Shifting Gears: Airlines had a very, very bad week
As the novel coronavirus continues to spread — having now topped 100,000 confirmed cases — it’s having a disastrous effect on demand for airlines, cruise ships, and other means of transportation.
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The Dow Jones Transportation Average, widely considered the best benchmark for the sector, has plunged more than 15% in the past month, easily outpacing the losses of its larger parent index, as airlines cut flights around the world. To cope with the slump, many airlines have offered employees unpaid leave, postponed planned hiring, and are even flying near-empty planes to ensure landing slots aren’t lost due to inactivity.
Chief executives from nearly all of the US’s major carriers met with President Donald Trump at the White House on Wednesday to discuss increased cleaning procedures and other expanded booking flexibility for anxious travelers.
Some cruise lines, also hemorrhaging enterprise value amid the panic, began offering on-board credit if vacationers agree to actually go on their scheduled sailings. A Princess cruise ship, meanwhile, is anchored off the coast of San Francisco awaiting test results after one passenger onboard died of the coronavirus. It’s the same cruise line as the ship that was quarantined for two weeks in Japan.
Stocks are still in freefall as of Friday morning March 6 — though airlines and cruise ships got a slight bump. Solid jobs numbers and an attempt to calm markets by White House economic advisor Larry Kudlow had little effect.
But it’s not all doom and gloom — I promise.
General Motors unveiled a sweeping plan for electrifying its fleet this week, including 22 electrified vehicles set to go on sale by 2023. It’s an “historic moment” for the US’s largest automaker, CEO Mary Barra said. Read Matt DeBord’s full account from Detroit here.
In a related vein, I talked to a “director of innovation” at GM about what her title actually means, and the steep directive she has from leadership for how to help a car company look beyond the automobile.
The team also published a deep dive into the next ten years of transportation this week. After a decade of seismic shifts in which carmakers have come and gone, technologies have emerged and fizzled, and companies have pivoted with ever-changing customer demands, the next ten years are likely to be even more intense.
What did we miss? What aspects of the coronavirus and selloff are you left wondering about? Let us know.