Coronavirus has put a stop to the UK’s downtime, grounding flights, closing pubs and cancelling restaurant dinner dates.
The aviation industry has been the focus of intense speculation surrounding a potential bailout. Chancellor of the Exchequer Rishi Sunak appears to have ruled out an industry-wide rescue package. The Anglo-German Tui (TUI) has, however, received a €1.8bn (£1.6bn) loan from the German government, which may be indicative of possible funding offered to the likes of easyJet (EZJ) and British Airways parent International Consolidated Airlines (IAG), should they desire it.
Any waistline inflation caused by the closure of gyms will hopefully be tempered by our inability to eat out, although this writer has yet to maintain such equilibrium. As we transfer the burning of calories from public spaces and into our homes, our food consumption has shifted out of restaurants and into takeout, to the benefit of Domino’s Pizza (DOM), whose recent surge in online deliveries has offset the decline in collections. Food sales have also moved across to supermarkets, potentially spelling trouble for the likes of Wagamama-owner Restaurant Group (RTN), who may fear an entrenchment of home eating behaviour. We don’t doubt a flurry of restaurant activity once social restrictions are lifted, assuming these businesses are still standing, and there may be value opportunities in this sector once we have a clearer timeline for the resumption of trade – assuming their debt burdens don’t overwhelm them.
As with the rest of the high street, government measures offering business rate holidays and salary support will go some way towards ensuring the survival of restaurants and other leisure outlets, including JD Wetherspoon (JDW), which paid £57.3m in business rates last year.
Most travel and leisure companies found themselves staring into the abyss at some stage in March, until the government arrived with support that will hopefully keep them afloat during this crisis. It will be fascinating to see how some exploit the temporary imprisonment of customers and find ways to maintain their custom from their living rooms. We doubt a permanent shift from pursuing leisure beyond our homes and anticipate a rebound on the return of normal trading conditions. But this period has served as warning to those who are overly-reliant on their traditional income sources and the ability to open their doors.
Coronavirus has had a mixed impact on electronics and tech hardware businesses, some of which may offer a safe haven during this crisis. A return to business as usual in China will prove a big boon to some of these companies, although demand pressures and slashed budgets in the rest of the world will ensure that the damage of coronavirus sustains beyond this point.
See below for our entire FTSE350 review:
FTSE350 profitability: the direction is clear but not the severity
FTSE350 Review: Coronavirus and the dividend dilemma
FTSE350 groups scramble for cash
Aerospace on the descent as defence stays on course
Construction hits the brakes once again
Coronavirus threatens electronics and technology
Engineering and industrials braced for a downturn
Few guarantees for financial services
Coronavirus slams high street doors shut
Insurers stuck between policies and politics
Miners hold on to their hats in Covid rout
Supermarkets thrive but coronavirus harms other personal goods
Oil companies suffer Covid-19 crunch
Pharma giants entering the testing fray
Property income prospects dimmed by Covid-19
Subscription-based models make for sturdy businesses
Downturn threat obscures outlook for outsourcers
Are telcos still a defensive play?
