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SARS Affecting U.S. Business
Aired April 23, 2003 - 14:05 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: SARS has now been identified in 27 countries, and the World Health Organization is blaming air travel for spreading it around the globe. In addition, China's Wongdong (ph) Province and Hong Kong, China's Shanghai Province, Beijing, and Toronto have been added to its travel advisories. Major League Baseball recommends players in that city refuse to sign autographs and stay away from public transportation and crowds. And as you might have guessed, the epidemic is beginning to infect U.S. businesses.
CNN Financial News Correspondent Fred Katayama is going to fill us in on all of that -- Fred.
FRED KATAYAMA, CNN FINANCIAL CORRESPONDENT: Hi, Kyra. Well, should the SARS scare last a long time?
Consumers here could feel the impact since The United States buys so many goods from Asia. 90 percent of toys, half of electronics products, and nearly half of all shoes come from factories in Asia. Chipmakers' Novellus and Microchip technology have warned that SARS will hurt their earnings.
DAVID WYSS, "STANDARD & POOR": We are getting a reduction in tourism from Asia, which is a consideration. But the big problem is the follow-on, the fact that we're not going to get airline orders from Asian airlines. We're not going to be able, possibly, to get in parts, toys, clothing, shoes, the stuff that American companies have all been making over in Asia for awhile.
KATAYAMA: Many manufacturers and investment banks with operations in those affected areas are temporarily banning travel to those regions and using videoconferencing instead. Executives coming back from trips there are asked to stay home for ten days. Some companies are encouraging local executives to work from home.
The hardest hit industry -- airlines. Traffic fell 10.5 percent in the third week of April from the year before. Some people simply don't show up for their flights, so the airlines have slashed their flight schedules.
JPMorgan now expects the industry to lose more than $6 billion this year, raising its earlier estimate of $3.5 billion.
Travel agencies are negatively impacted. The head of the American Association of Travel Agents estimates that new bookings have fallen 20 to 30 percent to southeast Asia and by about half to China.
Disney said it hasn't felt the impact just yet, but it told securities regulators SARS could disrupt its theme park business -- especially Walt Disney World in Orlando.
Retailers say business could slow down if trade shows continue to become ghost towns, but so far they say they haven't been impacted since Asian plants continue to ship out products. They could get hurt if SARS forces plants or ports to shut down.
And China also happens to be the world's leading exporter of babies. One adoption agency in Maryland told me earlier three families that were supposed to pick up their babies next month have postponed their travel -- a step which the Centers for Disease Control is also recommending to those parents. That's because all adoptions have to be processed at the consulate in Guang Jo, which happens to be Ground Zero for the epidemic -- Kyra.
PHILLIPS: Well, Fred, taking all this into account, what about portfolios -- buying and selling stock, maybe in airlines? What are you hearing? What has been advised?
KATAYAMA: Well, airline stock -- you mean for investors. Well, airline stocks have already been hit hard, slammed hard because of the war. And now we are seeing SARS on top of it. Plus, we've seen several companies go into Chapter 11. The parent of United Airlines, UAL, as well as USAir and now they're talking about American Airlines, which is now, once again, on the brink of bankruptcy. So a lot of people who follow the airline industry, analysts say, unless for the faint of heart, it's probably not the best time to invest in those stocks even though they are trading at very low, cheap levels.
PHILLIPS: All right, Fred Katayama. Thanks so much.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired April 23, 2003 - 14:05 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: SARS has now been identified in 27 countries, and the World Health Organization is blaming air travel for spreading it around the globe. In addition, China's Wongdong (ph) Province and Hong Kong, China's Shanghai Province, Beijing, and Toronto have been added to its travel advisories. Major League Baseball recommends players in that city refuse to sign autographs and stay away from public transportation and crowds. And as you might have guessed, the epidemic is beginning to infect U.S. businesses.
CNN Financial News Correspondent Fred Katayama is going to fill us in on all of that -- Fred.
FRED KATAYAMA, CNN FINANCIAL CORRESPONDENT: Hi, Kyra. Well, should the SARS scare last a long time?
Consumers here could feel the impact since The United States buys so many goods from Asia. 90 percent of toys, half of electronics products, and nearly half of all shoes come from factories in Asia. Chipmakers' Novellus and Microchip technology have warned that SARS will hurt their earnings.
DAVID WYSS, "STANDARD & POOR": We are getting a reduction in tourism from Asia, which is a consideration. But the big problem is the follow-on, the fact that we're not going to get airline orders from Asian airlines. We're not going to be able, possibly, to get in parts, toys, clothing, shoes, the stuff that American companies have all been making over in Asia for awhile.
KATAYAMA: Many manufacturers and investment banks with operations in those affected areas are temporarily banning travel to those regions and using videoconferencing instead. Executives coming back from trips there are asked to stay home for ten days. Some companies are encouraging local executives to work from home.
The hardest hit industry -- airlines. Traffic fell 10.5 percent in the third week of April from the year before. Some people simply don't show up for their flights, so the airlines have slashed their flight schedules.
JPMorgan now expects the industry to lose more than $6 billion this year, raising its earlier estimate of $3.5 billion.
Travel agencies are negatively impacted. The head of the American Association of Travel Agents estimates that new bookings have fallen 20 to 30 percent to southeast Asia and by about half to China.
Disney said it hasn't felt the impact just yet, but it told securities regulators SARS could disrupt its theme park business -- especially Walt Disney World in Orlando.
Retailers say business could slow down if trade shows continue to become ghost towns, but so far they say they haven't been impacted since Asian plants continue to ship out products. They could get hurt if SARS forces plants or ports to shut down.
And China also happens to be the world's leading exporter of babies. One adoption agency in Maryland told me earlier three families that were supposed to pick up their babies next month have postponed their travel -- a step which the Centers for Disease Control is also recommending to those parents. That's because all adoptions have to be processed at the consulate in Guang Jo, which happens to be Ground Zero for the epidemic -- Kyra.
PHILLIPS: Well, Fred, taking all this into account, what about portfolios -- buying and selling stock, maybe in airlines? What are you hearing? What has been advised?
KATAYAMA: Well, airline stock -- you mean for investors. Well, airline stocks have already been hit hard, slammed hard because of the war. And now we are seeing SARS on top of it. Plus, we've seen several companies go into Chapter 11. The parent of United Airlines, UAL, as well as USAir and now they're talking about American Airlines, which is now, once again, on the brink of bankruptcy. So a lot of people who follow the airline industry, analysts say, unless for the faint of heart, it's probably not the best time to invest in those stocks even though they are trading at very low, cheap levels.
PHILLIPS: All right, Fred Katayama. Thanks so much.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
