The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Monday related to the global economy, the work place and the spread of the virus.
AIRLINES: The founder and top shareholder of European carrier easyJet says the company has enough money only to get through August at best and wants to cancel a 4.5 billion-pound ($5.5 billion) contract with planemaker Airbus for what he calls 107 “useless aircraft."
In a long statement to the media, Stelios Haji-Ioannou says that terminating the contract is the only way for shareholders to retain any value in their holdings in the company. EasyJet, which flies predominantly in Europe, has grounded all 344 planes and like other airlines is struggling mightily with the global lockdowns on business and travel.
European companies are expected to get financial support from the government, though unlike the U.S. there has not been a coordinated regional plan to bail out airlines or planemakers.
In the U.S., Delta Air Lines, American Airlines, United Airlines and JetBlue have said they applied Friday for their share of $25 billion in federal grants designed to cover airline payrolls for the next six months. None disclosed the amount they are seeking. The grant money was part of $2 trillion relief bill approved last week. Delta’s CEO says his airline is burning more than $60 million cash per day, and United’s president puts it at $100 million a day.
Singapore, meanwhile, said it will suspend its Changi Airport Terminal 2 for 18 months from May 1. The airlines in Terminal 2 will be reallocated across the remaining terminals.
Its Terminal 4 operations have also been scaled down considerably, and Changi Airport may consider suspending operations temporarily if the remaining airlines choose to suspend or adjust their flight schedules.
STIMULUS: Japanese Prime Minister Shinzo Abe is preparing to announce a 108 trillion yen ($1 trillion) economic package to help the country weather the coronavirus crisis. Abe said Monday he plans to disclose details of the package as early as Tuesday.
Japan, the world’s third-biggest economy, was already in a contraction late last year before the virus outbreak walloped business and travel. The government has been slow to roll out containment measures, on a piecemeal basis, and only recently announced it would postpone the Tokyo 2020 Olympics by one year. But a surge in infections has prompted Abe and other leaders to discuss more stringent methods to contain the pandemic. Abe is expected to announce a state of emergency on Tuesday, at least for the hardest-hit big cities, such as Tokyo.
Japan’s package amounts to about one-fifth of its economy and includes 6 trillion yen in ($55 billion) in cash benefits, loans to help protect jobs and extensions of deadlines for for taxes and social benefit payments.