The rapid spread of the coronavirus since it was first reported in China has dealt an unprecedented shock to the global economy.
Following are business developments on Monday — March 23 — related to the outbreak as governments attempt to stabilise their economies, companies struggle to cope and millions of people face job losses and disruptions in supplies of goods and in services.
Airlines can’t seem to cut capacity as fast as air travel is fading as businesses and vacationers pull back on plans. Industry analysts are slashing their expectations even faster, with cuts of 40 per cent or more the norm.
Air Canada is laying off more than 5,000 flight attendants as the country’s largest airline cuts routes amid plunging demand. The Montreal carrier is laying off about 3,600 employees, plus 1,549 flight attendants at its low-cost subsidiary Rouge, according to Wesley Lesosky, head of the Air Canada component of the Canadian Union of Public Employees.
The layoffs will take effect by April and affect roughly 60 per cent of flight attendants. Air Canada says it will suspend most of its international and US flights by March 31. The carrier says employees will be returned to active duty status once flights resume.
GE aviation will cut about 10 per cent of its US workforce. David Joyce, vice chairman of GE and CEO of GE Aviation, will give up half of his salary starting April 1. The aviation arm of General Electric also said that there will be a temporary lack of work impacting approximately 50 per cent of its US maintenance, repair and overhaul employees for 90 days.
GE Aviation had already announced a hiring freeze, the cancellation of a salaried merit increase, a dramatic reduction of all non-essential spending, and a significant decrease in its contingent workforce.
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 decision comes as non-essential travel around the world comes to a standstill as governments close borders in an effort to slow the pandemic. The layoffs include all flight crew personnel.
The United Arab Emirates is suspending passenger transits through Dubai, the world’s busiest international airport, for two weeks to help stop the spread of the coronavirus. Suspending transit through Dubai, which connects Europe with Asia and Australia, will affect travelers around the world.
Low-cost airline Eastar Jet has become the first South Korean carrier to shut down all flights as demand plunges. The company says it will temporarily suspend its domestic flights from Tuesday to April 25. Other budget South Korean carriers including Air Seoul, Air Busan and T’Way Air operate only domestic flights after suspending their international services.
Yves Saint Laurent and Balenciaga are the latest luxury fashion labels ramping up the manufacturing of surgical masks to help the fight against Covid-19.
The Kering Group, which owns the labels, says French workshops that usually make clothes for Yves Saint Laurent and Balenciaga will switch over to manufacturing masks. It says production will begin “as soon as the manufacturing process and materials have been approved by the relevant authorities”. It did not say how many masks the workshops will be able to make. Kering said it will also buy and import 3 million surgical masks from China for donation to the French health service.
The world’s largest luxury group, Paris-based LVMH, has also said it has reached a deal with a Chinese industrial supplier to deliver 10 million masks to the French population.
French President Emmanuel Macron urged employees to keep working in supermarkets and some other businesses deemed essential amid a spreading shutdown imposed to fight the coronavirus.
Finance minister Bruno Le Maire has said that the whole supply chain for the food industry must be guaranteed after France shut down all restaurants, cafes, cinemas and retail shops that are deemed nonessential. Many employees are working from home. Businesses that are allowed to remain open must enforce rules about social distancing, washing hands and disinfection.
While some businesses are being required to close during the virus outbreak, others are seeing a surge in demand for their products. Dollar General said on Monday that it plans to hire up to 50,000 workers by the end of April as customers continue to head to its stores to stock up on household supplies.
Dollar General said it anticipates a majority of the new jobs will be temporary, but that some may be long term.
CVS Health also announced on Monday that it is looking to fill 50,000 full-time, part-time and temporary roles across the country. Positions include store associates, prescription delivery drivers, distribution center employees and member/customer service professionals. The company is also giving employee bonuses ranging from $150 to $500 to workers required to be at its facilities.
Other companies have also announced they are hiring more employees, among them Amazon and Domino’s Pizza.
H&M warned on Monday that it may need to permanently lay off workers as it wrestles with the financial implications of the virus. The Swedish fast fashion company said that 3,441 out of its 5,062 stores globally are temporarily closed. The closures, aimed to stop the spread of the virus, has had ”’significant negative impact on sales so far in March”, the company said.
The energy sector has lost almost half of its overall value in the month of March. Economic forecasts indicate a vast reduction in the amount of energy that will be needed as national economies are broadsided.
Total announced on Monday that it is planning more than $3 billion in organic capital expenditure cuts and suspending its $2 billion buyback program. The company is also now planning $800 million in savings this year, up from its previously announced $300 million in savings.
When the company had announced its buyback program, oil was around $60 per barrel. Since the coronavirus outbreak and oil dispute between Saudi Arabia and Russia, oil has fallen as low as $24 a barrel.