The spreading coronavirus could cost airlines as much as $113 billion in lost revenue
The economic affects of the coronavirus have preceded the spread of the virus itself, with financial markets swinging wildly, companies closing offices or asking employees work from home in affected areas, and throttling air travel across the globe. Following is a brief look at how things are changing in the economy and the workplace today as the outbreak widens.
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AIR TRAVEL: An industry group says the spreading coronavirus could cost airlines as much as $113 billion in lost revenue. That figure, released Thursday, is four times the number released just two weeks ago by the The International Air Transport Association, which is imploring governments for assistance. The group says the industry urgently needs help from governments in waiving some requirements and fees.
Southwest Airlines cut its revenue expectations for the quarter by $200 million to $300 million. “In recent days, the company has experienced a significant decline in customer demand, as well as an increase in trip cancellations, which is assumed to be attributable to concerns relating to reported cases of COVID-19,” the company said Thursday in a regulatory filing.
The struggling British airline Flybe collapsed Thursday as the outbreak quashed ticket sales. The British regional airline narrowly avoided bankruptcy in January, but the spread of the coronavirus sealed its fate, left passengers stranded, and is now threatening the viability of regional airports across the U.K.
Smaller carriers are particularly at risk. The low-cost carrier Norwegian Shuttle canceled 22 long-haul flights between Europe and the United States from late March to early May. The national carrier Finnair is laying off its entire staff based in Finland for two weeks to a month due to the economic impact of the outbreak.
ADRIFT: Princess Cruise Lines has notified passengers of its Grand Princess that federal health officials are investigating a “small cluster” of coronavirus cases connected to the ship’s mid-February voyage. It asked current passengers to stay in their cabins until they were cleared by medical staff and said those who had been on the previous voyage should contact their doctor if they develop a fever or other symptoms.
The Grand Princess is at sea off Mexico and will return early to San Francisco, where CDC and company officials will meet to determine the course of action, the cruise line said. California planned to fly COVID-19 testing kits out to the ship, which won’t be allowed to dock until the test results are completed, Gov. Gavin Newsom said Wednesday.
MALLS: Already teetering due to a drastic transformation in the retail sector, the more than 1,000 malls in the United States are bracing for a drop in foot traffic. Big malls like American Dream and Mall of America and mall owner Taubman Centers Inc. say they’re adding hand sanitizer stations, and they’ve also stepped up disinfecting high-touch areas like doors and handrails. The International Council of Shopping Centers said its members are following guidelines from the Centers for Disease Control and Prevention.
CLOSE TO HOME: More companies are reporting workers with infections in the United States. Facebook says it’s temporarily closing a Seattle office after a worker was diagnosed with the virus. The last time the employee came to the social network’s Seattle office was Feb. 21, so Facebook said the office will remain closed until Monday, when the incubation period ends. The company has encouraged its Seattle staff to work from home until March 31.
Amazon this week said one of its employees in Seattle, and two in Milan, Italy, had contracted the coronavirus. All were quarantined. The company told told its Seattle area employees to work from home if they can. Around 50,000 people work at the online retailer’s Seattle headquarters or its nearby offices in Bellevue, Washington.
Washington state has become a hot point, with most of the deaths in the U.S. being reported in a cluster there.
Microsoft asked its Seattle-area workers who can do their jobs outside of the office to do so until March 25. The directive also affects Microsoft employees in the San Francisco Bay Area. The Redmond, Washington, company said employees should still come in if they work at a data center, retail store or other location where their presence is needed, unless they have an underlying health condition, are over 60 or fall into other categories that health authorities say pose higher risks. Microsoft asked people to cancel travel to its Puget Sound and Bay Area campuses unless it is “essential for the continuity of Microsoft.” It has canceled non-essential travel to regions where the virus is active.
ENERGY: The oil-producing countries of the OPEC cartel on Thursday called for a deep production cut of 1.5 million barrels per day to support prices that are sagging due to the spread of the coronavirus. Air travel has plunged since the outbreak emerged in China, sapping demand for jet fuel. Manufacturing has been idled in China as cities with millions of residents locked down to contain the spread of the virus. Major companies around the world have halted business travel out of precaution. Despite the proposed cut, crude prices continued to decline. They have fallen 24% this year.
MARKETS SWINGS: Market volatility continued Thursday. After a huge swing into positive territory Wednesday, Dow tumbled 500 points in early trading, after falling about 700 points after the opening bell.
The Chicago Board Options Exchange Volatility Index, or VIX, pushed above 37. The VIX is also called Wall Street’s fear barometer. It’s been striking levels not seen in almost a decade in recent weeks. The French CAC 40 fell 2.4%, Germany’s DAX lost 2.2% and the FTSE 100 in London dropped 2.1%.
Treasury yields in the U.S. fell, with the 10-year yield falling toward another record low. It sank to 0.93% Thursday as investors dumped stocks and looked for a safe space for their money, despite meager returns.