EasyJet files turbulent post-virus flight plan 16 Apr 2020 The budget carrier hopes face masks and empty middle seats will speed up a return to the skies. Such measures will reduce profit as well as infection risks but lower taxes and fuel prices could help. The bigger question is how soon punters will feel safe enough to travel again.
Corona Capital: LVMH, L’Oréal, Pandemic bonds 16 Apr 2020 Concise views on the pandemic’s corporate and financial fallout. LVMH holds onto the luxury of cash, cutting its dividend; L’Oréal makes the best of lockdowns with more than 50% growth in e-commerce sales in the first quarter; and even Covid-19 fails to trigger pandemic bonds.
China’s 2003 auto recovery will be instructive 16 Apr 2020 Sales got a bump at the height of SARS, as consumers avoided public transit and purchased cars for the first time. That psychology could soon play out in India and other markets where ownership is low. But the drag of congestion and spending power may be bigger this time.
Tencent puts e-sports endgame into position 16 Apr 2020 The Chinese web giant has tightened its grip on rival video-game streaming sites Huya and DouYu. That paves the way for a merger that would create a $3.4 bln enterprise. The benefits of uniting are appealing. And with Covid-19 weighing on shares, the timing is better than ever.
Buffett may end up Occidental’s owner-by-accident 15 Apr 2020 The Sage of Omaha struck a clever deal with the shale driller by investing $10 bln through preferred shares. Now the oil price has halved, and on paper Occidental’s regular equity may be almost worthless. The true price of Buffett’s help is becoming clear.
Mnuchin gives airlines right mix of bailout fuel 15 Apr 2020 The U.S. Treasury secretary negotiated potential equity stakes in the likes of American and United, as well as insisting they repay some of the $25 bln in virus grants. Airline officials aren’t happy. But the terms seem less punitive than banks got in 2008. On balance, it’s fair.
Citi leads Wall Street trading-floor opportunists 15 Apr 2020 Mike Corbat’s traders hiked revenue by 39% in the latest quarter, the biggest jump in eight years. Rivals including Goldman Sachs also reported large gains. Market chaos helps those who profit from volatility. This may be as good as it gets until Covid-19 lifts – or returns.
Buyout barons deserve state help too – at a price 15 Apr 2020 Smaller private equity-owned firms, and those with heavy debt loads, are shut out of some U.S. and UK aid programmes. For the sake of their workers, that should change. But only if Blackstone, KKR and others submit to no layoffs or payouts through the term of government loans.
Banks’ love of plastic gets a bit less fantastic 15 Apr 2020 U.S. credit cards have delivered years of high returns and low delinquencies. JPMorgan is the biggest issuer; at Citi cards make up one-quarter of revenue. Now lenders are preparing for losses, and consumers aren’t spending. Covid-19 is taking the shine off a nice earner.
FCA’s big dividend ambitions bruised by pandemic 15 Apr 2020 Plummeting auto sales triggered by the Covid-19 crisis and idle plants expose carmakers’ acute need for cash. Tapping state aid would alleviate Fiat’s pandemic pain. But that would probably require delaying or reconsidering payouts to cement a planned union with France’s Peugeot.
Corona Capital: Airbnb 15 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: Airbnb’s new $1 bln loan doesn’t come cheap, especially when compared to Booking Holdings. But the home-renting unicorn has troubles, from few assets to offer as security to how to ensure properties are virus-free.
A Chinese investment megabank looks big, not bad 15 Apr 2020 State-backed Citic Securities and CSC could merge in a $70 bln deal. The resulting giant could fend off encroaching foreign rivals like Goldman, plus consolidate a fragmented local industry. The trick will be generating synergies despite inevitable turf wars and culture clashes.
Culture is disrupted for coveted tech worker bees 14 Apr 2020 Silicon Valley companies offered perks like free meals, beer, and sweet pay packages to retain white collar staff in a tight labor market. Benefits will be cut as companies try to shore up cash. Office activism for pet issues will be replaced by traditional worker demands.
Norwegian Air is lesson in bare-bones bailout 14 Apr 2020 The airline’s future hinges on creditors swapping $4.3 bln of debt for its nearly worthless equity. That would unlock enough state funds to allow the company to operate as a regional carrier. Its loss-making dream of a low-cost transatlantic revolution is dead whatever happens.
J&J shows safety is relative 14 Apr 2020 The $368 bln healthcare giant upped its dividend as increased demand for painkillers and Listerine helped first-quarter revenue rise 3%. But consumer-goods sales are likely to shrink, medical-device revenue is in free fall and litigation risk remains. J&J’s success won’t last.
JPMorgan adds turret to its fortress balance sheet 14 Apr 2020 Jamie Dimon’s mega-bank has set aside $8.3 bln for bad assets in case of a “fairly severe recession.” The lender is now better padded than in more than six years. Rivals will be under pressure to follow suit, but most can’t match JPMorgan’s ability to still squeeze out a profit.
Corona Capital: American football fail 14 Apr 2020 Concise views on the pandemic’s corporate and financial fallout: The NFL has better finances and sturdier supporters than the XFL, which just filed for bankruptcy right after its reboot. But the Super Bowl operator’s future also rests on coronavirus-induced physical distancing.
Pandemic pendulum swings towards race to reopen 14 Apr 2020 Western economies are gagging to unfreeze sectors hit by Covid-19 lockdowns. But they risk reversing progress in slowing the spread. Italy’s appointment of former Vodafone boss Vittorio Colao to lead a high-calibre committee of experts may be worth copying on a larger scale.
Virus sets off China Inc’s biggest clash 14 Apr 2020 Alibaba, Tencent and Ping An dominate e-commerce, video games, and insurance, respectively. Now the trio, worth a combined $1 trln, is converging on the healthcare system, which is due an urgent upgrade. Financial and regulatory risks abound, but patients will be better off.
ValueAct slides an atypically ajar shōji 14 Apr 2020 After a victory at Olympus, the U.S. investor is trying to push open the latticed door at $4 bln JSR. Unusually for a Japanese company, the synthetic rubber and chemicals maker has a foreign CEO and regularly pays out cash. That means it could be receptive to an outsider’s ideas.