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Coronavirus: EasyJet founder in threat to oust board

The billionaire founder of easyJet is threatening to seek the removal of most of its board members unless it cancels a £4.5bn aircraft order that he warned could threaten its future amid the coronavirus pandemic.

Sky News has seen a letter sent on Sunday by Sir Stelios Haji-Ioannou to John Barton, the low-cost carrier’s chairman, which said he would call an extraordinary shareholder meeting every seven weeks to remove one of its non-executive directors.

Along with other family members, Sir Stelios owns just under 34% of easyJet’s shares.

The entrepreneur is enraged at what he argues is easyJet’s lack of transparency about the order for 107 Airbus planes, which he labelled as “simply shareholder value-destroying”.

He informed Mr Barton that unless his concerns are met by midday on Wednesday, he would begin a rolling programme of calling EGMs every seven weeks to try to remove one of easyJet’s non-executive directors – beginning with Andreas Bierwith.

Prominent business figures who sit on the airline’s board include Moya Greene, the former Royal Mail Group chief executive, and Charles Gurassa, the Channel Four chairman.

Sir Stelios said the Airbus order had saddled easyJet with an existential threat at a time when the world’s aviation industry had effectively been grounded by the COVID-19 outbreak.

EasyJet has grounded its entire fleet and warned that it can no longer give investors guidanx

“Even with a resumption of air traffic, any income from passengers is likely to be too low to keep up with outgoings and would most likely render easyJet insolvent if it continues to pay Airbus for more aircraft,” he wrote.

“This crisis may result in the insolvency of easyJet PLC and if it transpires that a single penny from the company has been paid to Airbus between the grounding of the fleet and the date of the insolvency or any equity-raising which would prevent insolvency, I will personally sue all the easyJet directors for gross negligence and for defrauding easyJet’s creditors with the favouring of one creditor (Airbus with dubious rights to these monies) over all others.”

Sir Stelios’s declaration of war on the easyJet board comes just days after he received a £60m dividend payment from the airline.

In his letter to Mr Barton, he said he had offered to subscribe to new equity in easyJet as part of a wider share issue.

A number of institutional shareholders in easyJet are understood to have been informed of Sir Stelios’s plans over the weekend.

Sir Stelios gave the board until Wednesday to respond to his demands, which include the appointment of an independent law firm to serve notice on Airbus.

He also opposed public statements by easyJet chief executive Johan Lundgren that the company was seeking a government loan on commercial terms to help it weather the coronavirus crisis.

Last week, Rishi Sunak, the chancellor, said any state support for airlines would need to be in taxpayers’ interest and would be available “only as a last resort”.

That comment implied that airlines such as easyJet would need to tap their own shareholders for funding before approaching the government.

Sky News revealed this month that Virgin Atlantic was seeking financial aid from the taxpayer.

It is not the first time that the easyJet founder has been in dispute with the company over the size of its fleet, having settled several disputes with uneasy truces.

Sir Stelios launched the airline in 1995, before floating it in 2000.

EasyJet could not be reached for comment.

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Bail Out Journalists. Let Newspaper Chains Die.

The coronavirus is likely to hasten the end of advertising-driven media, our columnist writes. And government should not rescue it.

By Ben Smith

Elizabeth Green was musing the other day about buying 261 newspapers.

You could, this Sunday, purchase Gannett, the biggest newspaper chain in the country, for a mere $261 million — about a quarter of what Michael R. Bloomberg spent on his presidential campaign.

And Ms. Green, a founder of the nonprofit education news organization Chalkbeat, is one of the few people who may be able to raise the money to pull off a deal like that.

But she quickly realized that Gannett, the biggest newspaper chain in the country, wasn’t worth it: Buying it would mean signing up to pay off a high-interest loan from a giant New York private equity firm and relying on an advertising business model that may be in its death throes because of the coronavirus.

It’s a moment of deep crisis for the local news business, which could have been blown over by a light breeze and is now facing a hurricane. But it’s also a moment of great promise for a new generation of largely nonprofit local publications.

The time is now to make a painful but necessary shift: Abandon most for-profit local newspapers, whose business model no longer works, and move as fast as possible to a national network of nimble new online newsrooms. That way, we can rescue the only thing worth saving about America’s gutted, largely mismanaged local newspaper companies — the journalists.

“We need to accept that what local news is today is already dying,” said Ms. Green, 35.

She had that realization 12 years ago when she was a local education reporter. Her newspaper, The New York Sun, went under, and she created a new nonprofit organization to stay on the beat she loved. Now, her vision has expanded. She has co-founded the American Journalism Project, which aims to create a huge network of nonprofit outlets, some organized around subjects like education or criminal justice, others focused on covering a town, a city or a state. She wants to replace the hundreds of local newspapers now owned by hedge funds that are slowly being bled dry.

“We need to keep the values, keep the people, keep the lessons learned — and get rid of the shareholders and get a better business model,” she said.

Ms. Green has been working to expand one obviously needed coverage area, public health, to all 50 states, working with the nonprofit news service Kaiser Health News.

And on the local level, she and John Thornton, the other founder of the American Journalism Project, are working on a new project: backing a nonprofit outlet in West Virginia. It will be led by Greg Moore, a former Charleston Gazette-Mail executive editor, and Ken Ward, a reporter at the paper who won a MacArthur “Genius” grant for his coverage of damage done by the coal and gas industries to people’s lives. The not-yet-named new outlet (candidates include “Mountain State Muckraker”) will begin with a staff of about 10, seven of them journalists, a news team on the same scale as the diminished local paper.

“There’s all this ‘doom and gloom for local journalism stories’ that have happened in the last week or so, and I hope that other people see what we’re doing and understand that the important thing is the journalism — it’s the stories, it’s the investigations — that’s what matters,” Mr. Ward said. He will also be on the staff of the nonprofit investigative powerhouse ProPublica and will have support from Report for America, another growing nonprofit organization that sends young reporters to newsrooms around the country.

The news business, like every business, is looking for all the help it can get in this crisis. Analysts believe that the new federal aid package will help for a time and that the industry has a strong case to make. State governments have deemed journalism an essential service to spread public health information. Reporters employed by everyone from the worthiest nonprofit group to the most cynical hedge fund-owned chain are risking their lives to get their readers solid facts on the pandemic, and are holding the government accountable for its failures. Virtually every news outlet reports that readership is at an all-time high. We all need to know, urgently, about where and how the coronavirus is affecting our cities and towns and neighborhoods.

But the advertising business that has sustained the local newspapers — the car dealers, retailers and movie theaters that for generations filled their pages with ads — has gone from slow decline to free fall.

So the leaders trying to get the local news industry through this economic shock need to confront reality. The revenue from print advertising and aging print subscribers was already going away. When this crisis is over, it is unlikely to come back. Some local weeklies recently shut down for good.

Many of the worthy suggestions for saving the news business dodge this central issue. Margaret Sullivan, at The Washington Post, suggested a broad “coronavirus stimulus plan,” and a column in The Atlantic called for a huge government spending on public health ads. Without careful restrictions, a huge share of that government money will go to doomed newspaper chains for whom a major goal, as Gannett’s chief executive said on his last earnings call in late February, is paying a dividend to shareholders unwise enough to invest in his doomed business. (Gannett executives declined to speak to me for this column.)

So what comes next? That decision will be made in the next few months — by public officials, philanthropists, Facebook (which is expected to announce another wave of local news funding soon) and other tech companies, and people like you.

The right decision is to consistently look to the future, which comes in a few forms. The most promising right now is Ms. Green’s dream of a big new network of nonprofit news organizations across the country on the model of The Texas Tribune, which Mr. Thornton co-founded. There are also a handful of local for-profit news outlets, from The Seattle Times to The Philadelphia Inquirer and The Boston Globe, with rich and civic-minded owners. And there is a generation of small, independent membership or subscription sites and newsletters like Berkleyside.

Hundreds of devoted local journalists will be looking for jobs as soon as they can think about anything other than what the coronavirus is doing to local nursing homes and hospitals. We should be helping them, and paying for them, to build these new institutions, large and small.

Government support, as Report for America’s co-founder, Steven Waldman, suggests, could tip toward the new nonprofit organizations and small businesses. Facebook and Google could focus on backing them, rather than paying them to make YouTube videos. A group of journalists in California is now working on a “Marshall Plan” to push the state’s dying outlets into making “brute-force instant transitions" to a sustainable digital model, said Neil Chase, a former San Jose Mercury News executive editor who now leads the nonprofit CalMatters.

The people who run the big newspaper chains — Gannett, Tribune, the bankrupt-but-ambitious McClatchy, and the ruthless Media News Group — disagree, of course. They argue that the dream of digital advertising on a scale that can compete with Google, an original argument for mergers, is still within reach; and that they can cut and centralize their way to stability.

They also point out that these new models carry real risks of their own, and they’re right about that. I’ve learned first hand. I was chairman of the board of the New York nonprofit newsroom The City as it struggled to get its stories read. I’ve watched my wife build a small news outlet from scratch on the hard soil of local advertising and subscriptions at Bklyner. Newcomers will have to scramble to maintain staffs the size of even the most gutted local newsrooms. And nonprofit journalism can be boring, more attentive to its donors than its audience.

“It’s a bad idea to let government and rich people take over the news business and let the distributors completely off the hook,” said David Chavern, the president and chief executive of the News Media Alliance, the main newspaper industry lobbying group, which represents both chains and smaller local publishers and is seeking government help. (One legacy asset of the newspaper business is having a good lobbyist in Washington.) He argues that the best public policy, and the salvation for his members, is to force Google and Facebook to pay for the news on their platforms.

None of this is settled or easy. The most heated debate in places where the nonprofit news executives gather — these days, mostly an impromptu discussion on Slack — is whether it’s ever safe or ethical to take government funding.

The name of their Slack channel? #apocalypsenow.

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The Week in Business: Throwing Money at a Pandemic

By Charlotte Cowles

There’s no way to sugarcoat the devastating numbers that came out this past week. As the United States surpassed China in the number of confirmed coronavirus cases, record-high jobless numbers brought the economic toll of the pandemic into sharp focus. Congress rushed to push through a rescue bill. But will it be enough?

What’s Up? (March 22-28)

Throw Money at It

Get ready for the biggest stimulus bill in United States history, which was signed into law on Friday. The $2 trillion package will inject the ailing economy with cash, saving jobs and bailing out companies large and small. But it also redraws the boundaries between government and private industry by putting thousands of businesses and millions of workers on federally funded life support. These vast interventions are far broader in scope (and cost) than any stimulus measures taken during the 2008 financial crisis — and that’s not an accident. Lawmakers are wary of repeating the mistakes they made with those bailouts, which have long been criticized for favoring big banks and businesses over the needs of individual workers.

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Pence says virus taskforce soon to deliver recommendation on whether to re-open economy

(Reuters) – Vice President Mike Pence, heading the Trump administration’s response to the coronavirus outbreak, said on Saturday that he would deliver a recommendation to the president on whether to re-open the U.S. economy in the coming week.

Pence told the Fox News Channel that the taskforce he heads would base its decision on data and scientific advice.

“Ultimately the president will make a decision that he believes in the best interest of the American people,” he said.

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Bank of America capital levels allow operational focus during crisis: CEO

(Reuters) – Bank of America Corp (BAC.N) is better positioned to focus on operations rather than financial risk during the coronavirus outbreak, thanks to regulatory safeguards put in place after the financial crisis in 2008, Chief Executive Brian Moynihan said on Friday.

“What’s different this time is clearly our capital liquidity,” Moynihan said in a CNBC interview. “Everything that changed has led the banking industry be in a great condition to service clients continuously for the last few weeks as this thing has hit.”

The second largest U.S. bank by assets has extended more than $50 billion in loans this so far month to commercial clients looking for cash to survive the coronavirus recession. The retail division has fielded more than 150,000 requests to defer payments on mortgages and auto loans. Many requests are managed digitally, he said.

The bank has also been hiring and reallocating employees to the consumer bank to help manage a surge in requests related to the pandemic, according to a memo seen by Reuters. So far this month the Charlotte-based bank has hired 2,000 people and shifted 3,000 internal employees to support its consumer bank.

Bank of America followed its peers like Morgan Stanley (MS.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) in reassuring employees that they would not be immediately hit by layoffs as a result of the pandemic. In the memo sent to employees on Friday, the bank said it “will not do layoffs or job reductions in 2020 due to coronavirus impacts.”

“We don’t want our teammates to worry about their jobs during a time like this,” Moynihan said.

(Corrects second-last paragraph to reflect that Wells Fargo did not suspend layoffs through 2020)

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Exclusive: Russia calls for new enlarged OPEC deal to tackle oil demand collapse

MOSCOW (Reuters) – A new OPEC+ deal to balance oil markets might be possible if other countries join in, Kirill Dmitriev, head of Russia’s sovereign wealth fund said, adding that countries should also cooperate to cushion the economic fallout from coronavirus.

A pact between the Organization of the Petroleum Exporting Countries and other producers, including Russia (known as OPEC+), to curb oil production to support prices fell apart earlier this month, sending global oil prices into a tailspin.

“Joint actions by countries are needed to restore the(global) economy… They (joint actions) are also possible in OPEC+ deal’s framework,” Dmitriev, head of the Russian Direct Investment Fund (RDIF), told Reuters in a phone interview.

Dmitriev and the Energy Minister Alexander Novak were Russia’s top negotiators in the production cut deal with OPEC. The existing deal expires on March 31.

“We are in contact with Saudi Arabia and a number of other countries. Based on these contacts we see that if the number of OPEC+ members will increase and other countries will join there is a possibility of a joint agreement to balance oil markets.”

Dmitriev declined to say who the new deal’s members should or could be. U.S. President Donald Trump said last week he would get involved in the oil price war between Saudi Arabia and Russia at the appropriate time.

Dmitriev also said that a global economic crisis was inevitable as global debt to the world’s gross domestic product had risen to 323% as of now from 230% at a time of the previous economic crisis of 2008. The virus just triggered it, he said.

“Efforts to restore relations between Russia and the United States are now as important as ever, we will take all the efforts our side and hope the United States will also understand that this is necessary,” he said.

The fund – the Russian Direct Investment Fund – and its partners have produced 500,000 coronavirus test kits so far, but are planning to increase production to 2.5 million kits a week.

President Vladimir Putin said on Thursday he hoped Russia would defeat coronavirus in 2-3 months, as the total number of infected Russians, including some close to the country’s elite, topped 1,000, with four virus-related deaths.

Dmitriev said he believed that Russia should follow examples of South Korea and Hong Kong – which have shown how testing can limit the coronavirus spread.

For now, the fund and its partners are focusing on producing tests for companies which need them to test workers at towns where their big plants are located, so-called single-industry or “monotowns.”

Dmitriev said that within a month, test kits for fast and mass public use would be ready, so people could order them at home via taxi and delivery service apps at tech companies Yandex (YNDX.O) and Mail.Ru (MAILRq.L). Only a third of all tests will be exported.

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Mini-bull, tired bear, or something in-between

NEW YORK/SAN FRANCISCO (Reuters) – Investors could be forgiven for doing a double-take: Wait, we’re back in a bull market?

The Dow Jones Industrial Average’s surge of over 20% from its coronavirus-induced recent low this week, by one definition used on Wall Street, suggests a new bull market. The surge came on hopes a $2 trillion stimulus measure would flood the country with cash in a bid to counter the economic impact of the intensifying pandemic.

But that definition should be treated with a large piece of caution. The very definition of bull market is debatable, and given the market’s volatility on news about the pandemic, some said that calling the move upwards a “bull market” was tantamount to missing the forest for the trees.

“Labeling it a bull market when it fits a definition of being up 20% kind of removes any perspective from where we have been over the past month, and more importantly, where we might be going over the next few months,” said Willie Delwiche, an investment strategist at Robert W. Baird.

Other definitions say the index should crest the previous high and that a bull market can only be identified a long time after the event.

For example, a mini-bull market has occurred previously during a bear market – providing a false hope of relief. The S&P 500 logged a gain of 24% over a period of 30 trading days starting on Nov. 20, 2008, even as the bear market continued during the height of the financial crisis, and the index did not bottom till March 9, 2009, marking the start of the bull market.

Ed Yardeni, president and chief investment strategist at Yardeni Research, said that while there is consensus about the definition of a bear market – a 20% decline from a peak – the definition of a bull market is less widely agreed upon.

“Bull markets occur between bear markets,” Yardeni said.

Part of the confusion about whether the Dow is indeed out of the bear market is because while one group is widely recognized for determining U.S. economic cycles – the National Bureau of Economic Research – no such body is uniformly accepted for defining bull and bear markets.

(GRAPHIC: S&P 500 bear markets – here)

Analysts warn against putting too much stock in strict definitions of market cycles. Factors like the velocity of the market’s rise or fall, how much average stocks have changed, and the reasons behind the moves also contribute to whether investors view a major move as a turning point in sentiment or a short-term interruption to an existing bull or bear market.

Howard Silverblatt, senior index analyst at S&P Dow Jones Indices in New York, said he still sees the Dow in a bear market. The Dow would need to hit 29,551.42, the high of Feb. 12, to be technically in a bull market, he said.

“If we keep going up, eventually we could have a bull, but until it hits the record, it’s a bull run in a bear market,” Silverblatt said.

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U.S. not bailing out airlines, Boeing not using federal money: Treasury Secretary

WASHINGTON (Reuters) – U.S. Treasury Secretary Steve Mnuchin said on Friday that the coronavirus economic stimulus bill before Congress is not an airline bailout and that taxpayers will be compensated for relief given to companies hobbled by the global pandemic.

At the same time, Mnuchin said in an interview with Fox Business Network that plane-maker Boeing Co (BA.N) has not requested government help.

“I’ve been very clear this is not an airline bailout,” Mnuchin said. “And that taxpayers need to be compensated for relief they’re giving to airlines.”

U.S. airlines are preparing to tap the government for up to $25 billion in grants to cover payroll in a sharp travel downturn triggered by the coronavirus, even after the government warned it may take stakes in exchange for bailout funds, people familiar with the matter said.

Mnuchin can demand equity, warrants or other financial instruments in order to “provide appropriate compensation to the federal government.” A Treasury spokeswoman declined to comment on a report that Mnuchin would demand equity.

Airlines can ask for the equivalent of their payroll between April 1 and Sept. 30 of last year, according to the terms of the bill, meaning some large airlines could get $4 billion or more in total.

The House of Representatives planned to debate the legislation on Friday, then schedule a vote.

Mnuchin said Boeing said it does not intend to participate in the federal program. “Boeing has said that they have no intention of using a program that may change in the future,” Mnuchin said. “These are things that the companies need to come and ask us for. … Right now Boeing’s saying they don’t need it.”

Asked if the large stimulus bill could help avoid a recession, Mnuchin told Fox Business, “The No. 1 issue is not what the economic numbers are right now, the No. 1 issue is the hardship to the American people who are losing their jobs.”

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U.S. airlines cheer government relief but warn it is no 'cure' for deep industry crisis

CHICAGO (Reuters) – United Airlines Holdings Inc and Delta Air Lines welcomed on Friday a $50 billion relief package they said would protect jobs through September but warned that the continued challenges facing the industry will require more action.

Airlines are weathering their largest ever downturn as the coronavirus has ground global travel to a halt. A massive government stimulus package passed on Friday gives airlines some breathing room in terms of managing costs, but they still face tough decisions in the months ahead.

“If the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today,” United said in a memo to employees.

Based on projections for the spread of the coronavirus and the global economy’s reaction, Chief Executive Oscar Munoz and President Scott Kirby said they expect “demand to remain suppressed for months after that, possibly into next year.”

Delta CEO Ed Bastian told employees that the relief package was not “a cure” and urged workers to continue signing up for voluntary unpaid leaves of absence.

U.S. airlines are set to receive $25 billion in grants to cover payrolls over the next six months, but are still encouraging workweek reductions, unpaid leaves and early retirements to further cut costs as they face more cancellations than bookings.

Before the global crisis, U.S. airlines were transporting a record 2.5 million passengers a day. Now planes are only 10% to 20% full and new bookings are showing 80% to 90% declines in traffic even after dramatic cuts in capacity, industry lobby Airlines for America said.

Airlines say the situation is dramatically different from just four weeks ago and getting worse each day with no end in sight. All are planning continued capacity reductions into the summer.

Unions representing pilots and flight attendants also welcomed the bill but said challenges remain in implementing it.

EQUITY STAKES

In exchange for the $25 billion in direct grants, U.S. Treasury Secretary Steve Mnuchin can demand equity, warrants or other financial instruments, a prospect that caused some frustration for airlines as the deal was reaching the finish line this week, people familiar with the matter said.

Airlines expect to learn the terms of the aid in the next five to 10 days, senior United executives said, and trust they will not be so onerous that airlines would not apply.

Related Coverage

  • U.S. airlines expect clarity on terms of payroll grants in 5-10 days: UAL senior executives

The industry directly supports 750,000 jobs and has argued that it must have the financial ability to jump-start operations once demand starts to return.

The leaders of American Airlines Group Inc, which has the largest workforce of any U.S. carrier, said late Thursday that they had not decided to apply for federal funds, noting that the terms were still unclear.

Still, Mnuchin insisted on Friday that taxpayers would be compensated. “I’ve been very clear this is not an airline bailout,” he told Fox Business Network.

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Instacart Shoppers Plan to Strike Over Coronavirus Protections

As many as 200,000 workers could walk off the job unless demands for improved equipment and hazard pay are met.

By Derrick Bryson Taylor

Employees of Instacart, a tech company that delivers groceries and other household items ordered through an app, plan a nationwide strike on Monday, maintaining that the company has not provided them with supplies to protect them from being infected during the coronavirus pandemic.

It is unclear how many employees might strike. The company has approximately 200,000 shoppers, with plans to add 300,000 over the next three months.

The shoppers are independent contractors who can work as little or as much as they want. On average, they shop fewer than 10 hours per week, said the company, which partners with more than 350 retailers, including Costco, CVS Pharmacy, Petco, Target and Wegmans.

The planned strike comes as more and more people stay at home during the pandemic and come to rely on grocery delivery services to avoid visits to public spaces like supermarkets.

In an announcement with the Gig Workers Collective, an activist group, Instacart employees said the company’s “mistreatment of shoppers has stooped to an all-time low.”

“They are profiting astronomically off of us literally risking our lives, all while refusing to provide us with effective protection, meaningful pay and meaningful benefits,” the announcement said.

Instacart workers are demanding that the company supply them with personal protection equipment, like hand sanitizer, disinfectant wipes, sprays and soap.

Workers have asked for hazard pay — an extra $5 per order — and for the default of the in-app tip to be set to at least 10 percent of the order total. They are also seeking an expansion of pay for workers affected by Covid-19, the illness caused by the coronavirus.

Shoppers’ earnings vary depending on how many batches they choose to shop. The company said it was committed to an earnings structure that offered upfront pay and guaranteed minimums, which can vary from $7 to $10 per batch, depending on the market, and do not include customer tips.

The company this month announced new guidelines and policies to support the health and safety of its shoppers during the coronavirus outbreak, which has led to more than 1,800 deaths and more than 100,000 infections in the United States.

The company said it had secured hand sanitizer for the workers and that it would extend to May 8 its 14-day paid leave policy of hourly employees and full-service shoppers who have Covid-19 or are placed in isolation.

The company also said it would offer bonus pay of $25 to $200 for select employees based on hours worked from March 15 through April 15.

“The health and safety of our entire community — shoppers, customers and employees — is our first priority,” a company spokeswoman said. “We want to underscore that we absolutely respect the rights of shoppers to provide us feedback and voice their concerns.”

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