Coronavirus to cost global airlines nearly $30bn this year – business live

DATA FLASH: German manufacturing PMI shows sector still in contraction

It’s not a bright picture for German manufacturers, as flash manufacturing PMI for February came in below the 50-mark at 47.8. That’s slightly better than the January reading of 45.3 as well as Reuters forecasts for 44.8.

A ThyssenKrupp steel worker walks next to finished steel coils at the rolling mill department of the German steel maker in Duisburg, Germany. Photograph: Wolfgang Rattay/Reuters

Like France, Germany’s service sector expanded but at a weaker rate than expected. Service sector PMI came in at 53.3, lower than January’s 54.2 reading and below the Reuters poll of 53.8.

8.33am GMT08:33

DATA FLASH: French PMI data is a mix-bag

Flash manufacturing PMI out of France disappointed, coming in at 49.7 which is below the 50 mark that separates growth from contraction. Analysts had been expecting a reading of 50.7.

However, the French service sector performed better than forecast, with service sector PMI coming in at 52.6 compared to a Reuters poll for 51.3.

Service sector performance supported composite PMI readings for the months, resulting in a measure of 51.9, above forecasts for 51.0.

8.24am GMT08:24

If the coronavirus ends up resulting in a contraction in passenger growth for Asian carriers, it will be reminiscent of the decline that took place at the height of the SARS virus outbreak in 2003.

That was the only decline for regional airlines in nearly two decades.

A slide from IATA’s initial assessment of the coronavirus outbreak’s impact on the global airline industry. Photograph: IATA

8.11am GMT08:11

European stock markets are in the red at the start of trading:

FTSE 100 is down -0.6%
German DAX is down -0.6%
French CAC 40 is down -0.5%
Spain’s IBEX is down -0.5%

8.08am GMT08:08

Introduction: Airline body says coronavirus to cost industry nearly $30bn

Good morning, and welcome to our live coverage of the world economy, the eurozone, financial markets and business.

Airlines have been told to brace for a near $30bn (£23bn) hit to revenues in 2020, as fears over the coronavirus outbreak lowers passenger demand for air travel.

The International Air Transport Association (IATA) trade body has released initial forecasts showing a potential 13% loss in passenger demand for airline carriers in Asia-Pacific. That’s not great news for the region’s airlines, which were only expected to see 4.8% growth for full year. That translates into a $27.8bn revenue loss, the bulk of which will be shouldered by Chinese carriers.

Outside the region, global airlines are forecast to lose a further $1.5bn, assuming the loss of demand is focused to markets linked to China.

This would bring total global lost revenue to $29.3bn.

Alexandre de Juniac, IATA’s Director General and CEO, said:

The sharp downturn in demand as a result of COVID-19 will have a financial impact on airlines—severe for those particularly exposed to the China market. We estimate that global traffic will be reduced by 4.7% by the virus, which could more than offset the growth we previously forecast and cause the first overall decline in demand since the Global Financial Crisis of 2008-09.

He added:

Airlines are making difficult decisions to cut capacity and in some cases routes. Lower fuel costs will help offset some of the lost revenue. This will be a very tough year for airlines.

Elsewhere, it’s PMI central, so buckle up and get ready for some industry analysis.

The agenda:

8:15am GMT: French manufacturing PMI, services PMI
8:30am GMT: German manufacturing PMI, services PMI for February
9am GMT: Eurozone composite PMI, manufacturing PMI, services PMI for February
9.30pm GMT: UK composite PMI, manufacturing PMI for February
9:30am GMT: UK public sector net borrowing for January
2.45pm GMT: US manufacturing PMI, services PMI for February

Updated
at 8.15am GMT

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