Businesses Facing Huge Losses As China Fights Virus; Cathay Pacific Asks Employees To Take Unpaid Leave
GORANI: I want to return now to the other major international story we're following, the global fight against coronavirus. While the lives lost and people sick are the major headline in the virus story, it's also having a significant impact on the lives of ordinary people, because it's having a significant impact on the global economy. The parent company behind luxury brands like Versace and Jimmy Choo, says it's closed about two-thirds of its stores in China and obviously employees who work in those stores are affected. The ones that remain open are barely doing any business at all. It expects to lose more than $100 million of Chinese business this quarter. Disney says its parks in Shanghai and Hong Kong could remain closed for at least two months. Imagine all the employees there and the families they support. The shutdowns that could cost the company $175 million will also impact ordinary people in that part of the world. And Hong Kong airline, Cathay Pacific, is asking its 27,000 employees to take three weeks of unpaid leave in coming months. Cathay has cancelled 90 percent of its flights to Mainland China. Let's get more on how this is all impacting the global economy. Our business correspondent, Clare Sebastian, is there. So talk to us -- with us in New York. Talk to us about these brands. Because China is really a big driving force in terms of these luxury brands, profits, their revenue. There's this new emerging middleclass there. There's Chinese people with money now to spend on these big luxury brands. And if that side of the business is suffering, it's really going to hurt them a lot.</s>CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Hala. Many of these businesses have actually been expanding in China only now to see this stoppage. Capri Holdings, which as you say, is the owner of Versace, Jimmy Choo, Michael Kors, all very popular brands in China, they say that 150 of their 225 stores in the country are still closed. And as you mentioned, seeing much reduced traffic at the other ones. Those 225, by the way, that's about 17 percent of their global store base. So this is not an insignificant part of their business. And they are saying that revenue for the full year and for this quarter will be lower. Store closures, Hala, also affecting brands like Nike, like Adidas, also heavily dependent on China. And there's a sort of double whammy for some of these companies. Nike, for example, produces about a quarter of what they sell in China. So we are seeing supply chain impacts as well. That's impacting companies like Airbus which has a final assembly plant in Tianjin, which is also closed. Hyundai, the South Korean carmaker is suspending some of its production lines because of disruption to supply of parts from China. So this is rippling through a whole variety of different businesses and big multinational companies having to make difficult announcements to the market.</s>GORANI: And, Clare, Cathay Pacific asking its employees to take unpaid leave. How is that going to work?</s>SEBASTIAN: Yes. That's sort of the first of its kind of announcement that we've heard where personnel are being directly impacted, Hala. They are being asked, all of the 27,000 employees of Cathay Pacific have been asked to take three weeks of unpaid leave between March and June of this year. So they won't all be taking it at the same time. Cathay says it has to try to preserve cash as this crisis unfolds. The last time they did this was in 2009 after the global financial crisis. They also did it during the SARS outbreak in 2003. And don't forget, Cathay is already struggling and it's already decided to cut capacity this year after they were impacted to quite some degree by the pro-democracy protest in Hong Kong last year. So a very difficult time for that company.</s>GORANI: All right. Difficult for the employees. I guess the only very small silver lining is they're not layoffs. This is unpaid leave. So hopefully they'll be able to get back to work and make a living very soon. Thanks very much, Clare Sebastian. Still ahead, a first lady accused of murder. We have the story that captivated Lesotho. We'll be right back.