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Breakingviews - Corona Capital: Travel disruptions, Barbados, HDFC

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LONDON/MUMBAI (Reuters Breakingviews) - Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.

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- Travel disruptions

- Barbados

- HDFC

CRASH-LANDING. Travel companies’ getaway plans have been kyboshed by Prime Minister Boris Johnson. Shares in holiday operator TUI and airlines easyJet and Ryanair fell by 14%, 12% and 8% respectively on Monday after the UK government summarily announced a two-week coronavirus quarantine on sunseekers returning from Spain – Brits’ most visited foreign tourist destination – and advised against all but essential travel to the Spanish mainland following a surge in infections. The move coincided with Ryanair cutting its already shrivelled annual passenger target by one-quarter and warned of further declines if a second wave of the pandemic materialised.

In response, Hannover-based TUI has suspended holidays to mainland Spain for two weeks, although Ryanair and easyJet will continue to fly there. The former is particularly vulnerable given its precarious net debt load – equal to roughly 4 times estimated 2021 EBITDA. If Germany follows the United Kingdom’s approach, TUI’s balance sheet will be tested to breaking point. (By Christopher Thompson)

WARM WELCOME. Barbados is seizing on pandemic office closures. The Caribbean island has launched a year-long “work from home” visa to lure non-resident professionals. The Barbados Welcome Stamp allows anyone to work remotely on the island for 12 months for $2,000 per person or $3,000 for a family, and can be extended for a further 12 months. Those eligible for the visa would not pay Barbadian income tax.

The jury is still out on the impact of the pandemic on how we work. But the emergence of a market for remote working from holiday or exotic destinations might trouble financial centres such as London or New York. It could be a desirable benefit for new hires in jobs where office attendance is not mandatory and might even open ways to save money on tax. Governments, keen to get offices back to work and keep the infrastructure around them afloat, will be watching closely. (By Dasha Afanasieva)

NOT A GREAT LOOK. Aditya Puri is cashing out at a delicate time. The long-standing boss of India’s $82 billion HDFC Bank, the country’s top lender by market value, sold a 0.13% stake worth $113 million last week, according to a stock exchange filing on Saturday. The sale leaves him owning just 0.01% ahead of his expected retirement in October. The proceeds may help him to exercise outstanding share options upon stepping down.

The bank is well capitalised and looks in better shape than peers amid the pandemic: borrowers have taken up an interest-repayment holiday, endorsed by the regulator, on about 9% of HDFC’s loan book, less than one-third of the average for private sector banks. Still, there is much uncertainty. Industry-wide bad loans might double to 20% of the total. And HDFC is yet to name Puri’s successor. The share sale strikes a poor note. (By Una Galani)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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