Vale Taps Credit, Airlines Slash Flights: Brazil Virus Update

(Bloomberg) -- Vale, the world’s largest iron ore producer, joined Petrobras in tapping credit lines to cope with the added risks of the coronavirus outbreak, while airlines reduced flights to a fraction of regular operations.

The latest data from the Health Ministry shows cases rose to 2,201, with 46 deaths.

Here’s a summary of the latest measures taken by Brazilian companies:

March 24: Vale, airlines, Embraer

Vale asked banks to disburse $5 billion in credit lines while also announcing it will advance payments to small and medium-sized suppliers by as much as 85%. Steelmaker Gerdau postponed capex plans for the year and suspended Peru, Argentina and U.S operations.

Airlines announced a fresh cut in flights, with Gol reducing daily flights to 50 until May, suspending all international routes, and Azul cutting down to 70 flights a day, a 90% reduction in total capacity, until April 30.

IMC, which operates Pizza Hut, KFC and Frango Assado brands in Brazil, postponed store opening estimates for this year and 2021, while also reducing its staff by about 30%. In a silver lining, it said deliveries grew by more than 20% in the weekend of March 20-22 compared to March 6-8 period.

Embraer’s shares surged on a report that Boeing still sees the deal with the company as important in the midst of the crisis.

Itau Unibanco decided to suspend dismissals.

March 23: Klabin, malls shut

Renault joined carmakers in suspending activities until mid-April. Retailers Hering and Arezzo shut stores and factories, respectively, while mall association Abrasce said 550 malls across the country are shut -- 95% of the total.

Vale will suspend operations at its Malaysia port terminal that serves as a conduit to China until at least March 31, starting on Tuesday. Paper maker Klabin halted works for its Puma II project.

Beverage maker Ambev canceled its 2020 guidance, and travel agency CVC cut top level executives wages and hours by 50%.

March 22: BNDES help, Embraer

Embraer announced it was placing Brazil employees who can’t do their job remotely on temporary paid leave until the end of the month.

State development bank BNDES suspended payments on as much as 30 billion reais ($6 billion) of loans for six months to support companies, including direct and indirect credit operations. It also released 5 billion reais in working capital to small- and mid-sized companies, and will transfer 20 billion reais to a workers’ severance fund known as FGTS. The total injection from the lender amounts to 55 billion reais.

March 21: Retailers, Burger King

Clothing retailers Marisa Lojas and C&A Brasil will close its stores, as will electronics seller Via Varejo.

Operators of brands Burger King, Popeyes and Outback Steakhouse said restaurants would only take orders for pick-up or delivery.

March 20: Petrobras, automakers

National giant Petrobras postponed the sale of its refineries, and asked banks to disburse $8 billion in credit lines.

Fashion retailer Guararapes announced it would shut Brazil stores indefinitely, and flipflop maker Vulcabras halted all its Brazilian factories. Mall operator Iguatemi said it was closing another four venues.

Toyota and Fiat Chrysler joined carmakers in suspending operations.

Parana Banco asked for its IPO request to be suspended, the latest in a series of offers now scrapped.

March 19: Airlines help, JBS halt

Gol announced it was cutting wages and working hours in about 35% -- 40% for some top level executives -- even after the government announced a package to help the sector.

Volkswagen and Ford suspended production in Brazil -- the latter in Argentina as well. Truck and bus manufacturer Marcopolo, auto parts and the road implements producers Fras-Le and Randon also placed employees on furlough.

Meat giant JBS said it was halting operations in five of its 37 beef units in Brazil for 20 days due to lower export demand, while Minerva, the largest South American shipper, said it would pay workers for time off in four of its units.

State-owned Caixa Economica Federal released special credit lines, with a grace period of up to six months, for retail and service companies.

Fashion retailer Renner extended closures to Brazil, Uruguay and Argentina.

March 17, 18: Vale, malls

After placing its Canadian mine of Voisey’s Bay on “care and maintenance” for four weeks, also said it was revising the shutdown of coal processing plants in Mozambique, which could affect the 2020 guidance.

The following day, the company said it was studying temporarily halting its distribution center Teluk Rubiah Maritime Terminal in Malaysia.

Retailer Lojas Renner said it would interrupt activities in stores in the city of Sao Paulo. Mercedes-Benz announced it would grant mandatory vacations, as did General Motors.

BR Malls, Aliansce Sonae and Multiplan announced the temporary closure of their shopping malls in states including Rio de Janeiro to comply with restrictions imposed by local governments -- which were followed by Sao Paulo.

Minerva said it was halting production at four plants and pay workers for time off -- JBS was considering a similar plan at some Brazilian processing plants.

March 16: Delayed IPO, banks

Airline Azul slashed capacity by 20%-25%, while also lowering executive pay and halting new hires. Competitor Gol followed suit, reducing domestic capacity by 50% to 60%, and international capacity by 90% to 95%.

Meatpackers JBS and Minerva were said to be mulling paid time off on some of their Brazil plants as the outbreak hit demand, while Vamos was said to delay its IPO.

The five largest banks associated with Brazil’s Banking Federation have announced that they are open to meet requests for extension of debt maturities of individuals and micro and small businesses.

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