UK TOP NEWS SUMMARY: Service Sector Decline Slows In UK And Elsewhere

(Alliance News) - The following is a summary of top news stories ...

Alliance News 3 June, 2020 | 11:49AM
Email Form

(Alliance News) - The following is a summary of top news stories Wednesday.

----------

COMPANIES

----------

Ryanair Holdings reported practically no passenger traffic in May amid travel restrictions caused by Covid-19, saying it expects little to change in June. Ryanair said traffic in May dropped by 99.5% to just 70,000 passengers versus the 14.1 million passengers it carried a year earlier, as Covid-19 airspace closures continue to hurt its operations. Ryanair said it operated just 701 scheduled flights in May, including a number of rescue and medical flights on behalf of various EU governments, versus its budgeted schedule of 70,000 flights. Going forward, Ryanair said it expects minimal traffic in June, due to multiple EU government flight bans and restrictions. On a rolling annual basis to May, the company said it carried 121.0 million passengers, down 17% from 145.8 million a year prior.

----------

Wizz Air Holdings reported a rise in its earnings for financial 2020 due to expansion of operations and an "industry-leading passenger growth rate of 16%". For the year to March 31, Wizz Air posted revenue of EUR2.76 billion, a 19% rise from EUR2.32 billion reported for financial 2019. Pretax profit was EUR294.1 million, up from EUR128.9 million. The Budapest, Hungary-based company said it carried 40.0 million passengers in the recent financial year, a 16% increase from 34.6 million the year before. Ticket revenue per passenger fell by 4.6% to EUR37.7, Wizz Air noted, but it said ancillary revenue per passenger increased by 14% to EUR31.3 per passenger. Total ancillary revenue was up 32% year-on-year at EUR1.25 billion. Looking ahead, the company said it is not in a position to give guidance on net profit at this point due to the continued uncertainty regarding coronavirus, but it remains confident in its ability to thrive through the Covid-19 pandemic. It also said it has hired Charlotte Pedersen as a non-executive director and that Susan Hooper will retire as a director effective immediately.

----------

International Consolidated Airlines Group-owned Iberia protested Tuesday after the Spanish government pledged to sue 17 airlines for failing to inform travellers about their right to a refund for flights cancelled during the pandemic. A day after the consumer affairs ministry said it would take legal action, the Spanish carrier hit back. "Iberia and Iberia Express inform customers clearly about their rights," it said. Under European law, when a flight is cancelled, passengers must be offered an alternative flight or a refund. The refund may be voucher, but only if the customer consents, the European Commission clarified last month. "Shortcomings in the information provided on customers' rights following the cancellation of flights," led to the legal action, the ministry said. "The misleading omission of information by airlines in offering vouchers (as the only option) constitutes unfair trading involving a clear lack of consent as well as a breach of the law," a statement said. Other carriers to be named in the lawsuit are Air Europa, Air France KLM, Binter Canarias, easyJet, Eurowings, Dart Group's Jet2, Latam Airlines, Deutsche Lufthansa, Ryanair Holdings, Scandinavian Airlines, Transavia, TUI, United Airlines Holdings, Volotea and Wizz Air.

----------

SSP Group - which operates catering and retail units at airports - reported a 3.7% fall in revenue to GBP1.22 billion in the six months to the end of March. On a constant currency basis, revenue declined by 2.7%. SSP said like-for-like sales were down 8.4%, heavily hurt by Covid-19 and the closure of most of the global travel markets during March. As a result, the company said it swung to a pretax loss of GBP34.3 million compared with a GBP51.4 million profit a year prior. SSP declared no interim 2020 dividend and suspended its share buyback programme. In addition, SSP said it intends to conduct a non‑pre‑emptive placing of new shares to allow shareholders entitled to the 2019 final dividend to re-invest it back in to the company. SSP's final dividend of 6.0 pence per share - which was approved by SSP's shareholders at the company's AGM on February 26 - with a record date of March 6, will be paid on Thursday. Together, the total proceeds from the fundraising will not exceed GBP26.8 million, SSP said, being the total value of the 2019 final dividend. SSP said the share issue will allow it to retain within the company some of the cash due to be paid out.

----------

Japanese car maker Nissan Motor has warned it will not be able to sustain operations at its Sunderland manufacturing plant if Brexit negotiations fail to establish a trade deal. The 7,000 workers of the UK's largest car manufacturing plant rejoiced last week after surviving a global cost-cutting restructuring that saw the closure of the Japanese firm's Barcelona facility. A Nissan spokesman said at the time that "Sunderland [remained] an important part of our plans for the European business." But in an interview with the BBC, Nissan's global chief operating officer, Ashwani Gupta, warned the company would not be able to stand by its commitment to the Sunderland plant if the UK left the EU without a trade deal that enabled tariff-free EU access.

----------

MARKETS

----------

Stocks in London were trading higher on Wednesday, with investors feeling reassured by the gradual reopening for business of the global economies. "Stocks opened higher not only in Europe but almost everywhere around the globe as investors' risk appetite continues to grow in the middle of the week," said ActiveTrades analyst Pierre Veyret. Stocks in the US were pointed to the higher open, with the Dow Jones Industrial Average called up 0.7%, the S&P 500 up 0.4%, and the Nasdaq Composite up 0.3%.

----------

FTSE 100: up 1.3% at 6,301.11

FTSE 250: up 1.9% at 17,772.30

AIM ALL-SHARE: up 0.3% at 893.96

GBP: up at USD1.2591 (USD1.2535)

EUR: flat at USD1.1209 (USD1.1210)

Gold: down at USD1,719.09 per ounce (USD1,738.21)

Oil (Brent): flat at USD39.10 a barrel (USD39.20)

(changes since previous London equities close)

----------

ECONOMICS AND GENERAL

----------

UK private sector activity in May improved from record lows in April, but remained in contraction as new work and employment in the services sector continued to fall, survey data from IHS Markit showed. The IHS Markit/Chartered Institute of Procurement & Supply composite purchasing managers' index for May rose sharply to 30.0 points from a score of 12.9 in April. The services PMI rose to 29.0 in May from 13.4 in April, due to rising client demand as the UK economy started to reopen, especially in the construction sector. Market consensus according to FXStreet had seen the May services reading at 28.0. Around 54% of UK service providers reported a drop in business activity during the month, which was attributed to a severe lack of new business to replace work completed after the lockdown, following deep cutbacks to corporate spending in response to the Covid-19 pandemic. By contrast, only 13% of service providers reported an increase.

----------

Keir Starmer has accused the UK government of "winging it" in its handling of the Covid-19 pandemic and told Prime Minister Boris Johnson to "get a grip". The Labour leader stepped up his criticism of Johnson's record as he prepared to face him at Prime Minister's Questions for the first time since news emerged of the controversial lockdown trip made by Dominic Cummings. All eyes will be on the House of Commons at midday to see how the prime minister performs opposite the Labour leader, with Johnson likely to be grilled over his support for his senior adviser over his decision to take his family 260 miles away to Durham in March to self-isolate. The leaders will come face to face on the day the UK coronavirus death toll could reach 50,000, having passed 49,800 on Tuesday. Meanwhile, new quarantine restrictions on travellers arriving in the UK will be set out by Home Secretary Priti Patel on Wednesday, including requiring the majority of visitors to Britain to self-isolate for 14 days.

----------

The eurozone services sector recovered somewhat in May but still showed severe contraction, survey results from IHS Markit showed. The IHS Markit eurozone composite output index came in at 31.9 points in May, its best level in three months. It was higher than the flash reading of 30.5 and up on April's 13.6 and March's 29.7. However, the purchasing managers' index still remained well below the 50.0 no-change mark. It was again consistent with sharply falling activity across the region, as restrictions related to the coronavirus pandemic continued to hurt economic performance. The four largest euro area economies registered slower – albeit still severe – contractions in activity. Italy was the best-performing, followed by Germany and France. Spain remained the weakest-performing nation. The services business activity index rose markedly from April's record low of 12.0 to record a three-month high of 30.5.

----------

China's services sector swung back into expansion in May, data from Caixin showed, as business activity and new work rose at the quickest rate since late 2010. The seasonally adjusted headline business activity index rose to 55.0 in May from 44.4 in April, reflecting the first expansion since January, when the index was at 51.1, before falling to a record low of 26.5 in February. Due to the easing of lockdown restrictions related to the Covid-19 outbreak, business operations were allowed to resume and client demand improved, with business activity and new orders expanding at the fastest rate since September 2010, supported by firmer domestic demand. However, the pandemic still had a detrimental impact on new export work, which continued to fall. In addition, companies are still reducing their staffing levels; however the rate of job shedding was the slowest in four months. Business confidence across China's service sector remained strong in May, despite softening since the prior month.

----------

The German government has approved the lifting of travel warnings for 29 European countries, to take effect on June 15, Foreign Minister Heiko Maas said. The warnings - imposed worldwide in March due to the coronavirus outbreak - are set to be lifted for Germany's 26 fellow EU member states apart from Spain where restrictions on visitors will extend beyond June 15. Britain and three non-EU members of the borderless Schengen zone - Iceland, Switzerland and Liechtenstein - also will see the German warnings lifted, according to a document approved at a cabinet meeting in Berlin on Wednesday. Like Spain, Norway - the fourth non-EU Schengen member - has restrictions on arrivals in place beyond June 15, so is not included. Italy also reopened its borders to visitors from the rest of the EU and dropped a ban on travel between its regions. The relaxation of novel coronavirus containment measures came amid a steady drop in infection numbers and pressure to reopen the economy after strict lockdown measures.

----------

Copyright 2020 Alliance News Limited. All Rights Reserved.

Email Form

About Author

Alliance News

Alliance News provides Morningstar with continuously updating coverage of news affecting listed companies.

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies