LONDON BRIEFING: Airlines IAG And easyJet Warn On Coronavirus

(Alliance News) - The company warnings about coronavirus continued to pile up on Friday, as blue-chip airlines IAG and easyJet warned on softening demand due to the spread of the virus in Europe.

Global stocks are set Friday to cap their worst week since the financial crisis in 2008, after the Dow lost another 1,000 points in a day Thursday.

International Consolidated Airlines Group said it delivered "good" 2019 results despite higher fuel prices hurting operations during the year.

The British Airways parent reported 5.0% revenue growth to EUR22.47 billion year-on-year from EUR21.40 billion, but pretax profit dropped 35% to EUR2.28 billion from EUR3.49 billion amid higher employee, fuel, engineering and finance costs.

Group capacity, measured in available seat kilometres, grew by 4.0% to 337.75 billion from 324.81 billion the prior year. Group traffic, measured in revenue passenger kilometres, rose by 5.6% to 285.75 billion from 270.66 billion reported in 28.

IAG - which also owns Spanish carriers Iberia and Vueling, Level in Austria, and Irish airline Aer Lingus - reported record load factor of 82.6%, 0.7 point higher than in 2018.

It raised its annual dividend to 31.5 euro cents per share from 31.0 cents in 2018.

However, IAG warned that it is currently experiencing demand weakness on Asian and European routes resulting from the cancellation of industry events and corporate travel restrictions due to corovnavirus.

Budget airline easyJet also warned on coronavirus, saying that it has seen "significant" softening of demand and load factors into and out of its northern Italian bases. As a result, the company said it is planning to cancel some flights, particularly those into and out of Italy, while continuing to monitor the situation and adapting its flying programme to support demand.

IAG shares were down 6.9% early Friday, while easyJet was down 4.7%.

Here is what you need to know at the London market open:

----------

MARKETS

----------

FTSE 100: down 202.53 points, 3.0%, at 6,593.87

----------

Hang Seng: down 2.5% at 26,113.10

Nikkei 225: closed down 3.7% at 21,142.96

DJIA: closed down 1,190.95 points, 4.4%, at 25,766.64

S&P 500: closed down 4.4% at 2,978.76

----------

GBP: flat at USD1.2864 (USD1.2867)

EUR: firm at USD1.0996 (USD1.0984)

Gold: down at USD1,624.34 per ounce (USD1,655.10)

Oil (Brent): down at USD50.86 a barrel (USD51.32)

(changes since previous London equities close)

----------

ECONOMICS AND GENERAL

----------

Friday's Key Economic Events still to come

1100 GMT Ireland retail sales index

0930 CET EU EuroCOIN indicator of euro area economic activity

1400 CET Germany provisional consumer price index

0830 EST US personal income & outlays

0830 EST US advance economic indicators report

----------

Nigeria reported the first new coronavirus case in sub-Saharan Africa on Friday, as global stock markets tanked on deepening fears of a pandemic and the World Health Organization warned against the "fatal mistake" of complacency. The virus has proliferated around the globe over the past week, emerging in every continent except Antarctica, prompting many governments and businesses to try to stop people travelling or gathering in crowded places. The virus has killed more than 2,800 people and infected over 83,000 worldwide – the vast majority in China – since it emerged apparently from an animal market in a central Chinese city in late December. The number of new deaths and infections has been tapering off in China, following unprecedented quarantine efforts locking down tens of millions of people in the worst-hit cities. But infections elsewhere have started to surge, with Iran, Italy and South Korea becoming the major new hotspots and cases being confirmed in more than 50 countries. World Health Organization chief Tedros Adhanom Ghebreyesus said Thursday the world was at a "decisive point" and countries could still contain the epidemic if they "act aggressively now".

----------

UK consumer confidence has increased for the third month in a row, although sentiment overall remains negative, according to an index. GfK's UK consumer confidence index, which regularly asks people how they feel about their own finances and the wider economy, increased by two points in February. However the overall confidence score was still in negative territory, at minus seven – an improvement from minus nine in January and minus 11 in December 2019. A year ago, the reading was more downbeat, with an overall score of minus 13 recorded in February 2019.

----------

BROKER RATING CHANGES

----------

CREDIT SUISSE CUTS UNITED UTILITIES TO 'NEUTRAL' ('OUTPERFORM') - TARGET 920 (860) PENCE

----------

LIBERUM RAISES MCCOLL'S RETAIL TO 'BUY' ('HOLD') - TARGET 45 PENCE

----------

COMPANIES - FTSE 100

----------

Rolls-Royce said it had a "good" end to 2019 after a "challenging" first half, with revenue rising by 5% to GBP16.59 billion from GBP15.73 billion in 2018. The aircraft engines manufacturer is paying a 11.7p dividend for 2019, unchanged year-on-year. In the first half of 2019, Rolls-Royce experienced problems with the Trent 1000 TEN jet engine, and fixing those took longer than expected. The aerospace firm had been forced to launch a major maintenance and repair programme after discovering the high-pressure turbine blades on the engine deteriorated faster than anticipated. Looking ahead, Rolls-Royce said it expects to report underlying operating profit growth of about 15% in 2020. In 2019, this measure rose by 25% to GBP808 million. "The momentum we gained in 2019 underpins our confidence for the year ahead," said Chief Executive Warren East.

----------

London Stock Exchange Group reported "strong" financial performance in 2019, with revenue up 8% to GBP2.06 billion, as it continues to develop innovative services "in a range of areas". The stock exchange operator believes the proposed acquisition of Refinitiv will further accelerate its growth, adding data, analytics and multi-asset class capital markets capabilities. LSE declared a final dividend of 49.9 pence a share, resulting in a 16% increase in its annual payout to 70.0p. Looking ahead, LSEG said it remains "well-positioned" for future growth and intends to make further investments in the business, while also controlling costs.

----------

COMPANIES - INTERNATIONAL

----------

Chemicals firm BASF reported a fall in earnings in 2019 amid a tough year for its chemicals business, and noted recent heightened uncertainty amid the coronavirus outbreak. Sales in 2019 fell 1.5% to EUR59.32 billion, due to lower volumes and prices, with earnings before interest and tax, and before special items, falling 28% to EUR4.5 billion. The fall in earnings was largely due to the Chemicals and Materials segments, which saw Ebit slide by 50% to EUR791 million and 58% to EUR1.00 billion, respectively. BASF commented that it has experienced a "high level of uncertainty" in the first two months of 2020. "The coronavirus has added a new factor that is considerably hampering growth at the beginning of the year, especially in China. Lower demand and production outages in many industries are already visible consequences of the measures taken to prevent the further spread of the virus," said Brudermuller.

----------

Facebook filed a federal lawsuit against oneAudience data intelligence firm over a tactic it used to gather information about users of social media platforms. New Jersey-based oneAudience paid software makers to install "malicious" software in their apps in order to "improperly" collect data about people at Facebook and other social media sites, Facebook said. "Security researchers first flagged oneAudience's behavior to us as part of our data abuse bounty program," director of platform enforcement and litigation Jessica Romero said in a blog post. "Facebook, and other affected companies, then took enforcement measures against oneAudience." Measures taken by Facebook late last year included disabling apps; sending oneAudience legal notification to stop the activity, according to the social network.

----------

Friday's Shareholder Meetings

Green & Smart Holdings

Merian Chrysalis Investment

St James House (re share issue)

Finsbury Growth & Income

----------

By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.