the times | Friday March 6 2020 2GM 37
Business
James Dean US Business Editor
Fears about the Covid-19 outbreak sent
world stock markets deep into the red
again yesterday as the virus spread in
the US and UK, the airline industry
warned it faced a big financial hit and
more businesses sent staff home.
US markets suffered heavy losses last
night. The Dow Jones fell by 3.6 per
cent, or 969.58 points, to 26,121.28 and
the Nasdaq was off 279.49 points, or
3.1 per cent, to 8,738.59. The S&P 500 is
on course for its most volatile week
since 2011. In New York, the index,
which gained 4.2 per cent on Wednes-
day, closed down 3.4 per cent, or 106.18
points, to 3,023.94.
The FTSE 100 had earlier closed
down 1.6 per cent, or 110.16, to 6,705.43.
Germany’s Dax was down 1.5 per cent
and the CAC 40 in Paris fell 1.9 per cent.
Investors continued their flight to the
relative safety of government debt,
sending yields on benchmark British
and American bonds to new lows.
Markets had rebounded on Wednes-
day when the IMF unveiled a $50 bil-
lion funding package to help combat
the Covid-19 outbreak and the US Con-
gress agreed an emergency $8.3 billion
deal of its own. Several central banks,
including the US Federal Reserve, have
cut interest rates this week.
However, the number of coronavirus
cases has continued to rise as health
officials in many countries warn that
containment is becoming increasingly
unlikely. The global death toll stood at
3,303 yesterday, with 96,445 reported
infections, as Britain reported its first
fatality and a rise in infections, to 115.
Airlines were at the sharp end of the
sell-off after Southwest Airlines, the
world’s largest low-cost carrier, fol-
lowed its US rival United Airlines by
warning it faced a financial hit from the
crisis. In UK, the owners of Flybeblamed Covid-19 for its collapse while
one of Europe’s biggest low-cost air-
lines, Norwegian Air Shuttle, scrapped
its financial guidance for 2020 and can-
celled transatlantic flights.
The International Air Transport
Association estimated that airlines
could lose $113 billion in revenue this
year if the coronavirus spreads further,
or $63 billion if it does not. Late last
month the group had estimated coro-
navirus losses at $29.3 billion.
Other companies warning about an
impact on their finances from corona-
virus were Britain’s Saga, Germany’s
Hugo Boss and Taiwan’s Foxconn,
which assembles Apple’s iPhones.
Markets were also hit by increasing
numbers of businesses saying they
were sending staff home. Amazon, Al-
phabet, the owner of Google, Facebook
and Microsoft recommended employ-
ees in Seattle work from home, while
HSBC sent home roughly 100 staffcommodities currencies
$
70
62
54
46Brent crude (6pm)
$50.29 (-1.36)world markets (Change on the day)
$Gold
$1,665.24 (+22.12)
1,750
1,650
1,550
1,4508,500
7,500
6,500
5,500
Feb 6 2414 Mar 3 Feb 6 2414 Mar 3 Feb 6 14 24 Mar 3 Feb 6 2414 Mar 3 Feb 6 2414 Mar 3FTSE 100
6,705.43 (-110.16)
1.350
1.300
1.250
1.200$
1.250
1.200
1.150
1.100¤£/$
$1.2946 (+0.0110)£/€
€1.1559 (+0.0026)Feb 5 2413 Mar 3Dow Jones
26,121.28 (-969.58)
32,000
29,000
26,000
23,000from its office in Canary Wharf after
one was found to have the virus.
California declared a state of emer-
gency as it reported its first Covid-19
death and said that confirmed cases in
the state had climbed to 53. New Jersey
reported its first infection as the num-
ber of cases in New York doubled, to 22.
The US death toll climbed to 12 and
confirmed infections rose to 206.
Japan’s Nikkei closed up 1.1 per cent
and China’s Shanghai Composite rose
2 per cent as the number of reported
Covid-19 infections declined.
Oil fell 2.3 per cent to $49.96 despite
Opec saying it was recommending that
producers cut their daily output by
1.5 million barrels until the end of the
year and not just June to underpin the
price. Gold was up 1.8 per cent, or
$28.72, to $1,665.65. Yields on 10-year
British and US bonds fell respectively to
0.335 per cent and 0.9 per cent.
City firms send staff home, page 43Early gains lost as cases rise and companies send staff home
Virus fever sends volatile
markets back into the red
27,20027,00026,80026,60026,40026,20026,00025,80025,60025,400Dow Jones
Mar 2 Mar 3 Mar 4 Mar 5
Source: RefinitivMonday
1,293.96 pts
Central banks
promised to
support
economiesTuesday
785.91 pts
50-basis point cut
by Federal Reserve
failed to impressWednesday
1,173.45 pts
Rally by healthcare
stocks, upbeat
economic data,
stimulus measuresThursday
969.58 pts
Sell-off resumed
over fears about
economic slowdown11.6%
Fall from record
close of 29,551.42
on February 12Flybe failure
blamed on
‘U-turn’ over
£100m loan
Callum Jones, Alex RalphThe government and credit card com-
panies were in the firing line last night
amid the fallout from the collapse of
Flybe.
Ministers were accused of doing a
U-turn on financial support for the
struggling airline and failing to meet
their pledge to improve regional
connectivity in the UK. It also emerged
that credit card companies owed al-
most £50 million of cash to the airline
before its collapse.
Flybe was Europe’s largest regional
airline and its failure has raised
concerns about whether airports and
routes across the UK could be left
without services. The company carried
eight million passengers last year and
flew between 71 airports in the UK and
Europe, including Southampton, Exet-
er and Aberdeen.
Flybe was acquired last year by Con-
nect Airways, a consortium made up of
Virgin Atlantic, Sir Richard Branson’s
airline; Cyrus Capital, the Mayfair
hedge fund; and Stobart Group, owner
of Southend airport.
Connect said yesterday that it had
invested £135 million in Flybe, includ-
ing £25 million in January when it
sought to engineer a rescue deal with
the government. However, the airline
collapsed into administration after fail-
ing to secure fresh financial support
and suffering a drop in bookings
because of the coronavirus outbreak.
One senior source close to the share-
holders claimed that the government
had staged a “U-turn” on a proposed
£100 million loan to support Flybe.
They said the proposals had been
dropped after last month’s cabinet re-
shuffle, in which Rishi Sunak replaced
Sajid Javid as chancellor. The source
also said that the fierce backlash from
bigger rival airlines to “illegal state aid”
that would benefit its “billionaire own-
ers” had also been a factor.
Boris Johnson’s administration re-
ceived further criticism from airport
executives for dragging its heels over
promised action to improve regional
connectivity, having announced an
“urgent review” in January which has
yet to materialise.
Deb Bowen Rees, chief executive of
Cardiff airport, said she was “very dis-
appointed” that the review had not
been launched. “To be honest, nothing
has happened,” she said. “Consequently
there’s been no real progress at all.”
The administration of Flybe has
intensified concerns that other airlines
could fall into financial difficulty
because of the drop in bookings caused
by coronavirus. One industry insider
Continued on page 39, col 1