What to watch: Upper Crust owner taps investors, Lufthansa books loss, stocks rise

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

Upper Crust owner SSP asks investors for £27m

Upper Crust owner SSP (SSPG.L) on Wednesday asked investors to reinvest its final 2019 dividend in the company as part of a £26.8m share placing.

The cash will be used to bolster the company’s balance sheet during the coronavirus pandemic, which has severely dented its sandwich shops.

“Proceeds from the offering will allow for a proportion of the 2019 final dividend payment to be effectively retained in the business and further enhance the company’s cash and liquidity position during this period of unprecedented disruption in the global travel market as a result of the Covid-19 outbreak,” SSP said on Wednesday.

The announcement of the share placing came as the group said it had suffered “extremely low sales” due to the pandemic, which forced it to close its outlets, most of which are based in airports and train stations.

SSP reported that like-for-like sales fell 8.4% in the six months to 31 March. It swung to an underlying pre-tax loss of £10.7m during the period, compared to a profit of £54.2m last year.

The company, which also owns the Caffe Ritazza brand, said it was first impacted by the virus in its Asian operations in January and February before trading “deteriorated rapidly” in March as it spread further into Europe.

Renault gets its €5bn government-backed loan

French carmaker Renault (RNO.PA) has confirmed it has finalised a €5bn (£4.45bn, $5.6bn) state-backed loan to help it survive the coronavirus pandemic that has devastated the automotive industry.

The French government, which owns a 15% stake in Renault, will back up to 90% of the borrowed amount, the carmaker said.

Renault faced protests at some plants in France last week, after it announced that it would make some 4,600 redundancies, as part of a plan to cut around 14,600 jobs globally and reduce production capacity as part of a plan aimed to create cost savings of €2bn in the next three years.

French president Emmanuel Macron recently unveiled an €8bn rescue package to help the country’s struggling car industry survive the coronavirus crisis.

Lufthansa books €2bn loss as it plans drastic cost cuts

German flag carrier Lufthansa (LHA.DE) reported on Wednesday that the first quarter net losses due to the impact of the coronavirus pandemic came to €2.1bn (£1.87bn, $2.35bn ), as lockdowns brought the global aviation industry to a near-total halt.

This compared to a loss of €342m during the same three months last year. The first quarter 2020 loss included write-downs of €266m on its commissioned planes, and €57m on budget airline Eurowings.

Like all of its global competitors, Lufthansa was forced to ground nearly all of its fleet for the past couple of months as global travel bans came into force. It suffered a 98% slump in passengers in April, and a 26% drop in passenger numbers over the quarter compared to the same period last year.

The next step for Lufthansa will be cost-cutting measures, including job reductions, according to the airline. It has already put 87,000 of its around-137,000 staff onto short-work hours.

Wizz Air promises 'ultra low fares' as price war looms

The chief executive of discount airline Wizz Air (WIZZ.L) has struck an optimistic tone about a post-COVID-19 recovery, promising customers “ultra-low fares” to help fill planes.

József Váradi said he believed his company would “emerge from this crisis as an even more formidable business”.

“We are confident that we can ramp up operations quickly, re-stimulate demand with our ultra-low fares and contribute to the vital recovery of travel and tourism in our markets,” Váradi said in a statement.

The pledge comes days after Ryanair (RYA.L) chief executive Michael O’Leary said he would slash prices to stimulate demand.

UK economy buckles under 'deep cuts to corporate spending'

The UK’s dominant services sector continued to buckle under the weight of the coronavirus crisis in May.

Many firms have been hit hard by declining work and are slashing jobs rapidly amid “deep cuts to corporate spending,” according to the benchmark Markit purchasing managers’ index (PMI) survey.

The latest PMI data for Britain’s services sector, which makes up around four-fifths of the UK economy, lays bare the heavy toll of the lockdown on UK firms.

More than half of firms in services, from IT to banking to the arts, said they continued to suffer from falling work in May with the pandemic and lockdown crippling the economy.

Companies highlighted the impact of cancelled projects, customer closures and limited sales operations with staff on furlough.

Some 13% of firms said work had increased however, benefiting from a pick-up in activity in UK construction, online sales and demand from clients in the Asia-Pacific region.

Chinese economic data fuels European stocks

European stocks gained for a third consecutive day on Wednesday as strong data from China’s services sector fuelled investors’ hopes that the global economy will stage a strong recovery from the coronavirus crisis.

Markets looked set to side-step any impact from the continued civil unrest in the US, which saw largely peaceful protestors defy curfews across the country on Tuesday night.

A closely watched survey by IHS Markit found that China’s services sector’s purchasing managers’ index (PMI) reading came in at 55.0 in May, its highest since October 2010.

PMIs are an indicator of private sector activity and are given on a scale of 1 to 100. Anything above 50 signals growth, while anything below means contraction.

The pan-European STOXX 600 index (^STOXX) rose by around 1%, as did London’s FTSE 100 (^FTSE).

Germany’s DAX (^GDAXI) was up by around 1.6%, while France’s CAC 40 (^FCHI) was 1.5% in the green.

What to expect in the US

Futures were pointing to a positive open for US stocks on Wednesday.

S&P 500 futures (ES=F) rose by more than 0.4%, while Dow Jones Industrial Average futures (YM=F) rose by 0.6%. Nasdaq futures (NQ=F), meanwhile, were up by more than 0.3%.