AIRLINES STILL IN A TAILSPIN. Air travel is down 85 percent compared to a year ago and the public is becoming more wary, not less, of being sealed in an airplane full of strangers, surveys show, especially as new, localized virus outbreaks have occurred.
In June, 70 percent of people said it would be safer to be in a hospital emergency room or standing in line to vote than to be in an airplane, according to a Consumer Reports survey.
Airlines saw an uptick in reservations in late spring and early summer but that initial increase has ebbed, with July’s bookings down 74 percent year-on-year.
“We were all hoping that by the fall, the virus might run its course,” said Southwest Airlines CEO Gary Kelly. “Obviously, that has proven to be dead wrong.”
Standard & Poor’s predicted in May that a 55-percent fall in airline bookings would be the most airlines would face; in mid-August, S&P said the situation has gone “from bad to worse” and that airlines now will see passengers disappear by as much as 70 percent compared to last year.
Internal air travel in China, where the virus was contained earlier, has recovered about two-thirds of its pre-pandemic passenger volume, compared to the U.S., where no more than one third has been restored.
Air traffic across Europe has plunged 94 percent year-on-year, the most recent data shows. Air travel bumped up in early July when more than 20 countries opened their borders to each other, but new virus outbreaks triggered new restrictions.
Last week, Great Britain mandated a new 14-day quarantine for travelers –even its own citizens – coming from France or the Netherlands. Many countries still ban U.S. travelers.
The International Air Transport Association forecasts its industry will lose $84 billion this year, the worst loss in airline history. The group says traffic will not return to pre-pandemic levels until 2024.
TREND FORECAST: The longer and harder tourism falls, the greater the downward economic impact on travel-related nations, cities, industries, businesses… and the millions of workers affected by the crisis. The longer the media and politicians sell COVID Fear, the harder the sector will fall.
The industry will only rebound when the “old normal” replaces the New ABnormal.
CHAMPAGNE INDUSTRY GOES FLAT. After the global economic shutdown dried up the world’s taste for champagne by 30 percent in the first half of this year, the industry’s grape growers and wine producers have negotiated a 22-percent reduction in this year’s grape harvest compared to 2019, limiting yields to 8,000 kilograms of grapes per hectare, the smallest in 35 years.
Global sales are expected to drop by 30 percent to 200 million bottles this year, valued at €3.3 billion, compared to 2019’s record of €5 billion.
The champagne industry is managed by a cartel made up of 16,000 growers and 360 producers. Their task is to manage the amount of champagne so there is enough to satisfy demand but not so much that prices fall and tarnish the bubbly’s image as a luxury beverage.
With 1.4 billion bottles already in inventory, the group had to haggle their way to a grape yield that would cover growers’ costs but be small enough to keep producers’ prices up.
The quality of this year’s grapes promised a vintage year.
But “champagne is synonymous with partying and the world isn’t doing that right now,” noted David Faivre, a third-generation champagne maker in France.
TREND FORECAST: Until COVID War New ABnormal rules and regulations that impose social distancing and limit capacities at weddings, parties, events, restaurants, bars, etc., are repealed, the thirst for the higher life of champagne will continue to dry up.
BOEING CUTS EVEN MORE JOBS. After announcing 19,000 job cuts in July, Boeing now says it will offer a new round of employee buyouts to trim even more workers before determining how many additional employees will be laid off. About 6,000 workers already have left the company since the pandemic struck.
Boeing also may close one of the two plants building its 787 Dreamliner.
ARANDELL HOLDINGS GOES BUST. The U.S.’s third largest commercial printer filed for Chapter 11 bankruptcy on 20 August, citing operational troubles at its Kentucky plant as well as loss of business due to the economic shutdown.
The company is up for sale and will close the Kentucky plant.
The business has been a major printer of catalogs, and it has seen a significant share of its business disappear as shoppers have migrated to shopping online.
MARKS AND SPENCER TO CUT 7,000 JOBS. Combined with 950 layoffs already announced, the iconic British retail conglomerate will dismiss more than 10 percent of its 78,000-person workforce over the next three months. The cuts will come at the store, regional, and corporate levels.
The layoffs mark the largest job cuts in the company’s 136-year history.
Marks and Spencer, which has been struggling for years, reported food sales rose more than 2 percent in the last quarter, while clothing sales fell more than 38 percent.
For the past several years, the renowned retailer has been shifting away from clothing to emphasize its grocery business.
Marks and Spencer’s stock price has slid 74 percent since 2014.
CBL & ASSOCIATES PROPERTIES WILL GO BANKRUPT. One of the U.S.’s largest mall owners, the investment trust owns 90 shopping centers, many in smaller areas of modest incomes, is going bust.
CBL said it will file bankruptcy by 1 October and has reached a debt-for-equity exchange with bondholders that will erase about $1.5 billion in debts and other liabilities.
Stores of the now-bankrupt J.C. Penney chain anchored eight CBL malls, potentially leading to a domino effect: as anchor stores close, fewer shoppers come to a mall, draining business from other, smaller retailers that are also then forced to close.
Other troubled CBL tenants include Aldo Group, GNC Holdings, Macy’s, and RTW Tailwinds.
CBL reported collecting only 27 percent of rents it was due in April.
The trust had been precarious before the pandemic as customers for many of its tenants transferred an increasing amount of their shopping online.
