US reminds airlines travelers are entitled to cash refunds amid coronavirus disruptions

The US Transportation Department on Friday issued a notice to airlines reminding them they are obligated to refund tickets when they cancel a flight or make a significant flight schedule change that passengers opt not to accept, but will not take any immediate action against airlines.

US and foreign airlines have canceled hundreds of thousands of flights and eliminated millions of seats in the wake of a massive falloff in travel demand because of the coronavirus pandemic.

The Transportation Department said it is receiving a rising number of complaints and inquiries from passengers seeking refunds. Earlier this week, nine Democratic US senators urged the chief executives of 11 major airlines to issue full cash refunds to customers who cancel their flights.

The department said the “longstanding obligation of carriers to provide refunds for flights that carriers cancel or significantly delay does not cease when the flight disruptions are outside of the carrier’s control.”

The department said it could take an enforcement action when airlines deny refunds when a “carrier cancels a flight, makes a significant schedule change, or significantly delays a flight to be a violation of the carriers’ obligation.”

But the department said that, given the massive crisis, it “will exercise its prosecutorial discretion and provide carriers an opportunity to become compliant before taking further action.”

Airlines must contact in a timely manner passengers who were given vouchers “to notify those passengers that they have the option of a refund” and they must update refund policies to make it clear that they give refunds after a significant schedule change or canceled flight.

On Friday, Delta Air Lines and Southwest Airlines both extended the amount of time travelers have to use unused travel funds to rebook travel for flights. Delta will give passengers up to two years to rebook flights that are or were scheduled through May.

Airlines for America, an industry trade group representing American Airlines and other major airlines, said earlier this week that “each airline has crafted an approach it believes will best address the concerns and interests of its passengers, crew and other stakeholders, including announcing travel policies to accommodate customers.”

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Desperate Airlines Switch Passengers for Cargo to Stay Afloat

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Unable to fill planes with passengers as the coronavirus destroys travel demand, airlines are instead using their fleets to transport more cargo, including medicines, smartphones and Korean strawberries.

The likes of Cathay Pacific Airways Ltd., Korean Air Lines Co. and American Airlines Group Inc. are hauling a greater amount of goods in the belly of their passenger planes to keep up with demand. Cargo rates have risen over 10% in recent weeks as some companies are prepared to pay more to ship goods after drastic cuts in passenger flights left airlines with less capacity for cargo.

Airlines typically don’t operate in this fashion. Yet they are desperate to use whatever capacity they can for cargo as earnings from passenger operations have almost vanished with traffic down 90%. Though travel has been decimated, global trade continues, especially with factories reopening in China and demand surging for medical supplies to fight the pandemic.

“At least for the short term, as long as passenger flights are disrupted, cargo operations are expected to help some airlines make up for some of the losses,” said Um Kyung-a, an analyst at Shinyoung Securities Co. in Seoul. “With oil prices falling and higher rates, it’s become economical for some airlines to be using passenger planes for cargo.”

Airlines could lose $252 billion in revenue from passenger operations this year because of the pandemic, according to the International Air Transport Association. In normal times, about half of the world’s air cargo is transported on dedicated freighters and the rest goes in the bellies of passenger aircraft along with people’s baggage. Airlines have increasingly relied on passenger planes to transport cargo since the global financial crisis.

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While about 90% of global trade is carried by sea, air cargo transports over $6 trillion worth of goods annually and accounts for about 35% of trade by value, according to IATA.

Airlines including Cathay and Korean Air have more exposure to airfreight operations, which account for over 20% of their annual revenue. While many other airlines around the world become more reliant on passenger aircraft to haul cargo, they still operate freighters. Emirates, Qatar Airways, Cathay, Korean Air and Deutsche Lufthansa AG are the world’s top five cargo airlines.

Stemming Losses

While it won’t be enough to salvage the fortunes of airlines this year, earnings from cargo operations will help them narrow losses from the collapse in passenger operations, Um said.

Some carriers such as Delta Air Lines Co., Japan Airlines Co. and Air Canada don’t have freighters and have relied on passenger planes to carry cargo. That’s because many companies have been opting to move products by using less expensive modes of transport like ships.

“There’s a shortage of cargo space in the short term while demand is still there,” said James Teo, an analyst at Bloomberg Intelligence in Singapore. “Cargo yields are up double digits during this time. With passenger planes taken out, it has created a shortage of cargo capacity.”

For these flights, the belly holds of passenger aircraft are filled with items including mobile-phone parts and perishable goods in containers mounted on pallets to prevent items from shifting during flights. Usually, the cargo hull is shared with luggage from passengers. The planes will be empty of passengers and flight attendants, with only pilots in the cockpit flying the plane.

Chinese authorities warned about the implications of dwindling passenger flights on cargo shipments, saying international supply chains have been significantly affected and calling for measures to increase air-freight capacity. Chinese carriers will be helped to expand their fleets via lease or purchase, the State Council said in a statement after a meeting Tuesday.

The State Council also said mergers of air freight and logistics firms will be encouraged and express delivery companies will receive support for expansion. Where conditions allow, airports in places such as Beijing, Guangdong, Hong Kong and the Yangtze River Delta will provide around-the-clock customers clearance services, it said.

Cathay’s Case

Cathay, Asia’s biggest air-freight airline, has said a third of its cargo capacity was eliminated with the passenger service halts. Typically it carries half of its cargo load on passenger planes and the rest on its freighters. Its Cathay Dragon unit is using Airbus SE A330 aircraft to send cargo to China. The carrier was struggling to fill planes with passengers even before the virus outbreak as traffic slid in the second half of last year with the anti-government protests in Hong Kong, its base.

“While our freighter network remains intact, we are also ramping up our cargo capacity by mounting charter services and operating certain suspended passenger services purely for air freight to meet cargo customer demand,” Cathay Chief Customer and Commercial Officer Ronald Lam said on March 20. Chief Executive Officer Augustus Tang said in a memo to staff the same day that cargo capacity has been added for March and April.

Korean Air, Asia’s second-biggest cargo airline, is also deploying its A330 aircraft to Ho Chi Minh City and Qingdao to transport such products as LCD displays, ship components, mobile phone parts and Korean strawberries starting this month. Scoot is using its Boeing 787 aircraft to fly to Guangzhou and Nanjing twice a week each as charter flights for Singapore Air’s cargo operations, the budget carrier said.

Medical Supplies

In the U.S., American Airlines Group Inc. is shifting some of its biggest idled jets to ferry freight, its first scheduled cargo-only flights since 1984 when the airline retired the last of its freighters. The carrier will use its Boeing 777-300s to fly medical supplies, military mail, e-commerce packages and high-demand office equipment as more people work from home. The flights are between Frankfurt and Dallas-Fort Worth airports.

United Airlines Holdings Inc. is also using some of its 777 and 787 aircraft to make vital shipments, such as medical supplies, to Frankfurt from Chicago, the company said in a statement on its website. The carrier will initially operate 40 cargo charters a week and will continue to seek additional opportunities.

Lufthansa is looking to possibly deploy A330, A350 and 747 jets as freight-only flights to help secure supplies across Europe as it had inquiries to fly medical supplies to eastern Europe, CEO Carsten Spohr said on March 20. That freight would usually travel such distances by road, but the delays at some borders with lines as long at 70 kilometers are causing problems, he said. Among the large network airlines in Europe, Lufthansa is the only one that has kept a sizable full-freighter fleet.

IAG SA’s CEO Willie Walsh said on March 16 that the company may operate some of its passenger aircraft to ensure critical supplies are transported.

The move to operate passenger planes as freighters appears to be limited to short routes for now as cargo demand for longer distances won’t generate profit for most airlines. Still, as more carriers in Europe and the U.S. cut services and oil prices remain low, using passenger planes on longer routes could make economic sense for carriers. Fuel is one of their biggest costs.

“As more flights are cut on long-haul routes and oil prices stay where they are now, airlines could also consider using passenger planes for cargo to Europe,” Um at Shinyoung said. “While people put off any travel plans due to the coronavirus, that doesn’t mean they will stop buying. Global trade will still go on.”

— With assistance by Richard Weiss, and Siddharth Vikram Philip

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American Airlines to operate 1st cargo-only flight in 36 years due to coronavirus

After drastic cutbacks to both its international and domestic service, American Airlines is transitioning to cargo-only flights.

This week, the carrier announced it would be transporting medical supplies, mail, electronics and more as part of its first cargo-only flights in 36 years, utilizing a passenger aircraft grounded due to coronavirus cutbacks.

After drastic cutbacks to both its international and domestic service, American Airlines is transitioning to cargo-only flights.

This week, the carrier announced it would be transporting medical supplies, mail, electronics and more as part of its first cargo-only flights in 36 years, utilizing a passenger aircraft grounded due to coronavirus cutbacks.

“We have a critical role to play in keeping essential goods moving during this unprecedented time, and we are proud to do our part and find ways to continue to serve our customers and our communities,” said Rick Elieson, the president of cargo, and the vice president of international operations at American Airlines, in a press release shared Thursday.

“Challenging times call for creative solutions, and a team of people across the airline has been working nonstop to arrange cargo-only flight options for our customers.”

American’s first cargo-only flight since 1984 departs Friday from Dallas-Fort Worth International Airport (DFW), and will land on Saturday, at Frankfurt Airport (FRA) in Germany. After returning, the plane — a Boeing 777-300, with a capacity for 100,000 pounds of cargo — will make one more roundtrip flight to FRA.

All four scheduled flights are “are expected to be booked to capacity and transport medical supplies, mail for active U.S. military, telecommunications equipment and electronics that will support people working from home, and e-commerce packages,” according to American Airlines.

Flights will be operated by only necessary crew members, the airline added.

American Airlines’ Thursday announcement comes amid a time of uncertainty for the airline industry, with service slashed and demand for travel reportedly worse than it was post 9/11. Earlier this week, President Trump had expressed his desire to make the airline industry “No. 1” in terms of priority for a bailout, when discussing a potential $50 billion coronavirus stimulus plan during a White House press briefing.

In the meantime, American Airlines is reiterating that air cargo can play an important role during tumultuous times.

“Our team members across the airline are ready and willing to do what it takes to make sure people have the things they need during these unprecedented times,” an employee with American Airlines at DFW said in a press release.

American Airlines will also continue to transport cargo domestically, via its passenger flights.

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Airline Loans Would Come With Route Restrictions Under GOP Bill

A Senate Republican proposal responding to the fast-spreading economic devastation from the Covid-19 outbreak includes $58 billion for loans to airlines that have seen traffic plummet, but comes with conditions that could ensure they continue providing service.

Passenger carriers would get $50 billion in loans and loan guarantees, while cargo haulers would be eligible for $8 billion.

The total package proposed by Senate leaders matched the request made on Monday by Airlines for America, the trade group for large carriers. However, the industry had sought half of the $58 billion as grants with the remainder in loans. The Senate proposal includes no provision for direct grants.

The legislation would also suspend for the rest of the year a variety of taxes and fees collected on tickets, fuel and cargo. Those taxes raise the bulk of about $16 billion a year that is set aside to pay for the aviation system.

The Secretary of Transportation would be authorized in the legislation to ensure that airlines continue to make flights that were scheduled as of March 1.

The legislation would also require companies seeking the loans to first agree to cap executive pay at 2019 levels through 2022 and cap so-called golden parachutes to no more than twice an executive’s total compensation last year.

These provisions would apply to executives who earned total pay of more $425,000 in the 2019 calendar year. The provision would not apply to unionized airline workers whose pay was determined by existing collective bargaining agreements.

The proposal permits the federal government to take an equity stake in companies that receive loan assistance, “contingent on the financial success of the eligible business.”

Any gains collected from stakes in airlines would be deposited into the Airport and Airway Trust Fund, which would lose billions of dollars as tax revenue is halted. Proceeds from other companies would go toward the Treasury Department.

— With assistance by Jordan Fabian

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Airlines suspend flights due to coronavirus outbreak

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(Reuters) – Airlines have been suspending flights or modifying service in response to the coronavirus outbreak.

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Below are details (in alphabetical order):

AIRLINES THAT HAVE CANCELLED ALL FLIGHTS TO MAINLAND CHINA

* American Airlines – Extends suspension of China and Hong Kong flights through April 24

* Air France – Said on Feb. 6 it would suspend flights to and from mainland China for much of March

* Air India – Suspends flights to Shanghai, Hong Kong until June 30

CORONAVIRUS HOARDING TO BOOST THESE FOOD COMPANIES

* Air Seoul – The South Korean budget carrier suspended China flights from Jan. 28 until further notice.

FILE – In this April 20, 2017 file photo, Emirates planes are parked at the Dubai International Airport in Dubai, United Arab Emirates. (AP Photo/Kamran Jebreili, File)

* Air Tanzania – Tanzania's state-owned carrier, which had planned to begin charter flights to China in February, postponed its maiden flights.

* Air Mauritius – Suspended all flights to China and Hong Kong

* Austrian Airlines – until end-February

* British Airways – Jan. 29-March 31

CHINA SEES DROP IN NEW CORONAVIRUS CASES AS OTHER COUNTRIES SCRAMBLE

* Delta Airlines – Feb. 2-April 30

* Egyptair suspended flights on Feb. 1, but on Feb. 20 said it would resume some flights to and from China starting next week.

* El Al Israel Airlines – Extended its suspension of flights to Hong Kong and Beijing until May 2.

* Iberia Airlines – The Spanish carrier extended its suspension of flights from Madrid to Shanghai, its only route, from Feb. 29 until the end of April.

* JejuAir Co Ltd – Korean airline to suspend all China routes starting March 1

Japan Air Lines flight attendants wear protective mask as they walk through in terminal 5 at O’Hare International Airport in Chicago, Sunday. (AP Photo/Nam Y. Huh)

* Kenya Airways – Jan. 31 until further notice.

* KLM – Said on March. 2 it would extend its ban on flights to Chengdu, Hangzhou and Xiamen in China to at least May 3, because of the coronavirus outbreak. The airline expects to resume flights to Beijing and Shanghai on March 29

* Lion Air – All of February.

* LOT – Extends flight suspension until March 28* Lufthansa extends China flight cancellations until April 24

* Oman and Saudia, Saudi Arabia's state airline, both suspended flights on Feb. 2 until further notice.

* Qatar Airways – Feb. 1 until further notice.

* Rwandair – Jan. 31 until further notice.

* Scoot, Singapore Airlines' low-cost carrier – Feb. 8 until further notice.

* United Airlines – Feb. 5-April 23. Service to Hong Kong suspended Feb. 8-April 23.

* Vietjet and Vietnam Airlines – Suspended flights to the mainland as well as Hong Kong and Macau Feb. 1-April 30, in line with its aviation authority's directive.

AIRLINES THAT HAVE CANCELLED SOME CHINA FLIGHTS/ROUTES OR MODIFIED SERVICE

* Air Canada – Extended the suspension of its flights to Beijing and Shanghai until March 27. It also suspended its Toronto to Hong Kong flights from March 1 to March 27, but its Vancouver to Hong Kong route remains active.

* Air China – Said it would cancel flights to Athens, Greece, from Feb. 17 to March 18 and adjust flights between China and the United States. On Feb. 28 it resumed flying to Frankfurt from Chengdu, following a 21-day suspension, state-run Xinhua news agency said.

* Air New Zealand – Suspended Auckland-Shanghai service Feb. 9-March 29. Reduced capacity on Shanghai route throughout April and Hong Kong route throughout April and May.

* ANA Holdings – Suspended routes including Shanghai and Hong Kong from Feb. 10 until further notice.

* Brussels Airlines – Lufthansa subsidiary said on Feb. 28 it would cut flights to northern Italy by 30% from March 2 to 14.

* Cathay Pacific Airways – Plans to cut a third of its capacity over the next two months, including 90% of flights to mainland China. It has encouraged its 27,000 employees to take three weeks of unpaid leave in a bid to preserve cash.

* China Southern Airlines recommenced flights on Feb. 25 to Nairobi from Guangzhou.

* Emirates and Etihad – The United Arab Emirates, a major international transit hub, suspended flights to and from China, except for Beijing.

* Abu Dhabi's Etihad Airways has suspended flights to Hong Kong until March 28, the airline said on Feb. 26, citing a drop in demand.

* The UAE suspended all flights to mainland China, except Beijing, on Feb. 5.

* Finnair – Cancelled all flights to mainland China and decreased the number of flights to Hong Kong until March 28.

* Hainan Airlines – Suspended flights between Budapest, Hungary, and Chongqing Feb. 7-March 27.

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* Kenya's High Court ordered flights from China to be temporarily suspended, following a petition.

* Korean Air Lines Co. – The national flag carrier suspended eight routes to China and reduced services on nine Chinese routes between Feb. 7 and Feb. 22.

* Philippine Airlines – Cut the number of flights between Manila and China by over half.

* Qantas Airways – Suspended direct flights to China from Feb. 1. The Australian national carrier halted flights from Sydney to Beijing and Sydney to Shanghai between Feb. 9-March 29.

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* Royal Air Maroc – The Moroccan airline suspended direct flights to China Jan. 31-Feb. 29. On Jan. 16, it had launched a direct air route with three flights weekly between its Casablanca hub and Beijing.

* Russia – All Russian airlines, with the exception of national airline Aeroflot, stopped flying to China from Jan. 31. Small airline Ikar will also continue flights between Moscow and China. All planes arriving from China will be sent to a separate terminal in the Moscow Sheremetyevo airport. Aeroflot reduced the frequency of flights to Beijing, Shanghai and Guangzhou until Feb. 29.

* Vistara Airlines makes temporary reduction in flights to and from Bangkok and Singapore.

* Nordic airline SAS – Extended its suspension of flights to Shanghai and Beijing until March 29.

* Singapore Airlines – Suspended or cut capacity on flights to Beijing, Shanghai, Guangzhou, Shenzhen, Chengdu, Xiamen and Chongqing, some of which are flown by regional arm SilkAir.

* UPS – Cancelled 22 flights to China because of the virus and normal manufacturing closures due to the Lunar New Year holiday.

* Virgin Atlantic – Extended its suspension of daily operations to Shanghai until March 28.

* Virgin Australia – Said it will withdraw from the Sydney-Hong Kong route from March 2 because it was "no longer a viable commercial route" due to growing concerns over the virus and civil unrest in Hong Kong.

AIRLINES THAT HAVE MODIFIED SERVICE ON OTHER ROUTES 

* Asiana Airlines has decided to halt all flights to Daegu until March 9, while Korean Air Lines will also suspend flights until March 28.

* Air Canada to allow travelers to rebook flights to parts of Italy at no charge. United Airlines adds South Korea to travel waiver list but is not canceling flights.

* Bahrain civil aviation authority suspends all its flights from Dubai and Sharjah airports for 48 hours.

* British Airways said it would cancel some flights to and from Italy, Singapore and South Korea, as a result of reduced demand.

* easyJet said on Feb. 28 it would cancel flights, particularly in and out of Italy and cut costs across its business.

* El Al Israel Airlines said it would suspend flights to Italy, including Milan and Rome from Feb. 28 to March 14, and to Bangkok from March 2-27. It will also delay launching a new route to Tokyo from March until April 4.

* Kazakhstan plans to suspend flights to Iran from March 1 and reduce the number of South Korea flights

* Kuwait's civil aviation authority halts all its flights to and from South Korea, Thailand, and Italy. Kuwait had earlier suspended all its flights to and from Iraq.

* Lebanon halted flights for non-residents from countries including China, Iran, Italy and South Korea, the transport ministry said on Feb. 28. The ban excludes Lebanese citizens and foreign residents of the country.

* Lufthansa to cut number of short- and medium-haul flights in response to the accelerated spread of the coronavirus, adding it will suspend flights to Tehran until April 30

* Mongolia's National Emergency Commission said on Feb. 24 it had halted all flights from South Korea and would block entry through its borders until March 2. Mongolia had previously suspended all entries from China.

* Oman's civil aviation authority halted all flights between the sultanate and Iran.

* Royal Jordanian Airlines has suspended flights between Amman and Rome until further notice starting from Feb. 26.

* Russia's Ministry of Transport said on Feb. 27 it would suspend some flights to and from Iran, except those operated by its national carrier Aeroflot and Iranian airline Mahan Air.

* Tajikistan has suspended all flights to and from Iran until the virus situation there stabilizes, the Civil Aviation Agency said on Feb. 24.

* Tunisia may suspend some flights to Italy.

* Turkish Airlines extended a cancellation of flights to Iranian cities, with the exception to flights to Tehran, until March 10.

* Turkish commercial flights between Turkey and Iran are suspended until further notice. ''The Iranian carriers will fly empty to Turkey and be permitted to carry passengers destined for Iran. Turkish passengers will not be transported on these flights," Turkey's Civil Aviation Authority announced on its Twitter account.

* United Airlines – Sharply cutting flights to Japan and South Korea as travelers have slashed ticket purchases for those destinations.

* Vietnam's Bamboo Airways suspends flights between Da Nang and Nha Trang to Seoul's Incheon International Airport, starting Feb. 26

* Wizz Air said it would decrease the frequency of its Romania, Poland, Italy and Israel routes, cutting two-thirds of all flights on affected routes over three weeks between March 11 and April 2.

(Compiled by Jagoda Darlak, Tommy Lund, Amy Caren Daniel and
Shailesh Kuber)

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U.S. travel agency ticketing down 9.4% on the week, as coronavirus fears spark cancellations

U.S. travel agency ticketing measured by dollars transacted fell 9.4% this week from the year-earlier period, Vertical Research Partners said Friday, amid growing concerns about the coronavirus outbreak that started late last year in Wuhan, China. As the number of cases of the virus, called COVID-19 grows and spreads around the world, companies and individuals are cancelling trips with the Pacific region faring worst. The weekly decline represents a 400 basis point acceleration in the rate of decline from a week ago. On a rolling four-week basis, travel agency ticketing is 4.4% lower than a year ago, also equal to a 400 basis points decline. ago. Meanwhile, trip cancellations at U.S. travel agencies this week were ~21% higher y/y, which isn’t as bad as the 30-40% y/y increases we have seen in the prior few weeks," Vertical analyst Darryl Genovesi wrote in a note. In China, cancellations are higher than ticket sales, said the note, while Japan, Korea and South East Asia are showing declines of 60% to 75%, although Australia and the South Pacific are flat. The Atlantic region is weak with gross ticketing down about 4% and net ticketing down about 8%, despite a 10% capacity growth trend in the region. "Ticketing to the Nordics, Ireland, France and Benelux appear to have seen the biggest fall-off this week, followed by Spain, Portugal, Eastern, Southeastern and Central Europe including Germany," said the note. "Latin America ticketing is in much better shape than Europe or Asia, but also saw another step down this week with ticketing now tracking ~3% lower y/y compared with the 1-2% decline that we were tracking a week ago." The NYSE Arca Airline index XAL, -2.69% has fallen 20% on the week, while the S&P 500 SPX, -3.48% has fallen 11%.

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Boeing Dangles Funds for Max Simulator Sessions Ahead of Return

Boeing Co. is in talks with prominent customers about funding simulator training on the 737 Max once it’s cleared to fly again, in a bid to mollify airlines frustrated by a global grounding approaching a year in length.

The planemaker has told India’s SpiceJet Ltd. that it will cover the cost of putting pilots through sessions on the machines, which sell for up to $20 million, while FlyDubai and Ryanair Holdings Plc are in talks on the matter, according to people familiar with the discussions. The carriers are among the top Max buyers with almost 600 orders in total.

Negotiations are being conducted on an airline-by-airline basis, Chaz Bickers, a Boeing spokesman, said in response to questions from Bloomberg. The talks include provision of services such as training to offset costs from the Max’s idling, he said.

Boeing has repeatedly missed targets for re-certifying the Max, grounded since March after two fatal crashes. The company has set aside $8.2 billion to cover compensation to carriers forced to reschedule thousands of flights and shelve growth plans. The figure was increased by $2.6 billion after the Chicago-based planemaker last month accepted that Max pilots would benefit from simulator training, and the Federal Aviation Administration is expected to make it mandatory for the jet’s return.

The Allied Pilots Association, which represents American Airlines crew including 4,200 who fly 737s, said funding for Max simulators would be welcome and that it can make the difference between an in-flight situation being recoverable or not.

“Muscle memory doesn’t happen by reading manuals or experiencing creative computer-based training modules,” spokesman Dennis Tajer said. “Obviously Boeing has come to the conclusion it’s not satisfactory for this. We agree.”

Planning to line up flight simulators for Max operators began last year, before Boeing officially reversed course to support additional training for pilots, Dave Calhoun, the company’s new chief executive officer, told reporters last month.

“We are working closely with customers to support their training needs as we work towards safely returning the 737 Max to service,” spokesman Bickers said.

SpiceJet Chairman Ajay Singh said Feb. 12 that Boeing is paying for a simulator to be set up in India. FlyDubai, which has already received one machine, is in talks with the planemaker about compensation terms, a person with knowledge of the negotiations said. Both are among clients that have threatened to defect to Airbus SE.

Ryanair is also in discussions with Boeing on funding for simulator sessions, one person said. Europe’s biggest discount airline already has two machines at London Stansted but may need one at its Dublin base.

Good Position

FlyDubai said it’s waiting on the FAA and its own regulatory authority to issue directives before commenting on simulator and training requirements. Ryanair said it’s in-house machines mean it will be in a good position to train its pilots once the Max is certified as fit to fly.

There are currently 36 Max simulators worldwide, including eight at Boeing training centers in Miami, London, Shanghai, Singapore and Istanbul. Two more should be operative by mid-2020, while customers around the globe are also purchasing and installing additional machines, Bickers said. While that compares with 80 simulators for the earlier 737 NG, it should be sufficient for every Max user to train and retrain pilots, marketing executive Randy Tinseth said Feb. 12.

Boeing, which now expects the Max to return mid-year, revised its view in favor of the model’s pilots undergoing simulator training after inviting aviators to test redesigned flight-control software.

Hot Property

Some airlines with a machine may be asked to make it available to others, though the devices will be a hot commodity at carriers like Southwest Airlines Co., American Airlines Group Inc. and United Airlines Holdings Inc., which need to put thousands of pilots through their paces.

American Air said it will need full use of its one Max simulator, given the pilots it needs to train. The company expects to be reimbursed by Boeing for all financial impacts of the grounding, including simulator sessions, spokesman Ross Feinstein said. American reached a confidential settlement for Max costs in 2019, when the plane’s absence shaved $540 million from pretax income.

Southwest, the largest Max operator, is preparing for several scenarios on pilot training as it waits on the FAA decision, according to spokesman Chris Mainz, who declined to comment on any talks with Boeing regarding compensation. The carrier will have nine simulators by April and aims to have all of them operational by July 1.

CAE Inc., the biggest simulator maker, said in November it had begun to make machines for the 737 without orders in hand, believing more instruction would be needed. Training is likely to include the Max’s maneuvering characteristics augmentation system, known as MCAS and blamed for bringing down the crashed jets after it intervened in response to faulty sensor readings.

— With assistance by Anurag Kotoky, and Julie Johnsson

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The S&P 500 has to hold this level or risk a 10% correction, warns strategist

Those pinning hopes on a rebound for stocks after Monday’s brutal equity selloff are in for a nervous day.

Stocks are attempting to rally after a choppy morning and New York traders are waking up to find coronavirus headlines are no less worrying on Tuesday. It may just be too soon for some investors to take up Monday’s advice from Berkshire Hathaway’s Warren Buffett, who suggested they could use a selloff to buy a stock they like for even cheaper.

In short, it takes a “brave soul to be buying these markets,” notes Chris Weston, head of research at Australian forex broker Pepperstone, who provides our call of the day.

“When countries are closing borders, the threat of an outbreak is becoming more pronounced in Europe and the Middle East and supply chains are just going to be more disrupted, how do we model risk when we can’t even model economics with any confidence?” Weston asks.

He says any investors tempted to buy stocks right now should keep an eye on this important level on the S&P SPX, -0.59%.

“If we see price head through 3200, then it will lead to even higher volatility and risk of a 10% drawdown. The bulls need to defend this level or its good night Vienna,” said Weston, who provides the following chart of the S&P 500, which closed down 3.3% to 3,225.89 on Monday.

Now for some advice from a trader who has recently tried to profit from a couple of coronavirus-related drops for equities.

Jani Ziedins, the trader behind the Cracked Market blog, says he dipped a toe in after the market tumbled on a Friday three weeks ago on the first wave of coronavirus headlines. “That trade worked out brilliantly as the market rallied nearly 200-points over the next two weeks and I was fortunate enough to lock in profits near the highs,” he writes.

But he says trying that same move last Friday hasn’t really worked out too well, given Monday’s big rout. However, he bought small, so ended up with a smallish pile of losses. “This is a buyable dip, the only question is when,” says Ziedins.

The Dow DJIA, -0.50% , S&P SPX, -0.59%  and Nasdaq COMP, -0.55%  are moving higher, but European stocks SXXP, -1.17%stayed in the red. Trading was mixed for Asian markets, with the Nikkei NIK, -3.34% losing 3.3% and the KOSPI 180721, +1.18% up 1.2%. Gold GC00, -1.15% is off more than 1% after Monday’s huge gains.

Here’s a chart that UBS compiled from last Friday. It shows which are the top 10 stocks that investors are most — like Visa V, -1.46% and Microsoft MSFT, +0.61% — and least exposed to — Apple:

As the number of coronavirus cases continue to grow across the globe, the Trump administration has asked for $2.5 billion in emergency funds to fight it. United AirlinesUAL, -2.89% and Mastercard MA, -3.12% have become the latest companies to warn about fallout from the virus. And UBS analysts warned of a hit to Apple’s AAPL, -0.44% smartphone sales in China.

Elsewhere, shares in Moderna MRNA, +12.69% are surging on news that the drugmaker’s experimental vaccine will start human trials in April.

Home Depot shares HD, +1.47% are climbing after upbeat results and a dividend hike.

Technology company HP HPQ, +6.02% says it’s ready to explore a merger with rival Xerox XRX, +3.44%, but some are hearing mixed messages.

Online travel site Expedia EXPE, -1.02% is reportedly planning to cut 3,000 jobs.

A pair of home-price indexes, followed by consumer confidence and a speech by the Federal Reserve vice-chairman Richard Clarida are all ahead.

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Here are the worst-performing stocks Monday as investors panic over the coronavirus

A heightened fear of the coronavirus spread over the weekend amid reports of scores of new infections in Italy, pummeling U.S. stock indexes in early trading Monday.

The Dow Jones Industrial Average DJIA, -3.23% fell as much as 997 points (or 3.4%) during morning trading. The S&P 500 SPX, -3.15% was down as much as 3.2% and the Nasdaq Composite COMP, -3.62% plunged as much as 4.4%.

Travel-related and technology stocks were hit particularly hard.

The world’s integrated supply chains have investors worried about potential disruptions among companies based far away from the areas that have been hardest-hit by the virus.

Many vulnerable people have lived in what Chris Dillon, T. Rowe Price’s investment specialist for global capital markets, calls “closed-habitat systems.” These aren’t limited to cruise lines, but include factories with dormitory housing for workers, such as Foxconn Technology 2354, -0.66%FXCOF, +0.00%, which handles the final assembly of Apple’s AAPL, -4.15% iPhones in China. In an interview Feb. 21, Dillon said: “Foxconn has told its people not to go back” to some of the dormitories, which could hinder a return to normal assembly schedules.

Dillon said that while he and colleagues were “not understating the human tragedy,” it was important for investors to have perspective about the scale of the coronavirus. “Last year, 42 million people contracted the flu and 61,000 died” in the U.S. alone, he said.

Remember Warren Buffett’s sage advice: Don’t buy or sell on the headlines.

In the first few minutes of trading Monday, all but one of the 30 components of the Dow Jones Industrial Average were down.

Company Ticker Price change – Feb. 24, 2020 Price change – 2020 Decline from 52-week high Price change – 2019
Microsoft Corp. MSFT, -3.61% -5.5% 7.1% -11.5% 55.3%
UnitedHealth Group Inc. UNH, -7.38% -5.2% -2.8% -6.9% 18.0%
Apple Inc. AAPL, -4.15% -5.0% 1.3% -9.3% 86.2%
Visa Inc. Class A V, -3.81% -4.4% 6.3% -6.8% 42.4%
Walt Disney Co. DIS, -5.15% -4.3% -8.1% -13.3% 31.9%
American Express Co. AXP, -5.25% -3.9% 4.1% -6.2% 30.6%
Boeing Co. BA, -3.51% -3.8% -2.4% -28.7% 1.0%
Nike Inc. Class B NKE, -4.03% -3.7% -4.7% -8.6% 36.6%
Dow Inc. DOW, -4.59% -3.5% -14.8% -23.0% #N/A
Intel Corp. INTC, -3.23% -3.4% 3.9% -10.3% 27.5%
Goldman Sachs Group Inc. GS, -2.48% -2.9% -2.6% -10.6% 37.6%
Caterpillar Inc. CAT, -3.20% -2.9% -9.8% -11.5% 16.2%
J.P. Morgan Chase & Co. JPM, -2.72% -2.9% -5.4% -6.5% 42.8%
Exxon Mobil Corp. XOM, -3.97% -2.7% -17.6% -31.1% 2.3%
United Technologies Corp. UTX, -3.22% -2.5% -1.4% -6.8% 40.6%
Cisco Systems Inc. CSCO, -3.59% -2.4% -5.8% -22.5% 10.7%
3M Co. MMM, -2.26% -2.2% -13.0% -30.2% -7.4%
International Business Machines Corp. IBM, -1.92% -2.2% 9.4% -7.6% 17.9%
Chevron Corp. CVX, -3.77% -2.1% -11.5% -16.2% 10.8%
Home Depot Inc. HD, -1.97% -1.7% 10.5% -2.5% 27.1%
McDonald’s Corp. MCD, -0.92% -1.4% 7.7% -4.1% 11.3%
Pfizer Inc. PFE, -2.65% -1.4% -10.1% -20.9% -10.2%
Coca-Cola Co. KO, -1.73% -0.9% 7.7% -0.9% 16.9%
Travelers Companies Inc. TRV, -0.79% -0.8% -2.1% -13.5% 14.4%
Johnson & Johnson JNJ, -1.91% -0.7% 2.0% -3.7% 13.0%
Procter & Gamble Co. PG, -2.02% -0.7% 0.7% -1.8% 35.9%
Walgreens Boots Alliance Inc. WBA, -3.91% -0.7% -13.3% -28.9% -13.7%
Merck & Co. Inc. MRK, -1.07% -0.5% -9.9% -11.5% 19.0%
Walmart Inc. WMT, -1.86% -0.4% -0.6% -5.8% 27.6%
Verizon Communications Inc. VZ, +0.23% 0.4% -4.8% -6.1% 9.2%
Source: FactSet

You can click on the tickers for more about each company.

Among the S&P 500, 470 stocks were down. Here are the 10 worst performers:

Company Ticker Price change – Feb. 24, 2020 Price change – 2020 Decline from 52-week high Price change – 2019
American Airlines Group Inc. AAL, -9.81% -9.1% -11.8% -31.2% -10.7%
Advanced Micro Devices Inc. AMD, -7.53% -8.6% 6.2% -17.8% 148.4%
Tapestry Inc. TPR, -8.47% -7.8% -4.3% -29.4% -20.1%
IPG Photonics Corp. IPGP, -2.13% -7.6% -13.9% -31.5% 27.9%
Ralph Lauren Corp. Class A RL, -6.32% -6.9% -6.7% -18.2% 13.3%
Micron Technology Inc. MU, -3.93% -6.8% -1.2% -13.2% 69.5%
Norwegian Cruise Line Holdings Ltd. NCLH, -9.38% -6.7% -24.9% -26.7% 37.8%
Capri Holdings Ltd. CPRI, -4.09% -6.7% -32.3% -48.4% 0.6%
Nvidia Corp. NVDA, -6.19% -6.6% 16.7% -13.2% 76.3%
Cimarex Energy Co. XEC, -7.74% -6.5% -24.3% -47.8% -14.9%
Source: FactSet

Here are the 10 components of the Nasdaq-100 Index NDX, -3.69% showing the greatest declines Monday:

Company Ticker Price change – Feb. 24, 2020 Price change – 2020 Decline from 52-week high Price change – 2019
American Airlines Group Inc. AAL, -9.81% -9.1% -11.8% -31.2% -10.7%
Advanced Micro Devices Inc. AMD, -7.53% -8.6% 6.2% -17.8% 148.4%
Micron Technology Inc. MU, -3.93% -6.8% -1.2% -13.2% 69.5%
Nvidia Corp. NVDA, -6.19% -6.6% 16.7% -13.2% 76.3%
Tesla Inc. TSLA, -6.94% -6.6% 101.2% -13.1% 25.7%
Expedia Group Inc. EXPE, -7.18% -6.2% 4.1% -21.8% -4.0%
Booking Holdings Inc. BKNG, -6.64% -5.9% -11.7% -13.4% 19.2%
Lam Research Corp. LRCX, -4.27% -5.8% 2.1% -13.3% 114.7%
Lululemon Athletica Inc. LULU, -4.19% -5.5% 4.3% -9.2% 90.5%
Applied Materials Inc. AMAT, -4.67% -5.5% -0.5% -12.5% 86.4%
Source: FactSet

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Airlines warn of business slowdown from coronavirus outbreak

Some airlines say the coronavirus outbreak roiling China could cause their business to take a nosedive this year.

European carrier Air France-KLM warned Thursday that its earnings could drop by as much as 200 million euros, or $216 million, by April as the virus crisis slams the global air travel industry.

Australia’s Qantas airline similarly expects to slash as much as 150 million Australian dollars, or $100 million, from its earnings this year because of the carrier’s decision to cut its flight capacity to Asia by 16 percent until at least the end of May amid the outbreak.

“These past few months have been extraordinarily difficult for the tourism industry and we’ve tried to minimize the impact of our capacity reductions as much as possible,” Qantas chief executive Alan Joyce said.

American Airlines also expressed concerns about the potential financial impact of the virus in the annual report it filed with regulators Wednesday. The Texas-based carrier said its temporary suspension of flights to mainland China — the epicenter of the outbreak — and the possibility of a time of “significantly reduced” travel demand “has and will likely continue to result in significant lost revenue.”

Qantas and Air France-KLM have also halted flights to mainland China amid the coronavirus outbreak that has killed more than 2,100 people. Qantas’ latest service cuts will also affect trips to Hong Kong and Singapore, where Joyce said demand has weakened. Jetstar, Qantas’ secondary carrier, will also slash its services by 14 percent.

“We know demand into Asia will rebound. And we’ll be ready to ramp back up when it does,” Joyce said.

Big airlines including American, Delta and United moved to cut flights to China after the World Health Organization labeled the coronavirus outbreak a global health emergency. Officials in the US and other nations have also urged travelers to avoid trips to the country because of concerns about the virus.

Passengers wear surgical masks at an airplane access bridgeFlight attendants wearing mask at the arrival hall in the

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