Wall Street opens lower as virus lingers, Apple suffers

Supply of Apple’s top-selling iPhone has been constricted by the outbreak of COVID-19. (AFP)
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Updated 19 February 2020

Wall Street opens lower as virus lingers, Apple suffers

  • The benchmark Dow Jones Industrial Average was down 0.4 percent to 29,288.51 points after about 30 minutes of trading
  • US tech giant Apple fueled the drop after announcing it expects a financial hit from the epidemic

NEW YORK: US stock markets opened lower Tuesday on the first day of trading from the long holiday weekend, after Apple warned its results would suffer from the viral outbreak in China.
Nearly 1,900 people have died and more than 72,000 others have been infected by the virus that broke out in China and has since spread to some 25 countries, causing airlines to cut flights to China and many businesses to shutter operations.
All three major US indices posted gains last week even as traders were vigilant throughout for more serious disruptions from the COVID-19 illness.
But on Tuesday morning, the benchmark Dow Jones Industrial Average was down 0.4 percent to 29,288.51 points after about 30 minutes of trading.
The tech-rich Nasdaq slipped 0.1 percent to 9,717.22 points, and the benchmark S&P 500 declined 0.2 percent to 3,372.03.
US tech giant Apple fueled the drop after announcing it expects a financial hit from the epidemic, causing revenue in the current quarter to come in below forecasts as supply of its top-selling iPhone is constricted.
Apple shares were down around 2.3 percent, but Michael Walkley, an analyst at Canaccord Genuity, did not believe the gloom would last.
“Despite the COVID-19’s impact on Chinese iPhone demand and supply chain disruptions near-term headwind, we believe Apple is performing strongly across all business lines,” he said in a note.

The Cupertino, California-based company said Monday that all of its iPhone manufacturing facilities are outside Hubei province, the epicenter of the outbreak, and all have been reopened. But the company said production is ramping up slowly.
“The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues,” Apple said in a statement.
The death toll from COVID-19, a disease caused by the new coronavirus, was 1,770 as of Monday.
Apple says demand for iPhones is also down in China because many of Apple’s 42 retail stores there are closed or operating with reduced hours. China is Apple’s third largest retail market for iPhones, after the US and Europe.
Outside China, Apple said iPhone demand has been strong and is in line with the company’s expectations.
On Jan. 28, Apple said it expected second quarter revenue between $63 billion and $67 billion. Apple’s second quarter ends March 30.
Apple says the situation is evolving and it will provide more information on its next earnings call in April.

Before trading commenced, Walmart announced weak fourth quarter earnings that were battered by unrest in Chile, a key market, as well as disappointing toy and clothing sales during the Christmas shopping season.
But the largest private employer in the United States did not — so far — forecast any bad news from the new coronavirus outbreak and its shares rose 0.5 percent when markets opened.


British Airways burning through cash, CEO urges unions to engage

Updated 04 June 2020

British Airways burning through cash, CEO urges unions to engage

  • Job losses necessary as cash reserves of IAG, British Airways’ parent company, would not last forever

LONDON: The boss of British Airways said its parent company IAG was burning through $223 million a week and could not guarantee its survival, prompting him to urge unions to engage over 12,000 job cuts.
British Airways came under heavy attack from lawmakers in parliament on Wednesday, who accused it of taking advantage of a government scheme to protect jobs while at the same time announcing plans to cut its workforce by 28 percent.
Planes were grounded in March due to coronavirus restrictions, forcing many airlines to cut thousands of staff as they struggle without revenues. Airlines serving Britain now face an additional threat from a 14-day quarantine rule.
In an internal letter to staff seen by Reuters, Alex Cruz, the chief executive of British Airways said the job losses were necessary as IAG’s cash reserves would not last forever and the future was one of more competition for fewer customers.
BA also wants to change terms and conditions for its remaining workers to give it more flexibility by, for example, making all crew fly both short and long-haul.
Cruz said IAG, which also owns Aer Lingus, Iberia and Vueling, was getting through $223 million a week, meaning that it could not just sit out the crisis. The group had €10 billion of liquidity at the end of April.
“BA does not have an absolute right to exist. There are major competitors poised and ready to take our business,” Cruz said in the letter.
He urged two unions which represent cabin crew and other staff, GMB and Unite, to join in discussions to mitigate proposed redundancies. Pilots union BALPA is “working constructively” with the airline, he added.
Cruz also joined other airline bosses in criticizing Britain’s quarantine rule, due to come into effect on June 8, calling it “another blow to our industry.”