Global Business Daily: VW warning, Bezos' billions, Easyjet says relax
Patrick Atack in London
"Due to the current developments, the Executive Board of Volkswagen AG assumes for now that the full year outlook for 2020… can no longer be achieved."
Those words were written to VW investors today by Helen Beckermann, the group's head of investor relations, as it was revealed the German car maker's operating profits had fallen by 81 percent in the first three months of 2020.
On the other side of that coin, Easyjet said it is not worried about its loss of earnings, as "We've been able to adapt ourselves to reduced demand for the next couple of years, then have the flexibility to increase as demand picks up again," according to chief executive Lundgren.
Meanwhile, Jeff Bezos has extended his lead at the top of the billionaires' league table as Amazon share price gains added a reported $24 billion to his wealth. It's not all rosy, however, as the online retailer has decided to close its French warehouses after a court ruled it was not properly protecting its staff from COVID-19.
And as I write this, G7 leaders are meeting to discuss the Group's response to the pandemic - but while we can't bring you any news on that yet, I can point you towards today's interview with Alan Wheatley of Chatham House, who digests what the Group of 20 decided yesterday.
After yesterday's news that a French commerce court ruled Amazon was not doing enough to protect staff from the Coronavirus, the web giant has decided to close its warehouses in the country.
Amazon's boss Jeff Bezos appears to be one of the winners of the COVID-19 downturn - as the company's share price has jumped by around five percent, adding $24 billion to the account of the world's richest individual.
Arcadia Group, which owns high street fashion brands such as Topshop and Miss Selfridge, has canceled $124m worth of orders, which the garment industry said will cause producers to collapse.
German car manufacturer Volkswagen has canceled its 2020 outlook of four percent growth as it's first-quarter profits have taken an 81 percent hit. It says its original outlook is no longer possible.
While the concern in Europe is focused on Chinese firms taking advantage of the market falls, as Toni Waterman reported yesterday, the Saudi Arabian Public Investment Fund (a sovereign wealth fund) has started doing so. It's already invested in cruise firm Carnival and agreed to buy Premier League football club Newcastle United.
In the U.S. 5.2 million more people filed for unemployment benefits last week, taking the total to 22 million in the past four weeks.
Deutsche Post revealed its international delivery arm, DHL, is struggling to cope with increased parcel numbers due to the increase in online shopping as shops close their doors to stop the coronavirus spread.
A European Union document seen by the Financial Times said companies that receive monetary coronavirus aid from the bloc will be forbidden from paying dividends or "aggressive commercial expansion."
Pan-Asian growth will slow to a halt following the current pandemic, according to the IMF. It would be the first time since the end of the Second World War it has completely stopped growing.
Budget airline Easyjet has said it does not expect passenger numbers to return to pre-COVID-19 levels before 2022, but chief executive Johan Lundgren said it would survive due to adaptations put in place.
British insurer Aviva has followed large firms in other sectors by canceling bonuses for its executives and postponing pay rises due to the pressure from the ongoing pandemic. It follows an announcement last week that it would not pay 2019 end-of-year dividends.
At the Henriette Hørlocks Primary School in the Danish city of Odense, there were only about five kids absent out of a total of around 300. Outside, parents expressed their support for the government's decision. Guy Henderson reports from Denmark's third-largest city.
G20 finance ministers and central bank governors have been taking part in a virtual meeting. They've agreed on a coordinated approach to the suspension of debt service payments for the world's poorest countries. The move is part of efforts to provide stimulus to a global economy being pushed into the steepest downturn since the Great Depression.
Alan Wheatley is Associate Fellow for Chatham House's global economy and finance program, and he joined CGTN Europe to discuss the meeting and its outcomes.
At the center of these discussions are ways in which the poorest countries could be helped through this crisis. Do you think we really will see an international joint action on this front?
Well, you mentioned the debt relief proposal that was agreed today, which is welcome, but I would say that is necessary, but far from sufficient. In my experience, it's important with these meetings to see what is not included in the statements. And there are three things that I had hoped to see that were missing.
First of all, there was no mention of any effort to give poor countries access to emergency cash by allowing the IMF to make a new issue of special drawing rights, which is the IMF's in-house currency. There was no mention of what could be done to stop capital flight from emerging countries.
And for me, most astonishingly, there was no mention whatsoever of any efforts to roll back the trade protection measures that have been introduced during this crisis by dozens of countries preventing the export not only of medical equipment but also of food. And that, for me was a big disappointment.
I wonder how much global leaders are in agreement on the economic response measures and where, if anywhere, is the leadership coming from at the moment?
I think the obvious comparison is with the great financial crisis in 2008 and 2009. Now, Gordon Brown, who was British prime minister at the time and was the head of the G20, really grabbed that issue by the scruff of the neck, coordinated a strong response that we are simply not seeing this time.
Why? Well, for a start, Saudi Arabia is the current head of the G20. It's an economic giant, but a minnow in economic policymaking. I think Europe is doing its best, but it's hardly a cohesive force.
And importantly, the United States is missing in action for arguably the first time in its history during the course of a major crisis. So as a result of that, we're not seeing the coordinated action we need in a whole host of areas such as coordinated central bank action, a game plan for economic policymaking, when we finally come out of this crisis. And as I mentioned before, measures to staunch capital flight from emerging economies.
Okay. Let's look into your crystal ball. Take us down the road to a year's time when hopefully we might be beyond the immediate crisis of coronavirus. What is this landscape look like then?
Well, I think a lot depends on the progress we make against the virus. And you were reporting earlier about the positive news of the vaccines, vaccines which are now being tested. But here I think it's very important that finance ministers start thinking now about how countries are going to pay for the production and the distribution of this vaccine because as things stand at the moment, without a coordinated plan, rich countries will be able to afford it. But what about poor countries?
And a pandemic by its definition is a global crisis. And that means we are as strong only as our weakest link. So unless we can ensure that the vaccines go to all the countries in the world, we will remain susceptible to renewed outbreaks. And that means any economic measures we take between now and then will be blunted in their efficiency. So we need to do both, right, we need to have a coordinated economic plan running alongside the health care plan.
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