The aviation world is experiencing a severe upheaval due to the Corona virus.It is reported a 19% drop in worldwide orders, a double drop reflecting the Asian airline market. Airlines operating east flights are the first to be hit.
In a statement to the stock exchange, El Al estimated that the damage it would suffer from the Corona virus would reach $ 30 million. The airline reported to the stock exchange that it "regularly monitors developments in the world in connection with the Corona virus and examines the implications for its operations." The company estimates that in the first quarter of 2020, $ 30 million in revenue is expected, "mainly in the Eastern goals." However, the Company estimates that most of the decline is expected to offset "due to a reduction in the Company's operating expenses". El Al estimates that operational efficiency will enable it to reduce the extent of the damage.
Two weeks ago, El Al decided to stop her flights to Beijing until the end of March. Presumably, the line to Hong Kong, which is currently continuing at very limited volumes and with low occupancy, will soon be discontinued.
At this point, EL AL allows anyone who has ordered tickets to cancel or change up to 15.3 without penalty. This option affects occupancy rates when many do not want to take a risk and give up flights to Hong Kong. At this stage direct flights to Bangkok also continue as usual. In about two weeks El Al is expected to inaugurate air history with direct lines to Tokyo.
With health ministry recommendations not to visit Japan, Thailand, South Korea, Taiwan, and China of course, it is also assumed that the line to Tokyo asked about expecting it might pay the price of travelers' concerns.
The Castro Group issued earlier this week a significant announcement regarding its exposure to the effects of the crisis in China as a result of the spread of the corona virus. The public company announced on Monday that although the local holiday break in China was due to end after a week's extension by the local government, it was told by a number of Chinese suppliers "who produce some of the group's products" that at present "they are not returning to regular operations." This is due to "China's lack of clarity on the spread of the Corona virus and the measures to be taken to reduce its exposure."
Castro made it clear that "even though the company does not foresee currently harming its operations in the immediate range, continuing to shut down production plants in China or not returning to regular full-time work could affect the company's operations in the medium and long term."
The company also notes that "since there is still no forecast as to when the production operations in China will return to the series, the Company cannot currently assess the impact of continued disruption or cessation of production operations in China on its results, although as the aforementioned disruptions prolong, the Company expects their adverse effect on Its results will increase. "
Castro also notes that "the company is working with its suppliers in other territories to try to divert production operations, as far as possible, to these territories." The company added that "it will continue to monitor reports coming from China and will update as needed."
Castro, which trades at a value of NIS 320 million, has been suffering for a considerable period of time. Castro's stock today responded to the announcement relatively moderately, with a 2% decline in a meager trading cycle. This reality meets Castro when it is also in a negative momentum against the weak results, its failure to enter the US and the cancellation of Carolina Lamke's agreement with President Kim Kardashian.
Castro losses totaled NIS 68 million in the first nine months of the year. Castro's share fell 45% last year.
Technology company Sargon has released weak reports as expected for the 2019 summit, and expects to return to growth in 2020, despite opening a weak year. After India has bolstered the company's results in recent quarters, the next difficulty seems likely to come from China: Warning warns of a possible negative impact of the corona epidemic on the results, noting that the virus outbreak could have a significant impact on the supply chain and company customers in Asia, particularly in China. However, at this stage it is too early to determine the impact.
Sargon expects first-quarter revenue to decline in light of fourth-quarter order data, where the book-to-bill ratio was lower than 1, as well as due to regular seasonal effects. Further, it is forecasting a quarterly revenue rate of $ 70-75 million (lower than Sargon's revenue target in previous years and was $ 85-80 million), along with improved gross profit, net profit and positive cash flow in 2020.
In the fourth quarter, revenues totaled $ 71.3 million, down 16.9% over the same quarter and in line with the company's forecast. As CEO Ira Pelty said at an investor conference in January, profit in the fourth quarter was hit by two one-off provisions, the first at $ 2 million attributable to inventory, and the second at $ 1.3 million due to difficulties encountered by the company's longtime client. Operating loss of $ 2.2 million in the fourth quarter, compared with operating profit of $ 6.5 million in the same quarter.
On a non-GAAP basis, the loss is $ 5 million higher, compared to a non-GAAP net profit of $ 5 million in the corresponding quarter. Net loss per share was 5 cents.