Big layoffs, bigger hirings, massive markets swings



The Washington Post

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 Monday related to the outbreak as governments attempt to stabilize their economies, companies struggle to cope and millions of people face job losses and disruptions in supplies of goods and in services.

AIRLINES: 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% 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% of flight attendants. Air Canada says it will suspend most of its international and U.S. flights by March 31. The carrier says employees will be returned to active duty status once flights resume.

GE aviation will cut about 10% of its U.S. 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% of its U.S. 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.

REPURPOSED: 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.

HEAVY INDUSTRY: Millions of people are working at home. However, heavy industrial sectors have come to a standstill because the risk of infection, if operations continue, would be unavoidable.

A big auto industry trade group is telling Congress that 95% of U.S. auto assembly plants have been forced to close due to the coronavirus outbreak.

The Alliance for Automotive Innovation says in a letter obtained by The Associated Press that 42 of 44 U.S. assembly plants were closed as of Friday. The letter says 87% of the assembly plants in North America have been closed, including all seven in Canada and 60 of 69 in Mexico. It says analysts expect March sales to fall by up to 40% from 2019 figures.

The association is asking Congress for loans and loan guarantees for affected companies. It also is asking that businesses with more than 500 workers that provide paid leave for employees get a tax deduction or credit. Most U.S. auto assembly workers are being paid through the closure, which in most cases is scheduled to last into early April.

The industry also wants Congress to delay 2020 quarterly federal tax payments, start a temporary payroll tax holiday, extend expensing for machinery, and delay the June 1 effective date of the USMCA trade pact, which replaces the North American Free Trade Agreement. Forecasting as much as a 60% decline in reservations for April due to coronavirus travel restrictions, rental car giant Avis is cutting staff, reducing its fleet and pausing capital spending, among other actions.

The company says it will also evaluate compensation expenses for senior employees, including executive leadership, as it looks to save $400 million on an annualized basis. The Parsippany, N.J.-based Avis Budget Group said it has accessed $1.1 billion in cash from equity in its vehicle fleet and has an estimated $750 million in revolving credit, giving it the liquidity to operate “through the end of 2020 and beyond.”

Winnebago Industries halted production to protect workers from coronavirus exposure and to adjust production as demand for the company’s products is rapidly changing. Winnebago, which employees about 5,000 people, makes motor homes, travel trailers and boats under the Winnebago, Grand Design, Newmar and Chris-Craft brands.

The Forest City, Iowa-based company has production facilities in Iowa, Indiana, Oregon, Minnesota and Florida. The company said Monday that production will cease until at least April 12. Benefits and base pay will continue for the first two weeks.

Ford Motor Co. has suspended vehicle and engine production at its International Markets Group manufacturing sites located in India, Vietnam, South Africa and Thailand. The suspensions started Saturday and will continue for several weeks.


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