Tuesday, March 17, 2020

Flight Centre warns of 'inevitable' job losses as travel ban accelerates cost cutting

Major travel agent Flight Centre has accelerated its plans for a business-wide cost savings review in light of the government's unprecedented ban on international travel, with the company warning it would be "significantly impacted".

In a statement to investors on Wednesday, Flight Centre said the ban, coupled with reductions in airline capacity, would further damage the travel agent, which has around 850 stores across Australia.

Flight Centre CEO Graham Turner has said job losses would be “inevitable” in the current environment.Credit:Attila Csaszar

Urgent discussions with landlords, suppliers, banks, vendors and insurers will be held to help the company manage the "precipitous drop" in near-term travel activity.

The business has also asked the federal government for an assistance package in light of the recent $715 million airline bailout announced yesterday.

"The conditions that our industry is facing are unprecedented and have clearly arisen as a result of the coronavirus and the initiatives that are being implemented to slow its spread," chief executive Graham Turner said.

"Management is determined to overcome the significant challenges that it currently faces and, with the support of our stakeholders, is ready to prosper when conditions eventually normalise."

On Friday, the company announced it would shut 100 of its stores amid the coronavirus outbreak and suspended its full-year profit guidance. Recruitment was also frozen, and non-essential projects deferred.

At the time, the company said it was confident the only job cuts would be in head office roles, but today it walked back on that assurance, saying while it hopes to preserve as many roles as possible, job losses "across the industry and within the company" were inevitable.

Flight Centre shares ended the session on Wednesday 4.7 per cent weaker at $14.80, having slumped more than 60 per cent since late February.

Australia's travel sector has been one of the worst affected by the coronavirus outbreak, with widespread and deep cuts to airline capacity and a sharp drop in tourists as travellers stay away.

Virgin Airlines chief executive Paul Scurrah warned on Wednesday more help would be required in the face of "an unprecedented time in the global aviation industry".

"If this lasts for six or 12 months, the aviation sector as a whole in this country is going to need the government to support us," he said.

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How China Bent Over Backward to Help Tesla When the Virus Hit

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After the coronavirus outbreak caused a nationwide shortage of face masks in January, Chinese officials were quick to ensure thatTesla Inc. wouldn’t be left without.

China’s government helped the California-based carmaker secure the sought-after supplies that allowed it to reopen at a time when many of its competitors were still shut down. Tesla received 10,000 masks, cases of disinfectant that require a government permit, thermometers and other materials that allowed the company to restart its factory near Shanghai thefirst working day after the extended Lunar New Year break, according to state-run media.

The support for Tesla — which also included providing accommodation for some employees as the outbreak snowballed — is emblematic of China’s wider embrace of Elon Musk’s car venture. The tycoon has waged a charm offensive since deciding to build his first plant outside the U.S. in China, home to the world’s biggest electric-vehicle market, and has been rewarded with the support of officials even as the trade war strained relations with the U.S.

That backing is crucial for Musk’s vision to make China a centerpiece of his automotive ambitions, but also serves a purpose for Beijing, with Tesla’s new factory south of Shanghai a symbol of the government’s efforts to open the economy to global competition and be a world pioneer in EVs.

“Given Tesla’s image of having advanced electric-vehicle technology and expected strong demand for made-in-China Tesla Model 3s this year, no local government anywhere in the world would neglect such a new project,” said Yale Zhang, founder of AutoForesight, a Shanghai-based consultancy.

‘All Efforts’

As Beijingpushed local authorities to get the country back to work last month, officials in Lingang singled out Tesla as an example of their success in helping the area’s industry to recover.

The management committee of Lingang “will make all efforts to help key companies including Tesla return to normal production,” Xu Wei, a spokesperson for the Shanghai municipal government, said at a briefing in February. Tesla representatives in China declined to comment on the help it received from authorities.

Teslahas been impacted along with the broader auto sector in China as the virus prompts customers to stay home, causing ahistorical plunge in car sales. But the support it got allowed the automaker to recover from a shutdown aimed at slowing the virus’ spread that virtually paralyzed industry in China. A gauge of Chinese manufacturing plunged to arecord low in February, according to government data.

Dorms, Transportation

Besides the protective materials, Chinese authorities helped arrange dormitories for hundreds of Tesla employees, as well as transport to and from the plant amid the turmoil caused by the outbreak. Shanghai Lingang Human Resources Co., a government-backed agency that coordinates hiring in the area, said it’s helped Tesla add more than 100 new workers since the outbreak, assisting with virus screening and online interviews.

Authorities are also trying to ensure that Tesla’s parts suppliers in China resume production as soon as possible by providing epidemic-prevention materials, Sun Xiaohe, a local official in charge of assisting Tesla, told state media. Catering was also arranged, they reported.

While other automakers such as China’s Zhejiang Geely Holding Group Co. also received masks and other support, the actions to help Tesla have been trumpeted in state media and by local government-backed outlets. Footage of locally-built Model 3 sedans being assembled amid the epidemic have proliferated on TV and online.

Even before the virus, a swift regulatory-approval process enabled Tesla to start deliveries to customers in China in January, a year after it first broke ground on the factory.

“The Gigafactory project illustrated the cooperation between Tesla and the Shanghai government, and that the city has improved its business environment,” Wu Qing, deputy mayor of Shanghai, said at a ceremony that saw Tesla hand over its first China-made car.

Chinese Loans

Local banks provided financing for Tesla’s China push, including a$1.6 billion injection announced at the end of last year. The acquisition of land for the plant and a slew of local permits were cleared swiftly, and the plant was hooked to the nation’s power gridquicker than the average for other firms.

As the factory was being planned and local permits pending, Musk visited China often for meetings with everyone from Alibaba Group Holding Ltd. founder Jack Ma togovernment officials including Transport Minister Li Xiaopeng. He met with Premier Li Keqiang in Zhongnanhai, the leadership compound next to the Forbidden City in central Beijing where the country hosts its most high-profile foreign visitors. Musk was also photographed eating steamed buns, a local delicacy, during a visit to the capital last year.

In China, Elon Musk Sure Felt the Love That Was Missing at Home

Soon afterward, Tesla obtained an exemption from China’s 10% sales tax on cars. Typically, only electric vehicles made by Chinese companies have been exempt.

“The fact that Tesla received significant government support to overcome the current crisis shows China is delivering its promises to treat foreign firms on equal footing with local ones,” said Ivan Su, an analyst at Morningstar Inc. in Hong Kong.

— With assistance by Chunying Zhang, and Ying Tian

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Monday, March 16, 2020

Crypto Exchanges Suffering Major Outflows Even As Bitcoin Soars

Despite soaring prices for Bitcoin and other digital currencies, several crypto exchanges are experiencing major net capital outflows as allegations of fraud and manipulation create market volatility for the young industry. Withdrawals from trading platforms including Bitfinex, BitMEX, Binance and Kraken have exceeded inflows by roughly $622 million in the five-day period ended Wednesday, according to data from TokenAnalyst, a London-based blockchain research firm, per a detailed story in Bloomberg as outlined below.

Crypto Exchanges Seeing Major Net Capital Outflows

  • Bitfinex
  • BitMEX
  • Binance
  • Kraken

Source: Bloomberg

Bitcoin's Share of Crypto World Increases

It may seem counterintuitive that funds are being pulled from crypto exchanges just as Bitcoin has surged. The currency has risen about 100% this year and by over 55% in the last thirty days amid upheaval in the broader stock market. Yet experts say it's logical that investors spooked by turbulence and negative news in the crypto universe would favor what they view as the most secure asset in the group: Bitcoin.

That's illustrated by Bitcoin’s rising market share as a percentage of the entire crypto universe. It has increased from 53% at the start of the year to 60%, according to data provider CoinMarketCap.com.

“That Bitcoin, which is clearly the quality asset in the space, has outperformed in this recent rally is likely the result of it not only breaching the psychologically important $6,000 level, but also some significant institutional and/or sovereign buying. These buyers would be expected to invest disproportionately in the most established and vetted asset — and that asset is clearly Bitcoin," said Josh Gnaizda, chief executive officer of Crypto Fund Research, per Bloomberg.

To be sure, withdrawals have even affected Bitcoin and even could distort the currency's pricing. Since April 26, net outflows of Bitcoin and Ether from Bitfinex reached $1.7 billion in the wake of reports that the New York attorney general was investigating the exchange for covering up nearly $1 billion in losses.

Tether Behind Bitcoin Volatility

According to Bloomberg, Bitcoin’s sharp rise last week could have been amplified by capital flight from Bitfinex and Tether, which are affiliated.

“Since Tether is insufficiently backed, it means that some of the reserves backing customer assets on exchanges are likely insufficient,” said John Griffin, a finance professor at University of Texas at Austin who has researched cryptocurrency market manipulation. “So smart customers will not custody their funds on exchanges and pull their crypto off exchanges. This could put further upward pressure on Bitcoin prices as one would rather take fake money and exchange it to Bitcoin.”

Looking Ahead

While Bitcoin faces its own share of challenges as the largest coin in the crypto space, growing institutional interest in trading the asset has helped bring Bitcoin into the mainstream and thus grant it more stability. Many bulls view Bitcoin’s recent surge, even amid negative headlines of fraud and manipulation, as signaling that the “crypto winter” is over.

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Japan's Abe hails BOJ easing as 'swift' and 'appropriate'

TOKYO, March 16 (Reuters) – Japanese Prime Minister Shinzo Abe said on Monday the central bank’s decision to ease monetary policy was a “swift, appropriate” move that addressed unstable global market moves.

“The government will continue to work closely with the Bank of Japan and G7 countries, with a close eye on global economic developments,” Abe told parliament.

At an emergency meeting on Monday, the BOJ eased policy further by ramping up purchases of exchange-traded funds (ETFs) and other risky assets to combat the widening economic fallout from the coronavirus epidemic. (Reporting by Leika Kihara Editing by Chang-Ran Kim)

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Sunday, March 15, 2020

Amazon Glitch Stymies Whole Foods, Fresh Grocery Deliveries

Amazon.com Inc. suffered a technical glitch on Sunday affecting online grocery orders through its Whole Foods and Amazon Fresh delivery services, which have become lifelines for household essentials for people looking to avoid stores due to the coronavirus outbreak.

“As COVID-19 has spread, we’ve seen a significant increase in people shopping online for groceries,” an Amazon spokeswoman said in a statement. “Today this resulted in a systems impact affecting our ability to deliver Amazon Fresh and Whole Foods Market orders tonight. We’re contacting customers, issuing concessions, and are working around the clock to quickly to resolve the issue.”

The disruption also affected Prime Now orders, according to an internal Amazon memo reviewed by Bloomberg.

Panic buying that has left store shelves empty is also straining Amazon’s delivery capacity. Around the country, Amazon staff reported long lines to enter delivery stations and delays getting items they were supposed to deliver. Amazon notified delivery drivers Sunday evening about a “technical issue that is causing a delay to Prime Now, Amazon Fresh and Whole Foods Markets orders being assigned to delivery partners,” according to the company memo.

Jordan Insley, a resident of Woodinville, Washington, who pays $120 a year for Amazon Prime fast-delivery service, said he is considering canceling his membership since he hasn’t been able to rely on the online retailer for essentials like laundry detergent, garbage bags and bottled water since shortly after the outbreak began in the Seattle region. Amazon warned shoppers on March 2 that surging demand wasoverwhelming its delivery capacity.

“If you’re paying for Prime, you’re paying for a service that doesn’t exist,” he said.

Some shoppers took to social media to vent about grocery shortages using the hashtags#panicbuying and#coronapocalypse.

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Saturday, March 14, 2020

Airbnb Q4 loss widens to $390m - and that's before the coronavirus hit

SAN FRANCISCO (BLOOMBERG) – Airbnb’s losses deepened for the fourth quarter of last year, even before the coronavirus outbreak caused global travel to nearly grind to a halt.

The world’s biggest home-sharing company reported a loss of US$276.4 million (S$390 million) excluding interest, taxes, depreciation and amortisation, compared with a loss of US$143.7 million a year earlier, according to a person familiar with the company’s accounts. Revenue increased 32 per cent in the period to US$1.1 billion, and it has more than US$2 billion in the bank, the person said. Airbnb declined to comment on the figures.

Covid-19 has hit the travel industry hard and is likely to throw a wrench in the start-up’s growth trajectory and possibly thwart its plans for a public stock listing this year. Airbnb projected revenue to increase 25 per cent in the first quarter of this year, according to the person, who asked not to be named discussing information that’s not public. That projection likely underestimated the full effect of the coronavirus on international travel, the person said.

The coronavirus is now active in more than 100 countries, and has put Italy on near total lockdown. The Trump administration announced on Wednesday that it would significantly restrict travel to the US from Europe for 30 days. Airlines have cancelled flights to several countries, hotels have closed and many companies have forbidden international travel for their employees.

On Monday, Booking Holdings, the world’s largest online travel-booking site, withdrew its already bleak first-quarter guidance, citing the worsening impact of the coronavirus. Some analysts predict hotel revenue to decrease more than 50 per cent in the second quarter.

In China, Airbnb’s business has been devastated by the virus. Planned bookings for February and March were down by more than 90 per cent from a year earlier, the person said.

The widening losses could also raise flags for investors who are scrutinising the company ahead of a potential listing. Airbnb was profitable before interest, taxes, depreciation and amortisation in 2017 and 2018, but lost money on that basis in 2019, a person familiar with the accounts said previously. The company has been spending heavily on marketing ahead of its public debut.

With a private market valuation of US$31 billion, Airbnb had been seen as one of the most highly anticipated stock listings for 2020. But one of the main ingredients for a successful stock market debut is evidence of growth and – if not profit – the potential for big earnings in the future. The virus will make that harder for Airbnb to show this year.

Airbnb has already been fielding scores of complaints from guests who have been forced to cancel travel plans and are being denied a refund. Airbnb’s “extenuating circumstances” coronavirus policy currently only covers China, South Korea and Italy, while new travel restrictions are emerging frequently.

Unlike big hotel chains, Airbnb is a two-way platform, which means for every guest cancellation it approves there is a host at the other end who winds up out of pocket. As the company tries to strike a balance between the two, many guests have been left to negotiate over refunds with their hosts, who are not always willing to be flexible.

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Friday, March 13, 2020

Duggars finally flip Arkansas mansion, bagging more than $1M

Jim Bob and Michelle Duggar, stars of the reality TV show “19 Kids and Counting,” have successfully flipped one heck of a house. A Northwest Arkansas mansion renovated by the famous family sold in mid-February for $1.53 million.

The couple purchased the 10,000-square-foot residence in Springdale, AR, for $230,000 in November 2014. At that time, the oversize mansion was in sad shape.

The Duggars proceeded to work their magic, transforming the once run-down residence into a luxe estate. They hoisted it onto the market for a hefty $1.8 million last May.

The mansion had its price shaved to $1.65 million soon after its initial splash on the market. By July, the Duggars had discounted it to $1.45 million, before reducing the price even further to $1.1 million in September.

It disappeared from the market for a bit last fall, and in December, the couple relisted the home and bumped up the asking to $1.38 million.

Why? Well, when we first laid eyes on the family’s handiwork nearly a year ago, the enormous home was sparkling — but empty and a bit cavernous.

For its return to the market in December, it was rephotographed and stylishly staged. With four bedrooms, 5.5 bathrooms and an abundance of other rooms, the home takes a lot of furniture to make it feel homey.

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