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British Airways gets flighty and Starbucks smells the coffee over coronavirus

The business response to the coronavirus situation, which appears to be developing into a serious crisis, continues apace today. British Airways today announced that it was suspending all flights between the UK and Wuhan, the Chinese city where the virus originally broke out.

In a statement it said: “We have suspended all flights to and from mainland China with immediate effect following advice from the Foreign Office against all but essential travel.”

The UK government does not seem to be too alarmed by the virus at the moment, saying that there is no reason to panic, but it is the most significant decision taken by any major airline yet and one imagines the Foreign Office has all the large carriers on speed dial for situations like this.

The latest count is that the virus has infected 6,000 people and killed 132 in China, with a clutch more cases confirmed in Japan, the US, and worryingly for Europeans, Germany and France now too.

America’s United Airlines has also reduced its scheduled flights between three major US cities and China, but in its announcement to that effect, it said this was in response to a “significant decline in demand” – not the kind of altruistic, disease-preventing catalyst for action, but nonetheless probably a good thing.

Hundreds of British citizens are now being flown back, ostensibly at the behest of the UK government, but they will all be kept in quarantine for at least two weeks to help prevent any spread of the disease into the UK.

Other countries engaged in repatriation efforts for their citizens include Japan, Australia, the US, and a bunch of European Union member states too. As it turns out, disease prevention does not stop at long haul airlines.

The coffee chain Starbucks has closed half of its sites – 2,000 of them – to help protect its staff. China is the chain’s largest market apart from the United States, and it is likely to hit profits.

The chief executive euphemised that his company was “navigating” a “very dynamic situation”, and warned that while it had been expecting to upgrade its profit forecasts for the full-year accounts, it is now going to leave them as they are. It turns out not serving coffee to 100 million Chinese people can do damage to the old bottom line.

UK house price growth builds up to 14-month high

A key metric of economic strength and consumer confidence is house prices, and after a long period of dullness or even stagnation, growth is now at its highest in over a year. The average value nationally is 1.9% higher than a year ago, putting the price at just under £216,000. That’s according to Nationwide Building Society, which said the boost comes after 12 consecutive months of a sub-1% growth rate.

According to the Guardian, Nationwide’s chief economist Robert Gardner said: “Indicators of UK economic activity were fairly volatile for much of 2019 but the underlying pace of growth slowed through the year as a result of weaker global growth and an intensification of Brexit uncertainty. Recent data continues to paint a mixed picture.

Economic growth appeared to grind to a halt as 2019 drew to a close, though business surveys point to a pickup at the start of the new year.

“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years.”

It’s good news for those homeowners who had the guts and good fortune to be able to ride out the last few years, during which the sheer intensity of Brexit debate and wrangling depressed several major indicators in the UK economy.

Now that Boris Johnson has apparently banned ministers from using the word “Brexit”, and the thing is actually going to happen on Friday taking us into the implementation period, property owners may finally get to see some equity growth which they have almost certainly missed out on recently.

Apple achieves record profits

Not so long ago there was talk of Apple having reached its peak in terms of both innovation and creativity, and ability to keep generating more profit, especially when the main driver of its sales – the iPhone – was competing in a market suffering near saturation.

The story went that after 10 years of fierce competition in this space, virtually every consumer who could afford a smartphone now had a pretty decent one, probably their third or fourth. As such, the idea that they could be lured with a few more megapixels on the camera or a marginal increase of battery life was risible.

But here we are, and not only has Apple entered the trillion-dollar club along with Google, Amazon and Microsoft, but in the final three months of 2019, it generated $91.8 billion, $56 billion of which came from new iPhones. $22.3bn was profit.

But, since everything currently links back to coronavirus, chief exec Tim Cook has told investors his company is watching the situation in China very closely, not just because reduced Chinese demand for Apple products would hit profits, but also because the situation could affect large parts of the supply chain.

Apple’s devices are assembled in mammoth factories in several locations in the country, and any closure of those facilities due to the spread of the disease will create serious production tailbacks.

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