Michael O’Leary has always been willing to conduct more than one fight at a time, but the Ryanair chief executive, who seems in danger of exploding with fury every time he speaks at the moment, may be well-advised to calm down and deploy smarter tactics.
For starters, his outrage over “state-aid dopers”, as he calls Lufthansa, Air France-KLM and others, is unlikely to achieve much. Alitalia was being bailed out quietly by the Italian government even before Covid-19 arrived, so the chances of persuading the EU to jump on multiple instances of “illegal” state-aid are roughly zero.
Ryanair’s own £600m loan via the Bank of England’s coronavirus lending facility falls into a different bracket, O’Leary argued, because the scheme is not sector-specific and is generally available to credit-worthy borrowers. That’s true, but don’t expect the distinction to cut much ice with EU regulators. However unfair it is, flag-carrying airlines have always been treated differently.
O’Leary’s other rant about the “idiotic” nature of the UK government’s 14-day quarantine plan will enjoy some popular support among would-be holidaymakers, but the audience Ryanair would surely prefer to influence is government itself. Ministers, after all, will make the rules, not Ryanair.
O’Leary may help himself by sounding more constructive. Here’s an idea: since “not sure” and “hope for the best” Covid cases could be most dangerous in spreading the virus in airports and on planes, Ryanair could offer a refund to any passenger, and member of their family, who feels even mildly ill in the days before a flight.
No-quibble refunds are not Ryanair’s normal style, but an effort in that direction would show more seriousness than the current exercise in throwing insults.
Debt nightmare? Boot it Intu the long grass
The beleaguered board of Intu, the over-borrowed owner of shopping centres, has thought long and hard (again) about how to resolve a £4.5bn debt nightmare and here’s its latest idea: boot the problem Intu the long grass.
The “update on lender discussions” was really a proposal not to hold meaningful discussions for a while. The owner of the Trafford Centre near Manchester, the Metrocentre in Gateshead, Lakeside in Essex, and others is seeking a standstill arrangement that would allow it to operate on a “pay if you can” basis with lenders until the end of 2021.
In other words, covenant tests on borrowings, which the company is at severe risk of failing in June, would be waived and everybody would pledge to revisit the mess another day.
There is no guarantee all lenders will play ball, of course. Intu is a complex financial construction and has many flavours of lenders – everything from high street banks to hedge funds. But the board will probably get most of what it wants since it is impossible to round up buyers for large malls, as Hammerson proved when a sale of seven centres collapsed this month. Most lenders don’t want to take control of acres of retail space.
Prepare, then, for another round of “extend and pretend”. It may make short-term sense at Intu, but a delayed restructuring adds another layer of uncertainty to valuations across the retail property sector. Nobody knows what anything is worth – and the answers are likely to take ages to arrive.
HIV vaccine points to improvements at GSK
An encouraging Covid vaccine trial by the US group Moderna pushed stock markets everywhere higher on Monday, but there was a medical breakthrough on a different front closer to home. GlaxoSmithKline said its trial to develop a two-monthly injection to prevent HIV infection has shown excellent results.
This could be very big news for GSK, which is strong in HIV treatment but has been eclipsed in prevention by the US group Gilead, whose Truvada daily pill generates sales of about $2.5bn a year. GSK said a trial of its cabotegravir medicine had been stopped three years early because the data were so good – 69% more effectiveness than Truvada.
The result seems to have been way beyond GSK’s expectations and could mean approval for cabotegravir in the US and Europe later this year. It is just one treatment and nothing can ever be taken for granted in drug development – but it’s another piece of evidence that the long-promised improvement in productivity in GSK’s labs may finally be happening.
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