Cathay Pacific records up to $783m loss in 2021 as Covid curbs bite
Cathay Pacific recorded losses of as much as HK$6.1bn ($783m) last year as a continued reduced demand and strict coronavirus travel restrictions hit the Hong Kong airline.
The de-facto flag carrier expected to see a loss to shareholders of $719m to $783m in the year ended December 31, it said in a preliminary review on Monday. The figure still marked an improvement from the almost $2.8bn hit that its accounts sustained in 2020 following a pick-up in cargo demand.
Cathay has faced intense pressure from Hong Kong authorities who blamed its staff for fomenting the first outbreak of the Omicron variant. The company warned that a tightening of aircrew quarantine measures and other curbs last month could result in an estimated cash burn of almost $193m per month from February.
“These measures will have a significant impact on our passenger and cargo flight capacity,” chief executive officer Augustus Tang said.
The airline also said it carried 92,219 passengers last month, a more than 130 per cent increase from the year before, but still a 95 per cent decline from the pre-pandemic level in 2019.
Hong Kong has adopted a zero-Covid strategy similar to that in mainland China, which included three-week hotel quarantines and a ban on flights from eight countries until at least next month. Despite such measures authorities recorded 140 infections on Sunday, the highest number in a single day for 18 months, as the territory battles a spiralling outbreak of the Omicron variant.
Australian private sector shrinks for first time in four months, PMI shows
Australia’s private sector shrank for the first time in four months as the Omicron coronavirus variant disrupted operations, the latest purchasing managers’ index data show.
The IHS Markit Flash Australia Composite Output Index fell to a five-month low of 45.3 in January from 54.9 in December 2021, as both private sector output and demand declined while employment growth ground to a halt.
The Australian economy appeared to have bounced back in the second half of 2021. But a sharp rise in Omicron infections, which saw a daily record of almost 90,000 last week, has curbed growth, hurt consumer confidence and business optimism and affected supply chains, with supermarkets and the hospitality sector hit by anaemic staff levels. Those factors contributed to rampant price inflation.
The mining-rich state of Western Australia has continued to keep its border closed to other Australian territories as a result of the spread of Omicron.
Jingyi Pan, an economist with IHS Markit, said: “The Australian economy had slipped from a state of strong recovery [at] end-2021 to being affected by the surge in Covid-19 infections at the start of 2022.”
Despite the disruption posed by Omicron, Pan said there was cause for optimism: “There have been some early positive signs of Covid-19 infections peaking in Australia which may offer some hopes for a turnaround in the situation absent any further restrictions imposed.”
Australia’s Fortescue to buy Williams F1 battery and tech arm for £164m
Fortescue Metals Group’s green investment division has agreed to buy the battery and technology arm of the Williams Formula One racing team for £164m.
The Australian mining group said that it would use the battery systems and electrification technology acquired by Fortescue Future Industries to help achieve its target to be carbon neutral by 2030.
It plans to use the new systems to adapt its 3km-long freight trains, heavy industrial equipment and 400-tonne haul trucks to reduce emissions at its mining sites, it said.
The first major project will be an electric train concept, Fortescue said, which it expects to become a significant development in the green industrial transport sector.
Andrew Forrest, chair and founder of Fortescue, said: “This announcement is the key to unlocking the formula for removing fossil-fuel powered machinery and replacing it with zero carbon emission technology.”
Williams, one of the most famous names in car racing, was sold in 2020 to US fund Dorilton Capital for £152m in what was seen as an admission that the team could no longer compete with better funded rivals such as Red Bull and Mercedes-Benz.
What to watch in Asia today
Macau: The Chinese territory’s legislature will conduct its first reading of a gambling bill. The proposal would increase government oversight of the lucrative industry, halve the duration of casino licences to 10 years and regulate junket operations in one of the biggest shake-ups in the casino hub.
Singapore: Singapore is set to release its consumer price index for December, which will give an indication of the pace of recovery in domestic economic activity.
Taiwan: Taiwan will release industrial production data for December following a coronavirus-related disruptions, such as staff shortages, to manufacturing activities.
Pakistan: The State Bank of Pakistan is expected to stand pat at its monetary policy announcement, on expectations that a global surge in commodity prices will ease as central banks turn hawkish.
Markets: Futures for Australia, Hong Kong and Japan signal the region’s main bourses are set to decline after global stock markets recorded their steepest weekly drops since the start of the pandemic as the Federal Reserve moves to tighten financial conditions.
Rolls-Royce seeks bids for site to make small nuclear power plants
Rolls-Royce, the UK aero-engine maker, has launched a competition between regions in England and Wales to be the location of the main factory to build a planned fleet of small nuclear reactors.
An industry consortium led by Rolls-Royce has written to several of England’s regional development bodies and the Welsh government asking them to pitch for the manufacturing site, promising investment of up to £200m and the creation of up to 200 direct jobs.
The consortium secured £210m from the government last year towards the development of a fleet of mini-reactors after raising a similar amount of private sector funding.
UK prime minister Boris Johnson backed small modular reactors as part of his 10-point plan for a “green industrial revolution” to help meet the government’s 2050 net zero carbon target. The technology is viewed within the government as a good way to create manufacturing jobs as well as delivering on Johnson’s “levelling up” agenda to help less developed areas.
Under the plans, the reactors will be built in factories around the country and then assembled on site, reducing the risks and huge costs of construction of big nuclear power plants. The main factory will build the heavy pressure vessels that are part of the reactors.
Activist hedge fund Trian builds stake in Unilever
Nelson Peltz’s activist hedge fund Trian Partners has built a stake in Unilever, ratcheting up the pressure on the FTSE 100 company after its abortive pursuit of GlaxoSmithKline’s consumer health business.
People with direct knowledge of the matter told the Financial Times that the $8.5bn New York-based hedge fund had taken a position in the UK group’s shares, adding to the challenges facing chief executive Alan Jope.
The Unilever boss is already facing simmering shareholder discontent after its £50bn attempted takeover of GSK Consumer Health. He now confronts a fierce activist fund known for demanding streamlining and governance reforms at consumer goods groups including Procter & Gamble, Sysco and Mondelez.
The people with knowledge of the stakebuilding did not provide details on its size or when precisely it began.
The revelation comes after a tumultuous week for Unilever in which it was forced to acquiesce to shareholder demands that it halt its pursuit of GSK’s consumer health business after three failed bids.
The investor revolt last week drove Unilever’s share price down by as much as 11 per cent. It recovered part of the losses after the company said it would not raise its offer any further.
Fed expected to back first pandemic-era interest rate rise in March
The Federal Reserve is set to confirm its plans to raise interest rates in March for the first time since the onset of the pandemic, as the US central bank charts a more aggressive course towards monetary tightening in the face of sticky inflation.
Fed officials will convene this week for their inaugural policy meeting of 2022, the first since the central bank made its fight against rapid US consumer price growth its top priority.
The Fed has hardened its rhetoric in recent weeks about the risks posed by high inflation, with chair Jay Powell this month calling it a “severe threat” to a sustained economic expansion and a robust labour market recovery.
Its top policymakers have also made it clear that they are willing to act forcefully to ensure inflation does not become ingrained, by considering raising interest rates “sooner or at a faster pace” than anticipated and swiftly shrinking the Fed’s enormous balance sheet this year.
Coupled with mounting evidence that inflation is broadening out and the labour market is quickly healing, the central bank is well placed to move in March, many Fed officials and Wall Street economists argue.