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Rabu, 29 Januari 2020

Coronavirus: Airlines suspend flights, some Starbucks, KFC, McDonald's locations closed in China - CBC News

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2020-01-29 13:51:08Z
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Boeing posts first annual loss in 22 years because of the 737 Max crisis - CNN

The company reported a net loss of $636 million last year, compared to a $10.5 billion profit it made in 2018.

But its core commercial aircraft operation lost $6.7 billion last year, almost entirely because of Boeing's continued problems with the 737 Max. Revenue for the year plunged 24% because Boeing stopped deliveries of the 737 Max in March.

Boeing said it will pay an additional $2.6 billion to airline customers to compensate them for the grounding, which followed two fatal crashes that killed 346 people.

"We recognize we have a lot of work to do," said Boeing CEO Dave Calhoun in a statement. "We are focused on returning the 737 Max to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public. Fortunately, the strength of our overall Boeing portfolio of businesses provides the financial liquidity to follow a thorough and disciplined recovery process."

But the grounding will cost more than the amount Boeing owes airlines. The cost of producing the jet increased by $2.6 billion during 2019. Boeing had continued to build the Max throughout the year despite not being able to complete the deliveries and get most of the money for the plane from airline customers. It has about 400 completed jets parked in Washington state and Texas awaiting delivery.

Boeing also expects a cost increase of $4 billion in 2020 because of at temporarily shutdown of production earlier this month. Calhoun said last week it expects to restart the line in two or three months even without final approval for the plane to fly again.

All told the 737 Max crisis has cost Boeing more than $17 billion.

Boeing (BA) said last week it did not expect the plane will be approved to fly again until the middle of this year, although the Federal Aviation Administration subsequently said its approval could come before that time. The airlines have been adjusting their schedules, with United Airlines (UAL) executives saying last week that they don't expect to be able to use the plane during the upcoming summer travel season.

Although the 737 Max crisis is Boeing's biggest problem, other issues are dogging the company.

Slides it prepared for an investor call later Wednesday show it plans to record a charge for the Starliner space capsule it is developing for NASA. Starliner will need an additional uncrewed mission after it failed to reach the International Space Station as planned on its most recent flight. The amount of the charge was not indicated.

It also said that global trade tension is putting pressure on the widebody commercial jet market, Boeing's most profitable product. And it said the slowdown in production of the 787 Dreamliner widebody will stretch through at least 2023.

Correction: An earlier version of this story misstated Boeing's core loss.

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2020-01-29 13:32:00Z
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Boeing posts first loss in 22 years because of the 737 Max crisis - CNN

The company reported a net loss of $636 million last year, compared to a $10.5 billion profit it made in 2018.

Boeing said it will pay an additional $2.6 billion to airline customers to compensate them for the grounding, which followed two fatal crashes that killed 346 people.

All told the 737 Max crisis has cost Boeing more than $17 billion.

Although the 737 Max crisis is Boeing's biggest problem, other issues are dogging the company.

Correction: An earlier version of this story misstated Boeing's core loss.

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Boeing posts first annual loss in more than two decades as 737 Max crisis continues - CNBC

Boeing on Wednesday reported its first annual loss in more than two decades as costs from the 737 Max crisis rise sharply.

Boeing said it lost $636 million in 2019, marking the first annual loss since 1997. As a comparison, Boeing had posted a profit of $10.46 billion in 2018.

Boeing reported a loss of $2.33 per share for the fourth quarter of last year. Revenue in the last three months of the year dropped 37% to $17.91 billion compared with $28.34 billion in the year-earlier period.

Boeing's new CEO Dave Calhoun will speak to CNBC at 8 a.m. ET to discuss the company's results.

Boeing is struggling through a crisis stemming from two crashes of its 737 Max that killed all 346 people aboard the flights. The manufacturer this month suspended production of the planes, which regulators grounded in March after the second of the two fatal flights.

The debacle's costs to Boeing are rising to more than $18 billion, the company said, roughly double what it outlined in the previous quarter. That amount includes an additional $2.6 billion pretax charge to compensate airlines and other 737 Max customers because of the grounding. Boeing had taken a $5.6 billion pretax charge in the second quarter to compensate its customers.

The company recently reported its worst annual sales figures in decades and it handed the crown to the world's biggest aircraft manufacturer to its rival Airbus.

Calhoun, who took the reins this month, is set to face investors on his first earnings call at the helm of the company and is expected to detail the company's recovery plan and what it will cost. Boeing last week said it expects regulators to sign off on the planes mid-year, but the FAA has said it could come before that.

This is breaking news. Check back for updates.

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2020-01-29 12:07:00Z
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Coronavirus Outbreak Tests World’s Dependence on China - The New York Times

HONG KONG — The world is quickly learning how much it depends on China.

Ford and Toyota will idle some of their vast Chinese assembly plants for an extra week. Apple is rerouting supply chains. Starbucks has closed thousands of stores and is warning of a financial blow.

On Wednesday, British Airways suspended all flights to mainland China, while United Airlines and Air Canada are joining the growing number of carriers reducing service. Japan’s leaders are bracing for a possible hit. Hotels and tour operators across Asia are watching fearfully as the world’s largest source of tourism dollars tightens its borders.

The mysterious, pneumonialike coronavirus that has killed more than a hundred people and sickened thousands has virtually shut down one of the world’s most important growth engines. Desperate to slow the fast-moving virus, the Chinese authorities have extended the country’s national holiday to Feb. 3, and crippled land, rail and air transport. Entire cities have shut down.

An impoverished nation just four decades ago, China has become an essential part of the modern global industrial machine. China alone accounts for roughly one-sixth of global economic output. It is the world’s largest manufacturer and trader.

It has become so crucial to the operations of American companies that some members of the Trump Administration cite that dependence as a justification for the trade war President Trump initiated two years ago against Beijing, an economic conflict that is forcing businesses to consider shifting their factories in China to countries with better relations with Washington.

Now the coronavirus is testing that dependence.

Automakers like General Motors and Nissan plan to close their factories until the week of Feb. 3 to comply with the longer mandated holiday, while Toyota and Ford said this week that they would close some of their factories a week longer than that because of virus-related disruptions. Companies like G.M., Honeywell, Facebook and Bloomberg restricted travel for employees in China and established their own self-quarantine measures.

On Tuesday, the Seattle-based coffee company Starbucks said it had closed more than half of its 4,292 stores in its second biggest market and said it would take a quarterly and full year financial hit.

The full extent of the hit to the broader business world is not yet clear. Most of China had already been shut down since at least Friday for the annual Lunar New Year holiday, a weeklong nationwide hiatus. But with the outbreak showing no signs of slowing, many companies are already preparing for a longer slowdown.

“Our members are dealing with varying degrees of disruption in their businesses, including supply chain issues, temporary closings of some retail outlets and factories, and other challenges,” said Jake Parker, the senior vice president of the US-China Business Council, which represents major companies. “If travel restrictions and quarantines are expanded or the holiday extended beyond Feb. 8, that will amplify these problems.”

China’s importance goes beyond what it makes. Its consumers buy more cars and smartphones than anybody else. When they go abroad, Chinese tourists spend $258 billion a year, according to the World Tourism Organization, nearly twice what Americans spend.

Global companies were reconsidering their China strategies even before the trade war began. Its growth is slowing, its labor costs are rising, local companies are increasingly competitive and the government has become less accommodating. Still, its skilled worker base, extensive highway and rail systems and vast consumer market make China tough to quit.

Many companies are now looking for temporary stopgaps.

Tim Cook, the chief executive of Apple, said on Tuesday that the iPhone maker was looking for alternative suppliers to “make up for any expected production loss.” Foxconn, a Taiwanese company with an extensive network of factories in China that make gadgets on behalf of Apple and others, said its factories would continue to follow the new holiday schedule.

Apple is not the only company that has had to pivot quickly. Just last week, executives of Honeywell, the American engineering company, traveled to Wuhan for a ceremony related to its plans to open an innovation headquarters. Two days later, Wuhan was put under lockdown by the authorities. Honeywell has since restricted travel to certain parts of China.

Wuhan in particular appeals to major companies because it is a major national transport hub. The auto industry, including General Motors, Honda, Nissan and many others have set up shop there, and many of their suppliers have followed. It is the home to more than one third of all French investment in China.

On Monday, PSA Group, the French automaker, said it had set up crisis communications between Wuhan and its Paris headquarters to determine the potential impact on production. The company employs about 2,000 people in Wuhan through its joint venture and was evacuating 38 expatriates.

It is not clear how quickly businesses will bounce back. During the deadly SARS outbreak 17 years ago, which began in China and killed hundreds globally, some factories paid higher wages to bring workers back and get factories humming again.

Right now, businesses do not know enough to make those kinds of plans. Cummins, the Indiana company, does not know whether it will be able to open its seven sites in Wuhan after the Feb. 3 holiday extension because the city remains under lockdown. The facilities make fuel and power systems for rail and marine industries.

“Literally, we are evaluating on an ongoing basis in real time,” said Jon Mills, a spokesman for Cummins, “and I imagine other places are in the same position as we are.”

Ford, which does not have any operations in Wuhan, said several of its major plants would nevertheless be idled until Feb. 10. A spokesman declined to disclose further details. The factories in four cities churn out nearly half a million vehicles a year, or an average of 9,400 cars a week.

Businesses in other countries are also trying to determine the impact.

In Japan on Tuesday, Yasutoshi Nishimura, the minister of state for economic and fiscal policy, told a group of reporters that, “If the situation takes longer to subside, we’re concerned it could hurt Japanese exports, output and corporate profits.” Chinese visitors account for about 30 percent of all foreign tourists, and Chinese companies are major buyers of Japanese-made components, like semiconductors and lenses.

In Thailand, Chinese sightseers spend nearly $18 billion annually, totaling about a quarter of tourist spending.

“Chinese tourists are the number one tourists to Thailand,” said Yuthasak Supasorn, the governor of the Tourism Authority of Thailand. Mr. Yuthasak said in an interview that the government was exploring ways to compensate business owners who have lost money from the drop in tourists over the past few weeks. The government was even considering reducing parking fees for airlines and excise tax on jet fuel to lure more tourists, he said.

Anan Buates, 45, runs a business driving tourists. Chinese tourists are crucial to his business. So he grew alarmed when tour operators started making last-minute cancellations as the coronavirus emerged. Then, last week, China canceled overseas group tours.

“It’s their right and it’s their policy to prevent the spreading of the coronavirus,” Mr. Anan said. Still, he knows he faces a daunting challenge.

“We survive the whole year because they come the whole year.”

Eimi Yamamitsu contributed reporting from Tokyo, Ryn Jirenuwat from Bangkok and Cao Li from Hong Kong.

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2020-01-29 11:05:00Z
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British Airways cancels all flights to and from mainland China on coronavirus fears - CNBC

Customers queue to buy facial masks to prevent an outbreak of a new coronavirus, in Hong Kong, China January 28, 2020.

Tyrone Siu | Reuters

British Airways has stopped all direct flights to and from mainland China because of the coronavirus outbreak.

The airline said the suspension would be implemented "with immediate effect" following the viral outbreak which has caused 132 deaths and infected almost 6,000 people.

Beijing authorities have continued efforts to contain the spread, while other countries have begun to evacuate their citizens from the region.

Almost all deaths from the flu-like virus have occurred in the city of Wuhan and the surrounding province of Hubei, which remains on virtual lockdown.

Coronavirus live updates: Chinese health officials say death toll has risen to 132

British Airways normally operates daily flights to Shanghai and Beijing from Heathrow, but on Wednesday morning these were canceled without any indication of when they would resume.

"We have suspended all flights to and from mainland China with immediate effect following advice from the Foreign Office against all but essential travel," British Airways said in a statement.

The airline apologized to travelers for the inconvenience but said "the safety of our customers and crew is always our priority."

US. carrier United Airlines has already said it was suspending 24 U.S. flights to Beijing, Hong Kong and Shanghai between February 1 and February 8, because of low demand.

Air Canada and Cathay Pacific have also said they will reduce the number of flights in and out of China while Korean carrier Air Seoul has said it will halt all flights to China.

Indonesia's Lion Air said in a statement Wednesday that it would suspend all flights to China from February. Indigo, the Indian budget carrier, is to cancel all flights between Delhi and Chengdu from February 1. Its regular flight to Guangzhou will continue.

Travel and airline stocks have fallen sharply over the last two weeks as fears over the potential of the coronavirus to become a global pandemic have grown. On Wednesday, shares of British Airways parent International Consolidated Airlines Group fell before rising 0.2% by 10.00 a.m. London time.

The decision by BA follows an advisory by the U.K. Foreign Office that says only essential travel should be taken to anywhere in China.

In the United States, the White House has told airline executives it had been considering suspending flights from China, people familiar with the matter have told CNBC.

As yet, the Donald Trump administration has backed away from that move, but the U.S. Centers for Disease Control and Prevention said Tuesday that screening for the virus at 20 U.S. airports would be expanded.

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2020-01-29 10:18:00Z
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British Airways suspends all China flights due to coronavirus outbreak - The Verge

British Airways has suspended all its direct flights to mainland China in the wake of the coronavirus outbreak, Reuters reports. “We apologise to customers for the inconvenience, but the safety of our customers and crew is always our priority,” the company said in an email. BA.com currently shows no direct flights to mainland China, although flights to Hong Kong are unaffected. The company said that flights will be suspended until it receives more information from British officials, according to Bloomberg.

The airline is not the first to have dropped some of its China flights. However, in the case of United Airlines, which announced it would be suspending some of its flights yesterday, the decision was taken due to a “significant decline in demand,” rather than specific safety concerns.

British Airways announced the cancellation of its flights in the wake of the British Foreign Office’s warning against all but essential travel to mainland China. The UK is arranging to evacuate its citizens from Wuhan and the surrounding Hubei province as a result of the virus, which has resulted in 132 deaths in China. Over 6,000 people worldwide are currently thought to be infected, according to CNN.

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2020-01-29 08:36:33Z
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