Effects of COVID-19 intensifying across industries

Many industries are facing a challenging time due to the COVID-19 crisis, including travel and tourism, automotive, retail, technology and oil & gas. One of the worst affected is the travel and tourism industry. According to the World Travel and Tourism Council, the travel industry could see a US$2.1 trillion loss due to the virus. GlobalData’s filings database has found that Air France-KLM, Mariott, Hyatt, Delta Airlines and United Airlines are some of the major travel companies affected by the outbreak. 

Aurojyoti Bose, Lead Analyst at GlobalData, says: “The dire situation has seen US travel companies spending considerable chunks of their profit on share buybacks without stabilizing cash reserves, and now need the government to bail them out.”

The International Air Transport Association (IATA) suggests that Delta and United Airlines have only two months’ worth of cash at hand to cover expenses. Southwest Airlines, a company that was majorly affected by the 737 MAX grounding, is in a better financial position than its peers while having US$4bn operating cash flow and a low debt of US$654m in 2019.

In the case of Air France-KLM, there was news of a possible breakup and, to clear up any uncertainty, the company suggested that it is working on financial stability rather than breakup scenarios amid the outbreak. The company has also cut capacity by as high as 90%. Airline companies have frozen hiring and drastically reduced flight schedules to mitigate the rising costs of running empty flights due to the pandemic.


The automotive and oil & gas industry have also faced the brunt of the outbreak. The auto industry was already having to deal with the effects of the trade war, and the outbreak caused several companies, including General Motors, Ford, BMW, Volkswagen and Toyota, to shut up shop. To negate the effects, automakers decided to collaborate with mask and ventilator manufacturers to help with the rapidly rising demand. One example is Ford, who collaborated with 3M to manufacture respirator masks. 

A slippage in travel and auto demand due to lockdowns and quarantines has affected oil prices and left oil & gas companies unprepared for the crisis. The Saudi-Russia price war also threatens smaller companies with bankruptcy.

In the retail sector, Nike, Macy’s, Walmart and Kohl’s were among the top companies affected by the coronavirus. The surging demand for essential goods is causing companies such as Walmart and Target to struggle to keep up inventories.

Bose adds: “In the US, closures of several stores caused a historical decline in the retail industry. Rise in the sale of essential goods has not offset major declines in clothing and footwear sales.”

According to the US Census Bureau, the US retail industry declined by 9% in March 2020 when compared to the previous year. This is also the biggest monthly drop recorded even compared to the 2008 recession. Several clothing and footwear companies, including Macy’s and Nike, were expected to resume store operations by late March 2020, but the spread of the pandemic forced the industry to reconsider openings. To reduce the mounting pressure due to the closure of stores, retail companies are focused on driving digital sales.

In the technology sector, electronics and parts manufacturers such as Jabil and Foxxconn have seen volatile situations due to supply chain disruptions. However, with Chinese factories slowly returning to normal operations, the uncertainty seems to be clearing.

Companies such as Apple and HP have commented on the stabilization of their supply chains, and employee layoffs in the tech sector have only been limited to smaller companies, so far.

Telecom companies have been relatively unscathed from the virus’s impact, due to a rapid rise in network traffic. However, the virus has dented the 5G expansion. Verizon and AT&T have commented on the network traffic doubling. The surging demand is forcing telecom companies to seek emergency capacity expansions.

Bose concludes: “The pandemic has affected most industries in intricate ways. Yet, in the technology sector, companies could emerge as winners. Spikes in demand for cloud computing due to the growing need for reduction in computing costs during a rise in work from home orders is beneficial for companies such as Google, Amazon and Microsoft. While a boom in video conferencing has increased the use of Zoom, Microsoft Teams, Slack and Facebook’s apps. Big Tech companies and smaller startups with innovative solutions are primed to gain traction amid the outbreak.”

More Media