the times | Tuesday July 28 2020 2GM 35
Business
Four out of five global investors are
continuing to put money into or are
planning new moves in London after
the pandemic has subsided.
A poll of 506 investors with com-
bined assets under management of
$1 trillion found they remained confi-
dent about investing in London, despite
the severity of the economic and public
health crisis caused by Covid-19.
The survey was carried out in the
second week of July by FTI Consulting
on behalf of the City of London Corpo-
ration, the governing body for the
Square Mile, and included those in
equities, bonds and property.
London outperformed other compa-
rable global locations on measures
including access to global talent and
quality of life. Almost 80 per cent of
investors surveyed said London had
“above average” or “global leading”
provisions for socially distanced travel.
Forty-two per cent said London was
“very well placed” to maintain its posi-Easyjet
Airline is in the process of laying off
4,500 of its workforce and last month
raised £419 million in a share placing.IAG
It is in the process of making 12,000 of
its British Airways workforce
redundant and has indicated it plans to
raise €2.75 billion on the stock market£7
6 5 4 3 2 1 0
JFMAMJJ
2020
JFMAMJ J
£16
14
12
10
8
6
4
2
02020
Shapps flies into a
storm over Spain
P
andemics produce myriad
ethical questions. So what
about this one: is it right
that Grant Shapps should
be quarantined for only 14
days? Wouldn’t 14 years be more
appropriate? How can you have a
transport secretary flying off on a
fortnight’s Spanish holiday just
when the government he represents
ruins everyone else’s? Surely Mr
Shapps noticed the chaos Saturday
night’s sudden rule change caused:
Iberian hols in limbo for 1.8 million
Brits (not including this one, just to
be clear); rucks with insurance
companies over cancellations;
warnings that the summer has been
wrecked for the travel companies as
passengers think twice about
booking any foreign holiday; and
£2 billion off the shares of airlines
and holiday groups.
Yes, none of this was entirely Mr
Shapps’s fault. Ministers reacted to a
corona spike in Spain; one they felt
forced them to take it off the list of
quarantine-free countries. It was a
health not a transport decision —
and probably the right one. Even so,
Mr Shapps managed to get himself
in a right pickle. He’d flown out
with his family on Saturday
morning. Or just hours before
dialling into a call with the PM’s
Covid-19 committee that decided
the policy change; one that’ll force
him, and other travellers in Spain, to
return to quarantine.
Given Mr Shapps’s job, didn’t he
know the decision was coming
when they jetted off? Well, his
department says he’d been told on
Friday night there was a 50:50
chance of it. But, apparently, he
thought it morally wrong to use
such inside info, so he went anyway.
Really? Cynics would say he didn’t
want to give up his hols, so took the
quarantine risk; a far easier decision
for a government minister who can
work from home than a frontline or
gig economy worker who can’t. To
boot, he was planning on the full
two weeks’ sun and sangria.
It looked terrible, triggering an
inevitable backlash. Luke Johnson,
the entrepreneur of Patisserie
Valerie fame, asked on Twitter why
Mr Shapps was even on holiday in
Spain “when Britain’s public
transport system is close to collapse”
and the “government has shut down
the economy”, adding: “Only in the
public sector would such negligence
be tolerated.” Others recalled that in
April Mr Shapps infuriated the
travel industry by declaring: “I won’t
be booking a summer holiday at this
point, let’s put it that way.”
The upshot? Yesterday evening,
he decided he had better return
from his hols on Wednesday to help
sort out the mess; the sort of call
that goes with his job. At least he’ll
have had a refreshing mini-break.Up in the air
S
till, the Shapps holiday farrago
underlines one issue: if the
transport secretary can be
blindsided by the next twist in
government corona policy, what
chance the people running travel
companies? The Ryanair boss
Michael O’Leary runs just about
Europe’s most efficient airline. Butafter a first quarter where 99 per
cent of the fleet was grounded, he
says it’s “impossible to predict” how
long the virus will persist, with a
second wave his “biggest fear”.
Yes, the April-June quarter was
always going to be the worst: traffic
plunging from 42 million passengers
to just 500,000, with last time’s net
€243 million profits morphing into
€185 million losses. He hopes to be
flying 70 per cent of normal
schedules by September, but that
won’t save the summer, with his best
guess only a “smaller loss” in what’s
typically its most profitable quarter.
He forecasts a 60 per cent drop in
full-year traffic to 60 million
passengers. The shares fell 3.9 per
cent to €10.48. So, no wonder he’s
focused on the airline’s “cost
leadership”, even with €3.9 billion
cash in the hold. Yet there are at
least three issues that could blow
Ryanair off course, none really in
his control. First, government
decisions like Saturday’s that’ll see
passengers defer bookings and, if
markets are closed, increase the
clamour for refunds. Second, that
rivals such as Alitalia, Lufthansa and
Air France-KLM have been
refuelled with “a multibillion flood”
of state aid, skewing the market.
And, third, his “gamechanger”
Boeing 737-Max aircraft. Mr
O’Leary is still hoping for the first
delivery this year of the plane
involved in two fatal crashes killing
346 people. By next summer he’d
like 40 of them. People are worried
enough about flying lately without
adding the Max into the mix.Prudent advice
K
eeping Britain, America,
China and Hong Kong all
onside during a global
pandemic and US-Sino trade war
would test any bank. But hats off to
HSBC for antagonising all of them.
The decision of its senior Asia
banker, Peter Wong, to sign a
petition backing Beijing’s new
security law for Hong Kong put the
bank at loggerheads with Britain,
where it has its HQ; the people of
Hong Kong, home of 54 per cent of
its profits; and America, which
accused it of a “corporate kowtow”.
Yet it hasn’t even done HSBC any
good with Beijing. The official
People’s Daily newspaper claimed
the bank had “framed” the Chinese
telecoms outfit Huawei, resulting in
the arrest by the US authorities of
the finance chief Meng Wanzhou.
HSBC denied that, saying it had “no
malice against Huawei” and had
“only provided factual information”
to the US (report, page 40).
In short, under chairman Mark
Tucker, HSBC has become a
political football. Contrast,
Prudential: the UK headquartered,
Asia-focused insurer that’s regulated
in Hong Kong and also has a US
wing, Jackson, that it’s looking to
float. Yes, it doesn’t print Hong
Kong bank notes. But it does have a
third of its business there and in
China. So far it’s kept its mouth shut
and avoided getting embroiled in
any geopolitical row. If only HSBC
could say the same thing.business commentary Alistair Osborne
f passenger targets
€16 before the pandemic but fell to €8.13
during the market sell-offs, traded
down 42 cents or 3.9 per cent at €10.48.
Ryanair has always argued that crises
in the airline industry play to its
strengths, allowing it to grab market
share from rivals. However, during this
crisis governments across Europe have
moved to shore up airlines such asLufthansa of Germany, Air France,
KLM of the Netherlands and SAS and
Finnair in the Nordic countries.
With the addition of its delayed
delivery of the larger Boeing 737 Max
aircraft into its fleet from the end of this
year, Ryanair said it expects “to grow to
200 million passengers per annum over
the next five or six years”.City wins global vote of confidence
tion as a business centre post Covid-19,
ahead of Frankfurt, Paris, Hong Kong
and Tokyo. However, it came behind
New York and Beijing, which 51 per cent
and 47 per cent of investors respectively
said were “very well placed” to hold on
to their status as business hubs.
The poll will bolster hopes for a
speedy recovery following a downbeatforecast by the EY Item Club, which
said that the economy will not return to
pre-pandemic levels until 2024. It said
low business investment, alongside the
impact of rising unemployment and
poor consumer confidence, were likely
to weigh on the economy for the rest of
the year.
However, 72 per cent of respondents
said the development of a preventionplan to protect the City from the impact
of future pandemics would encourage
investment in London more than any
other incentive.
Accessibility of a skilled workforce,
workplace safety provisions, business
running costs and the level of security
threats and terrorism were cited as
factors that could encourage invest-
ment by more than 50 per cent of re-
spondents.
Catherine McGuinness, the corpora-
tion’s policy chief, said: “We will con-
tinue to strengthen our attractiveness
as we create the conditions for busi-
nesses of all shapes and sizes, as well as
the real estate investors and developers
who support those companies, to
prosper over the coming decade.
“In particular, the City aims to be-
come a world leader in sustainability,
becoming a global centre for excellence
in climate resilience, and we will be
refocusing our pre-pandemic agenda
on the built environment, transport
and digital connectivity to reflect the
new economic and social reality.”Louisa Clarence-Smith
42%
Investors who said London was well
placed to maintain its global positionQuarantine
leaves travel
firms reeling
Dominic Walsh
Almost £2.5 billion was wiped off the
value of leading airline and travel
stocks yesterday as hopes of a recovery
in the overseas holiday market were hit
by the decision to quarantine travellers
returning from Spain.
Shares of Easyjet, Tui Group, Rya-
nair and IAG, British Airways’ parent
company, took a battering amid fears
that the restrictions could prompt
holidaymakers to avoid flying and
cause huge damage to overseas travel.
The government announced on
Saturday that people returning to
Britain from Spain would have to self-
isolate for two weeks. The Foreign
Office extended its advice against all
but essential travel to mainland Spain
to include the Canary and Balearic
islands. This forces travel operators to
cancel trips and means insurance will
not be be valid.
Easyjet fell by 46¾p, or 8 per cent, to
542¼p, while Ryanair lost €0.42, or 3.9
per cent, to €10.48. Shares in IAG fell by
11¾p, or 5.9 per cent, to 187p, while Tui,
Europe’s biggest travel group, which
cancelled all holidays to mainland
Spain, slumped by 38½p, or 11.4 per cent,
to 301p.
Dart Group, the owner of Jet2 Holi-
days, was down 58p, or 8.5 per cent, to
624p, while Wizz Air gave up 154p, or
4.5 per cent, to £33.
Intercontinental Hotels Group, the
Holiday Inn and Crowne Plaza opera-
tor, fell 149p, or 4 per cent, to £36.19.
Whitbread, owner of the Premier Inn
chain, lost 63p, or 2.8 per cent, to £22.27.
Another big faller was the cruise
operator Carnival Corporation, which
depends on airlines to get many of its
passengers to their departure port. The
shares lost 80¼p, or 8.4 per cent, to
873¼p. On the Beach, the quoted online
travel agent, fell 11p to 274p.
Shares in SSP, one of the world’s big-
gest airport catering companies, which
is reeling from having to lay off 5,000
UK employees to counter the impact of
Covid-19, fell by 15¾p, or 6.7 per cent, to
221½p.