Buffett exits airlines
Hit by restrictions
Warren Buffett’s investment company Berkshire Hathaway has offloaded all of its shares in the US’s four largest airlines – Delta (US:DYAL), American (US:AAL), Southwest (LUV) and United (UAL). Mr Buffett relayed this to shareholders via a virtual annual meeting, explaining that “the world has changed for the airlines”. He added that “I hope it corrects itself in a reasonably prompt way” – but also that he could not gauge whether consumers would now have changed their habits. Airlines are among the sectors that have been most hurt by lockdowns and travel restrictions across the globe.
Premier Oil court approval
But faces appeal
Premier Oil (PMO) has received the green light from a court to go through with its takeover of BP (BP.) assets in the North Sea. But the plan was challenged by Premier creditor and major short position holder Asia Research and Capital Management (ARCM), which said it would immediately appeal the decision. The acquisition cannot proceed until the appeal is heard, and shareholders also need to back the plan. Premier announced back in January that it had set up the $871m (£700m) deal to buy BP’s Andrew Area and Shearwater operations and to buy Dana Petroleum’s 25 per cent stake in the Tolmount Area field.
NHS trials tracking app
Isle of Wight
A trial version of the NHS’s coronavirus tracking app is currently being tested on the Isle of Wight. The technology, which was created by the health service’s digital arm NHSX, uses Bluetooth signals to detect other app users that an infected person has been in “significant contact” with. But there are questions about data privacy. The government says this issue is “paramount”, and the National Cyber Security Centre was involved in making the app. Apple (US:AAPL) and Google (US:GOOGL) have developed their own app “with user privacy and security central to the design”.
German court questions bond buying
On Tuesday, the German Constitutional Court called for proportionality assessments for future quantitative easing by the European Central Bank (ECB), implying it would take steps to block further bond buying if such an assessment was not carried out within three months. Martin Bartlam, partner at international law firm DLA Piper, commented: “It [the statement] may now make it harder for the ECB to extend and widen the coronavirus response programme without running the risk that the German Bundesbank would not participate in view of the German constitutional challenges.”
House prices rose pre-crisis
Data lags
Annual house prices rose by 3.7 per cent in April, up from 3 per cent in March – the fastest pace since February 2017, according to the Nationwide House Price Index. But the effects of the coronavirus crisis have not been captured by the latest figures, because the index is constructed using mortgage approval data – for which there is a lag. Still, Nationwide’s chief economist Robert Gardner said: “In the opening months of 2020, before the pandemic struck the UK, the housing market had been steadily gathering momentum”. That activity is now “grinding to a halt”.
AIG profits plunge
Covid-19 losses
American insurance giant AIG’s (US:AIG) post-tax profits landed at $99m for the three months to March 2020 – down from $1.4bn a year earlier. This enormous contraction came after $419m in pre-tax catastrophe losses (CATs) net of reinsurance – including $272m in estimated Covid-19 losses related to the likes of travel, commercial property and trade credit. Chief executive Brian Duperreault said: “We believe Covid-19 will be the single largest CAT loss the industry has ever seen.” But he added that AIG remained in a strong financial position.
Telefónica in merger talks
The Financial Times reported that Telefónica has entered talks with Liberty Global about a deal to combine O2 and Virgin Media. The paper reported that although the Spanish telecoms group said it was still in the “negotiation phase”, a deal could be announced within the next few days. The talks are being led by chief executive of Liberty Global Mike Fries and chief executive and chairman of Telefónica José María Álvarez-Pallete. Telefónica tried to sell O2 to Three in 2015 for £10.25bn, but the deal was blocked by EU regulators.
The UK new car market contracted by a huge 97.3 per cent in April, as the coronavirus pandemic closed showrooms. Just 4,321 new cars were registered during the month, with deliveries continuing to frontline workers.
Now, the Society of Motor Manufacturers and Traders (SMMT) anticipates 1.68m new car registrations this year – the lowest number since 1992.
A day prior to the release of this data, Pendragon (PDG) confirmed that it hadheld exploratory discussions with car retail rival Lookers (LOOK) over a potential merger. These talks have now ceased,according to Pendragon.
