In an unprecedented move the Federal Reserve said it would buycorporate bonds, including new issues and the riskiest investment-grade debt, action that it shied away from during the financial crisis a decade ago. The central bank is using a subsidiary of BlackRock to manage the investments. It is also buying government debt (unlimited quantitative easing), reviving a facility that enables it to absorb securities backed by student, car and credit-card loans, and has pledged to help small businesses. Seearticle.
With passenger numbers down by 70% on Britain’srailwaysthe government suspended for at least six months the franchise system through which train companies operate on routes. The Department for Transport is doing this so that it can take on all the revenue and cost risk, in effect nationalising any losses. Train companies will continue to run services for a small fee.
The International Air Transport Association increased its estimate of revenue losses for theairline industrythis year to $250bn. Global carriers have asked governments to bail them out, but environmentalists want this linked to swifter action on carbon emissions.
Virgin Australiareportedly asked Australia’s antitrust authority to investigate public comments made by Alan Joyce, the chief executive ofQantas, Virgin’s arch-rival. Mr Joyce has suggested that Virgin should not receive state aid during the crisis, implying that it is “badly managed”, and has said he wants his airline to be the “last man standing”. Reports suggest Virgin is worried that Qantas is using the crisis to reduce competition. Meanwhile, and despite stretched credit markets, Qantas was able to raise A$1.1bn ($635m) in bank loans.
Norwegian Air, which was already struggling before covid-19 grounded flights, received its first cash injection from Norway’s government after securing a rescue package for the country’s airlines. Under the deal, commercial lenders provide 10% of loan guarantees and the government the remaining 90%.
Boeingsuspended production at its factory near Seattle for two weeks. Washington state has been hit particularly hard by covid-19 and dozens of Boeing’s workers have contracted the disease; one man has died.Airbusreopened its plants in France and Spain after a four-day hiatus, but reduced their output.
Workers at severalAmazonwarehouses in America tested positive for covid-19, forcing some of them to close while they were cleaned. Amazon is hiring 100,000 more people to cope with a surge in online shopping, but hundreds of employees have signed a petition urging the company to do more to protect them.
A sales update fromTargetprovided a glimpse into the impact of coronavirus on large retailers. Total sales were up by more than 20% in March so far compared with the same month last year, and by 50% for food and household essentials. Clothing sales were down by a fifth, however.
Nikerevealed that 80% of the stores that sell its products in China have reopened, after closing in February soon after the start of the virus outbreak.
SoftBankannounced a sale of up to ¥4.5trn ($41bn) of assets to fund a share buy-back plan and reduce its debt. The troubled Japanese conglomerate’s share price soared after the announcement. That was not enough to stop Moody’s from cutting its rating for SoftBank’s bonds by two notches.
Just in time for the family lockdown, Disney+ launched in Britain, Germany, Italy, Spain and several other European countries. Being stuck indoors has led to a surge instreaming, which has caused Netflix, Amazon Prime and others to reduce their playback quality in Europe to ensure films don’t stutter.
This article appeared in the The world this week section of the print edition under the headline “Business this week”