Three things you need to know in the financial markets this morning from investment writer, Tony Cross.
International Consolidated Airlines
There’s a flurry of statements out from the travel industry this morning, providing further detail as to their responses to COVID19. First up is International Consolidated Airlines [LON:IAG], who note that capacity in Q1 of this year will be down 7.5% on the same period in 2019, but more dramatic is the 75% cut in flights forecast for April and May. The company has some EUR9.3billion worth of liquidity behind it, but it seems as if another turbulent day lies ahead for airline stocks.
easyJet [LON:EZJ] also updates the market this morning, although is less prescriptive, focusing instead on ‘significant’ cancellations which will continue on a rolling basis and ‘could result in the grounding of the majority of the easyJet fleet’. The cash balance is somewhat smaller than that at IAG and the note also highlights assets including aircraft and landing slots, although under the current scenario, it’s difficult to see how these can be sensibly valued. The company notes – perhaps unsurprisingly – that given the uncertainty, forward guidance for the year cannot be given.
Other travel groups – notably WizzAir and Carnival Cruise Lines – have also updated the market, but moving away from the sector, retailers Kingfisher [LON:KGF] have this morning also published a note on the health crisis. A couple of notable observations in here include the fact that 95% of the factories it uses for supply in China have now reopened, whilst in February 2020, group sales were up 7.6% – or up 2.3% once the leap year effect was removed. Sales for early March remained ahead of last year’s numbers, although the enforced shuttering of stores in France and Spain from this weekend will likely have an impact. The company is aiming to circumvent this with click & collect and/or home deliveries via online channels. The company has just over £1 billion of liquidity available.
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