By Sarah McFarlane and Benjamin Katz 

As the coronavirus outbreak looks to extend, some of the world's biggest and best capitalized companies are racing for cash.

Airbus SE and Royal Dutch Shell PLC joined in the scramble of companies Monday that are slashing costs, shelving buybacks, or cutting dividends and asking banks to extend credit.

In response to the coronavirus's rapid spread around the world, retailers have closed storefronts, and companies in other industries have directed employees to work from home. Manufacturers have closed plants, and hoteliers have begun laying off employees. Many governments have imposed restrictions on large gatherings aimed at reducing the virus's spread.

Ford Motor Co. said Thursday that it was suspending its dividend to try to preserve its dwindling cash pile. Mining giant Freeport-McMoRan Inc. announced Monday that it was cutting its dividend and analysts expect some miners to follow suit.

Several U.S. retailers, squeezed by drop in revenue after closing their stores, have moved to draw down their credit lines in recent days. On Friday, Macy's Inc. tapped its $1.5 billion credit line and suspended its quarterly dividend. On Saturday, Best Buy Co. drew down its full $1.25 billion credit facility and suspended its share buybacks. AT&T Inc. has suspended share repurchases as it looks to preserve cash, while General Electric Co. said it would cut 10% of its U.S. aviation workers.

Oil companies have been hard hit by the combination of falling demand spurred by the pandemic and by rising supply from Saudi Arabia, which has resulted in crude prices halving in a matter of weeks. At the same time, the coronavirus has stunted the aerospace industry, leading to groundings of fleets across the globe and triggering a mass of order deferrals for new aircraft.

Occidental Petroleum Corp. slashed its dividend earlier this month, while France's Total SA made $5 billion of savings and took out a $4 billion loan to make up for an expected $9 billion shortfall caused by lower oil prices. The lower energy prices are helping the sector's working capital requirements but ultimately the oil rout will hurt their profits.

Shell halted its share buyback program and said Monday that it plans to cut spending to boost its balance sheet. The oil giant preserved its dividend but halted the $25 billion share buyback program it launched in July 2018. Investments were reduced by 20% to $20 billion.

"The combination of steeply falling oil demand and rapidly increasing supply may be unique, but Shell has weathered market volatility many times in the past," said Chief Executive Ben van Beurden.

Shell said its liquidity remained strong with $20 billion in cash and $10 billion of undrawn credit lines.

At the same time, Airbus said it was dropping its guidance for the full year and boosting its credit facility by about $10.7 billion as it manages the fallout on the aviation industry from the coronavirus outbreak.

It has withdrawn its 2019 dividend proposal valued at about $1.5 billion in cash and is suspending a top-up payment to pension funding. The company now has around $32 billion in available liquidity, it said in a statement Monday.

The company is also reopening its factories in France and Spain at reduced rates on Monday after pausing production to deep clean the facilities and provide safety measures for staff.

Airbus's move follows similar efforts made by Boeing Co. which said Friday that it was suspending its dividend while Chief Executive David Calhoun and Chairman Larry Kellner are forgoing pay through the rest of the year. The U.S. plane maker is seeking at least $60 billion in financial help from private sources, as well as taxpayer support, for itself, suppliers and the broader aerospace sector.

Write to Sarah McFarlane at sarah.mcfarlane@wsj.com and Benjamin Katz at ben.katz@wsj.com

 

(END) Dow Jones Newswires

March 23, 2020 11:38 ET (15:38 GMT)

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