Good morning, Quartz readers!
Airlines were finally flying high. Lower fuel costs, robust balance sheets, and a roaring economy have recently propelled profits in an industry more accustomed to bankruptcies.
But the coronavirus threatens to bring that crashing down.
On March 5, the International Air Transport Association (IATA) doubled its estimated impact from Covid-19 to at least $63 billion—$113 billion should the disease continue spreading. Airlines flying in Asia, home to the outbreak’s epicenter, have already cut available seat miles by 23% this month, according to consulting firm Oliver Wyman. As the outbreak intensifies, other regions are making similar cuts, with only Africa and Latin America (where minimal cases have been reported) so far unscathed.
Airlines have bounced back before, of course, including after the 9/11 attacks, 2008 financial crisis, and 2009 swine flu (H1N1) epidemic. “After past disease outbreaks, demand has returned to normal,” notes Khalid Usman of Oliver Wyman, suggesting he’s not planning for a worst-case scenario.
Yet a Darwinian winnowing of the weak has already begun. Airline share prices have fallen nearly 25% since the outbreak started, far more than during the same period of the 2003 SARS epidemic, reports the IATA. One carrier filed for bankruptcy this week: the troubled British budget airline Flybe. Others are looking shaky.
It’s shaping up to be a battle of the balance sheets. Who can weather the storm depends on how fast the outbreak (or possible pandemic) lasts, and how governments shield their industries in a global economy powered by the movement of people and parts. So far, governments have revealed the limits of their powers: The US decision to cut interest rates by 50 basis points earlier this week did little to stop markets tumbling the next day.
The Trump administration is considering extending “timely and targeted” assistance to industries affected by the outbreak, White House economic adviser Larry Kudlow confirmed yesterday. But the former chief economist of Bear Stearns, a now-defunct Wall Street investment bank, downplayed the risk of coronavirus to the US economy, arguing it was mostly “contained.” That’s an assessment not widely shared by public health professionals—or economists. —Michael J. Coren
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FIVE THINGS ON QUARTZ WE ESPECIALLY LIKED
Mexico’s state oil firm is illegally destroying mangroves. To make way for an $8 billion oil refinery in the state of Tabasco, Pemex is removing shallow-water forest important for wildlife and flood prevention. In an investigation that’s provoked soul-searching among the country’s regulators, Max de Haldevang and Daniel Wolfe focus on the intersection of business and politics, the corruption that often results, and the effect it can all have on the environment. —Pete Gelling, geopolitics editor
The “love drug” on trial. In the US, psychedelic therapy involving the use of MDMA, known colloquially as ecstasy, is edging closer to FDA approval. But treatments that lower inhibition and increase sexual arousal introduce dangers. Olivia Goldhill exposes disturbing incidents of sexual misconduct in the field, and uncovers systemic failings that mean psychedelic therapists are not held to the same standards as their mainstream counterparts. —Annalisa Merelli, geopolitics reporter
A market mystery. Why do US brokers with checkered pasts keep getting hired? And why are the bad apples so concentrated at just a few firms? Something is distorting the market. Dan Kopf and Gwynn Guilford trace a big piece of the problem to the way the industry’s private regulator presents data. It made me think twice about the value and bias in all kinds of disclosures, and about who’s protecting whom in the brokerage industry. —Heather Landy, executive editor
Learning to love the Mouse. Oliver Staley chronicles his journey from reluctance, to submission, to a full embrace of Disney World, or as he calls it the “bubble of corporate benevolence.” Despite his skepticism, he approaches his trip with genuine curiosity and awe. He finds lots to love about it, and pokes fun at the absurdities without being mean. As a parent of a five-year-old, Disney World is an unavoidable part of my future, and this piece gave me great comfort in that. —Jacob Templin, executive producer
Coronavirus has laid bare a feverish debate in Italy…over pasta, of course. While I’m sorry it took an epidemic to bring the debate over ridged vs. smooth pasta to the fore, it is delightful to read about tiny things that cause big cultural divides, as revealed by Annalisa Merelli. Especially when experts weigh in and disappoint those who were clinging to a haughty rule of thumb the way sauce clings to penne lisce. —Susan Howson, news editor
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FIVE THINGS ELSEWHERE THAT MADE US SMARTER
Prepping for the end times. There is a small—but growing—faction of society that believes we should give it all up and go back to the wilderness. At dedicated retreats, they learn how to hunt, gather, cook, and sleep the way our Stone Age ancestors did. When I first started reading the New York Times’ profile of the movement, every sentence seemed crazier than the last. By the end I was wondering, what if we are already in the end times, and I’m woefully unprepared? —Liz Webber, news curator
One more privacy domino falls. Manufacturers of police body cameras in the US have thus far refused to incorporate live facial recognition capabilities into their products, citing ethical concerns. But now, as Quartz alum Dave Gershgorn writes for OneZero, a former paintball retailer that entered the business in 2011 is offering law enforcement the kind of technology that others have vowed not to touch. —Justin Rohrlich, geopolitics reporter
The value of African DNA. Genetics research—and advances in precision medicine—are limited by the largely European genomes that make up scientists’ datasets. An excellent feature in the Financial Times (paywall) highlights efforts to expand the diversity of cataloged genomes by tapping the continent of Africa, where roughly 99% of our evolutionary history occurred. Importantly, it also asks who will stand to profit from research that comes out of such efforts. —Katie Palmer, science and health editor
What comes after the millennial aesthetic? We all know it when we see it: clean and uncluttered pastel interiors, bright but restrained advertisements—minimal, but not in an edgy way. The direct-to-consumer trend that brought us Casper mattresses and Outdoor Voices leggings also brought a vision of the world with it. An essay in The Cut explains how we got here—and ponders the era coming to a close. —Max Lockie, deputy news editor
Head of produce. Cauliflower’s transformation from a bland, overlooked veggie to a must-have carb substitute seemingly happened overnight. Farmers are adapting to keep up to the skyrocketing demand, and US sales have steadily risen in the past five years to over $700 million. The Wall Street Journal’s insights into the many ways consumers are utilizing cauliflower has me thinking: What food will be next? —Hope Corrigan, growth editor, special projects
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Our best wishes for a relaxing but thought-filled weekend. Please send any news, comments, Disney reasoning, and cauliflower recipes to hi@qz.com. Get the most out of Quartz by downloading our app and becoming a member. Today’s Weekend Brief was brought to you by Steve Mollman, Kira Bindrim, and Katie Palmer.