Coronavirus takes heavy toll on airlines and shipping firms
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Version 0 of 1. Companies count cost of China flight cancellations and weaker travel demand across Asia Air France-KLM, Qantas, and the global container shipping company Maersk have become the latest businesses to warn about the financial impact from the spread of coronavirus. The airlines have cancelled flights to and from China and are experiencing weaker demand for travel in Asia. If flights remain suspended until April, the Franco-Dutch group Air France-KLM expects the Covid-19 outbreak to wipe between €150-200m (£130-170m) off its earnings. Qantas, which predicts annual profits will be A$150m (£77m) lower, plans to reduce flights to Asia by 15% until at least the end of May. While its planes remain grounded, Australia’s flag carrier will put employees on leave and freeze recruitment. Alan Joyce, the chief executive of Qantas, said there was a similar drop in demand for flights during the Sars outbreak in 2003, which affected the airline for six to eight months. Qantas believes it can manage for at least six months without cutting jobs. “We are keeping the capability to have the rebound, keeping the aircraft, keeping the people, because we think it will happen eventually,” Joyce said. Maritime transport is also counting the cost of the outbreak. The Danish firm Maersk, which handles one in five containers shipped by sea, forecasts a weak start to 2020. It has not predicted the cost of lower demand and difficulties delivering to some ports. “It is still early days to measure the overall impact,” Maersk said. “However, the weekly container vessel calls at key Chinese ports were significantly down compared [with] last year during the last weeks of January and the first weeks of February. Freight rates are expected to decrease due to dropping demand for containerised goods transport.” The Chinese government has announced new stimulus measures to support the economy. Factories remain closed for longer than usual after the lunar new year holiday in January, and some large industrial centres are under quarantine conditions. The central bank cut its benchmark lending rate and added measures to keep the economy afloat, a move that bolstered Chinese stock markets. In a quarterly report, the central bank said it expected limited economic impact from the outbreak but had offered to extend credit and provide favourable terms to firms with a role in controlling the virus. According to reports from the mainland on Wednesday, there have been 2,004 deaths and 74,185 confirmed infections. New cases have fallen to fewer than 2,000 per day but officials have warned of a potential increase as people return to work. • Sign up to the daily Business Today email here or follow Guardian Business on Twitter at @BusinessDesk |