The rapid spread of coronavirus since it was first reported in China has caused unprecedented shock to the global economy.
Following are the business developments related to the epidemic as governments try to stabilize their economies, companies struggle to cope and millions of people face job losses and interruptions in the supply of goods and services.
AIRLINES: Airlines are failing to reduce capacity as fast as air travel is fading away as businesses and vacationers pull back on plans. Industry analysts are cutting their expectations even faster, with cuts of 40% or more the norm.
Air Canada is laying off over 5,000 flight attendants as the country’s largest airline cuts routes in falling demand. The layoffs will go into effect by April and affect approximately 60% of flight attendants. Air Canada says it will suspend most of its international and U.S. flights by March 31st.
GE aviation will reduce approximately 10% of its workforce in the United States. David Joyce, vice president of GE and CEO of GE Aviation, will give up half of his salary starting April 1st. General Electric’s aviation arm had previously announced a hiring freeze, the cancellation of an increase in salary, a drastic reduction in all non-essential expenses and a significant reduction in its contingent workforce.
The Canadian airline and travel company Transat AT Inc. has temporarily laid off about 70% of its workforce in Canada, or about 3,600 people.
The United Arab Emirates are suspending passenger transits through Dubai, the world’s busiest international airport, for two weeks to help stop the spread of the coronavirus. The suspension of transit through Dubai, which connects Europe with Asia and Australia, will affect travelers from all over the world.
The low cost airline Eastar Jet became the first South Korean airline to close all flights as demand plummeted. The airline says it will temporarily suspend its domestic flights from Tuesday to April 25th.
RECHARGED: General Motors is exploring the production of fans in a facility in Kokomo, Indiana. The automaker said Monday that it is working 24/7 with Ventec Life Systems in Washington state to build more critical medical devices. GM spokesman Dan Flores said he cannot comment on how many more fans Ventec will make or how soon they will arrive. The GM statement did not say even when the Kokomo facility could be in operation. Supply chain experts say it will be difficult to reuse an automotive plant to build a smaller, independent product like fans. They say such a change could take months, but GM could do it faster. Shilpan Amin, the company’s vice president of purchasing, wrote in an email last Sunday to GM senior that GM has commitments from Ventec parts companies to supply 93% of the fan parts to GM. The company is developing plans for the remaining 28 parts, he said in the email.
Yves Saint Laurent and Balenciaga are the latest luxury fashion labels that accelerate the production of surgical masks to help fight COVID-19. The Kering group, owner of the labels, says that the French workshops that usually produce clothes for Yves Saint Laurent and Balenciaga will switch to the production masks. Kering said he will also purchase and import 3 million surgical masks from China for donation to the French health service. The world’s largest luxury group – Paris-based LVMH – also claimed to have reached an agreement with a Chinese industrial supplier to deliver 10 million masks to the French population.
CORPORATE FIREWALL: Airbus is canceling a planned dividend payment and is accumulating 15 billion euros ($ 16 billion) in new credits to give the European aviation giant more liquidity to overcome the crisis. Last week the aircraft manufacturer had closed several plants to adapt them to safer health conditions.
Apparel firm VF Corp. says it will reduce $ 1 billion from its revolving credit line.
Royal Dutch Shell will reduce its operating costs from $ 3 to $ 4 billion over the next 12 months to adapt to the virus outbreak crisis and plunge oil prices. The company is also lowering capital expenditures to a maximum of $ 20 billion, down from previous expectations of $ 25 billion.
HEAVY INDUSTRY: millions of people work at home. However, the heavy industrial sectors have stopped because the risk of infection, if operations continue, would be inevitable.
A large commercial group from the auto industry is telling Congress that 95% of the US auto assembly plants have been forced to shut down due to the coronavirus epidemic.
The Automotive Innovation Alliance states in a letter obtained from the Associated Press that 42 of the 44 auto assembly plants in the United States have been closed since Friday. The letter states that 87% of assembly plants in North America have been shut down, including all seven in Canada and 60 out of 69 in Mexico. Analysts predict March sales will drop up to 40% from 2019 data. The association asks Congress for loans and loan guarantees for the companies concerned. It also requests that companies with more than 500 workers providing paid leave for employees get a tax deduction or a credit. Most US auto assembly workers are paid through closure, which in most cases is expected to last until late March and early April. The industry also wants Congress to postpone federal quarterly 2020 tax payments, begin a temporary tax holiday on wages, extend machinery expenditures, and delay the June 1 date of the USMCA trade pact, which replaces the North American free trade agreement.
Expecting a 60% drop in April bookings due to coronavirus travel restrictions, rental car giant Avis is cutting staff, reducing its fleet and pausing capital spending, among other actions. The company says it will also evaluate compensation expenses for senior employees, including executive leadership, as it seeks to save $ 400 million annually. Parsippany, New Jersey-based Avis Budget Group said it reached $ 1.1 billion in cash from equity in its vehicle fleet and estimated $ 750 million in revolving credits, giving it liquidity to operate “up to at the end of 2020 and beyond “.
Winnebago Industries has stopped production to protect workers from coronavirus exposure and to adjust production as the company’s demand for products is rapidly changing. Winnebago, which employs around 5,000 people, makes campers, travel trailers and boats under the brands Winnebago, Grand Design, Newmar and Chris-Craft. The Forest City, Iowa-based company has manufacturing facilities in Iowa, Indiana, Oregon, Minnesota and Florida. The company said Monday that production will cease until at least April 12th. The basic benefits and earnings will continue for the first two weeks.
Ford Motor Co. has suspended production of vehicles and engines at the International Markets Group’s production sites in India, Vietnam, South Africa and Thailand. Suspensions started on Saturday and will continue for several weeks.
REAL ESTATE: to conserve capital, the Zillow Group has postponed the purchase of housing in the 24 markets in which it participates in this activity. Last week Zillow blocked open houses for houses in all markets.
US home sales rose 6.5% in February, their highest level in 13 years. But this was for contracts signed in December and January, with closings in February. The first report of a coronavirus infection in the United States occurred on January 21, and the economist expects a major slowdown in the upcoming relationship with sellers closing their homes to potential buyers.
The commercial real estate market is at risk of collapse, warns the founder of Colony Capital, as mortgages are under increasing pressure. Thomas Barrack said in a blog post that liquidity ran out when companies were hit by a temporary cash flow deficit and a rapid drop in revenue. “The US mortgage market is on the verge of collapse,” Barrack wrote.
RENTALS: The federal regulator of giant mortgage buyers Fannie Mae and Freddie Mac aims to provide tenant relief in tenants in multi-family buildings affected by the viral crisis. The Federal Housing Finance Agency says that Fannie and Freddie will offer owners of multi-family properties relief on their mortgages, provided that they suspend all evictions of renters who are unable to pay due to the impact of the virus. The two companies together guarantee about half of the US housing loan market. Last week they temporarily suspended foreclosures and evictions of borrowers in single-family homes whose mortgages they guarantee.
SUPERMARKETS: the wholesale club of B.J. he is the latest to offer hourly wages for workers who stock the shelves while others stay at home. The increase in hourly wages would continue until at least April 12th. Key executives and staff will receive a one-time bonus, ranging from $ 500 to $ 1,000. Walmart, Target and Amazon are among the other company’s wage increases. Walmart also offers one-time bonuses to its part-time and full-time workers every hour.
RECRUITMENT: The spread of the virus has created a serious disruption in the workplace, with companies likely to send workers home. However, other companies, largely those deemed essential during the outbreak, have hired some sort of hiring.
Dollar General will hire up to 50,000 workers by the end of April when people order to stay free from the shelves of the business chain and stock up on pantries. The dollar general said Monday that most jobs will be temporary, but some may be long-term.
Papa John’s is hiring up to 20,000 people with high pizza demand. The need for new workers is so great, the company said on Monday that interviews can turn into a punch on the same day. Domino has already announced further hires.
CVS Health also announced Monday that it is looking to fill 50,000 full-time, part-time and temporary roles across the country. Positions include store co-workers, prescription drivers, distribution center employees, and customer / member support professionals. The company also offers bonuses for employees ranging from $ 150 to $ 500 to workers who need to be in its facilities.
THE STORES: H&M warned Monday that it may be necessary to permanently lay off workers as they struggle with the financial implications of the virus. The Swedish fast fashion company said 3,441 of its 5,062 stores worldwide are temporarily closed. The closures, aimed at stopping the spread of the virus, have had “a significant negative impact on sales so far in March,” the company said.
THE WAIT: Amazon is telling buyers that some items may take up to a month to be delivered as they handle a variety of online orders. The company said it is focusing on providing medical supplies, hand sanitizers, infant formula and other essential items for customers. Some top-selling books, for example, said they would be delivered in late April, much longer than two days or less than Amazon’s promised delivery times. The online retailer recently said it plans to hire 100,000 people in the United States to keep increasing orders as more people stay home and shop online.
ENERGY: the energy sector lost almost half of its overall value in March. Economic forecasts indicate a large reduction in the amount of energy that will be needed as national economies are on the sidelines.
Total announced on Monday that it is planning over $ 3 billion in organic capital expenditure cuts and suspending its $ 2 billion buyback program. The company is also planning savings of $ 800 million this year, up from the previously announced 300 million savings.
When the company announced its repurchase program, the oil was around $ 60 a barrel. After the coronavirus outbreak and the oil dispute between Saudi Arabia and Russia, oil fell to just $ 24 a barrel.
GIG ECONOMY DISRUPTED: Uber CEO Dara Khosrowshahi asks the federal government to help self-employed workers as drivers and delivery workers on its platform, not just full-fledged employees. Khosrowshahi sent a letter to President Donald Trump on Monday. Uber has 1.3 million people working on its platform in the United States. Khosrowshahi claims to provide food to people at home and to provide essential transportation services. The company offered up to 14 days of financial assistance to drivers and delivery personnel who were diagnosed with Covid-19 or placed in quarantine.