By Jaimy Lee
Airlines, hotels and cruise line operators that have relied on consumers and business professionals who have been spending freely on travel are again telling investors to prepare for a financial hit as the COVID-19 outbreaks in four European countries and in the U.S. have worsened.
American Airlines Group Inc. /zigman2/quotes/209207041/composite AAL +5.61% , Delta Air Lines Inc. /zigman2/quotes/200327741/composite DAL +7.80% and Norwegian Air Shuttle /zigman2/quotes/204014691/delayed NO:NAS +3.00% are cutting capacity. Delta put hiring on hold, Norwegian has temporarily laid off workers, and Qantas Airways Ltd. /zigman2/quotes/205878984/delayed DE:QAN +5.74% has asked all staff to take paid or unpaid leave. United Airlines Holdings Inc. /zigman2/quotes/205037281/composite UAL +12.50% CEO Oscar Munoz is foregoing his salary for four months.
The travel slowdown has been spurred by a number of factors, including nations putting into place travel restrictions for countries with large infection clusters, first for mainland China and then for Iran, Italy, and South Korea, among others. Large employers have told employees to stop non-essential international and domestic travel and in some cases work from home at the same time that events like South by Southwest and the Healthcare Information and Management Systems Society meeting have been canceled.
The novel coronavirus was first detected late last year in Wuhan, China, and has since spread to 116 countries. There are now 118,100 cases of COVID-19 and 4,262 deaths, according to the most recent data from the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering.
Italy, which has seen its outbreak worsen in the past week, has 10,149 cases and 631 deaths. South Korea has 7,513 cases and 54 deaths, and Iran now has 8,042 cases and 291 deaths. Cases in France (1,784 cases and 33 deaths), Germany (1,281 cases and 2 deaths) and Spain (1,646 cases and 35 deaths) have also jumped in recent days.
A decree put into place in Northern Italy this week has been extended to the entire country as the number of cases and deaths there have soared. People in Italy are only allowed to travel for work or family emergencies.
“We are all trying to adjust to this New Normal, respect the official guidance and continue with our lives,” Alison Fottrell, an Irish teacher who lives in Como, Italy, wrote on MarketWatch. “Even those people who are in isolation, at least those that I know of, are taking it well. They are dealing with it calmly and waiting for it to pass.”
In the U.S., there are 804 cases and 28 deaths, in California, Florida and Washington state.
The latest states to declare an emergency are New Jersey and Illinois (where it is called a disaster proclamation). The band Pearl Jam canceled the first leg of its “Gigaton” tour. “Jeopardy!” and “Wheel of Fortune” reportedly will put a hold on studio audiences to limit spread of the virus, sources told TMZ . At least five members of Congress have self-quarantined after coming in contact with an individual who has tested positive for the virus.
On Monday night, President Donald Trump announced that he is considering a possible payroll tax cut, relief to hourly workers, and loans to small businesses in response to the outbreak.
“It’s not our country’s fault,” Trump said at a news conference. “This was something that we were thrown into. We’re going to handle it.”
Here’s how companies are being impacted by COVID-19:
• United Airlines Holdings Inc. /zigman2/quotes/205037281/composite UAL +12.50% will cut flight capacity by 10% domestically and 20% internationally in April due to the coronavirus outbreak. Executives Oscar Munoz and Scott Kirby will forego their base salaries, effective immediately through June 30, and the company has withdrawn its first-quarter guidance.
• Delta Air Lines Inc. is reducing capacity by 15 points, implementing a hiring freeze, offering voluntary leave, and deferring spending as it struggles with the fallout from the coronavirus. The airline said it is cutting international capacity by 20% to 25% and domestic capacity by 10% to 15%.