So consider the flight plan as a lobbying exercise. After seeing that the lock door is ajar, Ryanair wants to force it to open. And it would be better if the fuzzy politicians did not adopt troublesome rules such as the forced blocking of the middle seat, a measure which O’Leary called “silly”.
Ryanair is not alone in the aviation industry trying to keep pace. However, far from showing how easy it would be to observe social distancing measures, the company’s two-minute “return to flight” video really demonstrated the opposite. It represented a passenger rolling his bag in a comically empty airport. Real life is not like that, at least not when flying with Ryanair.
O’Leary can’t be blamed for trying, but just saying it’s time to fly Europe again probably won’t be enough. Government messages about social distancing can be terribly confusing, but ministers, not Ryanair, still set rules on public safety.
More gloomy real estate, courtesy of Landsec
You would think that it would not be possible to cast more darkness on the British real estate sector, but the giant Landsec managed it. All it took was the release of a “serious but plausible downside scenario” that imagines a 75% drop in retail rents this year plus a 20% deficit in office tenants.
Such an outcome would certainly be considered serious, but few people would have previously considered it plausible. Landlords and tenants are fighting over the fallout from Covid-19, but Landsec described a rental disaster.
The modeling, the owner of Bluewater in Kent and Deutsche Bank’s brilliant new London office, tried to explain, was more of a “continuity” exercise designed to show that the balance sheet can withstand most storms.
On this point, it is almost certainly correct. Landsec has less leverage than most of its peers. He’s spread across multiple industries, which is just as good as the value of his retail portfolio has been cut by a fifth. And he can even afford to pay £ 80 million into a relief fund for small retail tenants who are struggling to keep them alive.
Still, Landsec still managed to drop its own share price by 13%, hitting industry-wide assessments in the process, and one can understand why. The real estate world is inhabited by born optimists. If one of the strongest outfits thinks that recovery will take until 2022 “at the earliest”, it’s a very negative view of the ground.
Dull is profitable nowadays
It’s a bit rich for Nick Read, CEO of Vodafone, to boast of the group’s “progressive” dividend policy. Only a year ago, he reduced the distribution by 40%, after defending the divi as “affordable”. Another cut would now have ended credibility, regardless of Covid-19.
Vodafone can clearly afford to distribute 2.4 billion euros (2.1 billion pounds sterling) to shareholders. Roaming charges may be lost, but data usage increases during locking, so revenues are more or less predictable. Rarely for FTSE 100 companies these days, he dared to propose a financial forecast for the current year: the free cash flow will be “at least 5 billion €”, therefore not very different from 5.7 billion € recorded during the 12 months ending in March. The dividend arithmetic works.
Shareholders will likely also be reassured by Read’s decision to rule out a counter offer for Virgin Media. Vodafone probably couldn’t afford to intervene anyway, but letting Virgin marry 02 in peace seems reasonable in its own right. The United Kingdom only represents 10% of Vodafone, and half of this revenue comes from the commercial side of the market, where the main rival will remain BT.
Instead, the main action of the companies will be a long-planned fallout from the infrastructure of European towers and masts, where valuations have been maintained due to utility-type cash flows.
Indeed, a lackluster utility vehicle is a good description of the modern Vodafone, whose start-up years have gone back with the stock price – going from 220p two years ago to 123p. The compensation for buyers at current levels, however, is a 6% dividend yield, which can ultimately serve as a support. Dull is OK these days.