Business Briefs – April 22, 2020
Pandemic Dealing European Tourism ‘Staggering’ Blow
HALLE, Belgium (AP) — The European Union says its vaunted tourist industry is facing “staggering” figures of decline because of the coronavirus crisis, and the bloc’s internal market commissioner wants the sector to be first in line when it comes to recovery funds.
Thierry Breton mentioned figures that the tourism economy could slump up to 70% and will be among the last to recover as the 27-nation bloc is facing perhaps the toughest challenge since its inception.
Across Europe, desolation illustrates the tourism crisis, from empty squares like the Brussels Grand Place to deserted monuments like Rome’s Colosseum, while idle gondolas await nonexistent tourists in Venice. Arrival areas in airports stand empty, and beaches, basking in the sunshine, are deserted.
Europe is hardly alone in facing hardship — what with the deserted waterfront under Cape Town’s Table Mountain and the closed-off pyramids outside Cairo. But Breton said the European market accounts for half of world tourism.
AP: Publicly Traded Firms Get $300M in Small-Business Loans
(AP) – Companies with thousands of employees, past penalties from government investigations and risks of financial failure even before the coronavirus walloped the economy, were among those receiving millions of dollars from a relief fund that Congress created to help small businesses through the crisis, an Associated Press investigation found.
The Paycheck Protection Program was supposed to infuse small businesses, which typically have less access to quick cash and credit, with $349 billion in emergency loans that could help keep workers on the job and bills paid on time.
But at least 75 companies that received the aid were publicly traded, the AP found, and some had market values well over $100 million. And 25% of the companies had warned investors months ago — while the economy was humming along — that their ability to remain viable was in question.
Chipotle Agrees to Record $25M Fine Over Tainted Food
LOS ANGELES (AP) — Chipotle Mexican Grill Inc. agreed Tuesday to pay a record $25 million fine to resolve criminal charges that it served tainted food that sickened more than 1,100 people in the U.S. from 2015 to 2018.
The fast food company was charged in Los Angeles federal court with two counts of violating the Food, Drug, and Cosmetic Act by serving adulterated food that in some instances caused outbreaks of norovirus, which causes diarrhea, vomiting and abdominal cramps, at restaurants. The virus is spread easily by people mishandling food.
The company admitted that poor safety practices, such as not keeping food at proper temperatures to prevent pathogen growth, sickened customers in Los Angeles and nearby Simi Valley, as well as Boston, Sterling, Virginia and Powell, Ohio.
SBA Reports Data Breach in Disaster Loan Application Website
NEW YORK (AP) — Thousands of small business owners reeling from the aggressive measures taken to halt the spread of the coronavirus may have had their personal information exposed last month on a government website that handles disaster loan applications.
The Small Business Administration said Tuesday that the personal information of more than 7,000 business owners applying for economic injury disaster loans was potentially seen by other applicants on the SBA website on March 25.
The SBA said only the disaster loan program was affected, not the Paycheck Protection Program, which did not begin until April 3 and which is handled by a separate system.
Coke Volume Plunges 25% in April; Hope For a 2nd Half Bounce
(AP) – Coca-Cola’s global volume tumbled 25% in April as the coronavirus pandemic gripped large swaths of the world population.
Those volumes made up of bottled drinks and the syrups Coke sells to theaters, restaurants, stadiums and music venues were humming early in the year, revealing how fast the virus hobbled human activity and commerce, from mom-and-pop shops to global operators like Coca-Cola Co.
Volume was up 3% through February excluding China, and Coke was on track to reach and possibly exceed its financial targets.
U.S. Home Sales Plunge 8.5%; May Grow Worse
BALTIMORE (AP) — U.S. sales of existing homes cratered 8.5% in March with real estate activity stalled by the coronavirus outbreak.
The National Association of Realtors said Tuesday that 5.27 million homes sold last month, down from 5.76 million in February. The decrease was the steepest since November 2015.
The situation will likely get worse, said Danielle Hale, chief economist at realtor.com.
“Going forward, we’ve seen both home buyers and sellers report being less confident, and many are making adjustments to the process,” Hale said. “Already, sellers are getting less aggressive with asking price growth, and we’re seeing roughly half as many new listings come up for sale this year versus last year.”
United Auto Workers Union Backs Democrat Biden for President
DETROIT (AP) — The United Auto Workers union is endorsing Democrat Joe Biden for president.
The roughly 400,000-member union says in a statement Tuesday that the nation needs stable leadership with less acrimony “and more balance to the rights and protections of working Americans.”
The union says Biden has committed to reining in corporate power over workers, encouraging collective bargaining, and making sure workers get the pay, benefits and protections they deserve. Biden also has committed to expand access to affordable health care, the union said.
As Price of Oil Drops, Trump Orders Plan to Help U.S. Energy Companies
WASHINGTON (The Washington Post/Reuters) – President Donald Trump said Tuesday he has ordered his administration to come up with a plan to provide federal assistance to the oil and gas industry in the United States, which has been staggered by the consequences of the coronavirus pandemic.
A huge drop in demand for crude oil because of the global economic slowdown has led to a glut that is close to filling all available storage capacity and that has driven prices below what most oil-producing American companies can sustain.
It reached the point Monday where futures contracts for May delivery of West Texas Intermediate were trading in negative figures, which translates into big losses for those left holding the contracts. Ominously, the price for June contracts fell precipitously by about 70% at one point Tuesday.
Over the past four years, the oil sector has built up an extremely large amount of debt — more than $200 billion among production and pipeline companies — and a significant number of firms were thought to be in precarious shape before the pandemic hit.
Oil companies operating in the Permian Basin, in west Texas and Oklahoma, in the Eagle Ford region of southwest Texas, and in the Bakken formation, primarily in North Dakota, have drastically cut back capital spending and have begun to shut in some of their producing wells.
Thousands in the industry have been laid off, but not to the extent that job losses have hit other sectors, especially hotels and food services.
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