“Over 75,000 people in Wuhan may be infected with coronavirus.” If they are admitting to that, it’s more likely five times that number.
US companies suspend China operations, restrict travel as coronavirus outbreak becomes global crisis
By: William Feuer, CNBC, Feb 1 2020:Key Points
- Disney, Tesla, airlines and other global companies with significant footprints in China are suspending operations as they respond to the outbreak of the coronavirus.
- The WHO has recommended against “measures that unnecessarily interfere with international trade or travel.”
- As the virus continues to spread, and institutions respond, it threatens to disrupt sectors from travel and retail to tech.
Staff members, wearing protective suits, watch as a plane carrying 32 Mongolian citizens for their evacuation from the Chinese city of Wuhan arrives in Ulaanbaatar, the capital of Mongolia on February 1, 2020.
Disney, Tesla, countless airlines and other global companies with significant footprints in China are suspending operations, temporarily shutting factories and instituting travel restrictions as they grapple with the coronavirus outbreak that’s derailed commerce in China and sent global markets spinning.
Infections from the virus skyrocketed this week, topping 11,000 as of Friday and surpassing the total number of infections from the nine-month SARS outbreak in less than a month. The World Health Organization formally declared the pneumonia-like virus a global health emergency on Thursday, citing concern that the outbreak continues to spread to other countries with weaker health systems. U.S. officials followed suit on Friday, imposing mandatory quarantines on U.S. citizens who have recently traveled to the Hubei province, the epicenter of the outbreak.
Local governments in China have extended mandatory factory shutdowns for the Lunar New Year from Jan. 31 to Feb. 9, impacting U.S. companies from Walmart to Tesla. Analysts are beginning to sour on companies with exposure to China, pressuring some stocks. A slew of companies this week warned investors that as the impact of the virus continues to spread, and institutions respond, it threatens to disrupt sectors from travel and retail to technology that look to the Chinese market for consumer demand or cheaper manufacturing in China.
Most of the economic cost of the outbreak “is not related to the virus,” said CEO of the World Travel and Tourism Council Gloria Guevara, who was the tourism minister for Mexico during the H1N1 outbreak. “It’s related to the panic,” and it can take between ten months and 19 months for tourism and spending in an area to fully recover from a local outbreak.
Most of the consequences of an outbreak like this are caused by mismanagement, lack of communication and panicked responses, Guevara said. She pointed to the SARS outbreak of 2003 as one example, saying it cost the global economy between $40 billion and $60 billion and cost China 2.8 million jobs.
“The management of the crisis is crucial. They need to be proactive and transparent. They need to work closely with the private sector and we need to not panic,” she said of international health officials. “They need to contain the spread of the virus and we fully support that, but at the same time we need to take the necessary measurements to protect the sector.”
Each company is responding to the situation in its own way: suspending operations, restricting employee travel, canceling holiday celebrations and more. Here’s how some companies have responded so far:
AirlinesDelta airplanes sit on the tarmac at John F. Kennedy Airport (JFK) on January 31, 2020 in New York City.
The airlines sector is feeling the immediate impact of the coronavirus. Demand for travel to China has plummeted as the virus spreads. Many airlines reduced service to China earlier in the week, but after the State Department placed a “Do Not Travel” warning on China Thursday, airlines began to cut service entirely to China.
- Delta Airlines announced Friday that it is suspending all service to China from Feb. 6 until April 30.
- American Airlines also said Friday that it is halting service to China after the union that represents American Airlines pilots sued the carrier to stop service to China amid health concerns.
- United Airlines, which has the most service to China of all U.S. airlines, said Friday it is also suspending all flights to Beijing, Shanghai and Chengdu from Feb. 6 until March 28. The airline will continue to operate a once-daily San Francisco-Hong Kong flight.
- Air Canada said Wednesday it is suspending all flights to Beijing and Shanghai from Jan. 30 to Feb. 29.
- British Airways, KLM Airlines, Cathay Pacific, Finnair, Turkish Airlines, Air France, Air Seoul, EgyptAir, Lion Air, Austrian Airlines, Kenya Airways, Vietjet and Lufthansa have also reduced or totally cut service to China.
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