Financial news

Coronavirus forces British Airways to suspend China flights

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Via Financial Times

British Airways has suspended flights to and from mainland China, as the coronavirus crisis forces multinational companies to halt operations in the worst affected areas.

Chinese officials on Wednesday said the death toll from the outbreak had risen to 132, with confirmed cases in the country climbing to 5,974.

The first evacuations of foreign nationals from the central Chinese city of Wuhan, the centre of the outbreak, are under way. A chartered ANA flight carried 206 Japanese citizens out of the city, while a US flight departed earlier on Wednesday carrying government staff and civilians.

BA, which flies to Beijing and Shanghai, said its flight suspensions followed Foreign Office advice that UK nationals avoid all but essential travel to mainland China.

“We apologise to customers for the inconvenience, but the safety of our customers and crew is always our priority,” the airline said, adding that it had blocked out sales until the beginning of March.

Big airlines have been among the companies worst affected by the coronavirus outbreak, as concerns mount over the impact on global travel. The share price of BA parent IAG has slid more than 10 per cent since mid-January, while European rivals Air France-KLM and Lufthansa have also been hit.

BA’s move follows a decision by Hong Kong airline Cathay Pacific to halve its flights to and from mainland China after the territory’s chief executive Carrie Lam pledged to scale back transport links with the mainland to prevent the spread of the virus.

More than a billion dollars were wiped from Cathay’s market value on Wednesday as its share price slid as much as 5 per cent in early trading.

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Hong Kong’s stock market, the first in China to reopen after the lunar new year holiday, fell sharply with the benchmark Hang Seng index down as much as 3 per cent. 

The Hang Seng China Enterprises index, which tracks the performance of large mainland companies listed in the territory, was down by the same margin. However, European shares opened firmer and US futures trading pointed to gains on Wall Street.

Among other moves by multinationals, Toyota has delayed the restart of operations at four auto plants in China after the lunar new year holiday and Starbucks has closed 2,000 outlets in the country and cautioned that the infection threatens to hit its annual results. China is the coffee chain’s largest market outside the US, and its most important global growth engine.

Japanese fashion group Fast Retailing has shuttered about 100 Uniqlo stores in Hubei, while Sweden’s H&M has shut 45 stores.

Other companies including HSBC, Standard Chartered, LG Electronics and Facebook have suspended or restricted travel by employees to China.

United Airlines has suspended some flights between US cities and Beijing, Shanghai and Hong Kong from February 1 to February 8.

Apple warned on Tuesday about the potential impact of the outbreak on its supply chain, widening its guidance on revenue to take the uncertainty into account.

“The situation is unfolding, it’s very new,” said chief financial officer Luca Maestri. “That’s the reason we put a wider range on our guidance.” He added that Apple had suppliers in the Wuhan areas that are being isolated, but that it had mitigation plans to source components from elsewhere if needed.

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Reporting by Philip Georgiadis in London, Alice Woodhouse, Hudson Lockett and George Hammond in Hong Kong and Christian Shepherd in Beijing

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