Europe

Air France-KLM unveiled a 1.05 billion-euro ($1.24 billion) quarterly operating loss and warned of worse to come as a resurgent coronavirus brings new travel curbs, Reuters reported. Shares in the Franco-Dutch airline group fell after it reported a 67% drop in third-quarter revenue to 2.52 billion euros on Friday, as France returned to full lockdown for at least a month. New COVID-19 outbreaks pose a threat to network airlines already weakened by the crisis and long-haul travel collapse.

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Tax experts have warned that an incoming law which moves HM Revenue & Customs higher up the list of creditors in insolvencies could further damage the economy and cause more companies to go bust, the Financial Times reported. From December 1, the UK tax authority will be ranked higher in the pecking order used to decide which creditors get paid first when a company fails. The change applies to unpaid VAT, income tax, employee’s national insurance, student loan deductions and Construction Industry Scheme deductions, but not corporation tax.

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The number of companies in significant financial distress has risen at the fastest rate for three years as businesses face increasing difficulties given the end of many government Covid-19 business support schemes, the Financial Times reported. More than half a million companies were in “significant distress” in the three months to September, based on data from court orders to pay off debts, according to corporate restructuring firm Begbies Traynor.

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Demand for British retail and office space contracted sharply during the third quarter and the outlook for the year ahead has worsened as working and shopping patterns change during the COVID-19 pandemic, a survey showed on Thursday, Reuters reported. The Royal Institution of Chartered Surveyors said 78% of chartered surveyors viewed the commercial property market as being in a downturn, up a little from 76% in the second quarter.

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An anomaly in credit insurance on Europcar Mobility Group could prove lucrative for some traders as the French rental-car firm seeks to restructure 1.3 billion euros ($1.5 billion) of debt, Bloomberg News reported. The cost of buying Europcar’s bonds and credit-default swaps in a combined trade has risen to 110% of the notes’ face value, indicating that traders expect they’ll get more than par if the insurance pays out, according to Jochen Felsenheimer, who trades both markets as managing director at XAIA Investment GmbH. He doesn’t have a position in Europcar.

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The European Central Bank is expected to resist pressure to unveil fresh stimulus measures on Thursday but it will likely pave the way for action in December as fresh restrictions aimed at containing the coronavirus pandemic fuel fears over a new recession, Reuters reported. Having already lined up unprecedented firepower to prop up the 19-member currency bloc’s economy, the ECB is in no hurry to act, as its ongoing bond buying could keep markets calm well into next year. Policymakers also appear keen to push governments to take the lead.

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SA’s second-largest diamond producer has noted a one-fifth increase in rough diamond prices as its three SA mines recovered from the lockdown, but it’s not enough to stave off a massively dilutive debt restructuring plan, Business Day reported. London-listed Petra Diamonds, which is engaged in a plan to address a $650m bond that falls due in 2022 and which would dilute existing shareholders to a mere 9% stake in the miner, reported a decline in production in the quarter to end-September, the first of its financial year. Consolidated debt was $688m at the end of September.

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The proportion of emerging market high-yield companies who have seen their liquidity position weaken in September has climbed back to June’s record high, with firms in Latin America driving the overall increase, Moody’s said in a research report, Reuters reported. The reading of Moody’s emerging markets liquidity stress indicator returned to an all-time high of 25.8% last month - up 1 percentage point from August and compared with its long-term average of just under 20%, Moody’s found. A rising trend indicates upward pressure on default rates.

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Nearly 200 airports in Europe will face insolvency in the coming months if passenger traffic does not start recovering by the end of the year, airports body ACI Europe said on Tuesday, Reuters reported. An estimated 193 European hubs are considered “at-risk airports”, ACI said, adding that they contribute to economic activity that creates 277,000 jobs and 12.4 billion euros ($14.66 billion) of European GDP.

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