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The outbreak of corona virus deepens its effects on global business

A loss of $ 29 billion in airline revenue. Car sales in China decreased by 92 percent. Outages for Procter & Gamble 387 suppliers in China.

With the Coronavirus spreading to the global economy and disrupting supply chains, global companies in almost all sectors face a stark reality: business will not go as normal.

Investors have taken notice. US stocks fell for a second day in a row on Friday. Energy, airline and technology stocks led the broader marketplace on Wall Street, with the S&P closing more than 1 percent lower, making it the worst day of the month. Oil and gas prices also fell, with the price of a record US barrel of crude falling by about 1 percent. Markets have become more volatile since the outbreak, but US investors have largely ignored this threat. Since January 7, when Chinese officials discovered the virus, the S&P 500 has remained above 3 percent, even after this morning’s sales. – Philips is dead

The International Air Transport Association warned this week of a sharp decline in profits of global carriers related to the collapse of travel in Asia due to the virus.

She said the outbreak could reduce global airline revenue by about $ 29 billion this year, leading to a small industry contraction compared to 2019.

Almost all of the losses are expected to hit airlines in the Asia Pacific region, which faces a 13 percent drop in passenger demand for this year, according to the association’s analysis.

Some airlines have begun to realize the aftermath of the outbreak, with Australian Air France-KLM and Qantas Group warning separately on Thursday of a possible financial hit.

Qantas said that the coronavirus It can reduce its profits For the fiscal year ending on June 30, $ 66 million to $ 99 million, while Air France-KLM estimated profits of $ 216 million between February and April of this year.

More than 20 international airlines have suspended or restricted roads that end in Wuhan, the epicenter, and other major Chinese cities.

  • Updated on February 10, 2020

    • What is Corona virus?
      It is a new virus that has been called a crown-like mutation that protrudes from its surface. Coronavirus can infect animals and people alike, and can cause a range of respiratory illnesses from common colds to more serious conditions such as severe acute respiratory syndrome, or SARS.
    • How infectious is the virus?
      According to preliminary research, it appears to be moderately contagious, similar to SARS, and may be transmitted through the air. Scientists have estimated that each infected person can spread it between 1.5 and 3.5 people without effective containment measures.
    • How should I be worried?
      Although the virus is a serious public health concern, the risk to most people outside China remains very low, and the seasonal flu poses a more urgent threat.
    • Who works to contain the virus?
      WHO officials spoke highly of China’s severe response to the virus, by shutting down transportation, schools and markets. This week, a team of experts from W.H.O. He arrived in Beijing to provide assistance.
    • What if you are traveling?
      The United States and Australia are temporarily denying entry to non-citizens who have recently traveled to China and several airlines have canceled their flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, as well as staying home when you are sick.

And airlines in Asia cut flights to other places. Singapore Airlines said it will temporarily cut flights between the country and the city Major destinations Such as New York, Paris, London, Tokyo, Seoul and Sydney.

Cathay Pacific, the Hong Kong transportation company, has also canceled almost all its flights to mainland China and cut service elsewhere in the next two months. – Naruk Chukchi and Amy Tsang

Car sales in China collapsed this month, as the China Passenger Car Association said sales of dealers fell 92 percent in the first half of February compared to the same period last year.

China is the world’s largest auto market with a wide margin. So diving in sales there is hurting the global industry.

Daimler, the German luxury car maker – that makes Mercedes-Benz – warned in its annual report that the virus could lead to a significant drop in Chinese economic growth. The report said that the virus “may not only affect the development of unit sales, but may also lead to significant negative impacts on production, the procurement market and the supply chain”.

Jaguar Land Rover has warned that the Corona virus may soon start creating production problems at assembly plants in Britain.

Like many automakers, Jaguar Land Rover uses parts made in China. With factories closing or operating at low capacity, assembly lines in the rest of the world are expected to lack the basic components. Keith Bracher

With much of China still closed, companies are struggling to get workers and factories working.

In a statement released this week, Foxconn, the world’s largest electronics maker and a major player in Apple’s supply chain, explained how difficult that was. Foxconn said its revenue would receive a blow from the spread of the Corona virus, and that it would be “cautious” in resuming work in its factories in China. The company said the plants outside the country are in places like Vietnam and Mexico at full capacity.

The revenue warning comes as Chinese leaders try to balance the restart of the economy and control the virus. Concerns about Foxconn production also underscore the potential broader impact of the epidemic on global electronic supply chains. Much of the world’s electronics comes from Chinese factories, which are also full of parts made in Chinese factories, and longer production suspensions may affect the overall supply. Some even warned that it could precipitate the classroom, which Chinese and American leaders sometimes urged out of security concern. Paul Mozour

Procter & Gamble, a large consumer product, said in a federal report this week that supply and demand disorders resulting from the outbreak will “materially” affect the company’s quarterly results.

“China is our second largest market – sales and profits,” said John R. Muller, the company’s CEO, at a conference in New York on Thursday, according to the report. “The number of store visits has decreased significantly, as many stores have closed or been operating at low hours. Some order has shifted online but the supply of delivery and manpower operators is limited.”

Mr. Muller said the company relied on 387 suppliers in China, each of whom was having difficulty resuming operations. Naruk Chukchi

The French government said it would urge companies to review their “excessive dependence” on China in terms of raw materials and spare parts, as the outbreak reveals weaknesses among French manufacturers who have used their supply chains there.

French Finance Minister Bruno Le Meyer has singled out carmakers who have trouble getting parts like brake pedals and the pharmaceutical industry that gets 80 percent of the raw materials for some medicines from China and Asia.

The government estimated that the economy could shrink about 0.1 percent this year as a result of the outbreak. Wuhan, the outbreak center, is home to More than a third All French investment in China. – Liz Alderman

Chinese banks have cut borrowing costs for companies and families in an effort to ease the economic blow to the Corona virus.

The move comes on the heels of a series of policies from the Chinese central bank to support the struggling economy with weeks of business closings nationwide. On Thursday, the People’s Bank of China said it cut the one-year loan rate to 4.05 percent from 4.15 percent, and cut the five-year loan rate to 4.75 percent from 4.8 percent.

Economists are slashing their growth forecasts for China this year because companies have just begun – to some extent – to return to work. Some said the move would not do much to address the widespread impact of the epidemic on the vibrant business community in China. – Alexandra Stephenson

Adidas, the German sportswear maker, said its activity on the Chinese mainland was decimated by the outbreak.

The company said sales in the region had fallen about 85 percent since the Chinese New Year on January 25, compared to the same period last year. Fewer shoppers in South Korea and Japan also contributed to lower sales, due to the sharp drop in Chinese tourism that also affected The aviation and hospitality sectors as well as the fashion retail business.

Adidas sells its products from about 12,000 stores in China, about 500 of which are its own stores and the rest are franchises. – Elizabeth Button

Geneva Abd contributed to the reporting.

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