Outbreak: bankruptcies, layoffs, quiet skies and empty rails

The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Thursday related to the global economy, the work place and the spread of the virus.


ZOOM: At the end of last year, the video-conferencing company Zoom had about 10 million daily users. By March, it was 200 million. CEO Eric Yuan is addressing some of the security concerns that have arisen as tens of millions of workers fled the office and logged in to Zoom.

The company is enacting a 90-day freeze on new features so that it can deal with concerns about privacy on the platform. It’s also bringing in third-party expertise to assess how it’s handling user security.

Among the issues disrupting users is “zoombombing,” when people who are not part of a group break into a Zoom meeting to post images or memes.

BREAKING THE PIGGY BANK: Southwest Airlines drew down $2.33 billion from an existing credit agreement, according to a regulatory filing Thursday. It also plans to apply for a share of $25 billion in federal grants to cover airline payroll costs for the next six months.

Companies in the travel sector have aggressively gathered whatever cash is available to ride out the coronavirus, but they certainly are not alone.

According to S&P Global Market Intelligence, which tracked 200 corporations across all economic sectors for its analysis, companies have accessed credit lines for $154.79 billion through March 27. The consumer discretionary sector, which includes auto manufacturers, travel and tourism companies and retailers, led the way.

GM and Ford were the biggest borrowers, each tapping more than $15 billion in credit.

ARMY OF UNEMPLOYED: Estimates for the first waves of job losses in the U.S. related to the outbreak were all over the map. The actual number blew all of those estimates away Thursday. The Department of Labor reported more than 6.6 million Americans applied for unemployment benefits last week, far exceeding a record high set just last week.

GE Aviation is furloughing half of the workers in its U.S. engine assembly and component manufacturing unit. GE would not give a specific number of layoffs, but the unit has 26,000 employees. Both salaried and hourly employees will be laid off for up to four weeks, the company said Thursday. GE will continue to provide “income security” and health benefits. The layoffs are in addition to GE’s previously announced 10% reduction of its U.S. workforce.

Boeing began offering a voluntary layoffs and CEO David Calhoun isn’t ruling out involuntary job cuts later.

In a letter to employees, Calhoun said the size of Boeing’s market will likely be altered by the virus. Under the voluntary layoff plan, eligible employees will be able to leave with a severance package of pay and benefits.

Nearly 900,000 workers have lost their jobs in Spain, authorities said Thursday. The job loss is vastly greater than in January 2009, when 350,000 workers lost their jobs during the global financial crisis.

TRAVEL: Gone unnoticed as millions shut in their homes are skies strangely devoid of aircraft. The number of people flying continues to hit new lows.

The Transportation Security Administration screened 146,348 people on Tuesday, nearly 8,000 fewer than Monday, and down 93% from one year ago.

Korean Air pleaded for swift government intervention Thursday.

The airline, South Korea’s largest, recently put all foreign pilots on unpaid leave for three months and may soon ask its entire workforce of 20,000 to do the same if conditions deteriorate.

The pandemic is expected to wipe out $23 billion in passenger revenue from airlines across the Middle East and Africa this year, according to an assessment Thursday by the aviation industry’s largest trade association.

The International Air Transport Association said Mideast airlines will see a $19 billion drop in revenue compared with last year.

OFF THE RAILS: With auto plants shut down, rail shipments from the auto industry tumbled 70% last week to 5,423 carloads, according to the Association of American Railroads. Total container shipments slid 14% as trade with China plummets.

On Thursday, the U.S reported that the trade deficit tumbled in February to the lowest level since 2016 as exports fell, and imports fell more. The politically sensitive gap in the trade of goods with China narrowed when the world’s No. 2 economy was locked down to combat the coronavirus outbreak.

Norfolk Southern, Union Pacific and CSX have warned of a material impact on earnings.

RAILWAY RIGATONI: A German supermarket chain has enlisted special trains to ensure a steady supply makes it across the Alps from Italy.

Aldi said Thursday that shipments by rail have so far brought more than 200 metric tons of fusilli, penne and spaghetti to satisfy surging demand in Germany.

MARKETS: Stocks are essentially flat after earlier gains began to fade. There is growing skepticism about a claim by President Donald Trump that millions of barrels of crude production could be cut to prop up the besieged energy sector.

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