The Times - UK (2020-07-28)

34 2GM Tuesday July 28 2020 | the times

Business

the country after Brexit. The govern-

ment bought its holding despite opposi-

tion from Sam Beckett, then acting per-

manent secretary at the Department

for Business, Energy and Industrial

Strategy, who described the deal as

“unusual”. She said that the taxpayer

Passengers go missing

Carnival

The owner of Princess, P&O and

Cunard raised $10 billion of extra

liquidity, reduced annual operating

costs by $7 billion and cut expendi-

ture by $5 billion and announced

plans to cut its fleet by 13 ships

Tui

Europe’s biggest travel group topped

up its liquidity to €2.1 billion with a

loan from the German government

and warned that 8,000 jobs could go

as it cuts costs by 30 per cent

Passengers go missing

£60

50

40

30

20

10

0

£4

3

2

1

0

2020

JFMAMJJ

JFMAMJJ

2020

JFMAMJJ

£12

10

8

6

4

2

0

2020

Source: Refinitiv

IHG

The Holiday Inn and Crowne Plaza

owner built $2 billion of liquidity,

cut executive pay, scrapped the

dividend and began a $400m cost

reduction programme

1

The billionaire behind the

American pharmacy chain that

owns Boots is to step down as

its boss, moving away from the

day-to-day running of Walgreens

Boots Alliance. Stefano Pessina,

79, the Italian-born dealmaker, will

become executive chairman once

a successor is found. Page 33

2

Astrazeneca has struck a deal

for a cancer drug potentially

worth up to £4.5 billion with a

Japanese peer as it deepens its

investment in potential

blockbuster oncology medicines.

Britain’s biggest pharmaceutical

company has a development and

commercialisation agreement with

Daiichi Sankyo for a targeted

medicine that could treat multiple

tumour types. Page 33

3

Britain has upped the ante in

a dispute with the United

States over a trade deal by

pushing for the lifting of a ban on

lamb and haggis imports and

saying that threats to put tariffs on

gin could derail talks. Liz Truss,

the trade secretary, criticised

“unfair” barriers for exporters and

cautioned that further duties on

spirits “would be hugely

problematic”. Page 33

4

Ryanair has reduced the

number of passengers it

expects to carry this year to

60 million, only 40 per cent of the

number who flew with it last year,

and may cut its outlook further.

5

Gold has surged to an all-time

high amid mounting tensions

between the US and China

and worrying rises in coronavirus

infection rates. It hit $1,943.93 per

ounce as investors sought shelter.

Page 36

6

Investors who bought Boohoo

shares because of its high

ethical ratings missed a “clear

red flag” that should have alerted

them to problems in its supply

chain, a leading City broker says.

Liberum said institutional

investors should have queried

limited disclosures on the sources

of its cut-price clothing. Page 38

7

The owner of the Cannes

Lions advertising festival has

fallen into the red. Ascential

reported a pre-tax loss of

£78 million in the first half of the

year after cancelling or delaying

exhibitions including the

advertising industry jamboree and

its Money 20/20 events. Page 39

8

The boss of the company

behind one of London’s worst

ever floats has admitted that

it should have been delayed. Samir

Desai, the founder and chief

executive of Funding Circle, said it

would have been wiser to reach

profitability first. Page 40

9

Shares in HSBC fell after the

bank was forced to deny it

had framed Huawei in the

Chinese telecoms firm’s dispute

with the US authorities. The bank

was responding to a report in the

People’s Daily newspaper that

accused HSBC of being an

accomplice of the US. Page 40

10

The Financial Conduct

Authority has been

criticised for a lack of

action over misleading financial

promotions despite scandals that

cost ordinary investors hundreds

of millions of pounds. Page 41

Need to know

Billionaire bets on satellite operator

An American telecoms billionaire has

taken a small stake in One Web, the

stricken satellite operator that the

British government bought out of

administration this month.

Charles Ergen, head of Echostar, a

US satellite owner, has invested an

undisclosed sum in the venture, which

hopes to offer mobile phone and broad-

band services from space.

Mr Ergen, 67, is investing in One Web

through Hughes Network Systems

(HNS), a subsidiary of Echostar with

more than 1.3 million satellite internet

customers.

The investment from HNS, which

was previously an investor in One Web,

will reduce the government’s 45 per

cent stake in the company. The govern-

ment acquired One Web in partnership

with India’s Bharti Global in a deal that

valued the company at $1 billion.

Dominic Cummings, the prime min-

ister’s chief adviser, has identified satel-

lite communications as a priority for

could lose its entire investment with

“no wider benefits accrued”, according

to a briefing document for ministers

made public last week.

One Web filed for bankruptcy and

axed most of its staff in March after fail-

ing to raise more investment. It had

been in talks with the Japanese tech

giant Softbank, one of its main backers,

over a $2 billion investment before the

Covid pandemic shattered its plans.

It had hoped to use 648 low orbit sat-

ellites, each the size of a fridge, to pro-

vide broadband services to anywhere in

the world, including remote areas with

poor connectivity. It has 74 satellites in

orbit and will require about $2 billion to

build its network. Competitors include

Elon Musk’s SpaceX and Amazon’s

Project Kuiper.

Mr Ergen is well known to satellite

executives in Britain. Two years ago he

launched an unsuccessful bid to

acquire Inmarsat, the UK’s largest

satellite operator. A keen poker player,

he was once ejected from a Lake Tahoe

casino for counting cards.

Simon Duke Technology Business Editor

Ryanair lands well short of

Robert Lea Industrial Editor

Ryanair has reduced the number of

passengers it expects to carry this year

to 60 million, only 40 per cent of the

number who flew with it last year, and

said it may cut its outlook further.

Europe’s busiest short-haul airline

revealed the extent of its plunge into

the red during the spring, its second

most important trading quarter, and

warned that it will remain loss-making

during its crucial summer season.

The shares fell almost 4 per cent on

the back of the figures as news of

another suspension in flights between

Britain and Spain because of Covid-19

outbreaks worried the sector.

Ryanair is the former regional Irish

airline which was transformed by the

arrival in the 1990s of Michael O’Leary,

now 59, who appropriated the business

model of Southwest Airlines in the US.

Its recipe of low-paid workers, basic in-

flight services, use of secondary or

tertiary airports, and high frequency

with fast turnaround on popular routes

propelled it to leadership in the Euro-

pean market where before the pan-

demic it operated 450 Boeing 737s.

The airline said yesterday that for the

April-June quarter, the first of the

company’s financial year, it carried only

half a million passengers, down from

41.9 million a year ago.

That brought in €125 million of reve-

nues down from €2.3 billion in the

spring of 2019, pushing Ryanair to a net

loss of €185 million compared with a

€243 million profit last year.

Passengers are returning to the air

but not quickly enough to save the

airline’s summer, its busiest season

when it makes most its money, or bring

back any kind of normality.

In its year to the end of March, Ryan-

air had been scheduled to carry 154 mil-

lion passengers. As the pandemic began

to have an impact it ended up

carrying 149 million passengers

in the 12 months.

Its initial forecasts for the

current year were that passen-

ger numbers would fall to

100 million. That was revised

down to 80 million in May and

now the carrier believes that

number will be 60 mil-

lion. Mr O’Leary

warned: “The fore-

cast of 60 million

passengers is tenta-

tive and could go

lower.” In its first-quarter results

the airline said: “The past quar-

ter was the most chal-

lenging in Ryanair’s

35-year history.

Covid-19 grounded

the group’s fleet for

almost four months

from mid-March to

end-June. On July 1, the group resumed

flights across the majority of our route

network.

“We expect to operate approximately

40 per cent of our normal July sched-

ule, rising to 60 per cent in August and,

hopefully, 70 per cent in September.

“This financial year will be a very

challenging year. It is impossible to pre-

dict how long the Covid-19 pandemic

will persist and a second wave of Covid-

19 cases across Europe in late autumn

when the annual flu season commen-

ces is our biggest fear right now.

“Given the current uncertainty,

Ryanair cannot provide any full-year

guidance at this time.”

Shares in Ryanair, which were over

O’Leary in a scrape

The chief executive of Ryanair

normally has one or two things to

complain about during his quarterly

updates. They have multiplied

during the pandemic (Robert Lea

writes).

There was initially some happy

news for Michael O’Leary to report:

that Ryanair passengers who are

flying are spending extra for

reserved seating and priority

boarding. But Mr O’Leary said that

this is being offset by a lack of

income from the suspension of

selling in-flight teas and coffees.

His war on “screenscrapers” has

intensified. Screenscrapers operate

on the internet and include On the

Beach, Love Holidays, and Last

Minute.com, which resell airline

seats to the public.

With Ryanair copping more than

its share of abuse from consumers

for failing to refund or offer

vouchers for rebooking on a timely

basis for cancelled flights during

lockdown, Mr O’Leary, below,

accused the screenscrapers of

bunging up the system. He said

there were issues with the accuracy

of email addresses and credit card

details for passengers who have

booked through these

intermediaries. “The refund issue

has really exposed the anti-

consumer behaviour of these

unlicensed screenscrapers,” he

said.“We can’t automate refunds for

those customers [who have booked

through intermediaries] because, if

we issue a refund to the

screenscraper and they don’t pay

the consumer, we run the risk that

the consumer will sue us.”

He said customers are finding out

that when they receive a fare

refund from Ryanair, it can be

less than the intermediary

charged them.

d

negotiations progressing.” Campaign-

ers have warned that Washington will

demand the removal of bans on food

products such as chlorine-washed

chicken and hormone-treated beef as

part of any trade deal.

American officials made clear last

year that they intended to “eliminate

practices that unfairly decrease US

market access opportunities or distort

agricultural markets to the detriment of

the United States” during trade talks.

However, the head of a new

government panel designed to protect

British farms after Brexit has dismissed

discussion of the topic as “pretty

pointless”. Tim Smith, chairman of the

trade and agriculture commission, said:

“There is no prospect of chlorinated

chicken or any of those other products

entering the UK market. And I just can’t

conceive of a way other than by

legislative changes that that is even

viable.”

The commission, which met virtually

for the first time on Friday and will be

formally launched today, will produce a

policy report over six months.

continued from page 33

Truss on US trade

The government bought One Web out of

administration with a 45 per cent stake