By Powerscourt on 26/05/2020

Powerscourt Coronavirus Briefing – 26 May 2020


A few green lights are now beginning to flash across the world’s economic dashboards even amid evidence that the economic nadir may have been reached.

The bad: much of the world remains mired in a severe downturn, with many economies on track to record severe annual contractions, and further large-scale layoffs still yet to come. The World Health Organisation on Monday issued a stark warning against complacency, saying an “immediate second peak” was a distinct possibility if measures over public health were lifted too quickly in developed nations.

The good: on Monday there were tentative signs that things have turned a corner in certain industries and regions, and Asian markets rose overnight after what was a public holiday weekend.  Tokyo’s Nikkei 225 index rose 2.55% to hit a three month high while Australia and New Zealand were at their highest levels in 10 weeks.

Data from internal security systems for airlines in the US on Monday showed a threefold uptick in travel between mid-April and late May. Meanwhile, a survey of German business sentiment showed a strong rebound for May. Ireland announced on Monday that it had 24 hours without virus deaths.

In the UK, Prime Minister Boris Johnson indicated that his Government was on track to move to the next stage of relaxation, providing a timetable to reopen non-essential retail outlets, as he said the UK was continuing to meet the key health tests showing that reopening was safe.

Any positive news on the UK’s roadmap out the coronavirus crisis, however, was drowned out on Monday by a howl of rage from the British public over the Government’s failure to sack Dominic Cummings, his controversial adviser. Cummings’s hastily arranged press conference to justify his decision to travel 400 km to take his wife and child to stay with his parents at the height of the crisis – when he was one of the key architects of the lockdown policy – did little to satisfy a baying press mob and an increasingly angry public, and the row is distracting an already thinly spread Government from focusing on recovery.

With some signs of stabilisation, however, the world is finding time to focus on other strategic priorities. Growing tensions between China and the West over Hong Kong are back in focus on Tuesday, after the Chinese government imposed a new security law at the end of last week.


Travel and Leisure 

Stagecoach Group

The transport group released a Covid-19 update today, noting the UK government’s announcement of a bus, tram and light rail restart programme in England to facilitate a planned increase in local services. It is explained that the Department for Transport has announced it is making available a further £245 million for buses, and £29 million for trams and light rail, with discussions ongoing between the Government and industry representatives regarding future arrangements. Stagecoach Chief Executive Martin Griffith said: “”With the comprehensive safety measures we have put in place and the support of our passengers and our employees, we stand ready to restore our services to closer to pre-COVID levels. We will continue to work with our local authority partners and other key stakeholders on making the best use of increased capacity.”


The German airlines is to receive a rescue package worth a total of €9bn from the German government, subject to approval by the EU and shareholders. The country’s Economic Stabilisation Fund, which was formed the mitigate the impact of Covid-19 on German businesses, will buy €300m worth of new shares, bringing its stake in the company to at least 20%. The aid will also include €3bn in loans via the country’s state-owned development bank, and as a consequence prohibit the airline from paying dividends or full executive pay.


Latin America’s largest airline has filed for bankruptcy protection in the United States, alongside its affiliates in Chile, Peru, Colombia, Ecuador and the US. Its affiliates in Argentina, Brazil and Paraguay are not included. Chief Executive Officer Roberto Alvo said: “We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option”.

Industrials & Transport 

Bombardier Transportation

The owner of Britain’s largest train factory has asked for contractual charges, amounting to around £20 million a month, to be suspended after it was forced to halt production. The company has told the UK government that it will be “unable to continue production” without this support. Its request comes as the Treasury prepares a new bespoke plan, named Project Birch, for strategically important companies facing severe cashflow issues.


Financial Services & Real Estate 


The Board of Europe’s largest lender is pushing executives to consider more drastic action as a result of the coronavirus crisis, following the significant restructuring that was announced in February. This included cutting 35,000 jobs, cutting costs by $4.5bn, and redirecting resources to HSBC’s profit centre in Asia. The latest changes suggested reportedly include further cuts, and the possible sale of its US business alongside its retail network in France.


The estate agent has today issued an update on the evolving impact of the Covid-19 pandemic, sharing that it is planning to start re-opening its branches over the course of this week, with all branches expected to open by 1 June 2020. It will be bringing back furloughed employees on a gradual basis from the same date. On business performance during the lockdown, it announced that commissions earned in the eight weeks between Monday 23 March 2020 and Friday 15 May were down 44% on the previous year. The company added that “it is still too early to predict what the full impact of the Covid-19 pandemic will be on Foxtons’ full year results”.




The IT infrastructure provider released a trading update today, in which it shared that it had traded “satisfactorily” during the period, delivering growth in revenue, gross profit and operating profit. It included that there remains a high degree of uncertainty in the coming months, with Softcat not immune to the challenges faced by the wider economy, but confirmed that it has moved seamlessly to a remote working model, with the Board encouraged by the resilience of the business thus far.

Kainos Group

The IT services provider announced its preliminary results for the year ended 31 March 2020, in which it shared revenue growth of 18% year-on-year and adjusted pre-tax profit growth of 9%. On the impact of Covid-19, it noted that it implemented home working for its 1,700 staff with no challenges, and anticipates that its customers in the public sector and in healthcare will likely be more robust than those in other sectors during this crisis. In order to manage its cost base however, it has furloughed staff, paused recruitment, and delayed pay increased and bonus schemes. A number of the most senior Executive Directors have elected to take no salary or bonus, while the remainder have reduced their compensation by 50%.



Boris Johnson sorry for public anger after Cummings defends trips – The Financial Times

High Street to reopen as UK edges back to normality – The Daily Telegraph

Big investors enjoy a £1bn payday from fundraisings – The Times