What to watch: EasyJet delays aircraft order, UK employers slash 600,000 jobs, stocks surge

Edmund Heaphy
Finance and news reporter
EasyJet has delayed the delivery of 24 Airbus aircraft until sometime between 2025 and 2027. (Salvatore Di Nolfi/Keystone via AP)

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

EasyJet delays Airbus delivery until at least 2025

EasyJet (EZJ.L) said on Tuesday that it had delayed the delivery of 24 Airbus (AIR.PA) aircraft until sometime between 2025 and 2027, noting that it had secured “additional flexibility” from the French planemaker.

The low-cost airline had already announced that it would defer delivery of the aircraft, citing the impacts of the coronavirus crisis and the need to prepare for lower demand in the travel sector.

“I am pleased to confirm the detail of EasyJet's revised aircraft delivery commitments,” said chief executive Johan Lundgren, noting that the move would defer capacity in the medium-term.

Founder Stelios Haji-Ioannou had pushed the airline to abandon the Airbus order entirely, stating that he would otherwise not inject any fresh capital into the company.

But, in a series of resolutions at the company’s annual general meeting in May, the company’s executive team received strong backing from shareholders.

Last month, EasyJet announced sweeping cost-cutting measures and said it planned to cut 30% of its workforce, or around 4,500 jobs.

The airline does not expect to see demand return to its pre-crisis levels before 2023.

“We continue to take every action to remove cost and non-critical expenditure from the business at every level in order to help mitigate the impact from the coronavirus,” the airline said in May.

9 million workers furloughed as cost of scheme hits £20bn

The number of workers furloughed under the government’s job retention scheme continues to climb, fuelling fears that the end of the scheme will lead to surging unemployment in the UK.

New data from the Treasury, published on Tuesday, showed that 9.1 million people had been been placed on furlough as of midnight on 14 June. It means 200,000 new workers have been furloughed across the UK in just the last week.

The cost of the job retention scheme has now climbed to £20.8bn ($26.2bn), the Treasury said. Under the scheme, which was launched in March, the government pays up to 80% of furloughed staffs’ wages, to a maximum of £2,500 per month.

The continued rise in the number of furloughed workers will fuel fears that the end of the scheme could spark a wave of unemployment when the job retention scheme comes to an end.

UK employers have slashed 600,000 staff since March

UK employers have slashed more than 600,000 staff jobs since March as the coronavirus becomes an “employment crisis,” new figures suggest.

Office for National Statistics (ONS) figures on Tuesday showed the number of employees on UK payrolls in May was down by 2.1% compared with March.

The claimant count, including both the unemployed and workers employed but with low earnings, hit 2.8 million in May.

Vacancy numbers fell to a record low of around 476,000 between March and May, down 60% on two months earlier, while average pay has also dropped at a record rate.

The official employment rate was only available for the three months to April. It showed employment at 76.4%, down only 0.1 percentage point on the previous quarter but still 0.3 percentage points up on a year earlier.

Serious Fraud Office ends probe into banknote maker De La Rue

Embattled passport and banknote maker De La Rue (DLAR.L) said on Tuesday that the UK’s Serious Fraud Office (SFO) had concluded a year-long probe into “suspected corruption” relating to its business in South Sudan, and will take no further action.

“De La Rue is pleased that the SFO has closed its investigation and that the SFO is taking no further action in respect of this matter,” the company said in a statement.

In a separate statement, the SFO said that, after an “extensive investigation and a thorough and detailed review of the available evidence,” the case did not meet the test for prosecution.

In July 2019, De La Rue disclosed that the SFO had opened the probe into its affairs in South Sudan. In 2011, the firm spent six months designing and manufacturing the country’s new currency.

De La Rue has been at the centre of several probes by the SFO, including a 2010 investigation into the falsification of banknote quality certificates by employees.

It is the largest commercial printer of passports in the world, and has designed around a third of the banknotes in circulation globally.

European stocks surge after US Federal Reserve move calms markets

European stocks rallied on Tuesday after the US Federal Reserve said it would step up its efforts to backstop the US corporate debt market, calming global markets.

The move, which will see it purchase a “broad, diversified market index” of corporate bonds in the secondary market, also came after the central bank launched its long-awaited Main Street lending programme.

Investors hope that the lending programme, which will offer up to $600bn (£478bn) in loans to US businesses with up to 15,000 employees or with revenues up to $5bn, will bolster the US economy as it contends with the coronavirus pandemic.

The pan-European STOXX 600 index (^STOXX) rose by around 2.3%, while London’s FTSE 100 (^FTSE) was up by around 2.6% even after data showed that UK employers have slashed more than 600,000 staff jobs since March.

Germany’s DAX (^GDAXI) was up by around 2.8%, while France’s CAC 40 (^FCHI) was 2.3% in the green.

What to expect in the US

Futures were pointing to a higher open for US stocks on Tuesday.

S&P 500 futures (ES=F) rose by more than 1.1%, while Dow Jones Industrial Average futures (YM=F) rose by around 1.7%. Nasdaq futures (NQ=F), meanwhile, were up by more than 1%.