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What to watch: Revenue falls at Amigo, passengers plummet at Gatwick, SoftBank offloads

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Edmund Heaphy
·Finance and news reporter
·5 min read
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LONDON, ENGLAND - JUNE 09: Cleaners spray a peroxide based disinfectant on handrails and surfaces as a protective measure against the spread of the coronavirus (COVID-19) inside the currently closed North Terminal at Gatwick Airport on June 9, 2020 in London, England. Gatwick Airport has introduced a range of protective measures to battle the spread of the coronavirus (COVID-19) as the airport prepares to increase operating hours from June 15, 2020, and to resume operations at the North Terminal with a range of airlines. The airport’s North Terminal closed in March due to the impact that coronavirus outbreak had on the number of flights able to operate. (Photo by Chris J Ratcliffe/Getty Images)
Revenue at Gatwick Airport plunged by 61% during the first half of its financial year. Photo: Chris J Ratcliffe/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Complaint costs soar and revenue dives at Amigo

Costs jumped as revenue fell over the last few months at embattled subprime lender Amigo Loans (AMGO.L).

Guarantor lender Amigo Loans said in a first quarter update on Friday that revenue fell 31.7% to £48.8m ($65m) in the three months to the end of June.

Customer numbers fell by 5.2% and the net loan book shrank by 24%. The company stopped most new lending in March in response to the COVID-19 crisis.

Amigo granted 47,000 payment holidays in the period due to COVID-19, which cost it £16m.

The cost of complaints rose 240% to £6.8m, while provisions for future complaint costs soared from £1.8m last year to £116.4m.

The rising costs and falling revenues led to an 83.4% collapse in quarterly profits, which dropped to just £3m.

London Gatwick sinks to £321m loss

London’s Gatwick Airport said on Friday that it swung to a £321m ($420m) loss in the six months to June, as it contended with a catastrophic collapse in passenger numbers and warned of longer-term impacts from the coronavirus pandemic.

Revenue plunged by 61% during the first half of its financial year, largely due to a 66% fall-off in passenger numbers during the period.

The news came after the airport on Wednesday said it needed to trim 600 jobs — or around a quarter of its workforce — so that it could reduce costs in the wake of weaker demand.

“Like any other international airport, the negative impact of COVID-19 on our passenger numbers and air traffic at the start of the year was dramatic and, although there are small signs of recovery, it is a trend we expect to continue to see,” said Gatwick Airport chief executive Stewart Wingate.

London Gatwick has also slashed its planned capital expenditure by £157m in 2020 and by £196m in 2021, and will also save £100m on operational spending, in part by moving flights to one terminal.

SoftBank to raise up to $14bn selling telecoms stake

SoftBank Group (9984.T) is selling down its stake in SoftBank Corp (9434.T).

Japan’s SoftBank Group, the conglomerate owned by billionaire investor Masayashi Son, said on Friday it would reduce its holding of its telecoms company SoftBank Corp, seeking to raise around $14bn (£11bn) selling shares.

“In light of the ongoing uncertainty in the market environment due to concerns about a potential second or even third wave of COVID-19, SBG believes it is necessary to expand cash reserves,” the company said in a stock market filing in Tokyo.

SoftBank Group plans to offer a 21.7% stake of SoftBank corp for sale, reducing its holding down to 40.4% of the Japanese telecoms company.

The offer price for the 1bn shares will be set during the window of 14 to 16 September, SoftBank Group said. Reuters reported that Friday’s closing price in Tokyo would value the stake at around ¥1.47tn ($13.9bn, £10bn).

Easing of lockdown measures bumps business confidence

The easing of lockdown measure in the UK saw overall business confidence rise for the third consecutive month by eight percentage points to -14%, according to a Lloyds bank (LLOY.L) survey.

The Business Barometer, which provides early signals about UK economic trends, showed that while business confidence improved, it was still well below the long-term average.

Although still in the negative territory, trading prospects saw a nine point increase— the largest monthly rise in more than three years — while economic optimism rose by eight points.

Nearly two thirds of firms also reported COVID-19 had a negative impact on demand in August, a modest decrease on last month’s 66%, indicating that businesses are slowly recovering following the easing of lockdown rules.

Of the 1,200 businesses surveyed between 3 August and 7 August, 39% anticipate they will be reducing their headcount, down 1% on last month.

European stocks mixed as traders assess US Fed's inflation shift

European stocks were mixed on Friday as markets continued to try and make sense of the historic shift on inflation announced by US Federal Reserve chair Jerome Powell.

On Thursday, Powell said that the central bank would launch a new monetary policy framework that will likely see interest rates in the US remain low for longer.

The Federal Reserve will now tolerate inflation “moderately” above its 2% target, Powell said, noting that persistently low inflation in the US over the last eight years has caused a series of economic problems.

The pan-European STOXX 600 index (^STOXX) fell by around 0.3%, while London’s FTSE 100 (^FTSE) was up by almost 0.1%

Germany’s DAX (^GDAXI) fell by around 0.3% after a steep fall in consumer sentiment in August, while France’s CAC 40 (^FCHI) was down marginally.

What to expect in the US

Futures were pointing to a positive open for stocks in the US on Friday as traders continued to digest stubbornly high unemployment data and Federal Reserve chair Jerome Powell’s pledge to try and nudge inflation higher.

Futures on the S&P 500 (ES=F) were up by more 0.3%, putting the index on track for its seventh straight day of gains. Dow Jones Industrial Average futures (YM=F) rose by almost 0.5%.