The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Thursday related to the global economy, the work place and the spread of the virus.
ZOOM: At the end of last year, the video-conferencing company Zoom had about 10 million daily users. By March, it was 200 million. CEO Eric Yuan is addressing some of the security concerns that have arisen as tens of millions of workers fled the office and logged in to Zoom.
The company is enacting a 90-day freeze on new features so that it can deal with concerns about privacy on the platform. It’s also bringing in third-party expertise to assess how it’s handling user security.
Among the issues disrupting users is “zoombombing,” when people who are not part of a group break into a Zoom meeting to post images or memes.
BREAKING THE PIGGY BANK: Southwest Airlines drew down $2.33 billion from an existing credit agreement, according to a regulatory filing Thursday. It also plans to apply for a share of $25 billion in federal grants to cover airline payroll costs for the next six months.
Companies in the travel sector have aggressively gathered whatever cash is available to ride out the coronavirus, but they certainly are not alone.
According to S&P Global Market Intelligence, which tracked 200 corporations across all economic sectors for its analysis, companies have accessed credit lines for $154.79 billion through March 27. The consumer discretionary sector, which includes auto manufacturers, travel and tourism companies and retailers, led the way.
GM and Ford were the biggest borrowers, each tapping more than $15 billion in credit.
ARMY OF UNEMPLOYED: Estimates for the first waves of job losses in the U.S. related to the outbreak were all over the map. The actual number blew all of those estimates away Thursday. The Department of Labor reported more than 6.6 million Americans applied for unemployment benefits last week, far exceeding a record high set just last week.
GE Aviation is furloughing half of the workers in its U.S. jet engine assembly and component manufacturing unit. GE would not give a specific number of layoffs, but the unit has 26,000 U.S. employees, including those who perform other jobs such as maintenance and repair work. Both salaried and hourly employees will be furloughed for up to four weeks, the company said Thursday. GE will continue to provide “income security” and health benefits. The furloughs are in addition to GE Aviation’s previously announced 10% reduction of its U.S. workforce.
Boeing began offering a voluntary layoffs and CEO David Calhoun isn’t ruling out involuntary job cuts later.
In a letter to employees, Calhoun said the size of Boeing’s market will likely be altered by the virus. Under the voluntary layoff plan, eligible employees will be able to leave with a severance package of pay and benefits.
Nearly 900,000 workers have lost their jobs in Spain, authorities said Thursday. The job loss is vastly greater than in January 2009, when 350,000 workers lost their jobs during the global financial crisis.
TRAVEL: Gone unnoticed as millions shut in their homes are skies strangely devoid of aircraft. The number of people flying continues to hit new lows.
The Transportation Security Administration screened 146,348 people on Tuesday, nearly 8,000 fewer than Monday, and down 93% from one year ago.
The peak summer travel season is looking like a bust.
American Airlines said Thursday it will reduce its international schedule this summer by more than 60% and delay new routes because of plunging travel demand during the coronavirus outbreak.
Flights to Asia will be cut the most. Still, the pullback is less severe than the 80% to 90% cuts American is making to international service in April and May. The number of passengers screened at U.S. airports has dropped more than 90% compared with a year ago.
Meanwhile, British Airways reached a deal with unions that will mean no one is fired in the coming weeks and months. The agreement applies to more than 30,000 workers and will mean that the government pays 2,500 pounds ($3,100) of a worker’s monthly salary with British Airways paying the balance up to 80% of an employee’s pay.
BOEING BOOST: Boeing will get $882 million in payments that the Air Force withheld because of problems with the company’s aerial refueling tanker.
The Pentagon said Thursday it wants to keep cash flowing to defense companies that are suffering during the coronavirus outbreak. Boeing will make changes to the KC-46 including improving a computerized camera system used during refueling that had drawn complaints from the Air Force.
OFF THE RAILS: With auto plants shut down, rail shipments from the auto industry tumbled 70% last week to 5,423 carloads, according to the Association of American Railroads. Total container shipments slid 14% as trade with China plummets.
On Thursday, the U.S reported that the trade deficit tumbled in February to the lowest level since 2016 as exports fell, and imports fell more. The politically sensitive gap in the trade of goods with China narrowed when the world’s No. 2 economy was locked down to combat the coronavirus outbreak.
Norfolk Southern, Union Pacific and CSX have warned of a material impact on earnings.
MARKETS: U.S. stocks closed slightly higher.
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