Category: Business News

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Travel company Tui has extended its cancelation of trips to Spain and its islands.

It has now cancelled all holidays to the Balearic Islands and Canary Islands until 10 August and all holidays to the mainland of Spain until 17 August.

The move is in response to advice against non-essential travel to Spain and a 14-day quarantine period for people arriving in the UK from Spain.

However, Tui is adding extra flights to destinations in Greece and Turkey.

Refunds

The UK changed its guidance on travel to Spain after a spike in infections in some regions.

Tui said that customers affected would be able to cancel and receive a full cash refund. Alternatively, they can amend their holiday to a later date, or to a new destination.

Those already in the country can continue as planned, although earlier this week fellow tour operator Jet2 told some of its customers to return early from Spain.

Tui has also cancelled holidays to Cyprus until early August and to Bulgaria all year.

Andrew Flintham, managing director of Tui UK and Ireland, said: “Over 70% of customers with cancelled holidays moved to another destination over the same period or in the coming weeks.”

He added that the extra flights the company had added last weekend to Greece and Turkey had already nearly sold out.

The government should work towards a more targeted approach when deciding where to impose quarantine restrictions, Mr Flintham said.

“[We call upon} the UK Government to work closely with the travel industry and remove the ‘blunt tool’ approach to quarantine and consider the rapid introduction of regional Travel Corridors.

“The level of uncertainty and confusion created this week is damaging for business and customer confidence in travel.”

Jet2 also recently urged the UK government not to introduce blanket quarantine periods on whole countries.

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On Thursday, Tui said it would shut 166 High Street stores in the UK and Ireland, affecting up to 900 jobs.

The decision was made after changes in customer behaviour, including a shift to online, the firm said.

About 350 retail stores will remain following the closures.

The company announced in May that it planned to cut around 8,000 jobs globally as it sought to reduce overhead costs by 30% in a major restructuring.

But as the coronavirus pandemic has drawn on, the shift to online has accelerated.

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British Airways owner IAG has said it will take until at least 2023 for passenger levels to recover from the impact of the coronavirus pandemic.

IAG, which also owns Aer Lingus, posted a loss of €4.2bn (£3.8bn) in the first half of the year as demand collapsed.

Passenger numbers fell 98% in the April-to-June period, and the group has said it is planning to cut jobs.

IAG said it planned to raise €2.75bn, and had support for this from its main shareholder, Qatar Airways.

However, its shares fell 6% to 170p in early trading on Friday.

• Airlines call for joint US-EU virus testing scheme

BA employs about 45,000 staff and has more than half of these on furlough. It is planning to cut up to 12,000 jobs and is facing the threat of strike action by staff whose jobs are under threat.

Chief executive Willie Walsh said: “The industry will recover from this crisis, though we do not expect this to be before 2023, and there will be opportunities for IAG to capitalise on its strength and leadership positions.”

He added that business had begun to pick up as guidance on travel abroad was loosened: “We have seen evidence that demand recovers when government restrictions are lifted.”

But he said the industry would never be the same again: “Anyone who believes that this is just a temporary downturn and therefore can be fixed with temporary measures, I’m afraid seriously misjudges what the industry is going through.

“This will represent a structurally changed industry and that’s why we’ve taken the action that we’ve taken and that’s why we believe now the the right time to raise additional capital.”

‘Disappointed’

Mr Walsh said customers with pre-existing bookings were continuing to fly to and from Spain, despite the government’s change to guidance advising against non-essential travel to the country and the re-imposition of quarantine for people returning.

Some IAG airline passengers are still chasing refunds for cancelled flights.

A Civil Aviation Authority review of airlines’ performance on refunds said on Thursday that test calls to BA terminated after a recorded message had played out.

Mr Walsh told the BBC: “It’s important for us to acknowledge we have disappointed people. We’ve not been able to refund people as quickly as we would like.”

He said the company had paid out £1.1bn in refunds and that it aimed to speed up the repayments process so people would receive refunds within seven days of applying. But he said it was a complex process, and much of it had to be done manually.

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Burberry has partnered with China’s tech giant Tencent to launch a luxury concept store using social media interactions.

The British retailer opened its first “social retail store” on Friday in Shenzhen, China’s technology hub.

The companies want to roll the concept out across Burberry’s network in China.

The tie-up comes as tensions rise between the two countries, with China’s UK ambassador saying relations have been “seriously poisoned”.

The Shenzhen social store is the first stage of the Burberry-Tencent partnership, aimed at bringing interactions from social media into physical stores.

“It marks a shift in how we engage with our customers,” Burberry’s chief executive Marco Gobbetti said. “When it came to innovating around social and retail, China was the obvious place to go as home to some of the most digitally savvy luxury customers.”

Tencent’s WeChat social messaging platform, China’s equivalent of WhatsApp, plays a big role in this new customer experience. The app has more than 1bn users in China.

A WeChat programme allows shoppers to unlock exclusive content and personalised experiences which they can share on their social media networks.

All the clothes are labelled with QR codes which show product information on the customer’s phone when scanned.

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“It is a unique space to test and learn, and to trial innovation that can be expanded to the rest of the Burberry network in China,” Mr Gobbetti added.

Retail analysts praised Burberry for the hybrid store which combines online shopping with traditional bricks-and-mortar retailing.

“Burberry has been savvy and ahead of the curve in understanding the importance of social media and e-commerce in targeting Chinese consumers,” said Shaun Rein, founder of the China Market Research Group.

“Too many luxury brands focus on bricks and mortar and the in-store experience only while Chinese want to shop online.”

Luxury brands have been selling strongly in China as residents can’t travel overseas on expensive foreign shopping sprees due to coronavirus travel restrictions.

“China is the best bet with the most digital and social savvy consumers, and a large market for luxury retail,” said Siddharth Pathak, a partner at management consulting firm Kearney.

“The usage of digital in stores has been prevalent in China for a few years now but this definitely takes it to a whole new level.”

Headwinds

However, Burberry could face headwinds given the growing political tensions between the UK and China.

On Thursday Beijing’s ambassador to London Liu Xiaoming said the relationship between the UK and China has been “seriously poisoned”.

The two countries have clashed over a number of issues recently including the banning of Chinese technology firm Huawei from the UK’s 5G mobile network and China’s new security law imposed in Hong Kong.

“Burberry could get caught up in UK-China tension. Chinese might boycott the brand if the UK continues to be seen supporting the Hong Kong riots,” warned Mr Rein.

The luxury British brand has 61 stores in China.

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The coronavirus crisis might be causing widespread economic upheaval around the world, but the world’s biggest tech firms are thriving.

Amazon sales soared 40% in the three months ending June, while Apple saw a surge in purchases of its iPhones and other hardware.

At Facebook, the number of people on its platforms, which include WhatsApp and Instagram, jumped by 15%.

The gains come as the firms face scrutiny over their size and power.

At a hearing in Washington on Wednesday, lawmakers grilled the companies about whether they were abusing their dominance to quash rivals, noting the sharp contrast between their fortunes and many other firms.

Their positions are likely to become even stronger, as the pandemic pushes even more activity online, said Congressman David Cicilline, the Democrat who leads the committee.

“Prior to the coronavirus pandemic, these corporations already stood out as titans in our economy,” he said.

“In the wake of COVID-19, however, they are likely to emerge stronger and more powerful than ever before.”

The gains weren’t a surprise to analysts – though just how well many of the firms did, was.

At Amazon, the quarterly profit of $5.2bn (£4bn) was the biggest since the company’s start in 1994 and came despite heavy spending on protective gear and other measures due to the virus.

“This is an exceptional quarter on all fronts under extreme circumstances,” Moody’s vice president Charlie O’Shea said of Amazon’s blockbuster rise.

What were the results?

The e-commerce firm’s sales surged 40% for the three months ending 30 June to $88.9bn (£67.9bn) – its strongest year-on-year growth in years. Profits rose to $5.2bn from 2.6bn for the same period in 2019.

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The flood of online shopping has strained the firm’s capacity. Amazon hired about 175,000 people in the quarter and is working to expand its warehouse space in anticipation of continued growth.

“We’ve run out of space,” chief financial officer Brian Olsavsky said on a call with analysts about the results.

Meanwhile, Apple said quarterly revenues jumped 11% year-on-year to $59.7bn.

The shift to remote work and school helped drive demand for new devices, such as Macs and iPads, both of which saw double-digit gains. Profits hit $11.25bn, up from $10bn in the same period a year ago.

Apple said the release of the low-cost iPhone SE in April had helped to boost sales and put the electronics giant in a better position, despite the financial impacts of the coronavirus crisis.

“The last few months have underlined the importance of users – and households alike – to own better quality devices, connections and services,” said Paolo Pescatore, tech analyst at PP Foresight. “Apple smashed it.”

At Facebook, revenues rose 11% – slower than other quarters – but were still ahead of analysts’ expectations, as small businesses continued to turn to the company to advertise. The firm’s profits hit almost $5.2bn for the quarter.

• Could a boycott kill Facebook?
• Amazon v EU: Has the online giant met its match?

The resilience was helped by a spike in users, which makes the firm attractive to advertisers, said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

The firm said 2.4 billion people were active on its social media platforms and messaging apps on average in June, up 15% from last year. That included nearly 1.79 billion daily active users on Facebook, up 12% year-on-year.

As lockdowns have eased, Facebook said it was “seeing signs of normalisation in user growth and engagement”, warning those figures could flatten or decline in the months to come.

Ms Lund-Yates said the firm also remains vulnerable to social and political pressure, which could just as quickly push users away again.

“But this isn’t the first time Facebook’s navigated regulatory or social speed bumps, and it has deep pockets to throw at fixing problems,” she said.

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Alphabet, which owns Google and YouTube, was the weakest of the four.

The search giant said revenues were $38.3bn, down 2% from a year ago, as businesses cut back on ad spending.

It was the first year-on-year decline in quarterly revenue for the search giant, since Google became a publicly-listed company in 2004.

Profits dropped about 30% year-on-year to roughly $7bn. But even those falls failed to faze analysts, who had expected damage.

“We expected April to be the bottom of the digital ad market, with a return to growth in May and June, and these results suggest that acceleration was stronger than expected,” eMarketer principal analyst Nicole Perrin said.

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Charities are calling on the chancellor to protect the jobs of workers who have been shielding during the pandemic.

A total of 15 charities have warned in an open letter that workers will be forced to choose between health and their jobs, when restrictions ease.

“Some of these workers will find themselves in an impossible position,” the letter says.

A government spokesperson said that the government had “worked tirelessly” to support the clinically vulnerable.

From 1 August, extremely clinically vulnerable people who have stayed at home to protect themselves from coronavirus in England, Scotland and Northern Ireland are allowed to return to work.

But charities including Age UK and Macmillan Cancer Support have said that these employees could be at risk of being made redundant, or returning to the workplace when they do not feel it is safe.

More than two million people deemed extremely vulnerable to coronavirus are shielding in England. About 595,000 of those people usually work, according to the charities.

“Our concern is that, especially as your furlough arrangements start to unwind and the shielding scheme is paused from next week, some of these workers will find themselves in an impossible position,” the charities write in the letter.

“This is because if their occupation is one which they cannot carry out from home, and if it is extremely difficult to make their workplace safe for them, they may be forced to choose between putting their health on the line by returning, or staying safe by giving up their job.”

The charities say this is “desperately unfair” for those who have made “great sacrifices” by staying at home, and call on Chancellor Rishi Sunak to take action and protect their jobs, as well as supporting businesses.

A spokesman for the Treasury said: “We understand how challenging the outbreak pandemic has been for the clinically vulnerable and we have worked tirelessly to support them.

“Employers must ensure the safety of those with such conditions when considering working arrangements, including whether work can be completed remotely.”

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He added that the Treasury had also announced £750m in funding for charities to enable them to continue their important work, ensuring those on the front line are able to reach people who need help.

‘Impossible task’

Chris Askew, chief executive of Diabetes UK and a signatory of the letter, said: “No-one should be faced with the impossible task of choosing between their health, by returning to work in an unsafe environment, and their financial security.

“The government must ensure that employers are supported to take all the necessary measures to keep all employees safe, if they are expected to attend work outside their home.

He added that the government should introduce a new support scheme for clinically vulnerable people who are unable to return to a safe work environment.

Employers have been told to make sure that people who are shielding can work from home wherever possible, including moving them to another role if required, according to government guidance.

If bosses cannot provide a safe working environment, those who are clinically vulnerable will be able to access financial support including statutory sick pay and welfare payments, it has said.

The charities’ letter also suggests extending the furlough scheme for those who have been shielding or are at high-risk.

Currently, the UK’s coronavirus furlough scheme is set to finish at the end of October.

The latest figures show that 9.5 million people are using the scheme, at a total cost of £31.7bn to the Treasury.

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Passengers arriving in the UK from Luxembourg from Friday will have to isolate for 14 days after the country was taken off the quarantine-free list.

The government said there had been a “consistent increase” in Covid-19 cases in the country since the end of June.

More than 120,000 Britons visit Luxembourg each year but the Foreign Office now advises against all but essential travel there.

It comes after quarantine for Spain was reimposed on Sunday.

Earlier it was announced that people who test positive for coronavirus or show symptoms in the UK must now self-isolate for at least 10 days, rather than seven.

The change, announced by the UK’s chief medical officers, comes as ministers try to avoid a resurgence of the virus.

On Thursday, a further 38 people in the UK died, bringing the total number of Covid-19 associated deaths to 45,999.

In advice published on Thursday, the Foreign Office said it was not telling Britons already in Luxembourg to leave. Instead it said UK travellers should “follow the advice of the local authorities”.

It said data from the Joint Biosecurity Centre and Public Health England had “indicated a significant change in both the level and pace of confirmed cases of coronavirus in Luxembourg”.

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Jet2 is contacting some customers on Spain’s Balearic and Canary Islands to ask them to end their package holidays early, the BBC has learned.

Hundreds of customers have had flights back to the UK cancelled and been asked to return sooner than planned.

Jet2 said it cannot afford to keep sending empty planes to pick up passengers on many different dates.

BBC correspondent Gavin Lee said he understands some families on Majorca refused to accept an early return.

He said travellers were informed of the changes via emails and text messages.

Jet2 told the BBC that flights and holidays to Tenerife, Gran Canaria, Fuerteventura, Lanzarote, Majorca, Menorca and Ibiza up to and including 9 August have been suspended.

This follows a decision to suspend all holidays and flights to destinations in mainland Spain – Costa de Almeria, Alicante, Malaga and Murcia – up to and including 16 August.

“We are operating empty outbound flights to pick up customers from these destinations up to and including 3 August, and we are contacting customers who are currently in these destinations to advise them of their options regarding flying back to the UK,” a Jet2 spokeswoman told the BBC.

“We appreciate that some of our package holiday customers were due to stay on holiday for longer than this and we apologise for any inconvenience caused.

“It is important to note that we are responding to a very fast-moving situation with updates coming from the government with little or no notice, and we have had to make decisions about our programme accordingly. We can assure these customers that we will be in touch with them to resolve any issues that they may have.”

Current government advice to holidaymakers in Spain is that there is no need to leave the country at this time.

It says travellers should follow the advice of the local authorities on how best to protect themselves and others, including any measures that they bring in to control the virus.

People returning to the UK from Spain have to self-isolate for 14 days.

‘Confused and upset’

Some travellers have told the BBC that they have been left in the dark, because Jet2 has not confirmed which day they are now meant to return to the UK.

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Simon Fordy, from Cumbria, is currently in Magaluf with his family. He is feeling “confused and upset” by the news, having spent almost £3,000 on an 11-day holiday.

Mr Fordy said the family is only five days into their summer break. He told the BBC he is now “constantly checking” his mobile phone, in case he receives word from Jet2 that the family needs to leave in the morning.

It is understood that several families in Magaluf have refused to accept an earlier return flight offered by Jet2.

The UK is advising against all non-essential travel to Spain, including the Balearic and Canary Islands.

It also removed Spain and its islands from the list of countries that are exempt from the 14-day quarantine rule, after Boris Johnson warned that there were signs of a “second wave” of coronavirus in Europe on Tuesday.

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John Lewis is planning to turn retail space it no longer needs into affordable housing as part of a strategic review of the partnership.

It said it was talking to third parties about “mixed-use affordable housing”.

“As we repurpose and potentially reduce our shop estate, we want to put excess space to good social use,” said John Lewis chairwoman Dame Sharon White.

Dame Sharon said the pandemic has sped up the shift to online shopping and the business will become “digital first”.

“As we repurpose and potentially reduce our shop estate, we want to put excess space to good social use,” she said.

John Lewis, which also owns the Waitrose supermarket chain, recently announced plans to close eight of its 50 department stores. putting 1,300 jobs at risk.

• Coronavirus: John Lewis and Boots to cut 5,300 jobs
• John Lewis: ‘Devastated’ shopper sets up petition to save Watford store

In a letter to staff – who are known as partners – Dame Sharon said she expects John Lewis department stores to generate 60% of its business from online compared to the pre-coronavirus outbreak level of 40%.

She said Waitrose’s online business will “rise above 20%, from 5%”.

Dame Sharon said it will reflect the way that customers, especially younger people, are shopping “with the pandemic accelerating the importance of digital”.

A spokeswoman for John Lewis & Partners said it was too early to give details on how excess store space will be used for private and affordable housing. She said there will be a further update in the autumn.

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Of its current 50 department stores, four are freehold while the rest are leasehold. Around one third of its 337 Waitrose shops are freehold.

On Thursday, Dame Sharon also set out the issues facing the business, including potentially more redundancies.

The firm has cut around 30% of its senior managers as part of £100m cost-saving drive.

She said it aims to make savings as early as possible this financial year and next, adding: “These are very difficult decisions and I deeply regret the personal impact on partners.”

Dame Sharon also said that profits this year and next are likely to be challenging and it will take between three and five years for them to recover.

But she said: “The strategic review should see green shoots in our performance over the next 9-12 months.”

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“The laminated book of dreams,” was how comedian Bill Bailey jokingly described the plastic-coated Argos catalogue.

But 48 years on from its launch, the catalogue is finally coming to an end.

The encyclopedia-like catalogues, the basis of many a child’s Christmas wishlist, will no longer be regularly printed by the end of the January 2021.

The catalogue was first launched in 1972 and at its peak was Europe’s most widely-printed publication, with only the bible in more homes across the UK.

But now Argos says that online shopping offers “greater convenience” than flicking through its print catalogue and no further take-home editions of the catalogue will be produced.

The retailer has produced more than one billion copies of its bi-annual catalogue during its 48-year run.

The catalogue was first launched in 1972 and quickly became synonymous with the brand.

‘Changing tastes’

During its heyday, its pages featured the likes of Emma Bunton and Arnold Schwarzenegger.

Mark Given, chief marketing officer at Sainsbury’s – which owns Argos, said the move was in response to a shift in customers’ shopping habits.

“Over the decades the Argos catalogue has charted the nation’s changing tastes and trends in everything from must-have toys to the latest gadgets and devices,” he said.

“Just as our customers’ tastes have changed over the years, so have their shopping habits. We’re seeing an increasing shift towards digital shopping, using our mobile app, website and in-store browsers.”

Customers shopping on smartphones and tablets now account for more than 70% of all Argos online sales.

The retailer said it would still produce a print version of its annual Christmas gift guide.

‘March of technology’

Steve Dresser, director at Grocery Insight, told the BBC that it had only been a matter of time before the retailer made the shift to digital-only.

“Everyone uses the internet for ordering nowadays, and e-commerce is experiencing a stratospheric rise again,” he explained.

“Post-Covid 19 there is even less of a call for a catalogue.

“The reality is the march of technology and progression doesn’t spare anything, not even the beloved Argos catalogue.”

Last year, Argos made all its back catalogues available to browse online, letting consumers reminisce over everything from the 1974 hostess trolley (then priced at £43) to the 1987 personal stereo (£19.95).

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UK-based bank Standard Chartered has seen its profits slump as it was hit by the impact of the coronavirus pandemic.

Underlying pre-tax profit fell 25% to $1.95bn (£1.5bn) for the first half of the year as economic weakness drove up the number of bad loans on its books.

The bank’s outlook was also clouded by political unrest in Hong Kong, which is its largest market.

Both Standard Chartered and HSBC have faced criticism over their positions on China’s actions in the city.

“Low interest rates and depressed oil prices continue to be headwinds and we expect new waves of Covid-19 related challenge in the coming quarters but I am confident that our resilience and client franchise will see us through,” group chief executive Bill Winters said in a statement.

The bank also said it had increased the amount of money set aside to cover potential bad loans in the first six months to $1.57bn.

The Covid-19 pandemic is hitting businesses globally as governments around the world shut down their economies to slow the spread of the virus.

The results from Standard Chartered come days before rival lender HSBC publishes its own half-year figures.

Breaking with tradition

Last month, both banks broke with their traditional political neutrality as they gave their backing to China’s new security laws for Hong Kong.

Standard Chartered and HSBC issued statements that said the legislation can help maintain long-term stability in the city.

However, that stance was criticised by a leading investor in the two banks.

David Cumming, the chief investment officer for equities at UK insurer Aviva, which holds around $1bn in shares of Standard Chartered and HSBC said: “If companies make political statements, they must accept the corporate social responsibilities that follow.”

“Consequently, we expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to the law,” he added in a statement.

In today’s earnings announcement Standard Chartered’s group chairman José Viñals addressed the international tensions over China’s policies in Hong Kong:

“We are convinced that more collaboration – not less – is the best way to find a sustainable equilibrium in these complex situations, but we do not expect an easy or quick resolution.

“We do believe, however, that Hong Kong will continue to play a key role as an international financial hub and we are fully committed to contributing to its continued success,” he added.