United Airlines on Tuesday said its operating revenue dropped 87 percent, to $1.5 billion, in the second quarter compared to a year earlier.
United said it lost $1.6 billion in the quarter, compared to a $1 billion profit during the same three months in 2019. The steep drop was the result of the catastrophic toll the pandemic has had on the airline industry.
“I am grateful for the professionalism and dedication of our United team members who persevered through a historic and challenging period to deliver for our customers,” Scott Kirby, the airline's chief executive, said in a statement.
As of Monday, United had about $15 billion of cash on hand, which it expects to increase to $18 billion by the end of September. United lost an average of $40 million a day in April, May and June and aims to reduce that to $25 million per day during the third quarter.
Air travel reached new lows in the second quarter, with the number of people flying falling as much as 96 percent on some days in April compared to last year. Traffic had started to recover in May and June, but stalled this month as coronavirus infections spread around the country and states imposed new travel restrictions. On Monday, the number of people screened at airport checkpoints was down 74 percent compared to last year.
As a result, United and other airlines have had to scale back schedules for August. The airline now expects to fly about 35 percent as many flights next month as it did last August and says the rest of the year will probably be much the same.
“We expect that air travel is not likely to get back to normal until we’re closer to a widely administered vaccine — so we’re in this for the long haul,” Mr. Kirby said in a statement on Monday.
On Tuesday, Mr. Kirby joined the chief executives of American Airlines, Lufthansa Group and International Airlines Group in asking the United States and European Union to restore trans-Atlantic travel and to test passengers for the coronavirus.
Most travelers are staying within national borders. But international flights are more lucrative than domestic ones and the flights between Europe and the United States are among the most valuable for airlines. For United, flights across the Atlantic accounted for about a quarter of its profits last year.
In the letter, the executives also said that a coordinated testing program “could be key to providing confidence to permit services to resume without quarantine requirements or other entry restrictions.”
United’s financial results mirrored those of Delta Air Lines, which last week revealed that its revenue declined 88 percent during the second quarter.
Best Buy will raise the starting hourly wage for all U.S. employees to $15, effective August 2, the electronics retailer said on Tuesday.
The company said sales were up by about 2.5 percent so far this quarter, which started May 3, over the same period last year.
“Strong consumer demand, combined with shopping experiences that emphasize safety and convenience, has helped produce our sales results to date,” Corie Barry, Best Buy’s chief executive, said in a statement.
The company furloughed 51,000 hourly store employees in the United States on in April, out of a total of about 125,000 employees. Hourly employees who continued to work received incremental hourly appreciation pay, which will end on Aug. 1.
Since June 12, Best Buy has brought about half of its furloughed employees back to work, the company said.
The wage hike may be an effort by the company to incentivize employees to start working again, rather than continuing to stay home and receive unemployment benefits.
“If unemployment insurance benefits are really keeping people out of the labor market, employers will have to raise wages in order to attract workers,” said Heidi Shierholz, senior economist at the Economic Policy Institute.
Best Buy follows other major retailers in hiking base wages: Target raised its minimum wage to $15 on July 5, and Amazon did the same in 2018. Walmart’s starting wage is $12 per hour.
Judy Shelton, an unorthodox economist who was an adviser to President Trump’s 2016 campaign, moved one step closer to a seat on the Federal Reserve’s Board of Governors on Tuesday.
The Senate Banking Committee approved Ms. Shelton’s nomination along party lines, putting her one simple-majority vote in the full Senate away from confirmation at a moment when the central bank is employing vast powers that she has a track record of questioning.
Opponents of Ms. Shelton’s nomination say confirming her would place the Fed at risk of politicization while it tries to rescue the pandemic-hit economy. Democrats on the committee have called for a second confirmation hearing in light of the crisis so that they can get her views on the current response.
Her nomination seemed shaky in the wake of her mid-February Banking Committee hearing, but Republican opposition has slowly crumbled.
Ms. Shelton moved forward along with Christopher Waller, who is research director at the Federal Reserve Bank of St. Louis and a more conventional pick. If they are confirmed by simple majority votes in the Senate, Ms. Shelton and Mr. Waller will fill the two empty seats on the Fed’s seven-member board in Washington.
No Democrats voted for Ms. Shelton, but five voted in favor of Mr. Waller.
Walmart said on Tuesday that it would not open on Thanksgiving Day, pushing back the traditional start of the holiday shopping season as a show of appreciation for its workers.
“We know it’s been a trying year, and you’ve stepped up,” John Furner, the head of Walmart’s U.S. operations said in a memo to employees. “We want you to enjoy the day at home with your loved ones.”
That large retailers like Walmart have opened their doors on Thanksgiving has been a sore spot for labor groups, who have said that additional shopping day comes at the expense of employees and their families.
A Walmart spokeswoman said the retailer had been open on Thanksgiving since “the 1980s.”
The company, which is the world’s largest retailer, said it made the decision to close on the holiday after one of its employees wrote a letter suggesting it.
Walmart has experienced a surge in demand during the pandemic, ranging from groceries to bicycles and electronics. The company has also been growing its e-commerce business, as more of its customers stay home.
It’s unclear whether traditional shopping events like Black Friday, when retailers try to attract as many customers to the store as possible with sales, can take place this year amid social distancing requirements.
“We know holiday shopping will be different this year, and we will be managing sales events differently,’’ Mr. Furner said in his memo.
At the same time, the company has had to find ways to incentivize its workers, thousands of whom have taken leaves because of health concerns. Also on Tuesday, Walmart gave another round of bonuses, including $300 to full time workers and $150 to part time employees.
Investors turned their focus once again to the need for more government stimulus to keep the economy afloat months into the pandemic.
Around the world stocks gained ground on Tuesday, buoyed by fresh plans by governments to boost deficit spending. Major markets in Europe rose on an agreement by European Union leaders to support the bloc’s countries with 750 billion euros ($857 billion) in grants and loans.
Stocks also climbed in the United States on signs of progress toward another package of tax cuts and government spending to prop up the economy.
The S&P 500 edged up less than a quarter of a percent, adding to gains on Monday that had lifted the index back into positive territory for the year.
The European Union’s stimulus package announced early Tuesday was notable because, for the first time, countries will raise large sums by selling bonds collectively, rather than individually. Spearheaded by Chancellor Angela Merkel of Germany and President Emmanuel Macron of France, the agreement sends a signal of European solidarity, while also exposing fault lines.
The deal comes as lawmakers in Washington are also trying to reach an agreement on another economic aid package, as millions of Americans are about to see their expanded unemployment insurance benefits expire. That new spending plan is still some way off, with Democrats and Republicans still disagreeing about the size and scope of the spending.
Still, economic optimism buoyed commodities markets. Gold and silver both rose. The price of benchmark American crude oil climbed 2.8 percent to $41.96 a barrel.
Elsewhere on Wall Street, shares were also lifted by a round of better than expected earnings results. Coca-Cola rose as the company reported a 28 percent drop in sales but delivered better than expected profits thanks to cost-cutting measures. Coca-Cola executives reported ongoing improvement in demand from customers but warned that fresh flare-ups of the virus could once again disrupt business.
International Business Machines’s quarterly earnings and sales both topped analyst expectations, and the company said it said it had strong demand for its cloud computing business. IBM’s stock jumped early, but it ended the day lower than it had started.
“We cannot discount there might be further waves of lockdowns, partial or full,” James Quincey, the company’s chief executive, told analysts after the company published its results.
Boeing’s beleaguered 737 Max could be in the air in a few months after the Federal Aviation Administration said on Tuesday that it was taking an important step forward in the complex process required to clear the plane for takeoff.
The regulator said that it was close to proposing design changes and crew procedures that would address its safety concerns. The public would have 45 days to comment on the proposed changes before the F.A.A. made its final decisions.
A number of hurdles remain before the agency lifts a March 2019 order that forced airlines to ground the plane after two fatal accidents in Indonesia and Ethiopia. But the F.A.A.’s decision to move ahead is nonetheless a big shot in the arm for Boeing, which has been devastated by the crisis surrounding the Max, one of its flagship jets, and the coronavirus pandemic.
The F.A.A. said it was still reviewing data collected during a series of critical test flights concluded early this month. It is also working on proposed pilot training requirements in coordination with regulators in Canada, Europe and Brazil.
Once those training requirements and the agency’s proposed design and crew changes are finished and additional documentation is reviewed and filed, the agency would rescind its grounding order.
The F.A.A. said on Tuesday that it would not speculate on a timeline for lifting its order, but analysts expect it will happen no sooner than the final few months of the year. There is a good chance that regulators around the world will quickly follow suit, though some may take longer to approve the plane.
Once it secures the F.A.A.’s approval, Boeing will have to ready planes for flight, a process that could take more than a week per jet and involves system checks, deep cleaning and software updates. The company will have to do that for hundreds of planes that customers have already received and hundreds more that Boeing has made but not delivered.
Several major airlines in the United States and Europe are asking officials to restore trans-Atlantic travel and consider working together to test passengers for the coronavirus.
A joint testing program would “enhance safety and build confidence,” the chief executives of United Airlines, American Airlines, Lufthansa Group, and International Airlines Group, which owns British Airways, said in a letter to Vice President Mike Pence and the European Union’s commissioner for home affairs, Ylva Johansson.
The letter, which provided no details about how a testing program would work, signals an eagerness among some airline executives to ramp up flights and stanch losses. Airlines have collectively lost tens of billions of dollars since the pandemic took hold earlier this year. In the United States, a federal program to help the industry pay workers ends on Sept. 30, and airlines have told workers they might have to cut tens of thousands of jobs to survive.
“Given the unquestioned importance of trans-Atlantic air travel to the global economy as well as to the economic recovery of our businesses, we believe it is critical to find a way to reopen air services between the U.S. and Europe,” the airlines told Mr. Pence and Ms. Johansson.
As passengers slowly start to fly again, most are staying within national borders. But international flights are more lucrative than domestic ones and those that operate between Europe and the United States are among the most valuable for airlines.
Travel between the two regions has been largely restricted since March. And when the European Union reopened its borders this month, it excluded visitors from the United States even as it welcomed people from Australia, Canada, New Zealand and 12 other countries.
In the letter, the executives also said that a coordinated testing program “could be key to providing confidence to permit services to resume without quarantine requirements or other entry restrictions.”
Jide Zeitlin, the chief executive of Tapestry, the owner of Coach and Kate Spade, and one of only four Black chief executives in the Fortune 500, resigned on Tuesday. The unexpected move came after the company’s board was made aware of a misconduct allegation involving Mr. Zeitlin and hired a law firm to investigate, according to a person familiar with the situation who spoke on the condition of anonymity.
Though Tapestry announced that Mr. Zeitlin was stepping down for “personal reasons,” Mr. Zeitlin later acknowledged in a statement that the exit was related to a past relationship.
“In the past month, a woman I photographed and had a relationship with more than 10 years ago reached out to various media organizations to express her concerns about what had occurred,” Mr. Zeitlin said in the statement. “I felt compelled to resign today because I do not want to create a distraction for Tapestry, a company I care deeply about.” The Wall Street Journal reported on the statement earlier Tuesday.
The company hired Fried, Frank, Harris, Shriver & Jacobson after the allegation recently came to light, the person familiar with the matter said.
In March, Tapestry had said that Mr. Zeitlin would remain at the helm for at least three more years.
Tapestry, which is based in New York, said that Joanne Crevoiserat, its chief financial officer, would serve as interim chief executive and that it had started a search for a permanent replacement.
The unexpected departure comes as the retail industry grapples with the fallout from the coronavirus pandemic. Tapestry, like other retailers, has been forced to close stores and adjust operations in China and in the United States as the virus continues to spread.
The company, which also owns Stuart Weitzman, is a giant with about $6 billion in annual sales, but had seen its shares drop by roughly 50 percent this year. It next reports earnings on Aug. 13.
Tailored Brands, the owner of Men’s Wearhouse and the JoS. A. Bank chain, announced plans on Tuesday to eliminate 20 percent of its corporate positions and close up to 500 of its retail stores, citing business disruptions resulting from the coronavirus pandemic.
“While today’s announcement is a difficult one, we are confident these are the right next steps to protect our business and position us to more effectively compete in today’s environment,” Dinesh Lathi, the company’s president and chief executive, said in a statement.
The apparel industry has been particularly hard hit by the pandemic, prompting bankruptcy filings from retailers like Neiman Marcus,J. Crew andJ.C. Penney. Stores largely shut their doors during the lockdowns, leading to unpaid rents and staff furloughs.
With millions of Americans unemployed or working from home, and a pause on proms and weddings, demand has plummeted for Tailored Brands’ core product: men’s suits. The company reported that net sales had fallen by 60.4 percent in the first quarter of the year, which ended May 2, compared with the same period last year.
Men’s Wearhouse was founded in 1973 by George Zimmer, who became known for his catchy slogan in TV and radio commercials: “You’re going to like the way you look. I guarantee it.” The business, catering to the common man who wanted to look sharp for work without breaking the bank, took off.
But in recent years, Tailored Brands has struggled to adapt to the rise of e-commerce, while saddled with extensive debt. On May 2, the company had a long-term debt of $1.4 billion and $244.2 million of cash and cash equivalents.
Tailored Brands also announced changes in leadership on Tuesday. Jack Calandra, executive vice president and chief financial officer, will leave the company as of July 31. Mr. Lathi and Holly Etlin, a managing director at AlixPartners who has been appointed to the newly created role of chief restructuring officer, will jointly take over Mr. Calandra’s responsibilities.
The beverage giant Coca-Cola reported a big drop in revenue and profit in the second quarter as many consumers remained at home during the coronavirus pandemic.
Revenue fell 28 percent in the quarter to $7.2 billion, while net income dropped 33 percent to $1.759 billion, the company said in an earnings report. Executives said, however, that they believed the second quarter was likely to be the most challenging of the year.
Coca-Cola attributed much of the declines in the quarter to continued weakness in its away-from-home channels, such as restaurants and theaters, which either remained largely closed or had limited capacity in the quarter globally. That segment of the market makes up about half of Coca-Cola’s total revenue.
But executives said they started to see improvements in the away-from-home segments as lockdowns around the world began to ease.
EBay said on Tuesday that it planned to sell its classified advertising division for about $9.2 billion in cash and stock, the latest effort by the company to refocus on its mainstay online sales business.
In agreeing to sell the unit to Adevinta, a Norwegian ad company, eBay agreed to demands from activist investors, including Elliott Management, who urged it to slim down its operations. The classified ads business is largely international, with footholds in Europe, Africa and other regions, and reported $1.1 billion in sales last year.
Under the terms of the transaction, eBay will receive $2.5 billion in cash and about 540 million shares in Adevinta. That will give eBay a roughly 44 percent stake in Adevinta and a 33 percent voting stake, letting it keep some exposure to what will become the world’s biggest online classifieds company.
“This sale creates short-term and long-term value for shareholders and customers, while allowing us to participate in the future potential of the classifieds business,” Jamie Iannone, eBay’s chief executive, said in a statement.
Late last year, eBay shed another unit, the ticket reseller StubHub, to a smaller rival, Viagogo of Switzerland, for $4.05 billion.
Shares in Adevinta, which beat out a number of rivals for the eBay business, were up 33 percent in trading on Tuesday.
The transaction is expected to close early next year, but must still be approved by regulators and shareholders in Adevinta.
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Snap, the maker of Snapchat, said on Tuesday that it had brought in more money than expected during the recent quarter despite advertisers cutting back their budgets during the pandemic. The social media firm generated $454 million in revenue, a 17 percent increase from the prior year, and lost $326 million, an increase of 27 percent. Daily active users of Snapchat grew to 238 million. During shelter-in-place orders in the first quarter of the year, Snapchat saw users rush to the platform as a means of staying in touch with friends and family while in isolation. But the surge faded faster than Snapchat expected, causing the company to miss its guidance on active users by 1 million.
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The pilots union for Alaska Airlines said that enough members had volunteered for buyouts or early retirement to avert the threat of furloughs. The union did not provide figures, but Alaska’s president had reportedly said that the airline would need to cut 3,000 jobs, more than a tenth of its work force. Industrywide, tens of thousands of airline workers are face the threat of furloughs this fall when federal stimulus funds expire.
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Southeastern Grocers, the owner of the Winn Dixie chain of supermarkets, joined the growing list of retailers that are now going to require customers to wear masks, as did Publix. In a statement on Monday, Southeastern said it would require the masks starting on July 27, while Publix will require masks starting Tuesday.
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LinkedIn is planning to cut about 960 jobs globally, 6 percent of its work force, as the pandemic has severely reduced demand for its key service: helping companies with hiring. The professional social network said it also planned to work with small businesses online rather than through a field sales team, meaning this team was no longer needed.
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The cost of the British government’s economic response to the pandemic is becoming clear. Between April and June, the Treasury borrowed about 128 billion pounds ($162 billion), more than double the amount borrowed in the whole of the previous fiscal year, which ended in March, the government reported Tuesday. Last month alone, the government needed £47 billion in cash more than it took in tax receipts. The net cash requirement was nearly £34 billion more than the same month a year ago. The nation’s debt pile is just under £2 trillion, about the same size as the British economy.
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