Hertz files for bankruptcy after coronavirus pandemic sees car rental business business plummet

Hertz files for bankruptcy after coronavirus pandemic sees car rental business business plummet

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The car rental company Hertz has filed for bankruptcy protection in the US due to debt and the stalling of global travel by the coronavirus pandemic.

Hertz was recently forced to cut 12,000 people from its global workforce and put another 4,000 on furlough, but the measures came too late to save the 102-year-old business.

The firm, which has more than 400 outlets across the UK and Ireland, was 18.7 billion US dollars (£15.3 billion) in debt at the end of March with only 1 billion dollars (£820 million) of available cash.

Starting in mid-March, the company lost all revenue when travel shut down due to the coronavirus pandemic and it started missing debt payments in April.

It plans to continue operating while restructuring its debts.

Hertz said on Friday: “The impact of Covid-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company’s revenue and future bookings.”

It added that the uncertainty over when the market would recover led the company to make the decision to file for bankruptcy.

The company, which began operating in Chicago with Model T Ford cars over 100 years ago, has also been plagued by management upheaval.

It named its fourth chief executive in six years on May 18 after the chief executive resigned last week.

“No business is built for zero revenue,” former boss Kathryn Marinello said on the company’s first-quarter earnings conference call on May 12.

“There’s only so long that companies’ reserves will carry them.”

Hertz’s bankruptcy protection filing comes as no surprise.

In its first-quarter report filed earlier in May with securities regulators, the company warned that it may not be able to repay or refinance debt and may not have enough cash to keep operating.

“Management has concluded there is substantial doubt regarding the company’s ability to continue as a going concern within one year from the issuance date of this quarterly report,” it said.

Under a Chapter 11 restructuring, creditors will have to settle for less than full repayment, but the business is likely to continue operating.

Source Article from https://www.standard.co.uk/business/business-news/hertz-bankruptcy-coronavirus-pandemic-car-rental-a4449181.html

May 23, 2020 |

Burberry hit by Covid-19 disruption but encouraged by recent Asia trading

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Burberry on Frisay said it is encouraged by a “strong rebound” in parts of Asia where lockdowns have eased, as it outlined how UK shops will look in future.

The FTSE 100 company, known for its trademark trenchcoats, revealed how Covid-19 travel restrictions and store closures hurt sales and profits for the year to March. But it also pointed to signs of growth since then.

Chief executive Marco Gobbetti said: “It will take time to heal but we are encouraged by our strong rebound in some parts of Asia.” Sales since the start of April in mainland China and Korea are ahead of the prior year.

The shares improved 34p to 1409p. Finance chief Julie Brown said when its UK branches reopen, stores will mirror what other sites are doing to promote social distancing. That includes staff splitting shifts, limiting the number of customers allowed in, and having signs up about distancing. Hand sanitisers will also be on site.

Burberry still expects difficulties ahead, with around 50% of its 421 sites still closed.

It booked a charge of £241 million in the year to March linked to the crisis, taking into consideration factors such as write-down on the value of stock.

It saw pre-tax profits fall to £169 million from £441 million and it said revenues for the year to March fell 3% to £2.6 billion. Comparable sales dropped 27% in the fourth quarter.

Burberry declared a full-year year dividend of 11.3p, down 73%.

It said given the uncertainty caused by Covid-19, “we believe it is prudent to protect our liquidity position at this time”. As a result, a final dividend has not been declared with future dividend payments to be reviewed at the end of FY 2021.

The move makes makes Burberry the latest FTSE 100 company to cut dividends.

The retailer has previously pointed out that before the virus escalated, it was seeing a “positive” response to new products. The boss today said: “Prior to Covid-19, we were delivering strong momentum across our brand and product, with sales ahead of our expectations.”

Gobbetti added: “We have taken swift action to mitigate the financial impact on our business, while prioritising the safety and wellbeing of our teams and customers. We have a strong balance sheet and liquidity, with space for investment when markets recover.”

Source Article from https://www.standard.co.uk/business/burberry-hit-by-covid19-disruption-but-encouraged-by-recent-asia-trading-a4447986.html

May 22, 2020 |

When will pubs reopen in the UK? Latest government updates

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UK pubs may be allowed to partially open soon as the Government relaxes coronavirus lockdown restrictions.

Pubs, cafes, bars and restaurants have been closed in Britain since March 20.

However, according to official recommendations, they could open by summer if they can maintain social distancing measures.

Pubs could make use of beer gardens and outdoor spaces to partially reopen in the coming months.

It could take longer for pubs without open areas to reopen – and they would have to pay for an outdoor licence.

Government officials had previously suggested the UK’s more than 48,000 pubs would not reopen for many months.

However, in early May Professor Robert Dingwall, a Government adviser said pub beer gardens could reopen, as long as they can maintain social distancing.

He told BBC Radio 4’s Today programme: “If it is a sunny weekend afternoon and the pub has a garden and the landlords are prepared to accept responsibility for not overcrowding that garden, I see no particular reason why it should not reopen.”

What measures will landlords take to keep customers safe?

Pubs will need to be regularly cleaned, and there could be limits on the number of people allowed inside at a time.

Staff working hours will likely be staggered, and hand washing kits will be added at exits and entrances.

Some pub chains, such as Greene King, plan to reopen gardens with customers ordering their drinks by phone to avoid long queues.

Some chains such as Wetherspoons already allow customers to use apps to order drinks and food – and this practice may increase as pubs re-open.

Tourism Alliance Director Kurt Janson told the Sun that pubs could open up large beer gardens on high streets and farmlands to help social distancing.

The Financial Times reported on Monday that British pub operators have asked for social distancing rules to be halved from two metres to one in talks with government on reopening, concerned that otherwise many would have to close.

How will Wetherspoons manage the reopening?

Wetherspoons, Britain’s largest pub chain with around nine per cent of the market, has revealed strict social distancing and cleaning measures for when its 875 UK and Irish pubs can reopen.

The company has said it will encourage people to pay by its app and sit outside. Tables inside will be separated by screens.

Customers will otherwise queue in a one-way system with social distancing measures in place.

Each pub will have at least two workers cleaning tables and frequent touch points regularly, Wetherspoons said. Hand sanitisers will also be installed in each pub.

Employees will be given masks and gloves, but won’t have to wear them, the company added.

Source Article from https://www.standard.co.uk/business/business-news/pubs-reopen-uk-coronavirus-lockdown-a4445081.html

May 22, 2020 |

EU's survival under threat warns billionaire George Soros

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Billionaire financier George Soros has warned that the European Union’s survival is under threat from coronavirus unless it can come up with the financial tools to help weak members such as Italy.

Soros wants to see the EU issue bonds, action the bloc has so far decided against taking.

Soros said: “If the EU is unable to consider it now, it may not be able to survive the challenges it currently confronts. This is not a theoretical possibility; it may be the tragic reality.”

Soros added that the EU would have to maintain its AAA credit rating to issue such debt – and thus have to have tax raising powers to cover the cost of the bonds.

Asked about Brexit, Soros said he was particularly worried about Italy: “What would be left of Europe without Italy? The relaxation of state aid rules, which favour Germany, has been particularly unfair to Italy, which was already the sick man of Europe and then the hardest hit by COVID-19.”

Soros used Quantum Fund in 1992 to bet successfully that sterling was overvalued against the Deutsche Mark, forcing then Prime Minister John Major to pull the pound out of the European Exchange Rate Mechanism.

Source Article from https://www.standard.co.uk/business/eu-survival-billionaire-george-soros-a4448321.html

May 22, 2020 |

Aviva expects £160 million of insurance claims from Covid-19

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The UK’s largest insurer Aviva on Thursday said it expects to pay £160 million of claims tied to the coronavirus shutdown.

Most of the payments will be in business interruption, travel insurance and commercial lines.

The FTSE 100 company said the crisis posed challenges to meeting its 2022 targets.

Sales in the second quarter have already been hit and it warned of consequences from a severe economic downturn.

Chief executive Maurice Tulloch said: “The economic outlook remains uncertain and will affect our business, however the strength of our capital and liquidity means we are well positioned to manage this crisis and continue to support our customers.”

The company’s solvency ratio, a measure of how much extra capital an insurer holds to withstand stressful situations, was 182% at the end of March, well above the 100% threshold.

Aviva said on Tuesday that former Lloyd’s of London chief financial officer George Culmer would become chairman of the insurance firm.

The company had £2.5 billion of liquidity.

Source Article from https://www.standard.co.uk/business/aviva-expects-160-million-of-insurance-claims-from-covid19-a4446761.html

May 21, 2020 |

Pets at Home outlines phased return of dog grooming service as sales top £1bn

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The chief executive of Pets at Home on Thursday said the retailer will start a phased return of grooming services and selling animals again for the first time since the lockdown came in.

Peter Pritchard spoke to the Evening Standard after his company reported annual sales surpassed £1 billion, but cautioned first-half profits will come in lower than a year earlier.

The FTSE 250 retailer has been allowed to keep stores open during the lockdown period, but shut non-essential parts of the firm such as dog grooming services and selling pets.

Pritchard today said these divisions were closed to promote social distancing. They were high-contact areas of the business.

He said: “We have taken our time to get everything safe to do this [reopen these divisions]. There will be a reduced grooming service to ensure there are less people in a salon at one time. There are many dogs that need to be groomed, and we have a long waiting list.”

Pets at Home will also start a phased return of selling pets, including hamsters and rabbits.

The company recorded comparable sales growth of 9% in the year to March 26, with total revenues up 10.2% to over £1 billion. That was a record for the chain.

However, it cautioned of tougher times ahead and anticipates first-half profits will come in lower than a year earlier.

In the run up to the lockdown pet-owners stockpiled on food, but that has slowed in the first quarter of this year.

Pritchard said as well as Covid-19 disruption hitting the company, Pets at Home has put aside £5 million to help the business. That includes a £1.9 million bonus for staff as a thank you, and costs spent to get stores better equipped for social distancing, such as screens put up around cashiers.

Source Article from https://www.standard.co.uk/business/pets-at-home-outlines-phased-return-of-dog-grooming-service-as-sales-top-1bn-a4446771.html

May 21, 2020 |

AstraZeneca promises a billion coronavirus vaccines by September

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Drug giant AstraZeneca has promised to deliver one billion doses of Oxford University’s potential Covid-19 vaccine by September.

The pharmaceutical firm said it has secured the first agreements for at least 400 million doses of the vaccine.

It comes as earlier this week Health Secretary Matt Hancock said that if Oxford’s Covid-19 vaccine candidate proves successful, then up to 30 million doses for the UK could be available by September.

AstraZeneca said it has now finalised its licence agreement with Oxford University for the “recombinant adenovirus vaccine”, which will be known as AZD1222.

But AstraZeneca has stressed that the vaccine may not work and that it is still waiting results from an early stage trial in southern England, before any moves towards late stage testing.

There are so far no approved treatments or vaccines for COVID-19 among those being tested by pharmaceutical giants across the world and experts predict a safe and effective means of preventing the disease could take 12 to 18 months to develop.

Other drugmakers including Pfizer, Johnson & Johnson and Sanofi are in various stages of vaccine development.

Pascal Soriot, chief executive of AstraZeneca, said: “This pandemic is a global tragedy and it is a challenge for all of humanity.

“We need to defeat the virus together or it will continue to inflict huge personal suffering and leave long-lasting economic and social scars in every country around the world. We are so proud to be collaborating with Oxford University to turn their ground-breaking work into a medicine that can be produced on a global scale.”

He added: “We would like to thank the US and UK governments for their substantial support to accelerate the development and production of the vaccine. We will do everything in our power to make this vaccine quickly and widely available.”

The company has received more than $1 billion (£820 million) from the US Biomedical Advanced Research and Development Authority for the development, production and delivery of the vaccine.

Source Article from https://www.standard.co.uk/business/astrazeneca-covid19-september-coronavirus-hancock-a4446821.html

May 21, 2020 |

Airline bosses using coronavirus as "excuse to slash jobs", union boss says

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Airline chiefs were in the firing line today after a trade union boss accused them of over exaggerating the impact from coronavirus in order to slash jobs.

Trade union head Brian Strutton told MPs that carriers were looking to “take advantage of the crisis” by cutting unnecessary headcount.

British Airways, Ryanair and Virgin Atlantic are among the airlines that have announced plans to make thousands of staff redundant and fears are that there could be further cuts to come.

Strutton, general secretary of British Airline Pilots’ Association, told the Commons Transport Select Committee: “I believe that airlines are exaggerating the problem.

“The predictions that some of the airline leaders are saying, of up to a five or six-year recovery, is not in line with industry standard predictions.

“Last week, Iata, the International Air Transport Association – which is usually the touchstone for these things – issued its new projections, and said that by the end of 2022 we would be back to 2019 levels.”

He added: “We’re in a trough at the moment, we will be coming out of it over the next two-and-a-half years, and I think that airlines are egging the pudding too much to take advantage of the crisis to make changes and downsize their workforce unnecessarily.”

His comments come as British Airways announced over the weekend that cabin staff face a potential whopping 55% cut to their salaries.

A letter received by staff yesterday outlines plans to slash cabin crew salaries to £24,000, while senior crew would have to downgrade to basic level pay.

Most senior crew – customer service managers – are currently on around £35,000, while some crew leaders – customer service directors – can earn up to £80,000 per year.

Unions are said to have threatened legal action and staff are planning on striking.

At the same time Sir Richard Branson is still looking for investment in order to save Virgin Atlantic.

In Europe there are signs that the airline and travel industry could restart this summer. The Italian government has passed legislation that will allow people to travel abroad from 3 June.

The government hopes the new rules will salvage the forthcoming vacation season, when Italians traditionally escape the cities for their annual summer breaks abroad or at home.

Source Article from https://www.standard.co.uk/news/airline-bosses-coronavirus-excuse-cut-jobs-a4445971.html

May 20, 2020 |

UK government sells bonds with negative yield for first time ever

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The UK sold gilts with a negative yield for the first time in history on Wednesday, meaning investors paid for the privilege of borrowing from the UK government.

The three year bond raising £3.75 billion was sold with a yield of -0.003%.

More follows…

Source Article from https://www.standard.co.uk/business/uk-government-sells-bonds-with-negative-yield-for-first-time-ever-a4445881.html

May 20, 2020 |

Serco apologises after accidentally sharing coronavirus contact tracers' emails

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Outsourcing giant Serco has apologised after it accidentally shared almost 300 email addresses of new recruits to the Government’s coronavirus contact-tracing programme.

The company is helping to sign up people to support efforts to track and trace cases of Covid-19 to help reduce the spread of the disease in the UK.

The Government has promised to recruit 21,000 contact tracers to manually gather information and get a detailed picture of who might be at risk of infection. Serco made the error when it emailed new trainees to tell them about training. Serco included 296 addresses in a CC section of an email rather than BCC, meaning they were visible to recipients.

A spokesman for the company said: “An email was sent to new recruits who had given us their permission to use their personal email addresses.

“In error, email addresses were visible to other recipients. We have apologised and reviewed our processes to make sure that this does not happen again.”

Ministers hope contact tracing will reduce transmission of COVID-19 by identifying and alerting people who may have been exposed to the virus, so they can protect themselves and others around them by self-isolating.

In February Serco said it had grown annual revenues for the first time since 2013 after winning major contracts, including a £1.9 billion deal to supply asylum accommodation and one worth £800 million to provide prisoner escorts and custody services in the UK.

It came after the company and fellow outsourcer G4S found themselves at the centre of a public and political storm in 2013 when it emerged that the pair had been overcharging the Government for electronically monitoring people who were either dead or in jail, or had left the country.

The two businesses were stripped of their responsibility for tagging criminals in the UK later that year.

It led to a £22.9 million settlement by Serco with the Serious Fraud Office, on top of a £70 million fine from the Ministry of Justice in December 2013.

Source Article from https://www.standard.co.uk/tech/coronavirus-serco-apologises-as-firm-accidentally-shares-contact-tracers-email-addresses-a4445571.html

May 20, 2020 |
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