................

Royal Bank of Scotland.......................

Ryanair...........................................................

S Immo..........................................................

SES..................................................................

Sabre...............................................................

Sberbank........................................................

Seawave Invest.........................................

Sherborne Investors C.........................

Siemens....................................................15,

Spencer Stuart..........................................

Square............................................................

Standard Chartered..........................14,

TCI....................................................................

TCS...................................................................

Teck Resources........................................

Tesco..............................................................

Tesla..............................................................6,

Thyssenkrupp............................................

Tinkoff............................................................

Trafigura.......................................................

Travelex.........................................................

Twitter..................................................6,12,

UBS....................................................................

Uber...................................................................

Uniper.............................................................

United Airlines.........................................

Verizon Communications...................

Walmart........................................................

Wayfair.............................................................

Wm Morrison.............................................

Zhejiang Hisun..........................................

Sectors

Aerospace & Defence....................16,

Airlines.....................................................13,

Automobiles..................................7,12,13,

Banks...............................................6,14,16,

Basic Resources.......................................

Energy.........................................................1,

Financial Services........................14,17,

Financials................................................14,

Healthcare.........................................10,12,

Industrial Goods......................................

Industrials......................................1,14,16,

Insurance......................................................

Mining............................................................

Oil & Gas.............................................6,14,

Pharmaceuticals..................................12,

Property.......................................................

Retail..............................................................

Support Services..........................14,17,

Technology...................7,11,12,15,16,23,

Telecoms...........................................12,15,

Travel & Leisure...........................14,17,

People

Baldauf, Sari..........................................12,

Black, Leon..................................................

Bramson, Edward...............................14,

Cook, Tim.......................................................

Culp, Larry......................................................

Diamond, Bob..............................................

Dorsey, Jack.........................................12,

Effron, Blair...................................................

Fink, Larry................................................7,

FitzGerald, Emma....................................

Higgins, Nigel............................................

Hohn, Christopher..................................

Hughes, Oliver..........................................

Immelt, Jeffrey..........................................

James, Tony..................................................

Levatich, Matt............................................

Looney, Bernard.......................................

Lundmark, Pekka...............................12,

Masojada, Bronek....................................

McFarland, Kim.........................................

Meissner, Christian...................................

Moelis, Ken....................................................

Muhairi, Khalifa al-.................................

O’Day, Daniel..............................................

O’Leary, Michael.......................................

Qebaisi, Saeed al-...................................

Quinn, Noel...................................................

Rubenstein, David...................................

Schwarzman, Steve................................

Shetty, BR....................................................

Singer, Paul.................................................

Staley, Jes...............................................14,

Suri, Rajeev............................................12,

Tinkov, Oleg...............................................

Toit, Hendrik du.......................................

Welch, Jack...............................................1,

Witherell, Jeffrey........................................

using limited companies are taxed at a

lower corporate rate.

JLR said it was following HMRC guide-

lines and that the group “will be compli-

ant with the new IR35 legislation”.

However, two contractors who spoke

to the FT said they had asked JLR for an

individual assessment but were told

that it would not be provided. They had

also written to dispute JLR’s decision but

had not received a reply in two months.

“Apart from one piece of communica-

tion, followed by a complete lack of

communication, they have blanket

assessed everyone and then closed their

ears,” one contractor said.

Additional reporting by Peter Campbell

would not comply with the new law. “In

some circumstances, it is entirely rea-

sonable to apply the same status deci-

sion to a group of off-payroll workers

with the same role, working practices

and contractual terms,” HMRC said.

But, it added, it would not be “right to

rule all engagements to be in or out of

the rules regardless of the contractual

terms and working arrangements”.

Non-staff workers have historically

made up about a third of JLR’s work-

force.

Contractors said that if they stayed at

JLR under the new employment status,

they would suffer a 30 per cent pay cut

because of the extra taxes. Individuals

with specific reasons for how their

worker status has been decided.

Companies that fail to take “reasona-

ble care” in doing this become liable for

the individual’s income tax and national

insurance as well as the employer’s

national insurance.

Several people within JLR told the

Financial Times that the carmaker

appeared to have taken a blanket

approach to classifying its off-payroll

workers and had deemed them all to be

employed for tax purposes, without suf-

ficiently considering their individual

working practices, roles or contracts.

The UK tax authority has explicitly

warned that any such blanket approach

E M M A AGY E M A N G

Jaguar Land Roverhas rejected claims
that the way it has handled a new law
could lead to higher tax bills for the
company and potential legal challenges
from the thousands of contractors in its
workforce.
From April 6, all large and medium-
sized companies must assess the tax
status of anyone they hire who works
through a limited company, under
changes to off-payroll working rules
known as IR35.
The changes require companies to
review the circumstances of each con-
tractor individually and provide them

JLR rejects bigger tax bill claims

3 Carmaker criticised over off-payroll workers 3 HMRC warns on approach to new rules

JLR has

‘blanket

assessed

everyone

and then

closed

their ears’

Contractor

Beijing believes China’ s economy will
recover quickly from the coronavirus
outbreak threatening global growth.
However, two separate indicators show
the nation’s downturn is unlikely to end
anytime soon.
The first is average traffic congestion
across 100 Chinese cities, based on daily
figures provided by Wind, a data
provider. Congestion is measured by a
ratio of peak to non-peak travel times: the
higher readings climb above 1, the longer
travelling the same distance within these
cities takes during rush hour.
In 2019 the ratio dipped to 1.2 during
the Lunar New Year holiday but quickly
sprang back to about 1.5 after it ended.
This year the ratio dropped to a record
low of less than 1.2 and has since only
inched back above that level.
The second indicator is box office
takings, which usually soar at Lunar New
Year. But revenue in the first eight weeks
of 2020 totalled just Rmb2.6bn ($372m),
down more than 80 per cent from a year
ago, according to Wind.
Julian Evans-Pritchard, a senior China
economist at Capital Economics, said the
drop in cinema revenues, in particular,
showed that even as some cities ease their
containment measures, consumers are
not yet willing to behave as they did
before the outbreak began.
“There’s going to be ongoing concerns
about importing the infection back into
China [from abroad], so it’s going to keep
consumers on edge even if they’ve
succeeded in containing it within China,”
he said.Hudson Lockett

Road less travelledTraffic and cinemas give measure of China’s downturn

Coronavirus keeps China’s

drivers o the road

Ratio of peak to non-peak travel times

across  cities















Jan Feb





Lunar

New Year



Lunar New

Year 

Sources: Wind; FT calculation



Number of cinema-goers

in China plunges

Box oice revenue, year to date (Rmb bn)









       

Lunar New

Year 

Lunar New

Year 

 

Week

Anearly deserted intersection in Wuhan yesterday as citizens stay at home— Noel Celis/AFP via Getty Images

The private equity industry defied the

coronavirus outbreak to descend on

Berlin for the SuperReturn conference.

The mood at the annual gathering was

buoyant, in part because 500km west

of the city Europe’s biggest-ever

buyout deal entered its final stages.

AnalysisiPAGE 14

Buyout sector buoyed by

record Thyssenkrupp deal

Jonathan

Wheatley

Tail

Risk

Emerging market bonds seem immune to the coronavirus.

Take the yield on Brazilian 10-year government bonds,

which has barely budged this year. After ticking up in the

past fortnight to 6.78 per cent, it is still tighter than the

6.8 per cent at which it closed 2018 and in a different world

from the 12.5 per cent it reached last September.

EM bonds as a whole, in fact, are holding up well amid

the giant sell-off that has hit risky assets across the board.

Does that make them a strange kind of haven?

Simon Quijano-Evans, chief economist at Gemcorp, a

London fund manager, says that depends not on EMs but

on the response, or lack of it, from governments. “The G

[ group of leading nations] needs to react in a

co-ordinated manner,” he said. “We have seen a total col-

lapse of G20 co-ordination in the past three or four years

and this needs to change, lest this turns into something

much more serious.” So far, he said, investors in EM bonds

were holding their nerve but the key question was how

long that would last.

Adam Wolfe, emerging

markets economist at Abso-

lute Strategy Research, said

investors had already priced

in some “pretty aggressive”

interest-rate cuts from devel-

oped market central banks

and that a search for yield

had supported EM bonds.

But if the monetary stimulus

investors were counting on

fell short, he added, EM fixed-income assets would come

under pressure.

Mr Quijano-Evans looked at the biggest five-day falls

during the past four decades in total-return indices of US

stocks in the S&P 500, European stocks in Frankfurt’s

Xetra Dax and EM sovereign bonds in the JPMorgan EMBI-

Global Diversified index. The S&P index fell 11.5 per cent to

last Friday and the Xetra Dax index 11.3 per cent in dollar

terms. Both are in the same ballpark as similar shocks

since the 1980s. But the EM bond index dropped just

2.1 per cent last week, a fraction of its losses in previous

wobbles, when it fell in line with US and European equities.

The gap in EM bond yields over US Treasuries had wid-

ened, Mr Quijano-Evans said, but the magnitude of the

falls in US yields meant EM bonds, too, had held up well.

This could be testament to the work being done by EM

central banks and governments to control inflation and

stabilise their currencies. “They have reduced some of the

riskiness,” Mr Wolf said.

The danger — as the OECD noted yesterday — is the viral

outbreak leads to a slowdown, further hitting commodity

prices, starting with oil. Brent crude dipped below $50 a

barrel yesterday. While that might benefit energy import-

ers, it would spell trouble for those exporters in Latin

America, Africa and the Middle East that have suffered lit-

tle damage. Brazil, too, would surely be in the line of fire.

[email protected]

The danger for

EM bonds is that

coronavirus leads

to a slowdown,

hitting prices,

starting with oil

Scaling upAlphabet applies AI to the

challenges of fish farming— ANALYSIS, PAGE 16

Fossil huntingBanks are finally facing up

to their stranded asset risks— INSIDE FINANCE, PAGE 14

MARCH 3 2020 Section:2Front Time: 2/3/2020 - 20: 15 User: julian.summers Page Name: 2FRONT, Part,Page,Edition: LON, 13, 1