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Industry executives consider plans to bring workers back.
It could be years before the U.S. economy fully recovers from the pandemic, but some airline and auto industry executives are starting to ask what it will take to reopen their businesses.
Delta Air Lines, American Airlines, United Airlines and Southwest Airlines have already aggressively advertised the precautions they are taking to lure back passengers, from fogging cabins with disinfectant to restricting food service to blocking out middle seats.
The chief executive of Delta, Ed Bastian, told financial analysts on Wednesday his company was prepared to “make whatever changes to the business model that will be necessary.” That could mean federally administered “immunity passports” or spacing out seats or running flights with fewer passengers.
“This recovery is going to take several years,” Mr. Bastian said. “It’s going to be multi-phased, it’s going to be choppy along the way. We’ll have opportunities to test all those theses and see what it takes.”
But what works for some airlines may not work for others. Michael O’Leary, the chief executive of low-cost carrier Ryanair, told The Financial Times on Wednesday that the airline would not return to flying with middle seats empty.
Automakers are also making plans to turn the lights back on. Volkswagen said on Wednesday it has called employees back to work at its plant in Chattanooga, Tenn., on May 3, making the company one of the first major automakers to resume manufacturing since much of the industry shut down because of the coronavirus pandemic.
The company said it had spent several weeks putting in place health and safety measures to protect the 3,800 people who work at the plant, which makes the Atlas sport-utility vehicle. Volkswagen stopped production at the plant on March 21 after state and local officials issued stay-at-home orders. Gov. Bill Lee of Tennessee said on Monday he would let his order for people to stay home expire on April 30.
General Motors, Ford Motor and Fiat Chrysler have not yet called factory workers back, and continue to negotiate with the United Automobile Workers union over safety measures.
The French carmaker Renault plans to begin limited production at a plant outside Paris on Monday. The company resumed production last week at factories in Portugal and Spain that make engines and gearboxes.
Renault’s plant in Flins, about 25 miles west of Paris, will be the first vehicle assembly plant in France to reopen. Initially only about one-quarter of the work force will report for duty to reduce the risk of infection, a spokeswoman said.
South Korea’s economy undergoes largest contraction since the 2008 financial crisis.
South Korea’s economy shrank at its fastest rate since the 2008 financial crisis during the first three months of the year, government data showed Thursday, as domestic consumption and trade reeled from the impact of the coronavirus pandemic.
The economy contracted a seasonally adjusted 1.4 percent from the previous quarter, according to preliminary data from the Bank of Korea. The economy expanded by 1.3 percent year on year.
South Korea was among the first countries to be hit hard by the coronavirus, after an outbreak in a church in the city of Daegu led to the rapid spread of the pathogen. Nevertheless, widespread testing efforts in South Korea have largely kept the outbreak under control and helped the country avoid having to institute the kinds of large-scale lockdowns that have caused enormous economic damage in China, Europe and the United States.
Even so, domestic consumption in South Korea dropped by 6.4 percent during the first quarter, the data said, as people stayed home to avoid getting sick. Exports fell by 2 percent despite an increase in shipments of semiconductors, one of the pillars of the country’s economy.
Although the damage to the economy this quarter was relatively mild compared with other countries, it is likely to deepen next quarter, when the data will more clearly reflect the sharp drop in demand from other countries hard hit by the virus, said Lee Geun-tae, a senior research fellow at the LG Economic Research Institute.
More than 100 public companies got millions in small-business loans.
As Congress prepares to restock a depleted small-business loan fund, complaints are mounting about the publicly traded companies that sucked up hundreds of millions of dollars from the fund’s initial distributions.
More than 100 public companies obtained more than $500 million in forgivable loans from the taxpayer-backed Paycheck Protection Program, based on a New York Times analysis of corporate filings. The recipients included Potbelly Sandwich Shop, a chain of 400 restaurants; Hallador Energy, a coal company; and Quantum Corporation, a data storage company, according to regulatory filings. Each received $10 million from the program’s $349 billion fund. (The restaurant chain Shake Shack returned its $10 million loan.)
Kura Sushi USA, a chain of sushi restaurants, is returning the roughly $6 million it got from the federal small business paycheck protection loan program, it said in a securities filing on Wednesday. A publicly traded company, it is controlled by its former Japanese parent firm, raising questions about whether companies based outside of the United States were benefiting from the forgivable loans established by Congress.
Ashford Inc., an asset management firm based in Dallas, makes money partly by advising two real estate investment trusts: Ashford Hospitality Trust and Braemar Hotels & Resorts, which together own more than 100 properties. Those companies reported that their hotel properties had received millions in forgivable loans through a government program meant to help small businesses.
The federal government usually considers a business “small” only when it has fewer than 500 workers, but an exception in the loan program allowed some companies to qualify based on the number of workers they have at each location. That made many chain restaurants eligible for loans. Other exceptions allowed business in certain industries, including mining, to qualify with larger workforces.
JPMorgan Chase was by far the largest lender to public companies, loaning them $93 million, according to research by Morgan Stanley.
Treasury Secretary Steven Mnuchin said his department would be issuing new guidelines on Wednesday that would tighten the rules for which types of companies could get forgivable loans, potentially restricting publicly traded companies from accessing the relief funds.
Mr. Mnuchin, who said this week that the program was not intended to aid big companies that have access to capital, urged firms that received loans to return the money if they did not meet the eligibility requirements. If they did not, he said, the loan would not be forgiven and those firms could face “severe consequences.”
Sentiment shifts again, and stocks and oil prices rebound from waves of selling.
Stocks rallied on Wednesday and oil prices reversed some of their tremendous losses as investors regrouped after two days of turmoil in financial markets.
The S&P 500 climbed more than 2 percent, and shares in Europe were also higher. The benchmark for American crude — which had been hammered out of concern that a glut in supply would soon overwhelm storage facilities — bounced back more than 20 percent.
Investors also rallied behind a handful of earnings updates that showed companies had not done as poorly in the first three months of the year as some had expected. After Snap, the owner of Snapchat, reported a surge in revenue and user growth, its shares rallied along with those of Twitter and Facebook.
Similarly, shares of some restaurant chains jumped after Chipotle Mexican Grill said on Tuesday that digital and delivery sales driven by the coronavirus crisis soared. Executives at Chipotle also said the company was preparing to reopen stores, as states lift stay-at-home restrictions. Chipotle, which agreed on Tuesday to pay $25 million to resolve criminal charges accusing the fast food company of serving tainted food from 2015 to 2018, was the best performer in the S&P 500 on Wednesday, with a gain of 14 percent.
Investors had other news to consider. The Senate on Tuesday passed a bipartisan $484 billion coronavirus relief package that would replenish a depleted loan program for distressed small businesses and provide funds for hospitals, states and coronavirus testing.
The gains came after the S&P 500 had fallen 3 percent on Tuesday, its sharpest decline in three weeks in a drop that had suggested a marked shift in sentiment among investors who had otherwise been buying stocks with every sign of progress in the fight against the coronavirus, effort to reopen the economy or indication that Washington would spend more to help. That optimism was briefly shattered on Monday when oil prices collapsed as energy traders panicked about disappearing demand for petroleum and the fact that there were few places left to store all the crude still being pumped.
But on Wednesday, some stability returned to the energy market, with the price of West Texas Intermediate crude, the American benchmark, rebounding. Shares of companies in the energy industry also rallied.
Europe’s central bank lowers its lending standards to prevent a credit crunch.
The European Central Bank said Wednesday it would lower its lending standards to allow commercial banks in the eurozone to post junk bonds as collateral for cheap loans, in an effort to prevent a credit crunch.
The extraordinary action by the central bank was a reaction to fears that hundreds of billions of euros in corporate bonds were on the verge of being downgraded to junk status, because the companies that issued the debt may not be able to repay it.
The mass downgrades could cause severe financial turmoil because, under the old rules, banks that hold the debt could no longer use it as collateral to borrow from the central bank.
Eurozone banks can borrow as much money as they want from the European Central Bank, but must post collateral. Previously the central bank did not accept junk bonds, but it said Wednesday it would allow the debt as collateral as long as it was still rated investment grade on April 7.
The central bank said in a statement that an ample supply of collateral “is crucial for banks to provide funding to firms and households during the current challenging times.”
What if you were paid to do a coronavirus test?
Short of testing everybody — an onerous exercise, even if enough test kits were available — figuring out the infection rate across the population requires a representative sample. The sample will include sick people clamoring to be tested but also people who have little interest in going through the ordeal.
Magne Mogstad and Alexander Torgovitsky of the University of Chicago and Andres Santos of U.C.L.A. have devised a technique to provide that rate by figuring out how to coax even people who believe they are healthy into taking a test for the coronavirus: Offer prizes.
The method is crafty. Say you split the sample into 11 equal random slices and offer people in each a reward. For simplicity, say the reward for taking the test scales up from nothing in the first group to $200. This method would yield the share of people who would take the test for nothing, the share who would do it for $20 and so forth.
To figure out who would take the test for $100 but not for $80, you would subtract the share of people who responded to the $80 reward from those who took it for $100. The infection rates for the group could be computed in a similar fashion, to reveal the pattern about how testing changes and the infection rate changes as rewards increase.
Catch up: Here’s what else is happening.
Boeing plans to start offering some workers voluntary buyouts on Monday, according to an email sent to employees this week. The email did not say how many workers would be eligible or how many Boeing hoped would take up the offer. Those approved would leave the company in early June with a week of pay for every year worked, up to 26 weeks.
Delta Air Lines announced plans on Wednesday to raise $3 billion, half of it in a private offering and half in the form of a loan. The announcement came hours after the airline reported its first quarterly loss in five years and said it planned to increase its access to cash on hand to $10 billion from $6 billion by the end of June.
Alcoa said Wednesday that it would stop production at its Intalco smelter in Ferndale, Wash., and lay off employees because of declining demand for its products. The aluminum maker had already cut production at that plant and others, and it said that about 30 percent of its global smelting capacity was now idle.
Kraft Heinz will continue to offer manufacturing employees a $100 bonus for the next two weeks, a company spokesman said on Wednesday. After two employees at a food production plant in Holland, Mich., tested positive for the coronavirus, Kraft Heinz closed the facility on Sunday for a deep cleaning and reopened it on Monday.
Rupert Murdoch’s Fox Corporation, the owner of Fox News and the Fox television network, announced pay cuts to its executive ranks that will affect 700 employees. Mr. Murdoch and his son, Lachlan, the company’s chief executive, will forgo their salaries through September, even though most of their compensation comes from stock awards and bonuses. Executives who report to Mr. Murdoch will see a 50 percent reduction in pay for the same period, and those working at the level of vice president will have their salaries reduced by 15 percent from May through July.
Reporting was contributed by David McCabe, Ben Dooley, Su-Hyun Lee, Eduardo Porter, Jack Ewing, Jeanna Smialek, Isabella Kwai, Stacy Cowley, Noam Scheiber, Sapna Maheshwari, David Yaffe-Bellany, Niraj Chokshi, Rick Gladstone, Keith Bradsher, Edmund Lee, Clifford Krauss, Vindu Goel, Kate Conger, Neal E. Boudette, Jack Ewing, Mohammed Hadi, Alan Rappeport, Carlos Tejada, Mike Ives, Katie Robertson and Kevin Granville.