cityam--2020-05-07--British Airways: Five things you need to know as IAG reports £1.5bn loss

British Airways owner IAG this morning reported a total first quarter loss of €1.8bn ( £1.5bn ) , saying that it was currently operating 94 per cent down on its total passenger capacity .
More worryingly , it said that it expected the second quarter ’ s results to be far worse , and warned that passenger demand would not return to pre-coronavirus levels until 2023 .
Read more : British Airways owner IAG targets ‘ meaningful return ’ to flying in July Here are five talking points from this morning ’ s results .
Last week IAG announced that @ @ @ @ @ @ @ job cuts at UK flag carrier BA , including a quarter of its pilots .
The decision prompted a horrified reaction from pilots ’ union Balpa , which has written to chancellor Rishi Sunak to ask for a moratorium on aviation job cuts .
However , IAG this morning said that due to the unprecedented slump in demand , “ further group-wide restructuring measures were essential ” .
Speaking to reporters , Walsh would not be drawn on the nature of the cuts , but confirmed that its other subsidiaries would be affected @ @ @ @ @ @ @ people have interpreted the announcements that we made in relation to British Airways , as indicating that we ’ re only looking at restructuring in British Airways ” , he said .
“ That is not the case ” .
Read more : British Airways to axe a quarter of pilots amid 12,000 job cuts The group is also set to cut 900 jobs at Irish carrier Aer Lingus , roughly 20 per cent of its workforce .
2 .
Gatwick presence up in the air BA ’ s main operations base in @ @ @ @ @ @ @ and the consultation on cutting 12,000 jobs could threaten its presence at fellow London airport Gatwick .
BA ’ s operations at Gatwick are roughly a fifth of the size of those at Heathrow , and in a memo seen by the BBC the airline said it was unclear whether operations would recommence from the airport after the crisis : “ As you know , we suspended our Gatwick flying schedule at the start of April and there is no certainty as to when or if these services can or will return ” @ @ @ @ @ @ @ morning said that although his personal preference would be to retain a base at Gatwick , it would depend on the jobs cuts : “ I would like to see us continuing to have a presence at Gatwick but that ’ s just a personal opinion , it ’ s not going to influence the consultation that will take place ” .
Read more : Virgin Atlantic to cut 3,150 jobs and quit Gatwick base On Tuesday fellow flier Virgin Atlantic said that it would quit its Gatwick base due to the crisis @ @ @ @ @ @ @ that it would purchase Spain ’ s third-largest carrier Air Europa for €1bn .
IAG already owns Iberia and Vueling , the country ’ s two largest carriers .
However , due to the effects of the pandemic , there has been some doubt as to whether the group would go ahead with the acquisition process .
According to Walsh , however , the purchase is very much still alive .
He told reporters : “ We still have to go through the full competition regulatory approval process .
And that is ongoing @ @ @ @ @ @ @ process continues ” .
IAG sprang a slight surprise in the morning ’ s results announcements by revealing it had drawn down £300m from the Bank of England ’ s Covid Corporate Financing Facility ( CCFF ) , which it had not previously announced .
It has also taken similar steps in Spain , whether Vueling and Iberia will receive over €1bn in state-backed loans from the government ’ s Instituto de Credito Oficial .
Walsh , who is a well-known opponent of state aid for airlines , said that the pandemic was @ @ @ @ @ @ @ more : IAG secures Spanish bank loans for Iberia and Vueling despite BA job cuts “ Excellent airlines through no fault of their own are suffering this crisis – it ’ s everyone .
“ I have no hesitation in saying and I ’ ve said it publicly , where general facilities are being made we will avail ourselves of those facilities .
“ Most of the companies who will receive support from the CCFF are good companies that are suffering through no fault of their own ” .
He added : “ @ @ @ @ @ @ @ reform , they should not be bailed out by receiving free money from the government ” .
Earlier this year Walsh complained to the EU over plans to rescue collapse regional carrier Flybe , calling it a “ blatant misuse of public funds ” .
Read more : Ryanair boss Michael O ’ Leary calls Flybe a ‘ loss-making turkey ’ in stinging rebuke to chancellor Sajid Javid 5 .
Worse still to come Although the airline said that it hoped to restart “ meaningful service ” from July , it also warned @ @ @ @ @ @ @ in terms of the reported impact of the crisis .
In the first quarter , total passenger capacity dropped only 10.5 per cent , with normal trading levels throughout January and February .
However , for the second quarter , IAG forecast that passenger levels would drop 90 per cent , which would ease back to 55 per cent in the third quarter .
In turn , this will improve to 30 per cent in the fourth quarter , giving an overall capacity reduction for the year of 50 per cent .
Although @ @ @ @ @ @ @ ’ s estimates pale in comparison with those of rival Air France , which is predicting capacity falls of 95 and 80 per cent through the next two quarters .
Read more : Coronavirus set to cost the world ’ s airlines up to $ 314bn However , Walsh warned that not to read too much into estimates : “ The reality won ’ t be what we or anyone else have said .
But it ’ s what we ’ re planning for ” .

British Airways: Five things you need to know as IAG reports £1.5bn loss
British Airways owner IAG this morning reported a total first quarter loss of €1.8bn (£1.5bn), saying that it was currently operating 94 per cent down on its total passenger capacity.
More worryingly, it said that it expected the second quarter’s results to be far worse, and warned that passenger demand would not return to pre-coronavirus levels until 2023.
Here are five talking points from this morning’s results.
1: More job cuts are ‘essential’
Last week IAG announced that it was consulting on up to 12,000 job cuts at UK flag carrier BA, including a quarter of its pilots.
The decision prompted a horrified reaction from pilots’ union Balpa, which has written to chancellor Rishi Sunak to ask for a moratorium on aviation job cuts.
However, IAG this morning said that due to the unprecedented slump in demand, “further group-wide restructuring measures were essential”.
Speaking to reporters, Walsh would not be drawn on the nature of the cuts, but confirmed that its other subsidiaries would be affected as well as BA:
“Some people have interpreted the announcements that we made in relation to British Airways, as indicating that we’re only looking at restructuring in British Airways”, he said. “That is not the case”.
The group is also set to cut 900 jobs at Irish carrier Aer Lingus, roughly 20 per cent of its workforce.
2. Gatwick presence up in the air
The sheer weight cuts could force BA to quit its base at Gatwick Airport after demand for flying begins again.
BA’s main operations base in the UK is at Heathrow airport, and the consultation on cutting 12,000 jobs could threaten its presence at fellow London airport Gatwick.
BA’s operations at Gatwick are roughly a fifth of the size of those at Heathrow, and in a memo seen by the BBC the airline said it was unclear whether operations would recommence from the airport after the crisis:
“As you know, we suspended our Gatwick flying schedule at the start of April and there is no certainty as to when or if these services can or will return”, the memo said.
Walsh this morning said that although his personal preference would be to retain a base at Gatwick, it would depend on the jobs cuts:
“I would like to see us continuing to have a presence at Gatwick but that’s just a personal opinion, it’s not going to influence the consultation that will take place”.
On Tuesday fellow flier Virgin Atlantic said that it would quit its Gatwick base due to the crisis.
3. Air Europa purchase ‘ongoing’ despite pandemic
In November, the group announced that it would purchase Spain’s third-largest carrier Air Europa for €1bn.
IAG already owns Iberia and Vueling, the country’s two largest carriers.
However, due to the effects of the pandemic, there has been some doubt as to whether the group would go ahead with the acquisition process.
According to Walsh, however, the purchase is very much still alive. He told reporters:
“We still have to go through the full competition regulatory approval process. And that is ongoing. So at this point, the process continues”.
4. Airlines in ‘different situation’ over state aid
IAG has already tapped Spanish state-backed loans to the tune of €1bn for its carriers Vueling and Iberia.
IAG sprang a slight surprise in the morning’s results announcements by revealing it had drawn down £300m from the Bank of England’s Covid Corporate Financing Facility (CCFF), which it had not previously announced.
It has also taken similar steps in Spain, whether Vueling and Iberia will receive over €1bn in state-backed loans from the government’s Instituto de Credito Oficial.
Walsh, who is a well-known opponent of state aid for airlines, said that the pandemic was a “different situation”:
“Excellent airlines through no fault of their own are suffering this crisis – it’s everyone.
“I have no hesitation in saying and I’ve said it publicly, where general facilities are being made we will avail ourselves of those facilities.
“Most of the companies who will receive support from the CCFF are good companies that are suffering through no fault of their own”.
He added: “Where airlines are unwilling or unable to reform, they should not be bailed out by receiving free money from the government”.
Earlier this year Walsh complained to the EU over plans to rescue collapse regional carrier Flybe, calling it a “blatant misuse of public funds”.
5. Worse still to come
Although the airline said that it hoped to restart “meaningful service” from July, it also warned that far worse was yet to come in terms of the reported impact of the crisis.
In the first quarter, total passenger capacity dropped only 10.5 per cent, with normal trading levels throughout January and February.
However, for the second quarter, IAG forecast that passenger levels would drop 90 per cent, which would ease back to 55 per cent in the third quarter.
In turn, this will improve to 30 per cent in the fourth quarter, giving an overall capacity reduction for the year of 50 per cent.
Although jaw-dropping in their own right, IAG’s estimates pale in comparison with those of rival Air France, which is predicting capacity falls of 95 and 80 per cent through the next two quarters.
However, Walsh warned that not to read too much into estimates: “The reality won’t be what we or anyone else have said. But it’s what we’re planning for”.


cityam--2020-05-07--Fifth of employees expect they will take a permanent pay cut at the end of the year

A fifth of employees expect to take a permanent pay cut by the end of the year due to the coronavirus pandemic , according to an exclusive poll for City A.M .
The poll , conducted by Redfield and Wilton Strategies , found that 18 per cent of respondents said it is unlikely they will have the same salary at the end of this year .
However , the majority ( 56 per cent ) said it is “ nearly certain ” or “ likely ” that they will have a job with the same salary at the end of @ @ @ @ @ @ @ of England : UK economy could suffer biggest crash in 300 years The pessimism comes as 6.3m employees have been placed on furlough .
There are concerns that an end to the scheme , as planned on 30 June , will lead to mass redundancies .
Eighty per cent of respondents said they expected unemployment to be higher at the end of 2020 than the current four per cent unemployment reported by the Office for National Statistics ( ONS ) .
Of those , 65 per cent expect the unemployment rate to be @ @ @ @ @ @ @ Bank of England today said it expected unemployment to soar to nine per cent in the second quarter of this year , higher than in the wake of the global financial crisis .
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic .
Eighty three per cent of respondents said the economy will “ need some time to recover ” from the coronavirus pandemic , reflecting the dire situation the Bank of England ( BoE ) presented today .
Data released today @ @ @ @ @ @ @ shrink by a staggering 14 per cent .
The Bank said it expected the UK economy to contract by 25 per cent in the second quarter of the year , having shrunk around three per cent in the first quarter .
Read more : Unemployment rate set to surge in UK coronavirus lockdown A quarter of Brits call for government to increase taxes The government has committed billions to helping employees and embattled sectors through the worst of the coronavirus crisis .
As a result , a quarter of Britons think the government @ @ @ @ @ @ @ spending , while 22 per cent think borrowing should be higher .
The furlough scheme has already cost approximately £8bn , supporting the 6.3m employees on furlough .
Twenty two per cent of respondents think the government should reduce spending .
Get the news as it happens by following City A.M. on Twitter .

Fifth of employees expect they will take a permanent pay cut at the end of the year
A fifth of employees expect to take a permanent pay cut by the end of the year due to the coronavirus pandemic, according to an exclusive poll for City A.M.
The poll, conducted by Redfield and Wilton Strategies, found that 18 per cent of respondents said it is unlikely they will have the same salary at the end of this year. However, the majority (56 per cent) said it is “nearly certain” or “likely” that they will have a job with the same salary at the end of this year.
The pessimism comes as 6.3m employees have been placed on furlough. There are concerns that an end to the scheme, as planned on 30 June, will lead to mass redundancies.
Eighty per cent of respondents said they expected unemployment to be higher at the end of 2020 than the current four per cent unemployment reported by the Office for National Statistics (ONS). Of those, 65 per cent expect the unemployment rate to be higher than 10 per cent.
The Bank of England today said it expected unemployment to soar to nine per cent in the second quarter of this year, higher than in the wake of the global financial crisis.
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.
Economy ‘needs time to recover’
Eighty three per cent of respondents said the economy will “need some time to recover” from the coronavirus pandemic, reflecting the dire situation the Bank of England (BoE) presented today.
Data released today shows the UK economy is likely to shrink by a staggering 14 per cent.
The Bank said it expected the UK economy to contract by 25 per cent in the second quarter of the year, having shrunk around three per cent in the first quarter.
A quarter of Brits call for government to increase taxes
The government has committed billions to helping employees and embattled sectors through the worst of the coronavirus crisis. As a result, a quarter of Britons think the government should increase taxes to pay for the spending, while 22 per cent think borrowing should be higher.
The furlough scheme has already cost approximately £8bn, supporting the 6.3m employees on furlough. Twenty two per cent of respondents think the government should reduce spending.
Get the news as it happens by following City A.M. on Twitter.


cityam--2020-05-07--Ex-Asda boss Andy Clarke praises UK supermarkets' 'incredible' response to coronavirus crisis

Former Asda chief executive Andy Clarke said the UK supermarket sector had responded “ incredibly well ” to the challenges of the coronavirus pandemic .
Clarke , who led Asda for six years before leaving in 2016 , said UK grocers had managed to “ get Britain back on track ” after a surge in stockpiling caused product restrictions in the lead up to the lockdown .
It is “ heartening to see how the retail sector has pulled together ” , he told City A.M ’ s The City View podcast .
He said : “ The retailers responded @ @ @ @ @ @ @ lockdown with the right management in stores , availability of product seems to be pretty much back where it was.
” Read more : Shoppers spend extra £524m at UK supermarkets in April The former supermarket boss said keeping shelves stocked during the crisis had demonstrated a “ dramatic piece of management ” .
Grocers were forced to implement product restrictions after the coronavirus pandemic in the UK caused a spike in panic buying .
The industry has also been grappling with a huge jump in demand for online delivery slots and implementing @ @ @ @ @ @ @ early media shots of empty shelves whether it was about toilet rolls or disinfectant or basic food commodities was quite an eye opener to everybody whether you ’ re in the industry or not , ” Clarke added .
“ Sometimes we forget that the the UK is world class when it comes to food logistics…there were some early concerns that it would be difficult to get product into the country but that doesn ’ t seem to have been the case , product has flowed .
“ The supermarkets through the expertise @ @ @ @ @ @ @ flowing around the country from Scotland to the south coast of England and east to west .
”

Ex-Asda boss Andy Clarke praises UK supermarkets’ ‘incredible’ response to coronavirus crisis
Former Asda chief executive Andy Clarke said the UK supermarket sector had responded “incredibly well” to the challenges of the coronavirus pandemic.
Clarke, who led Asda for six years before leaving in 2016, said UK grocers had managed to “get Britain back on track” after a surge in stockpiling caused product restrictions in the lead up to the lockdown.
It is “heartening to see how the retail sector has pulled together”, he told City A.M’s The City View podcast.
He said: “The retailers responded incredibly well and now some weeks into lockdown with the right management in stores, availability of product seems to be pretty much back where it was.”
The former supermarket boss said keeping shelves stocked during the crisis had demonstrated a “dramatic piece of management”.
Grocers were forced to implement product restrictions after the coronavirus pandemic in the UK caused a spike in panic buying.
The industry has also been grappling with a huge jump in demand for online delivery slots and implementing in-store social distancing measures.
“Those early media shots of empty shelves whether it was about toilet rolls or disinfectant or basic food commodities was quite an eye opener to everybody whether you’re in the industry or not,” Clarke added.
“Sometimes we forget that the the UK is world class when it comes to food logistics…there were some early concerns that it would be difficult to get product into the country but that doesn’t seem to have been the case, product has flowed.
“The supermarkets through the expertise that they have….have managed to keep product flowing around the country from Scotland to the south coast of England and east to west.”


cityam--2020-05-07--Banks blasted over ‘disappointingly slow’ pace of lending as coronavirus loans hit £5.5bn

Banks have lent over £5.5bn to SMEs through the CBILS scheme but a leading industry body has said the process is still too slow .
The British Chambers of Commerce ( BCC ) said the improvement in the number of firms accessing CBILS is welcome .
However , head of economics Suren Thiru said that with many firms “ only having a few months cash in reserve the pace of delivery remains disappointingly slow.
” Read more : £2bn of ‘ bounce back ’ loans for SMEs approved in first 24 hours UK Finance data shows £1.4bn worth of loans @ @ @ @ @ @ @ April to 6 May , bringing the total to £5.5bn .
But of the 62,674 received applications under the scheme , just 33,812 have been approved .
“ Government must also be ready to further expand the existing grant schemes to ensure that as many businesses as possible get access to the support they need , ” Thiru added .
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic .
Small firms have said they were shut out of the CBILs scheme @ @ @ @ @ @ @ .
As a result , chancellor Rishi Sunak introduced the bounce back loan scheme this week to iron out these issues .
So far the scheme has approved more than 69,000 loans equating to over £2bn .
The new loan scheme offers the UK ’ s smallest firms loans worth 25 per cent of turnover , up to £50,000 .
The loans are 100 per cent guaranteed by the government .
Read more : More than 100,000 UK firms apply for ‘ bounce back loans ’ on first day Thiru said : “ @ @ @ @ @ @ @ Back loan scheme is encouraging for the smallest businesses that are struggling to stay afloat .
However , more needs to be done to ensure that all businesses get access to the finance they need.
” He added that the current template for the bounce back loans should be applied to CBILs , “ including adopting an easier and more consistent application process.
” Get the news as it happens by following City A.M. on Twitter .

Banks blasted over ‘disappointingly slow’ pace of lending as coronavirus loans hit £5.5bn
Banks have lent over £5.5bn to SMEs through the CBILS scheme but a leading industry body has said the process is still too slow.
The British Chambers of Commerce (BCC) said the improvement in the number of firms accessing CBILS is welcome. However, head of economics Suren Thiru said that with many firms “only having a few months cash in reserve the pace of delivery remains disappointingly slow.”
UK Finance data shows £1.4bn worth of loans were provided in the week from 29 April to 6 May, bringing the total to £5.5bn. But of the 62,674 received applications under the scheme, just 33,812 have been approved.
“Government must also be ready to further expand the existing grant schemes to ensure that as many businesses as possible get access to the support they need,” Thiru added.
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.
Small firms have said they were shut out of the CBILs scheme due to inconvenient application and strict criteria.
As a result, chancellor Rishi Sunak introduced the bounce back loan scheme this week to iron out these issues. So far the scheme has approved more than 69,000 loans equating to over £2bn.
The new loan scheme offers the UK’s smallest firms loans worth 25 per cent of turnover, up to £50,000. The loans are 100 per cent guaranteed by the government.
Thiru said: “The strong start made by the Bounce Back loan scheme is encouraging for the smallest businesses that are struggling to stay afloat. However, more needs to be done to ensure that all businesses get access to the finance they need.”
He added that the current template for the bounce back loans should be applied to CBILs, “including adopting an easier and more consistent application process.”
Get the news as it happens by following City A.M. on Twitter.


cityam--2020-05-07--How the O2-Virgin Media merger will reshape the telecoms sector

O2 and Virgin Media this morning confirmed they will join forces in a mammoth merger that will create a new £31bn telecoms powerhouse .
The deal — reports of which first emerged last week — came as little surprise to industry watchers , though the timing of the deal in the middle of a global pandemic has raised some eyebrows .
Speaking to investors this morning Jose Maria Alvarez-Pallete , chair of O2 ’ s Spanish parent company Telefonica , vowed that the deal would “ transform the telecoms landscape in the UK ” .
But what will the tie-up @ @ @ @ @ @ @ rivals and customers ?
Read more : O2 and Virgin Media confirm merger to create £31bn telecoms player The pairing of O2 ’ s mobile services with Virgin Media ’ s broadband and pay-TV offering has come as little surprise to the industry , with analysts hailing a “ natural fit ” .
Even BT boss Philip Jansen acknowledged that the merger was a “ sensible ” move due to the growing need to converge telecoms services .
Both Telefonica and Virgin Media owner Liberty Global , which is led by billionaire John @ @ @ @ @ @ @ from the market for several years , and the 50/50 joint venture offers a key opportunity to pull back .
Moreover , the deal allows the Spanish group to pay down its net debt by as much as £5.8bn .
Regulators are expected to wave through the deal — as they did for BT ’ s £12.5bn takeover of EE in 2016 — but hurdles may still remain .
“ The greatest challenges will arise after the deal completes , ” says Kester Mann , analyst at CCS Insight .
“ In particular @ @ @ @ @ @ @ dig deep to fund the costly expansion of cable and 5G services throughout the UK.
” Mike Kiersey , principal technologist at Boomi , says the firms ’ ability to integrate their IT infrastructure would be key to ensure the success of the merger .
“ Once this has been established , a clear M & A post-merger integration plan is critical to integrating business-critical applications , IT systems and data , ” he says .
“ Both companies need to understand the importance of a harmonised infrastructure , and the severe implications @ @ @ @ @ @ @ systems.
” There ’ s no doubt that the O2-Virgin Media deal represents a significant shake-up of the UK telecoms market .
However , the impact is likely to be most severely felt by Vodafone .
The mobile operator has been frequently linked to a tie-up with Virgin Media in recent years , but a deal has never materialised .
CCS analyst Mann says Vodafone is the “ biggest loser ” as the deal exposes its weak position in the market for converged services .
In a further blow , the merger will @ @ @ @ @ @ @ network deal with Virgin Media .
Liberty Global ’ s service currently uses BT ’ s network , but was due to switch to Vodafone from next year .
So as rivals look at the new world order , further deals could be in the offing .
Ernest Doku , mobiles expert at Uswitch , suggests the deal could spark an “ arms race ” across the industry .
It was a rough morning for BT shareholders , who were hit with both a dividend suspension and the emergence of a major new @ @ @ @ @ @ @ ’ s acquisition of EE four years ago and sets up fresh competition in the converged provision of mobile and broadband services .
Holly Niblett , head of digital at Compare the Market , says the new entity posed a “ major challenge ” to the dominance of BT in the UK , adding that it could benefit consumers .
“ Shared costs between Virgin Media and O2 should enable cost savings that , in an increasingly competitive market , may be passed onto customers as the big players battle for market share @ @ @ @ @ @ @ could respond to this threat to its market-leading position by lowering prices , which would be good news for consumers.
” Jasper Lawler , head of research at London Capital Group , says : “ The combination will bring extra bargaining power to potentially achieve what the two entities by themselves never could.
” He adds that the deal could “ finally ” prompt regulator Ofcom to order the break up of BT and its Openreach infrastructure division .
Read more : O2 cuts ties with Carphone Warehouse as retailer plots store closures @ @ @ @ @ @ @ of contention — will be how Telefonica and Liberty Global present the merged entity to the market .
Marketing is a fundamental driver of success for telecoms firms , many of which offer the same or very similar services at comparative costs .
O2 and Virgin Media are both household names in the UK , and the two companies will be keen to ensure they build on this presence , rather than diluting it .
Sophie Lord , executive director of strategy at Landor , says the new company could drive a new @ @ @ @ @ @ @ great brands have a synergistic quality to them — Virgin Media famous for ‘ fast ’ and irreverence ( if rather lacking any real personality ) , O2 famous for entertainment and service , ” she says .
“ Let ’ s hope they become more than the sum of their parts , and not just a ‘ holding ’ company to its many platforms — if they manage this then we ’ ll all be benefitting , rather than the just the deal makers and brokers.
” Kester Mann argues that the @ @ @ @ @ @ @ at the expense of Virgin Media .
“ Both have a strong presence , but O2 ’ s respected customer service , highly loyal customers and sponsorship of the O2 arena mean it is impossible to drop , ” he says .
“ A multi-brand approach serves only to duplicate costs and risks confusing customers .
”

How the O2-Virgin Media merger will reshape the telecoms sector
O2 and Virgin Media this morning confirmed they will join forces in a mammoth merger that will create a new £31bn telecoms powerhouse.
The deal — reports of which first emerged last week — came as little surprise to industry watchers, though the timing of the deal in the middle of a global pandemic has raised some eyebrows.
Speaking to investors this morning Jose Maria Alvarez-Pallete, chair of O2’s Spanish parent company Telefonica, vowed that the deal would “transform the telecoms landscape in the UK”.
But what will the tie-up mean for the two businesses, their rivals and customers?
A natural fit
The pairing of O2’s mobile services with Virgin Media’s broadband and pay-TV offering has come as little surprise to the industry, with analysts hailing a “natural fit”.
Even BT boss Philip Jansen acknowledged that the merger was a “sensible” move due to the growing need to converge telecoms services.
Both Telefonica and Virgin Media owner Liberty Global, which is led by billionaire John Malone, have been eyeing an exit from the market for several years, and the 50/50 joint venture offers a key opportunity to pull back.
Moreover, the deal allows the Spanish group to pay down its net debt by as much as £5.8bn.
Regulators are expected to wave through the deal — as they did for BT’s £12.5bn takeover of EE in 2016 — but hurdles may still remain.
“The greatest challenges will arise after the deal completes,” says Kester Mann, analyst at CCS Insight.
“In particular, the new unit will need to dig deep to fund the costly expansion of cable and 5G services throughout the UK.”
Mike Kiersey, principal technologist at Boomi, says the firms’ ability to integrate their IT infrastructure would be key to ensure the success of the merger.
“Once this has been established, a clear M&A post-merger integration plan is critical to integrating business-critical applications, IT systems and data,” he says.
“Both companies need to understand the importance of a harmonised infrastructure, and the severe implications of a failure to integrate two different systems.”
Vodafone: Left in the cold?
There’s no doubt that the O2-Virgin Media deal represents a significant shake-up of the UK telecoms market.
However, the impact is likely to be most severely felt by Vodafone. The mobile operator has been frequently linked to a tie-up with Virgin Media in recent years, but a deal has never materialised.
CCS analyst Mann says Vodafone is the “biggest loser” as the deal exposes its weak position in the market for converged services.
In a further blow, the merger will almost certainly scupper Vodafone’s virtual network deal with Virgin Media. Liberty Global’s service currently uses BT’s network, but was due to switch to Vodafone from next year.
So as rivals look at the new world order, further deals could be in the offing.
Ernest Doku, mobiles expert at Uswitch, suggests the deal could spark an “arms race” across the industry.
BT buckles
It was a rough morning for BT shareholders, who were hit with both a dividend suspension and the emergence of a major new rival.
The O2-Virgin deal mirrors BT’s acquisition of EE four years ago and sets up fresh competition in the converged provision of mobile and broadband services.
Holly Niblett, head of digital at Compare the Market, says the new entity posed a “major challenge” to the dominance of BT in the UK, adding that it could benefit consumers.
“Shared costs between Virgin Media and O2 should enable cost savings that, in an increasingly competitive market, may be passed onto customers as the big players battle for market share,” she says.
“BT could respond to this threat to its market-leading position by lowering prices, which would be good news for consumers.”
Jasper Lawler, head of research at London Capital Group, says: “The combination will bring extra bargaining power to potentially achieve what the two entities by themselves never could.”
He adds that the deal could “finally” prompt regulator Ofcom to order the break up of BT and its Openreach infrastructure division.
Building the brand
One major consideration — and possible point of contention — will be how Telefonica and Liberty Global present the merged entity to the market.
Marketing is a fundamental driver of success for telecoms firms, many of which offer the same or very similar services at comparative costs.
O2 and Virgin Media are both household names in the UK, and the two companies will be keen to ensure they build on this presence, rather than diluting it.
Sophie Lord, executive director of strategy at Landor, says the new company could drive a new narrative for 5G.
“These two great brands have a synergistic quality to them — Virgin Media famous for ‘fast’ and irreverence (if rather lacking any real personality), O2 famous for entertainment and service,” she says.
“Let’s hope they become more than the sum of their parts, and not just a ‘holding’ company to its many platforms — if they manage this then we’ll all be benefitting, rather than the just the deal makers and brokers.”
Kester Mann argues that the joint venture should keep the O2 brand at the expense of Virgin Media.
“Both have a strong presence, but O2’s respected customer service, highly loyal customers and sponsorship of the O2 arena mean it is impossible to drop,” he says.
“A multi-brand approach serves only to duplicate costs and risks confusing customers.”


cityam--2020-05-07--FTSE 100 rises despite Bank of England's dire economic warning

The FTSE 100 rose today on hopes the UK can recover quickly from the coronavirus fallout – despite a dire warning from the Bank of England on the impact on the UK economy in 2020 .
London ’ s blue-chip index rose 0.74 per cent to 5,896 points shortly before midday .
Read more : Bank of England says economy could shrink 14 per cent but rebound sharply The rise came after the Bank of England today warned coronavirus could cause the UK economy to shrink 14 per cent in 2020 .
But it predicted a strong recovery in 2021 @ @ @ @ @ @ @ Andrew Bailey held interest rates at their record low of 0.1 per cent to help the UK battle the shock to the system .
The FTSE 100 stubbornly clung onto hopes of a recovery , however , with the UK expected to ease its lockdown starting Monday .
The Bank of England ’ s scenario warned of the worst economic slump in 300 years .
Connor Campbell , financial analyst at Spreadex , said the projections are “ rather terrifying ” .
They include a 14 per cent slump in UK GDP over @ @ @ @ @ @ @ rate .
“ Globally the central bank is expecting [ GDP ] to shrink by 20 per cent in the second quarter , ” Campbell added .
But the FTSE 100 was buoyed by the Bank ’ s “ crucial ” projection of a 15 per cent recovery in 2021 .
“ This , combined with the ongoing and prospective lockdown-easing measures around the world… helped the markets tentatively rise.
” Prime Minister Boris Johnson is set to reveal a three-stage easing of the lockdown next week .
That could involve outdoor workplaces @ @ @ @ @ @ @ larger shopping centres will open their doors to customers once again and people will be encouraged to return to offices .
Last of all restaurants , pubs , gyms and hotels will reopen , it is reported .
They are considered the most risky places to go as the UK fights a potential second wave of coronavirus infections .
Read more : UK draws up three-stage plan for easing coronavirus lockdown European stocks also posted rises .
Germany ’ s Dax rose 0.9 per cent and France ’ s Cac index climbed 0.86 @ @ @ @ @ @ @ benefited from a stronger than expected 3.5 per cent growth in Chinese exports in April .
That helped take the sting out of the tail of the Bank of England ’ s latest economic scenario , analysts said , in signs of a robust economic recovery .
“ Better-than-expected data from China took the markets by surprise , ” Russ Mould , investment director at AJ Bell , said .
“ [ It ] helped to stabilise earlier declines in parts of Asia and also gave support to the FTSE 100.
” He @ @ @ @ @ @ @ leading investors to speculate that the country could quickly recover from the pandemic ” .
“ Mining and oil shares rallied on the FTSE as investors bet that commodities demand could soon improve as China gets back to work , ” Mould added .
Shell and BP rose 2.9 per cent and 0.8 per cent respectively on the export data .
And miner Anglo American jumped almost three per cent .
BHP was up 2.4 per cent and Rio Tinto up 1.8 per cent .
“ The assessment of the economy from the @ @ @ @ @ @ @ Wilson , chief market analyst at Markets.com .
“ The BoE said indicators of UK demand have generally stabilised at ‘ very low levels ’ with a reduction in the level of household consumption of around 30 per cent.
” He added that the Bank ’ s recovery projections are “ optimistic ” considering the scale of the coronavirus pandemic ’ s fallout .
“ Let ’ s hope the plausible scenario is right , ” Wilson said .
“ I have a nasty feeling it won ’ t be .
There will @ @ @ @ @ @ @ way people shop , work , travel and simply move around .
“ The deep central bank and government support , especially furlough schemes , will make a huge difference , but things won ’ t be the same.
” Read more : Coronavirus : UK construction sector grinds to a halt in worst month on record The FTSE 100 managed to jump despite a strong recovery in the pound , which sank yesterday .
Some analysts linked its fall to awful data showing UK construction sector activity fell at a record rate @ @ @ @ @ @ @ sterling posted a big rebound , jumping 0.57 per cent against the dollar to $ 1.2403 .
Normally a strong pound hurts the FTSE 100 , which counts many exporters on its index .
BT suffered badly as it revealed the extent of the coronavirus fallout on its bottom line .
Shares sank over seven per cent in early trading as boss Philip Jansen scrapped the telecom giant ’ s dividend .
Read more : BT scraps dividend as Covid-19 and full-fibre rollout hit profit Insurer RSA posted the strongest growth on the @ @ @ @ @ @ @ four per cent as profit grew by double digits .
And Paddy Power Betfair owner Flutter and miners Anglo American and Melrose also posted initial share price boosts of over two per cent .

FTSE 100 and US stocks rise despite more dire economic warnings
US stocks have joined the FTSE 100 in positive territory as investors bet on a relatively speedy economic recovery from coronavirus despite yet more dire economic predictions.
London’s blue-chip FTSE 100 index was up 1.4 per cent at 5,933 points in afternoon trading. This was despite the Bank of England warning of the worst slump in 300 years.
Read more: Bank of England says economy could shrink 14 per cent but rebound sharply
US stocks rose when trading opened on Wall Street. Investors shrugged off the news that more than 33m Americans have made jobless claims in around seven weeks. The Dow Jones, S&P 500 and Nasdaq were all 1.4 per cent higher in early trading.
Equities also rose in Europe, with the continent-wide Stoxx 600 one per cent higher. Germany’s Dax rose 1.2 per cent and France’s Cac index climbed 1.3 per cent.
The rise in stocks came despite the Bank of England today warning that coronavirus could cause the UK economy to shrink 14 per cent in 2020. This would be the worst economic slump since the early 1700s.
Connor Campbell, financial analyst at Spreadex, said the projections are “rather terrifying”. They include a nine per cent unemployment rate, up from under four per cent at the start of the year.
However, investors were cheered by the Bank’s prediction of a strong recovery in 2021 after the pandemic has passed.
US stocks rise as investors digest earnings
US equities climbed higher despite the number of new claimants for unemployment insurance rising by 3.2m. This took the total to more than 33m since lockdowns began.
However, a raft of upbeat corporate earnings reports helped US stocks. Media conglomerate Viacom CBS soared after reporting a jump in streaming subscribers.
Shares in biotechnology firm Moderna also jumped after saying progress on its experimental coronavirus drug was advancing.
The rise in US equities continued a recent trend. Investors have for weeks shrugged off terrible economic data and looked towards a hoped-for rebound in 2021.
The S&P 500 is now only around 10 per cent off for 2020, having risen roughly nine per cent over the last month.
Bank’s 2021 recovery hopes keep stocks green
The FTSE 100 was buoyed by the Bank’s projection of a 15 per cent recovery in 2021, analysts said. Bailey said government support measures will prevent major economic “scarring”.
On top of this, sentiment was supported by Bailey’s suggestion that said more stimulus bond-buying is very much on the table.
However Neil Wilson, chief market analyst at Markets.com, said the Bank’s recovery projections are “optimistic” considering the scale of the coronavirus pandemic’s fallout.
“Let’s hope the plausible scenario is right,” Wilson said. “I have a nasty feeling it won’t be. There will be deep and lasting changes to the way people shop, work, travel and simply move around.”
Investors have also found heart in reports that Prime Minister Boris Johnson will reveal a three-stage easing of the lockdown next week.
Read more: UK draws up three-stage plan for easing coronavirus lockdown
That could involve outdoor workplaces and small shops reopening first. Then larger shopping centres and offices could reopen. Last of all would be restaurants, pubs, gyms and hotels, it is reported. They are considered the most risky places to go.
Despite gaining in the morning, the pound was trading 0.2 per cent lower against the dollar at $1.232.
Chinese exports boost FTSE 100 stocks
The FTSE 100 also benefited from a stronger than expected 3.5 per cent growth in Chinese exports in April.
That helped take the sting out of the tail of the Bank of England’s latest economic scenario, analysts said, in signs of a robust economic recovery.
“Better-than-expected data from China took the markets by surprise,” Russ Mould, investment director at AJ Bell, said. “[It] helped to stabilise earlier declines in parts of Asia and also gave support to the FTSE 100.”
He said China’s data is “leading investors to speculate that the country could quickly recover from the pandemic”.
Oil prices rose again today, with investors betting on recovering demand. Brent crude was up six per cent to $31.40 per barrel. US WTI crude was up nine per cent at $26.10 per barrel.
FTSE 100 winners and losers
“Mining and oil shares rallied on the FTSE as investors bet that commodities demand could soon improve as China gets back to work,” Mould added.
Shell was up three per cent while BP had risen one per cent. Miner Anglo American had jumped almost six per cent. And BHP was up four per cent.
Read more: BT scraps dividend as Covid-19 and full-fibre rollout hit profit
BT suffered badly as it revealed the extent of the coronavirus fallout on its bottom line. Shares sank over seven per cent after boss Philip Jansen scrapped the telecom giant’s dividend.
Insurer RSA posted the strongest growth on the FTSE 100 early on, and was last up seven per cent after profit grew by double digits.


cityam--2020-05-07--Are we heading back towards single-use plastic because of coronavirus?

The battle against plastic pollution has rapidly gained momentum in recent years .
Our 2018 report – Plastics phase-out : exposure through the value chain – analysed the challenges across sectors beyond the use of carrier bags , microbeads and straws .
We concluded that the issue was not just a point of public concern but either an opportunity for forward-thinking companies or a threat to business profitability .
The over-riding priorities of the COVID-19 crisis have , at least in the short term , constrained efforts to tackle the challenge , both from a corporate prioritisation and from a @ @ @ @ @ @ @ term a circular economy for plastics is inevitable .
This means not simply making , using and disposing of plastic but removing unnecessary plastic , making innovative products and circulating items back into use .
We have identified 60 new regulations attempting to tackle single-use plastic .
We ’ ve had discussions with more than 100 companies about their commitments and responses to increasing regulation .
We believe the recent reversal of progress is a blip .
As our latest report on progress – Forging a new future for problematic plastic : are @ @ @ @ @ @ @ to urgently ramp up disclosure , ambition and action .
How coronavirus has increased demand for “ flexible packaging ” Market intelligence firm Wood Mackenzie has predicted a 5 % increase in demand for consumer “ flexible packaging ” in Europe this year .
This is despite demand falling to under 1.5 % last year , as shown in the graphic below .
Flexible packaging is mostly single-use plastic such as bags , liners and wraps , although it includes paper , foils and combination materials .
Plastic-free shopping has become harder due @ @ @ @ @ @ @ re-usable coffee cups over health fears .
The price of virgin plastic has also plummeted due to the fall in oil prices , making it more appealing .
For more : – This is a golden opportunity to show the merits of stock markets – How have sustainable businesses performed during the crisis ?
– Climate change and coronavirus : where next ?
With the closure of cafes , fast food outlets and restaurants , shoppers have been more reliant on supermarkets and other grocers – a sector where 37 % of packaging @ @ @ @ @ @ @ ’ s Unwrapping the Packaging Industry report .
Plastic ’ s protective and hygienic appeal during the pandemic have boosted consumption in developed markets such as Europe and the US .
Risks to progress but a complete u-turn on plastic waste commitments is unlikely Overall , we see responses to the crisis playing out over three themes : • the elimination of problematic and unnecessary items ; • innovation to ensure plastics we do need are reusable , recyclable or compostable ; • and circulation of the plastics in use within the economy @ @ @ @ @ @ @ of plastic pollution , its negative impact on global ecosystems and potential human health risks linked to microplastics are all too important to ignore .
Although some stakeholders are lobbying for governments to lift restrictions on single-use plastic items and some regulation has been delayed , we believe the regulatory pressure will continue .
For example , the European Commission has already confirmed that deadlines for the EU-wide ban on single-use plastic items , set to come into force by 2021 , must be respected .
Likewise , the UK government is not @ @ @ @ @ @ @ which will apply to plastic packaging that does not contain at least 30 % recycled plastic from 2022 .
How businesses must ramp up disclosure , ambition and action It is hard to ignore the benefits of plastic within the healthcare industry during the COVID-19 crisis .
Almost all PPE ( personal protective equipment ) is made from plastic , with some items such as aprons and gloves even counted as single-use .
However , as the hospitality sector re-opens for business and regulators review their pre-COVID agenda , it will become clear @ @ @ @ @ @ @ ocean plastic pollution has not fallen .
The long-term risks remain .
We believe consumer and regulatory pressure to transition to a more circular economy will continue , although it may not necessarily proceed at the desired speed .
COVID-19 should provoke a stronger response , not weaker .
The crisis has underscored the need for the business community to focus on long-term solutions , not quick fixes .
Business models and infrastructure can endure and even prosper in times of crisis if they act decisively .
It is time for businesses to @ @ @ @ @ @ @ read more at Schroders insights and follow Schroders on twitter .
Important Information : The views and opinions contained herein are of those named in the article and may not necessarily represent views expressed or reflected in other Schroders communications , strategies or funds .
The sectors and securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell .
This communication is marketing material .
This material is intended to be for information purposes only and is not intended as promotional material in @ @ @ @ @ @ @ intended as an offer or solicitation for the purchase or sale of any financial instrument .
The material is not intended to provide and should not be relied on for accounting , legal or tax advice , or investment recommendations .
Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions .
Past performance is not a guide to future performance and may not be repeated .
The value of investments and the income from them may go down as well as up @ @ @ @ @ @ @ amounts originally invested .
All investments involve risks including the risk of possible loss of principal .
Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy .
Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions .
The opinions in this document include some forecasted views .
We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know .
However , there is no guarantee than @ @ @ @ @ @ @ .
These views and opinions may change .
Issued by Schroder Investment Management Limited , 1 London Wall Place , London , EC2Y 5AU .
Registration No .
1893220 England .
Authorised and regulated by the Financial Conduct Authority .

What is City Talk? City Talk allows marketers to connect directly with our audience by publishing content on cityam.com
Are we heading back towards single-use plastic because of coronavirus?
If people do not cease to use plastic disposable plastic dishes, then the seas and oceans of Europe will be polluted by waste of modern civilization
The battle against plastic pollution has rapidly gained momentum in recent years.
Our 2018 report – Plastics phase-out: exposure through the value chain – analysed the challenges across sectors beyond the use of carrier bags, microbeads and straws. We concluded that the issue was not just a point of public concern but either an opportunity for forward-thinking companies or a threat to business profitability.
The over-riding priorities of the COVID-19 crisis have, at least in the short term, constrained efforts to tackle the challenge, both from a corporate prioritisation and from a hygiene perspective.
But in the long term a circular economy for plastics is inevitable. This means not simply making, using and disposing of plastic but removing unnecessary plastic, making innovative products and circulating items back into use.
We have identified 60 new regulations attempting to tackle single-use plastic. We’ve had discussions with more than 100 companies about their commitments and responses to increasing regulation.
We believe the recent reversal of progress is a blip. As our latest report on progress – Forging a new future for problematic plastic: are companies prepared? –shows, businesses need to urgently ramp up disclosure, ambition and action.
How coronavirus has increased demand for “flexible packaging”
Market intelligence firm Wood Mackenzie has predicted a 5% increase in demand for consumer “flexible packaging” in Europe this year. This is despite demand falling to under 1.5% last year, as shown in the graphic below.
Flexible packaging is mostly single-use plastic such as bags, liners and wraps, although it includes paper, foils and combination materials.
Plastic-free shopping has become harder due to coronavirus lockdowns and retailers have banned re-usable coffee cups over health fears. The price of virgin plastic has also plummeted due to the fall in oil prices, making it more appealing.
For more:
– This is a golden opportunity to show the merits of stock markets
– How have sustainable businesses performed during the crisis?
– Climate change and coronavirus: where next?
With the closure of cafes, fast food outlets and restaurants, shoppers have been more reliant on supermarkets and other grocers – a sector where 37% of packaging is single-use plastic, according to EY’s Unwrapping the Packaging Industry report.
Plastic’s protective and hygienic appeal during the pandemic have boosted consumption in developed markets such as Europe and the US.
Risks to progress but a complete u-turn on plastic waste commitments is unlikely
Overall, we see responses to the crisis playing out over three themes:
the elimination of problematic and unnecessary items;
of problematic and unnecessary items; innovation to ensure plastics we do need are reusable, recyclable or compostable;
to ensure plastics we do need are reusable, recyclable or compostable; and circulation of the plastics in use within the economy and not the environment.
The scale of plastic pollution, its negative impact on global ecosystems and potential human health risks linked to microplastics are all too important to ignore.
Although some stakeholders are lobbying for governments to lift restrictions on single-use plastic items and some regulation has been delayed, we believe the regulatory pressure will continue.
For example, the European Commission has already confirmed that deadlines for the EU-wide ban on single-use plastic items, set to come into force by 2021, must be respected.
Likewise, the UK government is not budging on the Plastic Packaging Tax, which will apply to plastic packaging that does not contain at least 30% recycled plastic from 2022.
How businesses must ramp up disclosure, ambition and action
It is hard to ignore the benefits of plastic within the healthcare industry during the COVID-19 crisis. Almost all PPE (personal protective equipment) is made from plastic, with some items such as aprons and gloves even counted as single-use.
However, as the hospitality sector re-opens for business and regulators review their pre-COVID agenda, it will become clear that – unlike with carbon emissions – ocean plastic pollution has not fallen.
The long-term risks remain. We believe consumer and regulatory pressure to transition to a more circular economy will continue, although it may not necessarily proceed at the desired speed.
COVID-19 should provoke a stronger response, not weaker. The crisis has underscored the need for the business community to focus on long-term solutions, not quick fixes.
Business models and infrastructure can endure and even prosper in times of crisis if they act decisively. It is time for businesses to renew their vows.
You can read more at Schroders insights and follow Schroders on twitter.
Important Information: The views and opinions contained herein are of those named in the article and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. The sectors and securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy or sell. This communication is marketing material.
This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. The opinions in this document include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. Issued by Schroder Investment Management Limited, 1 London Wall Place, London, EC2Y 5AU. Registration No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.


cityam--2020-05-07--AA profit rises a fifth after strong operational performance

Driving association the AA saw its profit rise nearly a fifth over the financial year , and said it expected this year ’ s performance to be only marginally lower due to the coronavirus crisis .
Shares in the motorists group rose nearly 14 per cent on the back of the announcement .
Read more : Sadiq Khan unveils plans to transform roads for walkers and cyclists post lockdown Profit for the year rose 17 per cent to £257m , up from £219m in the previous year .
Revenue also grew to £995m , up two per cent on 2018 @ @ @ @ @ @ @ per share more than doubled in the period , rising 104 per cent to 14.1p .
The association also said that it had grown its membership by 0.2 per cent in the second half of the year , taking its total number of members to 3.22m .
Of these , 80 per cent were retained from the previous 12 months , which the company said reflected the strength of its service proposition .
The firm said that although trading in February and March had been in line with expectations , it had seen @ @ @ @ @ @ @ in at the end of March .
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic .
In response to this , the business said it had implemented swift changes to its operations and cost base to mitigate the ongoing effects during the lockdown .
The AA has cancelled all pay rises and its normal bonus structure , as well as implementing a 15 per cent reduction in pay for all board members .
It has also already suspended its final dividend @ @ @ @ @ @ @ said that it expected membership to be down during the first half of the year as the country goes through the lockdown followed by some recovery as restrictions ease .
What the AA said Simon Breakwell , the firm ’ s chief executive , said : “ The last financial year was a year of strong operational and financial performance for The AA and further delivery on our strategic plan .
Read more : Coronavirus : Travel industry in line for £4bn support package “ The business continued to perform in line with @ @ @ @ @ @ @ this year but as we entered April we started to see greater variance as a result of COVID-19 .
“ We have responded quickly with changes to our operations , both in Roadside and Insurance , and material cost reduction programmes to mitigate the significant uncertainty ahead ” .

AA profit rises a fifth after strong operational performance
Driving association the AA saw its profit rise nearly a fifth over the financial year, and said it expected this year’s performance to be only marginally lower due to the coronavirus crisis.
Shares in the motorists group rose nearly 14 per cent on the back of the announcement.
The figures
Profit for the year rose 17 per cent to £257m, up from £219m in the previous year.
Revenue also grew to £995m, up two per cent on 2018, when it totalled £979m.
Earnings per share more than doubled in the period, rising 104 per cent to 14.1p.
The association also said that it had grown its membership by 0.2 per cent in the second half of the year, taking its total number of members to 3.22m.
Of these, 80 per cent were retained from the previous 12 months, which the company said reflected the strength of its service proposition.
Why it’s interesting
The firm said that although trading in February and March had been in line with expectations, it had seen more variable levels since lockdown measures kicked in at the end of March.
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.
In response to this, the business said it had implemented swift changes to its operations and cost base to mitigate the ongoing effects during the lockdown.
The AA has cancelled all pay rises and its normal bonus structure, as well as implementing a 15 per cent reduction in pay for all board members.
It has also already suspended its final dividend for this financial year.
The AA said that it expected membership to be down during the first half of the year as the country goes through the lockdown followed by some recovery as restrictions ease.
What the AA said
Simon Breakwell, the firm’s chief executive, said: “The last financial year was a year of strong operational and financial performance for The AA and further delivery on our strategic plan.
“The business continued to perform in line with our expectations through February and March of this year but as we entered April we started to see greater variance as a result of COVID-19.
“We have responded quickly with changes to our operations, both in Roadside and Insurance, and material cost reduction programmes to mitigate the significant uncertainty ahead”.


cityam--2020-05-07--Car use on the rise as drivers await easing of lockdown measures

The UK ’ s drivers have begun to use their cars more than earlier in the coronavirus lockdown period , an study by the RAC has found , ahead of Sunday ’ s announcement of how the measures will be eased going forward .
Comparing data from last week to that in the second week of lockdown , the RAC found that the number of cars on the road had risen by 11 per cent .
In addition , the total number of miles driven a day rose 23 per cent across the two weeks , with 18 per cent @ @ @ @ @ @ @ which are based on analysis of data from RAC black boxes , are supported by a survey of drivers that found that four in 10 are using their cars more often than earlier in the lockdown .
According to the survey , the top reason people gave for using their cars more was to shop for food and groceries , which was cited by 23 per cent of drivers .
RAC head of roads policy Nicholas Lyes said that the increase was possibly being driven by fatigue and boredom as the lockdown period @ @ @ @ @ @ @ weather luring people outside .
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic .
With a sunny bank holiday likely to add to the temptation , Lyes said that all eyes would be on the government ’ s announcements on Sunday .
However , Number 10 has sought to manage expectations today , with a spokesperson saying that any easing of the guidelines next week would be “ very limited ” .
Johnson will announce the next phase of the country @ @ @ @ @ @ @ a review by ministers of the current lockdown , which is now in its seventh week .
During a Cabinet meeting the prime minister said the country would move forward with “ maximum caution ” and consider data and scientific forecasts when considering whether to ease the strictest social distancing measures .
Read more : Sadiq Khan unveils plans to transform roads for walkers and cyclists post lockdown “ We are at a critical moment in the fight against the virus and we will not do anything which risks throwing away the efforts @ @ @ @ @ @ @ , Johnson ’ s spokesman added .
Lyes stressed that people should continue to follow the advice until told otherwise : “ Until anything concrete is confirmed , the current advice remains to only go out when necessary for essential purposes , or where you can not work from home ” .

Car use on the rise as drivers await easing of lockdown measures
The UK’s drivers have begun to use their cars more than earlier in the coronavirus lockdown period, an study by the RAC has found, ahead of Sunday’s announcement of how the measures will be eased going forward.
Comparing data from last week to that in the second week of lockdown, the RAC found that the number of cars on the road had risen by 11 per cent.
In addition, the total number of miles driven a day rose 23 per cent across the two weeks, with 18 per cent more breakdowns recorded.
The figures, which are based on analysis of data from RAC black boxes, are supported by a survey of drivers that found that four in 10 are using their cars more often than earlier in the lockdown.
According to the survey, the top reason people gave for using their cars more was to shop for food and groceries, which was cited by 23 per cent of drivers.
RAC head of roads policy Nicholas Lyes said that the increase was possibly being driven by fatigue and boredom as the lockdown period goes on, as well as improved weather luring people outside.
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.
With a sunny bank holiday likely to add to the temptation, Lyes said that all eyes would be on the government’s announcements on Sunday.
However, Number 10 has sought to manage expectations today, with a spokesperson saying that any easing of the guidelines next week would be “very limited”.
Johnson will announce the next phase of the country’s virus strategy on Sunday following a review by ministers of the current lockdown, which is now in its seventh week.
During a Cabinet meeting the prime minister said the country would move forward with “maximum caution” and consider data and scientific forecasts when considering whether to ease the strictest social distancing measures.
“We are at a critical moment in the fight against the virus and we will not do anything which risks throwing away the efforts and sacrifices of the British public”, Johnson’s spokesman added.
Lyes stressed that people should continue to follow the advice until told otherwise: “Until anything concrete is confirmed, the current advice remains to only go out when necessary for essential purposes, or where you cannot work from home”.


cityam--2020-05-07--UK lockdown: Consumer confidence remains 'severely depressed'

Consumer confidence in the UK ’ s lockdown economy remained “ severely depressed ” at the end of April , although research indicated there could be some pent up consumer demand when restrictions lift .
GfK ’ s consumer confidence index was at minus 33 at the end of April , a one-point increase on the previous score .
However , consumer confidence has plummeted 20 points since April last year .
Read more : US stocks slip back as consumer confidence plunges The major purchase index reported a three-point jump , suggesting there could be some pent up demand @ @ @ @ @ @ @ .
Confidence in both personal finances and the general economic situation over the next 12 months also lifted by three points , indicating growing optimism among consumers .
GfK client strategy director Joe Staton said : “ Despite a one-point improvement in our second Covid-19 flash report at minus 33 , consumer confidence in Britain ’ s lockdown economy is still severely depressed .
“ However , we are recording small improvements in our personal finances and the wider economic picture for the next 12 months , key indicators when gauging optimism for @ @ @ @ @ @ @ : Consumer confidence teeters on brink of record low during coronavirus lockdown “ And although the majority of high street retailers have been closed since 23 March , we are also seeing a small pick-up in our Major Purchase Index with a three-point increase , a possible indication of pent-up demand once business returns to the ‘ new normal ’ .
“ But in contrast to this , the nine-point spike in the Savings Index suggests cautious consumers are stashing money under the mattress over worries for the future .
”

UK lockdown: Consumer confidence remains ‘severely depressed’
Consumer confidence in the UK’s lockdown economy remained “severely depressed” at the end of April, although research indicated there could be some pent up consumer demand when restrictions lift.
GfK’s consumer confidence index was at minus 33 at the end of April, a one-point increase on the previous score. However, consumer confidence has plummeted 20 points since April last year.
The major purchase index reported a three-point jump, suggesting there could be some pent up demand when business is able to open up.
Confidence in both personal finances and the general economic situation over the next 12 months also lifted by three points, indicating growing optimism among consumers.
GfK client strategy director Joe Staton said: “Despite a one-point improvement in our second Covid-19 flash report at minus 33, consumer confidence in Britain’s lockdown economy is still severely depressed.
“However, we are recording small improvements in our personal finances and the wider economic picture for the next 12 months, key indicators when gauging optimism for our path to recovery.
“And although the majority of high street retailers have been closed since 23 March, we are also seeing a small pick-up in our Major Purchase Index with a three-point increase, a possible indication of pent-up demand once business returns to the ‘new normal’.
“But in contrast to this, the nine-point spike in the Savings Index suggests cautious consumers are stashing money under the mattress over worries for the future.”


cityam--2020-05-07--UK lockdown: Online sales soar 109 per cent to record high

Online sales soared to a record high in April after high street stores shut their doors during the UK ’ s coronavirus lockdown .
Non-store sales surged 109.6 per cent last month , the strongest result since records began 10 years ago , after all non-essential physical stores closed .
Read more : UK lockdown : Shoppers spend more on booze , beauty and crafts However , overall retail sales plunged 29.6 per cent during the month due to the impact of the lockdown .
Almost a third of discretionary spend was wiped out in April , according to the @ @ @ @ @ @ @ firm BDO .
Total like-for-like sales in the lifestyle retail sector fell 40.1 per cent in April – a historic fall for the category and the third consecutive month of negative sales .
Fashion sales plummeted 31.4 per cent , the second double digit decline for two consecutive months , as housebound shoppers spent less on new clothes .
Meanwhile , homeware sales were down 23.9 per cent during the month .
BDO head of retail and wholesale Sophie Michael said retailers should prepare for the coronavirus pandemic to have a lasting effect @ @ @ @ @ @ @ are allowed to reopen .
Read more : UK draws up three-stage plan for easing coronavirus lockdown “ Faced with a drop in consumer confidence , worsening job security , and lower spending in the economy , retailers will have to adapt their business models and strategies for the ‘ new norm ’ , ” she said .
“ These results reveal that almost a third of discretionary spend was wiped out in April .
With such a significant amount of spend removed , retailers will be focusing on preserving cash , engaging @ @ @ @ @ @ @ building operational efficiency .
“ While the government has offered unprecedented short-term support , retailers need visibility and certainty of aid beyond June in order to plan for the longer term and re-build confidence among consumers .
”

UK lockdown: Online sales soar 109 per cent to record high
Online sales soared to a record high in April after high street stores shut their doors during the UK’s coronavirus lockdown.
Non-store sales surged 109.6 per cent last month, the strongest result since records began 10 years ago, after all non-essential physical stores closed.
However, overall retail sales plunged 29.6 per cent during the month due to the impact of the lockdown.
Almost a third of discretionary spend was wiped out in April , according to the latest retail sales tracker by professional services firm BDO.
Total like-for-like sales in the lifestyle retail sector fell 40.1 per cent in April – a historic fall for the category and the third consecutive month of negative sales.
Fashion sales plummeted 31.4 per cent, the second double digit decline for two consecutive months, as housebound shoppers spent less on new clothes.
Meanwhile, homeware sales were down 23.9 per cent during the month.
BDO head of retail and wholesale Sophie Michael said retailers should prepare for the coronavirus pandemic to have a lasting effect on consumer behaviour, even after shops are allowed to reopen.
“Faced with a drop in consumer confidence, worsening job security, and lower spending in the economy, retailers will have to adapt their business models and strategies for the ‘new norm’,” she said.
“These results reveal that almost a third of discretionary spend was wiped out in April. With such a significant amount of spend removed, retailers will be focusing on preserving cash, engaging their customers through online channels, and building operational efficiency.
“While the government has offered unprecedented short-term support, retailers need visibility and certainty of aid beyond June in order to plan for the longer term and re-build confidence among consumers.”


cityam--2020-05-07--Long queues and no discounts: London's West End sets out rules as 600 shops prepare to reopen

West End businesses have been advised to cut opening hours and abandon in-store promotions as London ’ s shopping and entertainment district prepares to reopen after the UK coronavirus lockdown .
Retailers have been urged to only offer sales and promotions online to avoid drawing big crowds into stores .
Read more : Shoppers wary about life after lockdown as restrictions cost UK retailers £2.7bn a week Visitor numbers will be managed with waiting areas to the left of store entrances to avoid long queues .
Shops should reduce trading hours to between 11am and 7pm , according to the @ @ @ @ @ @ @ today .
Footpaths in Oxford Street , Bond Street and Regents Street will be marked to help visitors observe social distancing guidelines .
The area will also be deep cleaned before businesses get the go-ahead to reopen , and workers and customers will be provided with face masks and hand wash .
The New West End Company , which compiled the recommendations for its , said the drop off in international tourists meant there will be fewer visitors to the area .
Selfridges store director Meave Wall said : “ Today ’ s @ @ @ @ @ @ @ customers as we continue to adapt our services to maintain public safety .
Collectively adopting a consistent approach across the West End will help us all adopt the habits to keep each other safe over the coming months.
” New West End Company chief executive Jace Tyrrell said : “ Our priority is a safe re-opening of the West End , and we continue to work collaboratively with West End businesses and local authorities to put in place clear operational and logistical plans to get back to work safely .
“ Having acted @ @ @ @ @ @ @ is right that we set an example for the nation ’ s high streets in helping communities rebuild confidence in spending time together outside.
” On Sunday the prime minister is expected to announce a plan for the UK to lift its lockdown restrictions , with some measures being rolled back from Monday .
Retail and leisure businesses are working on plans to implement social distancing measures in place , so they are ready to reopen when the government gives the green light .
Read more : London retail rents to drop as @ @ @ @ @ @ @ British Retail Consortium and published last month recommended that shops limit entry and exit points , using separate doors to access and leave the store if possible .
The industry organisation also said retailers should limit the number of customers in a store at one time after calculating how many could reasonably follow two-metre social distancing .
The recommendations included providing hand sanitiser , disinfectant wipes for trolleys or basket handles , and regularly cleaning touch points such as door handles , hand rails and lift buttons .
BRC chief executive Helen Dickinson @ @ @ @ @ @ @ many retailers have proved how shops can be run safely and effectively in line with the government ’ s social distancing advice .
“ This guidance is the product of retail ’ s incredible efforts to adapt to exceptional circumstances .
The industry knows how to serve the public while protecting staff and customers alike .
“ Specific guidance for shopping centres by Revo said retail landlords should establish a revised centre capacity and consider using footfall technology to track the number of shoppers .
Car park capacity should also be revised to @ @ @ @ @ @ @ more : UK retail parks fare better in lockdown than high streets and shopping centres One way access points were also recommended , as well as “ de-cluttering ” common areas of the centre to ease the flow of shoppers .
Both the common areas and individual retail units of the shopping centre should be disinfected by one company .
Landlords should consider isolating food court areas from the rest of the centre , Revo said .
Vivienne King , chief executive at Revo , said : “ This framework is designed to @ @ @ @ @ @ @ safety challenges , namely managing hygiene , capacity and maintaining social distancing , and offering reassurance for the public .
“ As controlled environments , retail parks and shopping centres are well-placed to adapt to the new environment and collaboration between property owners , retailers and local authorities will be crucial to ensure that this is an effective process and that operations are continuous .
”

Long queues and no discounts: London’s West End sets out rules as 600 shops prepare to reopen
Oxford Street during the UK coronavirus lockdown
West End businesses have been advised to cut opening hours and abandon in-store promotions as London’s shopping and entertainment district prepares to reopen after the UK coronavirus lockdown.
Retailers have been urged to only offer sales and promotions online to avoid drawing big crowds into stores.
Visitor numbers will be managed with waiting areas to the left of store entrances to avoid long queues.
Shops should reduce trading hours to between 11am and 7pm, according to the document handed out to West End businesses today.
Footpaths in Oxford Street, Bond Street and Regents Street will be marked to help visitors observe social distancing guidelines.
The area will also be deep cleaned before businesses get the go-ahead to reopen, and workers and customers will be provided with face masks and hand wash.
The New West End Company, which compiled the recommendations for its , said the drop off in international tourists meant there will be fewer visitors to the area.
Selfridges store director Meave Wall said: “Today’s guidelines provide helpful clarity for colleagues and customers as we continue to adapt our services to maintain public safety. Collectively adopting a consistent approach across the West End will help us all adopt the habits to keep each other safe over the coming months.”
Oxford Street during the lockdown
New West End Company chief executive Jace Tyrrell said: “Our priority is a safe re-opening of the West End, and we continue to work collaboratively with West End businesses and local authorities to put in place clear operational and logistical plans to get back to work safely.
“Having acted early to protect public health, it is right that we set an example for the nation’s high streets in helping communities rebuild confidence in spending time together outside.”
Limiting customer numbers
On Sunday the prime minister is expected to announce a plan for the UK to lift its lockdown restrictions, with some measures being rolled back from Monday.
Retail and leisure businesses are working on plans to implement social distancing measures in place, so they are ready to reopen when the government gives the green light.
Guidance prepared by the British Retail Consortium and published last month recommended that shops limit entry and exit points, using separate doors to access and leave the store if possible.
The industry organisation also said retailers should limit the number of customers in a store at one time after calculating how many could reasonably follow two-metre social distancing.
The recommendations included providing hand sanitiser, disinfectant wipes for trolleys or basket handles, and regularly cleaning touch points such as door handles, hand rails and lift buttons.
BRC chief executive Helen Dickinson said: “Since the lockdown, many retailers have proved how shops can be run safely and effectively in line with the government’s social distancing advice.
“This guidance is the product of retail’s incredible efforts to adapt to exceptional circumstances. The industry knows how to serve the public while protecting staff and customers alike. “
Shopping centres
Specific guidance for shopping centres by Revo said retail landlords should establish a revised centre capacity and consider using footfall technology to track the number of shoppers.
Car park capacity should also be revised to limit the number of visitors.
One way access points were also recommended, as well as “de-cluttering” common areas of the centre to ease the flow of shoppers. Both the common areas and individual retail units of the shopping centre should be disinfected by one company.
Landlords should consider isolating food court areas from the rest of the centre, Revo said.
London Designer Outlet in Wembley Park during lockdown
Vivienne King, chief executive at Revo, said: “This framework is designed to support property owners in addressing the key safety challenges, namely managing hygiene, capacity and maintaining social distancing, and offering reassurance for the public.
“As controlled environments, retail parks and shopping centres are well-placed to adapt to the new environment and collaboration between property owners, retailers and local authorities will be crucial to ensure that this is an effective process and that operations are continuous.”


cityam--2020-05-07--Any easing of lockdown restrictions will be modest, says Raab

Foreign secretary Dominic Raab has said that any easing of the UK ’ s current lockdown restrictions will be modest .
In the Downing Street briefing , he said there is “ no change in the rules ” over the bank holiday weekend before Boris Johnson ’ s statement on Sunday .
Read more : Exit strategy : How and when Boris Johnson will end the UK lockdown He emphasised that the Prime Minister would reveal details of a “ roadmap ” for easing the UK ’ s lockdown in an address on Sunday evening .
He said any steps @ @ @ @ @ @ @ echoing the PM ’ s statements to opposition leaders earlier today .
“ In relation to any changes we will be guided by the evidence .
We have to take those decisions at the right moment , ” Raab said .
He added that any changes in the short term will be “ modest , small , incremental ” and closely monitored .
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic .
It is still unclear what Johnson will lay out @ @ @ @ @ @ @ The first restrictions to be lifted are epected to be the opening of non-essential shops .
Then the public may be allowed to socialise in small groups .
The second stage could see large shopping centres reopening and more employees encouraged to return to offices .
The Cabinet were updated on Sage ’ s advice and as a result of social distancing measures , the infection rate – the R level – is now between 0.5 and 0.9 .
The overall number of new cases and rate of deaths are both steadily falling @ @ @ @ @ @ @ the Office for National Statistics ( ONS ) , said the R rate is below one in all four nations of the UK , and is lowest in London .
Raab added that a further 539 people have died , bringing the death toll to 30,615 .
86,583 tests have been carried out in the past day , meaning it is the fifth day the government has missed its 100,000 testing target .
Dr Jenny Harries , deputy chief medical officer , said there had been a “ technical glitch ” in the @ @ @ @ @ @ @ news as it happens by following City A.M. on Twitter .

Any easing of lockdown restrictions will be modest, says Raab
Foreign secretary Dominic Raab has said that any easing of the UK’s current lockdown restrictions will be modest.
In the Downing Street briefing, he said there is “no change in the rules” over the bank holiday weekend before Boris Johnson’s statement on Sunday.
He emphasised that the Prime Minister would reveal details of a “roadmap” for easing the UK’s lockdown in an address on Sunday evening. He said any steps taken next week will be modest, echoing the PM’s statements to opposition leaders earlier today.
“In relation to any changes we will be guided by the evidence. We have to take those decisions at the right moment,” Raab said.
He added that any changes in the short term will be “modest, small, incremental” and closely monitored.
Listen to our daily City View podcast as we chart the economic fallout and business impact of the coronavirus pandemic.
It is still unclear what Johnson will lay out how the UK will ease lockdown. The first restrictions to be lifted are epected to be the opening of non-essential shops. Then the public may be allowed to socialise in small groups.
The second stage could see large shopping centres reopening and more employees encouraged to return to offices.
Read more: Boris Johnson to announce ‘very limited’ lockdown easing
Infection rate is lowest in London
The Cabinet were updated on Sage’s advice and as a result of social distancing measures, the infection rate – the R level – is now between 0.5 and 0.9. The overall number of new cases and rate of deaths are both steadily falling.
Sir Ian Diamond, chief of the Office for National Statistics (ONS), said the R rate is below one in all four nations of the UK, and is lowest in London.
Raab added that a further 539 people have died, bringing the death toll to 30,615. 86,583 tests have been carried out in the past day, meaning it is the fifth day the government has missed its 100,000 testing target.
Dr Jenny Harries, deputy chief medical officer, said there had been a “technical glitch” in the lab over the weekend.
Get the news as it happens by following City A.M. on Twitter.