News Impact on Business
3 mins read

News Impact on Business

In the wee hours of January 15, 2020, the world woke up to the chilling news of the COVID-19 global pandemic. Simultaneously, the international business community received a shiver down its spine as uncertainty and apprehension loomed concerning the pandemic’s implication on global businesses. Among the sectors most affected was the airline industry as travel restrictions came into full effect.

American Airlines, one of the largest airlines worldwide, became an emblematic case of this impact. Prior to the pandemic news, American Airlines was recording an upward trajectory in its stock market value. On February 12, the stock closed at $30.47, an indication of good tidings in the business. However, as news about the virus and its global spread became more prevalent, the airline’s stock began to nosedive. By March 20, the stock plummeted to an alarming $10.25, nearly a third of its price just over a month before.

This rapid decline was a direct consequence of the news disseminating about the severity of the pandemic. The World Health Organization’s declaration of COVID-19 as a global pandemic on March 11 triggered a worldwide panic. International borders slammed shut as governments rushed to contain the virus’s spread.

In response to the evolving news and imposed international travel restrictions, American Airlines suspended at least 75% of its long-haul international flights from the U.S. starting from March 16. This drastic measure sent a shockwave throughout the industry and investors, signaling the grave reality of the situation. Consequently, the stock market’s response was swift and brutal, further driving down the share price.

As the news progressively painted a grim picture, American Airlines faced one of its toughest periods. The company’s stocks spiraled down further as customers demanded refunds for their already booked flights. Over the second and third quarters of 2020, American Airlines reported a net loss of $2.1 billion and $2.4 billion respectively. It was a sharp contrast to the profit of $662 million it had reported in the second quarter of 2019.

Moreover, the news about layoffs also played a significant role in shaping the airline’s business trajectory. To stay afloat, American Airlines announced a plan in July 2020 to lay off or involuntarily furlough 25,000 employees in October. The news brought about a decline in investor confidence, causing further erosion in the company’s stock value.

In this detailed account of American Airlines, we see that the news, especially of catastrophic events like the COVID-19 pandemic, can have a profound and immediate impact on businesses. It showcases how rapidly changing news landscapes can alter a company’s direction, influencing its operational decisions, financial performance, and its standing in the eyes of investors. This case underscores the importance of news in shaping and influencing the trajectory of businesses in today’s interconnected world.

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