The coronavirus pandemic has left British Airways (BA) fighting for its survival, Alex Cruz, the CEO of the airline, said Wednesday.
Cruz, who has taken a one-third pay cut, said BA is burning through £20 million ($25.9 million) per day.
Only 187,000 passengers flew with the BA on the week starting September 7, compared to 1 million this time last year, he told a government committee.
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The UK’s flag-carrier airline British Airways (BA) is fighting for survival, its boss said Wednesday.
Its CEO Alex Cruz told a government committee that the coronavirus pandemic is “worst crisis that British Airways has gone through in its 100 years of history,” adding that the firm is burning through £20 million ($25.9 million) per day. He has taken a one-third pay cut, he said.
The company has already cut more than 8,000 jobs.
“COVID has devastated our business, our sector, and we’re still fighting for our own survival,” he said.
Only 187,000 passengers travelled with the company on the week starting September 7, he said, compared to 1 million at the same time last year.
“We remain worried about the virus in the winter season. People are still afraid of travelling. We are having weekly changes to the quarantine list. All the data that we get are still pointing at a slow recovery process,” Cruz said.
British Airways has joined other airlines in calling for a test-and-quarantine scheme between London and New York — the world’s busiest intercontinental air link — that will “minimize the quarantine process” and encourage passengers to fly again. But the government says that there is no alternative to 14 days of self-isolation.
In April, British Airways announced plans to cut up to 12,000 jobs from its 42,000-strong workforce. This has since been increased to 13,000. Cruz described the job cuts on as an “impossible situation” on Wednesday, adding: “I deeply, deeply regret that way too many loyal and hardworking colleagues of mine are having to leave our business.”
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New York battles COVID-19 hot spots as Washington wrangles over relief
By Maria Caspani
NEW YORK (Reuters) – New York City restaurants welcomed patrons back inside for the first time in months on Wednesday as authorities scrambled to contain COVID-19 outbreaks in some neighborhoods and negotiators in Washington wrangled over a coronavirus relief package.
Coronavirus infection rates continued to climb in many of the nine ZIP codes in the boroughs of Queens and Brooklyn where new clusters have emerged, Mayor Bill de Blasio said on Wednesday.
The city is deploying 400 police officers as well as other officials to improve compliance with social-distancing rules and a face-covering mandate in the affected neighborhoods.
Residents and visitors will be fined up to $1,000 if they refuse to wear a mask in public, de Blasio said on Tuesday, after the daily positivity rate topped 3% for the first time since June as more students headed back to the classroom.
On Wednesday, the rate ticked back under 1%, he told a news conference, while the seven-day rolling average of infections rose slightly to 1.46%.
Indoor dining made a comeback but at 25% capacity and with many restrictions: Tables have to be six feet apart, staff must take patrons’ temperature before they enter the restaurant and bar tops will remain closed for seating.
New York Governor Andrew Cuomo on Tuesday slammed local authorities for failing to strictly enforce coronavirus health and safety rules in the state’s 20 hot spot ZIP codes, and threatened to take action if they did not step up.
“Local governments, enforce the law. If you are unwilling to enforce the law, I will enforce the law,” Cuomo told reporters on Wednesday.
The governor said he had “a good conversation” on Wednesday morning with the leaders of the state’s Jewish Orthodox community, which has experienced a rise in infections, and planned to have a second one in the afternoon.
The areas of concern in the state are in Rockland, Orange and Nassau, in addition to the New York City neighborhoods.
‘THIS MASK IS WORKING’
U.S. Treasury Secretary Steven Mnuchin said after meeting with House of Representatives Speaker Nancy Pelosi on Wednesday that they were making progress on COVID-19 relief legislation, though no deal was reached.
The economic cost of the pandemic, which has killed more 206,000 people in the United States and infected more than 7.2 million, has been steep. Walt Disney Co <DIS.N> said it would lay off some 28,000 employees as its flagship California theme park remains closed, in the latest such announcement by a large company.
The United States is reporting 43,000 new infections on average each day, compared with 35,000 two weeks ago, according to a Reuters tally.
Over the past two weeks, coronavirus cases have been rising in 30 out of 50 states, including the former epicenters of Arizona, New Jersey, New York and Texas, compared with 19 states the previous two weeks.
In Alabama, where the positivity rate was near 13% last week, Governor Kay Ivey, a Republican, said on Wednesday that she was leaving in place a mask mandate she issued in July after it proved effective in reducing the number of new infections.
“We do believe this mask is working,” Alabama Health Officer Scott Harris told a news conference. “But obviously we don’t want to continue this any longer than we have to do that.”
North Carolina Governor Roy Cooper said he was encouraged by the stability of key coronavirus indicators and announced further loosening of some restrictions as part of a Phase 3 reopening on Friday.
(GRAPHIC: Where coronavirus cases are rising and falling in the United States – https://graphics.reuters.com/HEALTH-CORONAVIRUS/USA-TRENDS/dgkvlgkrkpb/index.html)
(Reporting by Maria Caspani in New York, additional reporting by Peter Szekely in New York, Editing by Sonya Hepinstall)
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Goldman Sachs Predicts Over 40% Rally for These 3 Stocks
A new wave of optimism is splashing onto the Street. Investment firm Goldman Sachs just gave its three-month stock forecast a boost, lifting it from Neutral to Overweight, with it also projecting “high single-digital returns” for global stocks over the next year.What’s behind this updated approach? Goldman Sachs strategist Christian Mueller-Glissmann cites the impressive rebound in global earnings growth and reduced equity costs as the drivers of the estimate revision. On top of this, a “broader procyclical shift” in stocks and other assets could take place during the remainder of this year.“We have shifted more cyclical on sectors and themes tactically but still prefer growth vs. value on a strategic horizon… In the near-term, elevated uncertainty on U.S. elections and a better global growth outlook might benefit non-U.S. equities more, but in the medium term a large weight in structural growth stocks is likely to support the S&P 500,” Mueller-Glissmann noted.As for the “most important catalyst” that could spur growth optimism in the next year, the strategist points to additional clarity on when and how a COVID-19 vaccine will be available.Turning Mueller-Glissmann’s outlook into concrete recommendations, Goldman Sachs’ analysts are pounding the table on three stocks that look especially compelling. According to these analysts, each name is poised to surge in the 12 months ahead.Raytheon Technologies (RTX)First up we have Raytheon Technologies, which is an aerospace and defense company that provides advanced systems and services for commercial, military and government customers. While shares have stumbled in 2020, Goldman Sachs thinks the weakness presents a buying opportunity.Representing the firm, analyst Noah Poponak points out that RTX is “too high quality and well positioned of a company to trade at an 11% free cash flow yield on the fully aerospace-recovered and fully synergized 2023E free cash.”The analyst’s bullish outlook is largely driven by the company’s aerospace aftermarket (the secondary market that deals with the installation of equipment, spare parts, accessories and components after the sale of the aircraft by the original equipment manufacturer) business, which Poponak argues is “the best sub-market within Aerospace over the long-term.” This segment makes up roughly 45% of RTX’s aerospace revenue.Even though COVID-19 flight disruptions have weighed on this part of the business, Poponak points out total aircraft in service is down only 25% year-over-year, and flights have dipped less than 50%. He added, “China domestic traffic is now up year on year, and while international remains depressed, we believe the recovery in global air travel could be quicker from here than broad expectations for a recovery by 2023-2024.”Poponak highlights that in previous downturns, the aftermarket had to confront headwinds that arose from the increased use of parting out, inventory pooling and delayed aftermarket spending. “Even then, aftermarket grew at or faster than ASMs, and we believe there was pent-up demand heading into this downturn that support aftermarket tracking the recovery in global air travel. Long-term, we expect air traffic to grow 2X global GDP, as it has historically,” the analyst commented.Adding to the good news, the Geared Turbo Fan, which is a type of turbofan aircraft engine, product cycle could generate substantial revenue and EBIT growth at Pratt & Whitney, in Poponak’s opinion.“Given the high OE exposure to the A320neo, which has the strongest backlog of any aircraft in the market, we see Pratt OE revenue holding up better and recovering faster than peers. New GTF deliveries will drive expansion in the installed base for Pratt, which was declining for most of the 2000s. Despite the end of V2500 OE deliveries, that program is just moving into the sweet-spot for shop visits on the aftermarket side,” Poponak opined.What’s more, Poponak sees merger synergies as capable of fueling margin expansion and cash generation, with the historical synergy capture in the space implying that upside to guidance isn’t out of the question.In line with his optimistic approach, Poponak stays with the bulls. To this end, he keeps a Buy rating and $86 price target on the stock. Investors could be pocketing a gain of 49%, should this target be met in the twelve months ahead. (To watch Poponak’s track record, click here)In general, other analysts echo Poponak’s sentiment. 7 Buys and 2 Holds add up to a Strong Buy consensus rating. With an average price target of $78.63, the upside potential comes in at 36.5%. (See RTX stock analysis on TipRanks)Boeing (BA)Moving on to another player in the aerospace space, Boeing has also struggled on account of the COVID-19 pandemic, with it failing to match the pace of the broader market. That being said, Goldman Sachs has high hopes for this name going forward.Firm analyst Noah Poponak, who also covers RTX, points out that BA has already trimmed production rate plans by half, compared to the peak plan from before the COVID crisis and MAX grounding. A slower-than-anticipated air travel rebound could result in more reductions, but the analyst argues these would be much smaller than the reductions that have already been witnessed. He added, “Historically, the best buying opportunities in BA shares are right after it has capitulated to production rate cuts.”According to Poponak, compared to previous economic declines, the peak to trough in the current downturn is larger and faster, although this is partly related to the grounding of the 737 MAX in 2019. “We believe this will result in a less severe dislocation of supply and demand balance, and see deliveries recovering to 2018 levels by 2024 as global air travel recovers and airlines replace accelerated retirements,” he explained.As for how the company can fulfill its new production rate plan “given the mix of its backlog is so much more weighted to growth than replacement,” Poponak believes “the answer is that airlines during this downturn are revising that mix.” Since the pandemic’s onset, airlines have revealed higher aircraft retirement plans, and braced for less growth. “That means for a given revision in an airline’s order book, there is also a substantial mix shift toward replacement from growth within the new delivery numbers. Therefore, the backlog will not necessarily lose all of its growth orders,” the analyst stated.Additionally, following an uptick in aircraft order cancellations in March and April, the pace has slowed. “Even assuming another 200-plus unit cancellations this year, we estimate the 737 MAX would have nearly 6X years of production by the middle of the decade at our revised production rate estimates,” Poponak mentioned.When it comes to free cash flow, the analyst is also optimistic, with Poponak forecasting that BA will see positive free cash flow in 2021. “We think the market is underestimating the mid-cycle achievable aircraft unit cash margins across the major programs, extrapolating temporarily negative items into the future, and underestimating the degree of inventory unwind likely to occur in 2021,” he said.If that wasn’t enough, the MAX recertification could be a major possible catalyst. The company is working towards recertification and return to service, with Poponak expecting both to come before year-end.Taking all of the above into consideration, Poponak maintains a Buy rating and $225 price target. This target conveys his confidence in BA’s ability to climb 35% higher in the next year.Turning to the rest of the analyst community, opinions are mixed. With 8 Buys, 8 Holds and 1 Sell assigned in the last three months, the word on the Street is that BA is a Moderate Buy. At $192.40, the average price target implies 16% upside potential. (See Boeing stock analysis on TipRanks)Immatics (IMTX)Combining the discovery of true targets for cancer immunotherapies (therapies that utilize the power of the immune system) with the development of the right T cell receptors, Immatics hopes to ultimately enable a robust and specific T cell response against these targets. Based on its cutting-edge approach, Goldman Sachs counts itself as a fan.Writing for the firm, analyst Graig Suvannavejh notes that unlike CAR-T approaches, a T cell receptor (TCR)-based approach can go after targets inside the cell, and fight the 90% of cancers which are solid tumor in nature. The company is advancing two technologies: ACTengine, designed for personalized TCR-based cell therapies, and TCER, which targets TCR-based bispecific antibodies.ACTengine is the more advanced technology, with its four assets IMA201, a genetically engineered T cell product candidate that targets melanoma-associated antigen 4 or 8, IMA202, which targets melanoma-associated antigen 1, IMA203, which targets preferentially expressed antigen in melanoma (PRAME) and IMA204 that targets COL6A3 (found in a tumor’s stroma and is highly prevalent in the tumor microenvironment/TME in a broad range of cancers) expected to enter the clinic soon.Using the TCER platform, IMTX is developing IMA401 and IMA402, or “off-the-shelf” biologics consisting of a portion of the TCR which directly recognizes cancer cells and a T cell recruiter domain which recruits and activates the patient’s T cells.Speaking to the market opportunity, Suvannavejh mentioned, “Cancer immunotherapies have made great strides over the past decade, and in particular, advances seen with CAR-T have paved the way for cell therapy-based approaches… CAR-T, however, has to date only shown limited effect in treating cancers that are solid tumor in nature. With more than 90% of all cancers being solid tumors — with lung, breast, colorectal and prostate cancers accounting for c.60% of the total — this is the opportunity for IMTX.” To this end, he believes cumulative 2035 sales could land at $15.5 billion for the ACTengine-based assets.Reflecting another positive, since 2017, IMTX has inked at least one significant partnership per year with top global biopharma companies. According to Suvannavejh, each provided non-dilutive funding opportunities.The analyst added, “…the ARYA Sciences Acquisition Corporation, a special purpose acquisition company (SPAC), merger that enabled IMTX to become a publicly traded entity brought in a deep roster of well-known, experienced healthcare-dedicated institutional investors. Taken together, we find these to be validating of IMTX’s longer-term prospects.”Looking ahead, the initial clinical data readouts for IMA201, IMA202 and IMA203, which are slated for Q1 2021, and investigational new drug (IND) application submissions for IMA204 and IMA401 in 2021 and YE2021, respectively, reflect key potential catalysts, in Suvannavejh’s opinion.Everything that IMTX has going for it convinced Suvannavejh to reiterate his Buy rating. Along with the call, he attached a $17 price target, suggesting 73% upside potential. (To watch Suvannavejh’s track record, click here)Are other analysts in agreement? They are. Only Buy ratings, 4, in fact, have been issued in the last three months. Therefore, the message is clear: IMTX is a Strong Buy. Given the $19 average price target, shares could soar 93% in the next year. (See Immatics stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
White House stimulus proposal goes over $1.5 trillion with $20 billion for airlines
(Reuters) – The Trump administration has proposed including a $20 billion extension in aid for the battered airline industry in a new stimulus proposal to House Democrats worth over $1.5 trillion, White House chief of staff Mark Meadows said on Wednesday.
“There’s $20 billion in the most recent proposal for the airlines that would give them a six month extension,” Meadows told reporters aboard Air Force One, noting that the industry was in urgent need of support.
American Airlines and United Airlines, two of the largest U.S. carriers, said they were beginning furloughs of over 32,000 workers on Thursday as hopes faded for a last-minute bailout from Washington. U.S. airlines have been pleading for another $25 billion in payroll support to protect jobs for a further six months after the current package, which banned furloughs, expired at midnight EDT.
Coronavirus relief talks between the White House and House Democrats had stalled in large part over the price tag, with Democrats seeking $2.2 trillion and the White House staying firm at $1.5 trillion.
Meadows declined to provide the total value of the White House’s latest proposal but said the figure is “certainly above the $1.5 trillion that has been articulated to date.”
“As you get above $1.5 trillion, it gets extremely difficult to justify based on the facts,” he cautioned, explicitly stating that $2 trillion was too much. “If it starts with a 2, it’s going to be a real problem,” he added.
Speaking on a flight to Washington from the swing state of Minnesota where U.S. President Donald Trump had headlined a rally ahead of presidential elections in November, Meadows said he was hopeful talks will continue with Democrats on Thursday.
Meadows also told reporters that a stop-gap spending bill approved by the Republican-controlled Senate and the Democratically-led House to fund the government through December 11 had been received by the White House. Trump has signed the bill.
(Reporting by Alexandra Alper in Washington; Editing by Muralikumar Anantharaman and Raju Gopalakrishnan)
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