American Airlines Warns Employees of Up to 20,000 Job Cuts: Live Updates
American Airlines Warns Employees of Up to 20,000 Job Cuts: Live Updates
American Airlines told employees on Wednesday that it could furlough as many as 20,000 people starting Oct. 1, after federal stimulus funds expire.
“We know American will be smaller going forward and we must right-size all aspects of our airline to adjust to that new reality,” the airline’s chief executive, Doug Parker, and president, Robert Isom, said in a letter to employees. “Although this is a day none of us wanted to see, we have created new, generous programs intended to help offset as many front line furloughs as possible.”
Despite planning to send out legally required warnings to 25,000 employees, American said it expects to be overstaffed by about 20,000 workers this fall. The warnings, which the airline started sending on Wednesday, will go to nearly 10,000 flight attendants, 3,200 maintenance workers, 2,900 passenger service employees and 2,500 pilots, among others. Last week, United Airlines said it could furlough as many as 36,000 workers in the fall.
Both airlines hope to reduce those numbers by encouraging employees to retire early or accept buyout packages. American said it would offer some employees the option to take leave from the company for up to two years while receiving part of their salary and retaining health and travel benefits.
Passenger airlines were able to avoid draconian cuts after Congress passed the CARES Act in March, which set aside $25 billion to help the companies pay workers, provided they refrain from substantial cuts through Sept. 30. American was the largest recipient, receiving $5.8 billion in mostly grants and some loans. Delta Air Lines received $5.4 billion and United received $5 billion.
The unions that represent pilots, flights attendants and other workers at American and other airlines have voiced support for extending that funding through March 31. In the letter on Wednesday, American echoed that support.
Delta Air Lines and Southwest Airlines have warned that they may also make similar cuts this fall.
Officials from the Organization of the Petroleum Exporting Countries and Russia said Wednesday that cuts in oil output that had helped shore up the energy market in recent months would be eased modestly in August, as detailed under an agreement reached in April.
Oil ministers from Saudi Arabia, Russia and other producers met Wednesday by video conference to review market conditions. The group said in a statement after the meeting that “there were encouraging signs of improvement as economies around the world open up.”
The lockdowns, intended to curb the spread of the coronavirus, slammed demand for oil by reducing driving, air travel and other activities that use the fuel. But demand has slowly risen in recent months.
Beginning in August, the cuts in output will be reduced from 9.7 million barrels a day — or about 10 percent of global production in normal times — to around 8.1 million barrels a day, according to Saudi Arabia’s oil minister, Prince Abdul Aziz bin Salman, who ran the meeting.
The production increases will come at a time when the coronavirus pandemic is surging in some countries, including the United States and Brazil, potentially jeopardizing recovery of demand for oil.
However, the Saudi oil minister said that with countries having gained experience in dealing with the virus in recent months, he thought any outbreaks were likely to be contained.
On Wednesday, the price of Brent crude, the international benchmark, was up about 2 percent to more than $43 a barrel. West Texas Intermediate, the American standard, also rose, to about $41 a barrel.
J.C. Penney, the 118-year-old retailer that filed for bankruptcy in May, said on Wednesday that it would cut 1,000 corporate, field management and international jobs, as the company shrinks and closes 152 stores.
The layoffs are separate from job cuts tied to the retailer’s first round of store closures, where most liquidation sales have started. A spokeswoman for J.C. Penney has said that the retailer plans to close up to 250 locations over all, which would leave it with roughly 600 stores.
J.C. Penney, which is based in Plano, Texas, said in bankruptcy filings that it had nearly 85,000 associates, but did not specify how many were full or part time.
The cuts at the corporate level add to the broader pain in the retail industry, which has been left reeling from the pandemic. The disruption has forced a spate of bankruptcies since May and spurred layoffs at surviving retailers. Macy’s said last month that it would cut about 3,900 corporate and management jobs, or 25 percent of that staff.
Walmart will begin requiring that all of its customers wear masks in its stores, starting on Monday.
The new rule from the nation’s largest retailer, which has more than 5,000 stores nationwide, is a strong statement about wearing masks in public space at a time when the issue has become politicized.
In a statement, Walmart said that 65 percent of its stores, which include Walmarts and Sam’s Clubs, are in areas where there is already some form of government mandate to wear masks.
At Sam’s Clubs, the company said that it would provide complimentary masks to customers who did not already have one. (Sam’s Club customers have to pay a membership fee to shop there.)
But in Walmart stores — which are far more numerous — the details for this new policy are still being ironed out.
The company said it was creating a new job called a “health ambassador.” That person will be stationed next to the front door and will remind customers of the new rule.
“Ambassadors will receive special training to help make the process as smooth as possible for customers,’’ Walmart said, and “will work with those who show up at a store without a face covering to find a solution that works for everyone.”
The retailer did not immediately identify what those possible solutions might be or say that it would provide masks to customers who didn’t have one.
Walmart joins a growing list of companies that are requiring customers to wear masks, including Starbucks and Best Buy. The retailer Kohl’s said on Wednesday that its customers would be required to wear masks starting Monday, and the grocery chain Kroger announced on Twitter that its customers would, too, starting July 22.
Black business owners are more likely to be hindered in seeking coronavirus financial aid than their white peers, a new study has found.
The study looked at how more than a dozen Washington-area banks handled requests for loans under the federal government’s Paycheck Protection Program. It was conducted by the National Community Reinvestment Coalition, a nonprofit organization in Washington, in partnership with researchers from universities in Utah and New Jersey.
From late April to late May, the researchers and the nonprofit group, which advocates better access to capital for low-income and minority communities, sent pairs of would-be loan applicants to branches of 17 banks. In each pair, a Black borrower and a white borrower shared similar credit and asset characteristics. To make the study more conservative, the researchers gave each Black borrower a slightly better financial profile than his or her white counterpart.
The Black borrowers were offered different products and treated significantly worse by employees than white borrowers in 43 percent of the tests, the study found. Of the 17 banks, some of which were tested through multiple branches, 13 had at least one test in which a white borrower was treated better than his or her Black counterpart. In the rest of the tests, the pairs were treated relatively equally or the difference wasn’t significant enough to count as a violation of fair lending laws, in the researchers’ view.
Critics of the $660 billion program — which was intended to prop up small businesses through forgivable loans — have said that its structure was likely to perpetuate historical inequalities in the financial system, where Black Americans have struggled to obtain credit and capital.
Buoyed by heightened activity in the markets, Goldman Sachs reported its highest bond-trading revenue in nine years, helping it to deliver a solidly profitable quarter despite increased costs and a slowdown in other areas of its business.
Revenue spiked in Goldman’s trading area, more than doubling the unit’s performance from a year ago, and rose dramatically in its investment-banking business. Overall, the firm’s revenue for the second quarter was $13.3 billion, a 41 percent upswing from the same period last year. Its earnings were $2.4 billion, essentially the same as a year ago.
During the quarter, compensation costs rose substantially, as did other expenses that were not specified, perhaps reflecting an increasing set-aside for future legal costs. That theme has been borne out by other large banks this week, whose quarterly profits plunged as they stowed away money to protect them from future losses.
BBC News is cutting 520 jobs as part of a sprawling cost-cutting plan, 70 more jobs than previously announced because the pandemic has put more strain on the British broadcaster’s budget.
In January, 450 job losses were announced but then postponed in March to meet the demands of covering coronavirus and its impact. The reactivated plan, detailed on Wednesday, will be even more sweeping. “The Andrew Neil Show,” hosted by the longtime political interviewer, will be cut, business news coverage will be scaled down, and there will be reductions in World Service programming, among other changes.
“The increased financial pressure on the BBC as a result of Covid-19 means the number of job losses in BBC News will rise to around 520,” the organization, which has been financed by an annual license fee paid by listeners and viewers for nearly 100 years, said on Wednesday. “This will include senior management posts.”
In 2016, the BBC announced it needed to save 800 million pounds ($1 billion), with about a tenth of that coming from the 6,000-person news department. In addition to the 520 job losses in BBC News, the BBC said in recent weeks it would cut 600 jobs from regional services in England, Scotland, Northern Ireland and Wales.
The BBC has also renewed its plan to end free TV licenses for people over 75, a move that has caused clashes with the government.
Earlier on Wednesday, The Guardian newspaper said it planned to cut 12 percent of its work force, about 180 jobs.
Stocks rose on Wednesday, lifted by a drugmaker’s report of progress with a promising, but early-stage, candidate for a coronavirus vaccine, and data on industrial production added to evidence of the economy’s recovery.
The S&P 500 jumped about 1 percent. Markets in Frankfurt, Paris and London also rose sharply.
Oil prices were also higher, on a day when major producers decided to ease restrictions on output. The production curbs were approved in April when the industry was facing a calamitous fall in oil demand, and any relaxing of the rules would signal stronger energy markets.
The gains on Wall Street were largely spurred by news from the biotech company Moderna, based in Cambridge, Mass., which said an experimental drug provoked a positive immune response and appeared safe among the first 45 people who received it. It is the first coronavirus vaccine to be tested in humans, and Moderna’s shares were sharply higher.
Policymakers and economists have long predicted that a complete recovery in growth depends on the development of a vaccine, and investors have been quick to respond to even the slightest signs of progress toward one.
On Wednesday, the rally was led by companies that have the most to gain from a return to pre-pandemic levels of travel and consumption. American Airlines, Gap, and MGM Resorts — which have become a proxy for the market’s enthusiasm about a rebound — were all among the best-performing stocks in the S&P 500.
Investors also learned that industrial production in the United States jumped by more than expected in June, recovering from earlier declines as factories were reopened. The report is just the latest of several — from data on housing sales to hiring — that highlight the economy’s bounce back from the depths of a recession earlier in the year.
That recovery, however, is threatened by a rise in new coronavirus cases around the world. And as governments reimpose restrictions on activity and government assistance programs come to an end, some economists have warned that the recovery is likely to take longer than investors anticipate.
The United States economy is headed for a tumultuous autumn, with the threat of closed schools, renewed government lockdowns, empty stadiums and an uncertain amount of federal support for businesses and unemployed workers all clouding hopes for a rapid rebound from recession.
For months, the prevailing wisdom among investors, Trump administration officials and many economic forecasters was that after plunging into recession this spring, the country’s recovery would accelerate in late summer and take off in the fall as the virus receded, restrictions on commerce loosened, and consumers reverted to more normal spending patterns. Job gains in May and June fueled those rosy predictions.
But failure to suppress a resurgence of confirmed infections is threatening to choke the recovery and push the country back into a recessionary spiral — one that could inflict long-term damage on workers and businesses large and small, unless Congress reconsiders the scale of federal aid that may be required in the months to come.
The looming economic pain was evident on Tuesday as big companies forecast gloomy months ahead. Delta Air Lines said it was cutting back plans to add flights in August and beyond, citing flagging consumer demand. The nation’s biggest banks warned that they were setting aside billions of dollars to cover anticipated losses as customers fail to pay their mortgages and other loans in the months to come.
“The earlier-than-anticipated resumption in activity has been accompanied by a sharp increase in the virus spread in many areas,” Lael Brainard, a Federal Reserve governor, said on Tuesday. “Even if the virus spread flattens, the recovery is likely to face headwinds from diminished activity and costly adjustments in some sectors, along with impaired incomes among many consumers and businesses.”
The Paper Store filed for bankruptcy protection Tuesday citing the financial strain caused by closing all of its stores for weeks at a time because of coronavirus lockdowns. The chain, which has sold specialty gifts for 55 years, operates a warehouse and 86 stores throughout the Northeast and employs roughly 2,000 people. The company hopes to sell by late August in order to get the cash needed to buy millions of dollars worth of inventory for Christmas, its busiest season.
The Trump administration, which mistakenly sent $1.4 billion of stimulus money to dead people, has begun canceling checks that were delivered to the deceased. The Internal Revenue Service said in an update on its website that such checks should still be returned to the federal government but that it was taking action to ensure they cannot be cashed. A Government Accountability Office report released last month found that about $1.4 billion of the $270 billion of direct stimulus payments went to the deceased.
Three of the nation’s biggest banks revealed that they had set aside billions of dollars to cover potential losses on loans, signaling that they do not expect consumers and corporations to be able to pay their debts in the coming months as the pandemic continues to gut employment and commerce. Collectively, JPMorgan Chase, Citigroup and Wells Fargo have put aside $25 billion during the second quarter, they said. As a result, their quarterly profits plunged. It was Wells Fargo’s first quarterly loss since 2008.
Lael Brainard, a Federal Reserve governor, warned that a second wave of coronavirus cases could imperil the economy and markets once again, even though financial conditions have calmed since the wild days of March and the labor market has begun to mend. “A broad second wave could reignite financial market volatility and market disruptions at a time of greater vulnerability,” Ms. Brainard said, speaking to the National Association for Business Economics. And in any case, “the strength of the recovery will depend importantly on the timing, magnitude and distribution of additional fiscal support.”
Best Buy, the electronics retailer with about 1,000 locations in the United States, said on Tuesday that it planned to require customers to wear face coverings in its stores starting Wednesday. The company said that it would provide masks to customers who did not have one, and would make exceptions for small children and people who could not wear masks for health reasons, according to a blog post.