In case the scale of the disruption to the airline industry wasn’t obvious already, EasyJet confirmed on Thursday that it will make a full-year loss for the first time in its history. It will report a headline pre-tax loss of between £815m and £845m, with another £440m of non-headline charges linked to its restructuring programme and fuel hedges, among other things, which will weigh the airline down further.
EasyJet flew 50 per cent fewer passengers in the year to the end of September, and 38 per cent of its previously planned schedule between July and September. Despite cost-cutting measures, at £620m revenues for the final three months of EasyJet’s financial year were still lower than its cash burn at less than £700m — and almost three quarters lower than the same period a year ago.
EasyJet said flying peaked in August and had tapered off during September as quarantine rules and changes in government guidance put people off flying. It will only fly 25 per cent of the schedule between now and Christmas, with no financial guidance for the year ahead.
Hargreaves Lansdown attracted £800m in net new business during the three months to September, with a rebound in the markets helping lift its assets under management by £2.9bn in total to £106.9bn. Hargreaves said it was a “pleasing result” given weakening investor sentiment due to Covid-19 and “the re-emergence of Brexit uncertainty”.
Shepherd Neame is the latest brewer to warn of tough times ahead. It said that it anticipated challenging trading during the winter months. On Wednesday Greene King said it would cut 800 jobs and keep 79 sites temporarily closed with some to stay shut permanently.
Imperial Brands said sales of vaping products and other tobacco alternatives fell by almost a third over the past twelve months, underlining the regulatory difficulties Big Tobacco groups have experienced with new products. Tobacco revenue is still expected to rise by 1 per cent year-on-year, though.
Gambling group GVC and spread betting site CMC Markets both have trading updates out on Thursday. The boom in online trading looks to have continued at CMC, while at GVC online gaming revenues also remain well above pre-Covid levels, up 26 per cent year-on-year between July and September.
Also out on Thursday is a quarterly update from recruiter Robert Walters.
Beyond the Square Mile
Activist investor Daniel Loeb has called on Disney to divert $3bn that it is currently paying in dividends to sharply increase content for its streaming service. The radical plan is set out in a letter to Disney chief executive Bob Chapek, seen by the Financial Times, in which Mr Loeb says the company could surpass Netflix’s subscriber base “in just a few years”. Mr Loeb told investors his investment group, Third Point, bought more Disney shares in the second quarter and now owns 5.5m, or 0.3 per cent of the company, valued at $676m.
The Vatican invested some donations for the poor and needy in derivatives that bet on the creditworthiness of Hertz, the US car rental company that defaulted on its debts earlier this year. Documents seen by the Financial Times show that in 2015 the Vatican bought structured notes containing CDS as part of a bet that Hertz would not default on its debts by April 2020. Hertz filed for bankruptcy in May of this year, giving the Holy See a narrow escape on the investment, which paid out in full. Pope Francis had previously criticised CDS, calling them “a ticking time bomb”.
US bank regulators have fined Citigroup $400m for failing to correct “longstanding deficiencies” in its risk and control systems, and ordered the lender to upgrade its processes and technology. The fine comes on the heels of news that, in August, Citi mistakenly wired $900m to creditors of one of its clients sparking a protracted legal fight. Last month, the bank announced Mike Corbat would retire as chief executive in 2021, several years earlier than expected.
Essential comment before you go
Murphy’s Law dictates that machinery fails unless defensive design prevents it. Namesake Ken Murphy has made an appropriately wary start at Tesco.
Frasers’ — formerly Sports Direct’s — “Fearless 1,000” bonus plan is a reminder of other schemes that purported to share the wealth, including The Persimmon 140, as it might have been called, and the £150m Boohoo scheme launched this summer.
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