I am Leon Gettler. My job is to review and monitor the week’s news in business, finance, and economics. I bring it all to you, every week.

This is episode number seven in our series for 2020 and today’s date is Friday, March 20.

First I talk to Brendan McKeegan from Australian Plant Proteins, which has secured funding to commence the fit-out of a manufacturing facility of a pulse-based extract in Horsham, Victoria

And then I’ll be talking to IFM chief economist about the outlook for the Australian economy

But first, let’s talk to Brendan McKeegan

Listen to the full podcast here:

The coronavirus pandemic will bankrupt most of the world’s airlines by the end of May, the Centre for Aviation has warned, urging coordinated government and industry action to avert “a catastrophe”. “Many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants”, the centre, known by its acronym CAPA, said in a statement on Monday. “Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.”

Airlines worldwide have been impounding fleets in the hangar over the past few weeks as demand has plummeted, and the situation is only worsening as governments impose arrival bans or mandatory quarantines on incoming passengers.

The White House is looking at a rescue plan for its airline industry, and European airlines are calling on their governments for emergency life support. Qantas has watched investors erase $4.5 billion from its market capitalisation in the past fortnight, even after slashing international capacity by nearly a quarter last week and putting staff on leave.

Over the weekend a Qantas spokesman said the salvo of government-announced travel restrictions would “require further cuts to the Qantas Group’s flying schedule beyond what we announced just last week”. Virgin Australia is also seen as under a cloud but has emphasised that, like Qantas, it is sitting on more than $1 billion in cash. Virgin’s British cousin, Virgin Atlantic, on Tuesday (AEDT) cut its flight schedule by 80% and asked staff to take up to eight weeks’ unpaid leave in the next three months. The airline has called for a government bailout of up to $15 billion, saying the British industry needed “clear, decisive, unwavering support”. The boss of Airline Intelligence and Research, former Qantas chief economist Tony Webber, warned the worst was yet to come.

Qantas and Jetstar will cut international capacity by about 90%, and worrying still, domestic capacity by around 60%, until at least the end of May. Qantas said demand for air travel is unlikely to recover for weeks, possibly months. 30,000 employees will be affected and will be managed with a mix of paid and unpaid leave. The cuts to Qantas and Jetstar routes come on top of previously announced changes to services. In a statement, the airlines said the changes were due to a drop in travel demand due to coronavirus, and meant grounding about 150 aircraft. Virgin Australia has suspended international flights from March 30 until June 14.  The airline will also cut domestic capacity by 50% to June 14. The moves will see the equivalent of 53 aircraft in Virgin’s fleet grounded. The airline admitted the changes would hit its workforce, but it did not put a number of potential job losses.

The federal government unveiled new relief measures for Qantas, Virgin and regional airlines hit by the COVID-19 pandemic made up of refunds and waivers of fuel excise, air services charges and regional security fares totaling $715 million. Deputy Prime Minister Michael McCormack said the estimated upfront benefit would be $159 million, which would reimburse the charges paid by domestic airlines from the beginning of February. As well as the relief from fees and taxes, there is speculation that the government could also offer a line of credit, even though both Virgin Australia and Qantas have in private conversations told ministers they should be able to ride out the pandemic.

Tourism industry leader Simon Westaway said this morning that watching the effects of coronavirus devastate the Australian tourism industry is like watching a “horror movie” that just keeps on unfolding. Mr. Westaway called on the federal government to keep upping its rescue package. He reiterated that the tourism industry directly employs one million Australians, through 300,000 local businesses, of which the vast majority are small or micro-enterprises often situated in regional areas.

The US Federal Reserve on Sunday cut its benchmark rate by a full percentage point to near zero and will boost its bond holdings by $700 billion to cushion the U.S. economy from the coronavirus outbreak. In another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic, the Fed will keep interest rates near zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” the Federal Open Market Committee said in a statement.

But a sharp cut in interest rates by the Federal Reserve ahead of schedule and its pledge of massive asset purchases added to the alarm about the pandemic that has paralysed supply chains and squeezed company revenue.  And the markets plummeted as a result. The S&P 500 sank 12%, its worst day since 1987 and extending losses as Trump said the economy could fall into a recession. The S&P wiped out its gain in 2019 and is now down almost 30% from its all-time high. In London, the FTSE 100 fell 4 %. The S&P/ASX 200 Index dropped 9.7% to 5002 points, its biggest fall on record. Hong Kong’s Hang Seng Index fell 3.9% and China’s CSI 300 closed down 4.3%.

Germany and the United States have become embroiled in a diplomatic battle over who will gain the rights to a COVID-19 vaccine now being developed by scientists in Tübingen, as both countries reportedly were preparing large bids. Donald Trump promised CureVac, the German biotech firm, $US1 billion ($1.6 billion) to give the US exclusive rights, Welt am Sonntag reported, citing government sources in Berlin. A condition of the purchase would make it available for use only in the US. Although the vaccine is being developed in co-operation with the state-funded Paul Ehrlich Institute, CureVac is a private firm, thus limiting Berlin’s options to impose an export ban. The German government has confirmed it is instead engaged in negotiations to secure the use of the vaccine. CureVac said it “abstains from commenting on speculation and rejects allegations about offers for the acquisition of the company or its technology”.

Heavy offshore investor selling of Australian government bonds has forced the Reserve Bank of Australia to prepare new coronavirus-fighting stimulus measures to calm volatile financial markets, including moving towards buying government debt securities and printing money. The RBA has also signaled it is ready to cut rates to a record low of 0.25%,

China’s industrial output fell to its lowest level on record in the first two months of this year and urban unemployment hit its highest rate ever in February, as the coronavirus brought the world’s second-largest economy to a standstill. Industrial output tumbled by 13.5% in the first two months of this year and the urban unemployment rate surged to 6.3% in February, the National Bureau of Statistics said. The latest economic data also showed that China retail sales plummeted by 20.5% year-on-year in January and February, and fixed asset investment fell by 24.5%, down from 5.4% growth when the data were last reported.

The cancellation of the Australian Grand Prix is likely to blow a $5m hole in the budget of Network 10, capping off a horror week for the broadcaster that has seen staff sent home because of coronavirus fears and the resignation of its CEO, Paul Anderson.  The cancellation of the Grand Prix in Melbourne comes as broadcasters struggle with a changing timetable of canceled and postponed sporting rights affecting hundreds of millions of dollars in sports rights. It is understood Ten had about $5m in advertising tied up in the Grand Prix with major broadcast partners such as Kia, and the broadcaster will now struggle to make revenue targets for the quarter in an already tough media environment.

Mr. Anderson resigned on Wednesday, US owners ViacomCBS introducing a new “co-head” management structure that sees his role as CEO of Ten and ViacomCBS Australia removed. The network said it would “run our regular programming schedule” instead of the Grand Prix and “our sales team is currently working through the implications of the decision with our broadcast partners”. It said it supported the decision to cancel for the “wellbeing of our employees, partners, the racing teams and everyone who was planning to attend is our number one priority”.

Telco major Telstra has told its entire Australian-based office staff to work from home from Monday for at least two weeks amid the unfolding COVID-19 crisis. The move, which is expected to impact thousands, marks the biggest of the nation’s corporates to formally invoke a work from home policy for its staff. The telco has offices in each capital, with its headquarters in Melbourne. Telstra said there had not been a case of COVID-19 in its own workforce, rather the move was a precautionary measure. At the same time, Telstra has canceled all events and meetings of more than 25 people and canceled all domestic air travel.

Big four consulting firm KPMG will split its workforce into a “blue team” and a “white team” from next week and keep them separate from each other to try to avoid infections. The list of businesses sending staff home indefinitely is also growing. Macquarie has told its 15,700 staff around the globe they should work from home from Wednesday. The ASX is working at home until further notice, following an employee testing positive to COVID-19 on Saturday.

UBS retail analyst Ben Gilbert estimates supermarket sales have risen at least 25% year on year in recent weeks due to the panic hoarding. This is consistent with comments on Monday by Woolworths managing director of supermarkets, Claire Peters, who said Australia’s largest retailer had experienced its highest sales for more than 12 months over the weekend, selling sevens days’ worth of toilet paper in a day.

The Master Grocers Australia has called for a one-year wage freeze in response to economic challenges posed by COVID-19. The body, which represents 4000 independent supermarkets, liquor, timber and hardware stores such as those that operate under IGA, FoodWorks and Mitre 10, made the submission to the Fair Work Commission’s annual minimum wage review.   

Crown Resorts said on Monday it was adopting several “social distancing” measures at its casino in Melbourne in light of the growing threat posed by the spreading coronavirus. Those measures include turning off every second gaming machine and electronic table, creating a distance between gamblers at tables, restricting the number of players at each stand-up table game to five players and restricting the number of people in food and beverage, banqueting and conference facilities to 450. In a statement to the Australian Securities Exchange Crown said it has also implemented other precautionary measures across its Perth and Melbourne operations including providing “alcohol-based hand sanitiser and more frequent and strengthened cleaning measures.

Fisher & Paykel Healthcare, a dual-listed manufacturer of medical devices used by hospitals in the treatment of respiratory illnesses, has experienced a spike in demand from the coronavirus pandemic which has prompted a profit upgrade. The company, listed on both New Zealand and Australian stock exchanges, is going against the trend as a wave of companies in other industries rapidly downgrade profits or withdraw any form of profit guidance as economies progressively shut down across the world.

Fisher & Paykel has put on extra shifts and hired more workers at its factories in Auckland in New Zealand and Tijuana in Mexico as demand from hospitals and government agencies jumps for its respiratory humidifiers and devices used in ventilation treatments for hospital patients.

Fisher & Paykel said on Tuesday it had upgraded its full-year profit projections for the 12 months ended March 31 to between $NZ275 million to $NZ280 million, from a previously flagged range of $NZ260 million to $NZ270 million. The company has also lifted its full-year revenue forecast to $NZ1.24 billion from $NZ1.2 billion previously. It had previously given guidance on February 21. Fisher & Paykel Healthcare shares have gained 18% since the start of January to $25.06 at the close of trade on Monday, to be one of the best-performing stocks on any stock exchange at a time when the world’s financial markets have crashed heavily. Fisher & Paykel Healthcare sells its products in about 120 countries, but a spokeswoman said on Tuesday that some of its raw materials suppliers had been affected by the coronavirus pandemic.

Cochlear had more than $2 billion wiped from its market value on Monday after scrapping its full-year earnings forecast because of the downturn set off by the rapid spread of the coronavirus in Europe and the US. The Sydney-based hearing implant maker cited delayed surgeries and lower sales as it led a wave of earnings guidance withdrawals and negative surprises which snared advertising business oOh!media, travel software company Serko and wealth manager Challenger.

The widening circle of damage shows how the coronavirus is disrupting virtually every sphere of economic and social activity as its spread accelerates outside of China. Private hospital operator Ramsay Healthcare has abandoned profit guidance for fiscal 2020 as patients defer elective surgery due to the coronavirus outbreak.

Aristocrat Leisure has withdrawn the outlook statement provided at its AGM due to uncertainty surrounding the outbreak. Elmo Software downgraded its financial year 2020 guidance citing disruption to its operations as a result of the Covid-19 pandemic. Mirvac withdrew its financial year 2020 earnings and distribution guidance citing uncertainty over the duration and impact of the COVID-19 pandemic.

Kathmandu has downgraded earnings, warning COVID-19 will crimp in-store sales in Australia and Rip Curl sales in Europe as shoppers shy away from mass gatherings or are in enforced lockdown. Dual-listed Fonterra Co-operative Group cut its interim dividend around the uncertainty of the impact COVID-19 could have on second-half earnings but stuck to its full-year earnings guidance.

Telstra is warning customers phoning or messaging its customer helplines to expect longer wait times after it was forced to close call centres in the Philippines due to coronavirus containment measures. The telco said the closures were made in response to policies announced by the Philippines government overnight. Call centres in Australia and India will remain open. It came as Australia’s telecommunications firms announced they would suspend rivalries to cooperate on ensuring the nation’s networks can cope with an up to 40% surge in demand as more and more Australians work and study from home.

NBN Co will lead the special working group of telcos, which will include senior executives from Telstra, Optus, TPG, Vodafone and Vocus. The decision was reached after the government called executives from the major telcos to a virtual roundtable Monday to discuss the COVID-19 crisis. With businesses, universities and schools across Australia closing their doors and conducting business and classes from home, the residential networks – both NBN and the legacy copper DSL – will see unprecedented demand.

The increase in quarantined customers has forced food delivery companies to balance a potential boom in orders alongside the risk of spreading sickness to customers and drivers alike. Both Uber Technologies and Deliveroo have said they’re setting aside funds to compensate drivers who might fall ill or are forced to be quarantined. Deliveroo’s other provisions include ordering hand sanitiser on behalf of drivers, and letting customers in some areas of the UK order kitchen and household products from supermarkets via the app. Takeaway.com said that from Friday all its deliveries from restaurants in Europe would be made contact-free.

And that’s it for this week. And next week I’ll be talking to Rahul Sood, Unikrn CEO and former GM of Microsoft Ventures. We’ll discuss how Unikrn’s upcoming experience launches will change the gaming landscape. Unikrn is an esports, wagering and gaming company with investors including Mark Cuban, Ashton Kutcher, Elizabeth Murdoch and others. And I’ll be talking to economist professor Sinclair Davidson about the government’s stimulus package and its shortcomings

In the meantime, you can find me on Twitter at talkingbizz, on Facebook and on LinkedIn. And if you want, leave a comment. Wishing you all a terrific week, and looking forward to bringing you Talking Business next week.