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Tens of thousands of airline workers are bracing for a wave of furloughs starting Thursday after a widely supported effort to renew federal stimulus funding for the industry failed to overcome a congressional stalemate.
American Airlines and United Airlines told employees on Wednesday night that they would proceed with more than 32,000 furloughs, though both companies said they would reverse course if lawmakers provided the funding the industry had sought.
“I am extremely sorry we have reached this outcome,” Doug Parker, American’s chief executive, said in a letter to staff. “It is not what you all deserve.”
Passenger airlines received $25 billion in payroll funding under the March stimulus law known as the CARES Act, on the condition that they refrained from broad job cuts until Oct. 1. Unions representing airline workers had garnered bipartisan support in Congress for another round of aid in recent weeks, but the effort was caught in the deadlock over a broader stimulus package, even after airline executives pleaded their case in Washington.
The pandemic’s toll on air travel and the industry has been so severe that tens of thousands of airline employees have already volunteered to take pay cuts, unpaid leave for an extended period, buyouts or early retirement.
The tumultuous presidential debate on Tuesday night between President Trump and former Vice President Joseph R. Biden Jr. only added to concerns that a chaotic race to the November elections would further agitate the markets.
Companies big and small have been on a roller coaster as coronavirus cases in the United States have continued to rise, and policymakers in Washington have inspired little confidence that they are ready to pass additional pandemic relief.
The first presidential debate has only added to the risks facing business. Many business leaders were concerned about disruptions to a smooth transition of power if Mr. Trump lost, while others expressed dismay at Mr. Trump’s refusal to condemn white supremacy and his suggestion that the Proud Boys, a far-right group, should be prepared to “stand back and stand by.”
“People just want stability, some degree of normalcy,” said Aaron Levie, chief executive of the tech company Box. “We want to understand what the geopolitical landscape looks like, what trade looks like, what immigration looks like. There’s not a clear underlying philosophy that drives this administration, other than nationalism. You just can’t predict the next move.”
Mr. Levie said he was concerned that another term for Mr. Trump would lead to fewer foreign nationals coming to the United States to pursue education and professional opportunities, noting that many of the country’s most successful companies have been started by immigrants.
Here’s what others said:
“I do think that America does not look very stable is a problem,” said Alex Karp, the chief executive of Palantir, a tech company that had its debut on Wall Street on Wednesday. “Fifty percent of our business is outside of America, and the fact that the global brand of America is really suffering could long-term impact our business.”
Barry Sternlicht, a co-founder and the chief executive of Starwood Capital, a real estate investment fund, said at CNBC’s “Delivering Alpha” conference that Mr. Trump’s “stand back and stand by” comment “was it for me.” He added: “I have no space in my life for that.”
“It was hard to watch,” said Mindy Grossman, the chief executive of Weight Watchers parent WW International. “It was hard to watch. We look at our leaders in a certain way and I don’t think that was exemplified in the event last night”
“I can’t tell you who won, but I can tell you who lost: that was the American people,” Robert L. Johnson, the founder of Black Entertainment Television, said on CNBC. “It was a waste of an hour and a half that gave no guidance, no direction at all over where the country will go after this election.”
Lloyd Blankfein, who served as chairman and chief executive of Goldman Sachs until the end of 2018, tweeted that Mr. Trump’s behavior at the debate has raised Mr. Biden’s appeal among investors.
So far the stock market doesn’t seem too upset at the prospect of Biden winning, despite Trump’s more market friendly policies. Perhaps folks think their stocks and 401(k)s will do better with higher taxes and increased regulation than with nastiness and scorched earth.
— Lloyd Blankfein (@lloydblankfein) September 30, 2020
“I thought Trump was so horrible that he didn’t do himself any good,” said Michael Novogratz, a trader and merchant banker who is supporting Mr. Biden. “His rudeness, his facial anger, the whole body language was just so violent.”
Ryan Gellert, the new chief executive of Patagonia, the popular outdoors brand, said the debate “was a real embarrassment to America and our leadership place in the world.” He added: “The fact that we are now in advance debating the efficacy of an upcoming election and trying to delegitimize it — it’s such a turn in the wrong direction.”
Stocks climbed on Wednesday, but ended September with its first monthly loss since March.
The S&P 500 was 0.8 percent higher, after earlier gains of more than 1.5 percent faded late in the day. The benchmark fell nearly 4 percent in September.
That monthly decline came as investors worried about gridlock over a new economic stimulus plan. Those losses have been trimmed somewhat in recent days as negotiators tried to resume talks over a coronavirus relief package to provide aid to American families, businesses, schools, restaurants and airline workers. On Wednesday, the early rally came after Treasury Secretary Steven Mnuchin said on Wednesday that he was giving stimulus talks “one more serious try.”
A retreat in once high-flying technology stocks like Apple and Amazon has also weighed on the broad market this month. Apple dropped more than 10 percent in September. Amazon is down about 9 percent. Shares of both companies rose on Wednesday.
It may have helped on Wednesday that — despite its acrimonious tone — the presidential debate on Tuesday didn’t lead to any unexpected policy announcements by President Trump or his rival, Joseph R. Biden Jr.
“Markets have remained calm as no policy surprises have emerged from the debate so far,” wrote Jeffrey Halley, senior market analyst at Oanda. “The uncertainty ahead of the debate has subsided.”
“Lost in the noise of the debate,” Mr. Halley added, “China has released another impressive set of data.” China’s official Purchasing Managers Index, which covers large firms, and the private Caixin/Markit Manufacturing Purchasing Managers’ Index, which includes an important measure of smaller export-oriented companies, both released stronger than expected numbers.
More numbers to come: On Friday, the U.S. Labor Department will release the nonfarm payroll data for September.
The Federal Reserve on Wednesday said it would extend its ban on share buybacks by big banks as well as its cap on dividend payouts through the end of the year, a move the central bank said was an effort “to ensure that large banks maintain a high level of capital resilience” as pandemic-spurred economic uncertainty persists.
The Fed in June prevented banks from increasing their dividend payouts above second-quarter levels, with an additional limitation based on earnings, and banned stock buybacks. Those changes only lasted through the third quarter, and the central bank said in a statement earlier this month that it would “announce by the end of September” whether it would keep them in place.
The now-extended limitations apply to only the largest banks — those with more than $100 billion in total assets, which include firms like Bank of America, Citigroup and Wells Fargo. Preserving big bank capital — money that is readily available to be used — “provides a cushion against loan losses and supports lending,” the Fed said.
Lael Brainard, a Federal Reserve governor who has previously indicated that she would prefer to shut off, rather than cap, dividend payouts, dissented against the decision.
While the Fed’s decision stops short of cutting off dividends, the extended limitations may come as a disappointment to some banks. Share buybacks help boost a company’s stock price, and higher dividends are obviously desired by investors.
JPMorgan Chase & Company had indicated that it might restart buybacks if allowed. Speaking at an investor conference in mid-September, Jennifer Piepszak, JPMorgan’s chief financial officer, said that her bank “wouldn’t rule out” resuming share buybacks in the coming quarter but that “it will obviously depend on whether we have regulatory constraints.”
The Fed reiterated in its statement that it would conduct a second stress test — an analysis of how bank balance sheets hold up in bad circumstances — later this year. While stress tests are usually done annually, officials decided that it was prudent to re-examine bank health given the shaky economic backdrop.
“Results will be released by the end of the year,” the Fed said.
The head of the Federal Aviation Administration, Stephen Dickson, said on Wednesday that he was pleased with the changes that Boeing had made to its troubled 737 Max jet but that the regulator would not rush to clear the way for the plane to fly again.
Mr. Dickson, a former airline pilot, told reporters “I liked what I saw” after he flew the Max for two hours in the Seattle area, where Boeing makes and tests most of its planes.
“We’re in the home stretch, but that doesn’t mean we’re going to take shortcuts to get it done by a certain date,” Mr. Dickson said. He earlier had promised that the agency would not lift its March 2019 order grounding the plane until he flew it himself.
Mr. Dickson did not say when the plane would return to service, but analysts expect the agency to allow the Max to fly again by early next year.
The test flight came as the House Transportation and Infrastructure Committee approved a bipartisan bill to strengthen the F.A.A., including its oversight of Boeing. In a scathing report this month, Democrats on the committee described the two 737 Max crashes that killed 346 people in Indonesia and Ethiopia as the “horrific culmination” of engineering flaws, mismanagement and a lack of oversight.
Still, the plane could soon be back in service. Last month, the F.A.A. determined that Boeing’s proposed changes to the Max’s design and crew training and maintenance procedures “effectively mitigate” the safety problems that contributed to the crashes. It is also finalizing an order, a draft of which was published last month, that would lift the grounding order. Once that happens, Boeing and the airlines that fly the Max will start getting the planes ready by checking the plane’s systems, rerouting some internal wiring and training pilots.
Before Wednesday’s flight, Mr. Dickson also received the recommended pilot training reviewed this month by the F.A.A. and aviation regulators in Canada, the European Union and Brazil. That aviation regulators’s findings will be incorporated in a forthcoming F.A.A. report and is expected to include flight simulator training, which some experts have argued might have prevented the crashes had it been required earlier.
Dennis Williams, a former president of the United Auto Workers union, on Wednesday pleaded guilty to embezzling tens of thousands of dollars of union funds for lavish personal expenses and luxury travel and participating in a scheme with other senior union officials to conceal those activities.
Mr. Williams, 67, was president of the union from 2014 to 2018 and is one of 15 people who have been charged in a yearslong investigation into corruption at the U.A.W. by federal prosecutors in Detroit.
“Dennis Williams’s guilty plea today shows that instead of fulfilling his fiduciary duty to his fellow union members, Williams chose to betray their trust and embezzle hundreds of thousands of dollars from the U.A.W. for the personal benefit of himself and other high-ranking U.A.W. officers,” Thomas Murray, district director at the Department of Labor’s Office of Labor-Management Standards, said in a statement.
Prosecutors previously obtained guilty pleas from Mr. Williams’s successor as president, Gary Jones, and other senior union officials. The leaders were charged with using union funds to pay for private villas in Palm Springs, Calif., expensive cigars, golfing apparel, greens fees at golf courses and lavish dinners.
The investigation, which has been led by U.S. attorney for the Eastern District of Michigan, has also resulted in guilty pleas on other charges unrelated to embezzlement case by three former executives at Fiat Chrysler, a senior union official who once served on the board of directors for General Motors, and several other union officials.
The U.S. attorney, Matthew J. Schneider, has described the investigation as the largest of its kind into a labor union.
“Today’s conviction demonstrates that we will continue our drive forward to provide ethical and honest leadership for the U.A.W.’s membership,” he said on Wednesday.
The National Association of Theater Owners, a trade organization for cinemas in the United States and beyond, has mostly put on a brave face during the pandemic: Movie theaters can and will get through this crisis.
On Wednesday, with cinemas still closed in New York and Los Angeles and studios having vacated most of the October release calendar, the group struck a very different tone in a letter to Congress pleading for financial help. “Absent a solution designed for their circumstances, theaters may not survive the impact of the pandemic,” the letter said.
The theater association was joined by the Motion Picture Association, which represents the largest studios and Netflix; the Directors Guild of America; and 70 Hollywood heavyweights, including Martin Scorsese, Greta Gerwig, Clint Eastwood, Alfonso Cuarón, Lulu Wang, Christopher Nolan, Judd Apatow, James Cameron, Michael Bay, Alejandro Gonzalez Iñárritu, Barry Jenkins and Barbara Broccoli.
The letter said that “69 percent of small and midsize theater companies will be forced to file for bankruptcy or close permanently” without government help. The group suggested Congress could redirect unallocated CARES Act stimulus funds or enact new measures. Such theater closures would translate into 99,000 lost jobs.
More than 60 percent of households with children in the United States reported serious financial problems — including struggles to afford medical care, depletion of household savings and difficulty paying credit card and other debts — during the coronavirus pandemic, according to a new poll.
Black and Latino households with children bear the brunt of the hardships. Of the Latino households who responded, 86 percent reported these difficulties; in Black households, 66 percent reported them. In white households, the number hovers around 50 percent.
The immense differences were surprising, as they came after federal and state governments invested heavily in programs for communities disproportionately affected by the pandemic, said Robert Blendon, a director of the study behind the report and a professor at the Harvard School of Public Health.
“So much money was spent to put a cushion under households,” Dr. Blendon said, adding that because of this, “the expenditures should have lowered for everybody.” But, he said, “the numbers of people in trouble, that is the shock.”
The poll, conducted by NPR, the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health, surveyed more than 3,400 adults, 1,000 of whom were living with children under the age of 18, from July 1 to Aug. 3.
Now that some government measures to support households financially during the pandemic are waning, experts are concerned that the financial devastation could be worse than what the survey shows, said Julie Morita, the executive vice president of the Robert Wood Johnson Foundation. Now, Dr. Morita said, “households are probably suffering just as much if not more,” leaving Black and Latino communities especially “unprotected.”
The survey highlights other challenges faced by households with children during the pandemic. More than a third of them reported “serious problems” keeping children’s education going. Six in 10 said that an adult in the home lost their job, was furloughed or had wages or hours cut. And in nine out of 10 households where someone contracted the coronavirus, they faced “serious financial problems” in addition to difficulty caring for their children.
These responses, Dr. Blendon said, show that a high number of households — particularly Black and Latino ones — will face substantial long-term financial effects from the pandemic.
“It’s a very large number of people who can’t pay the basics,” Dr. Blendon said. “You have unbelievably vulnerable people over the next six months.”
One in four women — and one in three mothers — are considering scaling back or dropping out of the work force, according to a new study that examined disruptions in the workplace caused by the pandemic.
Mothers are more likely to be thinking about taking drastic steps than fathers, and among those mothers who are thinking about downsizing or leaving, a majority cite child care responsibilities as a primary reason, according to the study, the sixth annual Women in the Workplace report from McKinsey and LeanIn.org.
Researchers at McKinsey and Lean In polled more than 40,000 North American workers for the survey, which is one of the most comprehensive studies of working men and women during the pandemic. The study comes at a time when many children have returned to school and parents are struggling to juggle work responsibilities while helping their adjust to online learning or a different and limited in-person school schedule.
The study also found that the pandemic has hit Black and Latina mothers particularly hard, with Latina mothers 1.6 times more likely than white mothers to be responsible for all child care and housework, and Black mothers twice as likely to be handling these obligations.
The report warned that corporate America is at a crossroads for gender parity. Over all, the study found that as many as two million women are considering taking a leave of absence or leaving the work force, the first year that the study has shown signs that women are leaving the labor force at higher rates than men.
“Without bold steps, we could erase all the progress we’ve made toward gender equality in the six years of this study,” the report stated. “But if companies rise to the moment, we can lay the foundation for a more flexible and equitable workplace in the long term.”
A panel of judges began hearing evidence Wednesday against Rupert Stadler, the former chief executive of Audi, a division of Volkswagen, as he became the first of dozens of former managers and engineers to face trial in Germany on charges they oversaw an enormous emissions cheating conspiracy.
For the first time, prosecutors offered a new motivation for why they contend Mr. Stadler, who was also a member of Volkswagen’s management board, authorized the sale of diesel Audis with illegal emissions software even after U. S. authorities had exposed the fraud: He wanted to keep sales up so he could collect his bonus.
Mr. Stadler, 57, who ran Audi, Volkswagen’s luxury car division, from 2007 to 2018, arrived at a Munich courtroom Wednesday morning with his lawyers, German media reported.
The evidence against Mr. Stadler and three other defendants will be heard by a panel of three professional judges and two lay judges, who are similar to jurors, in that they do not necessarily have formal legal training. All five members of the panel will vote on whether to convict Mr. Stadler when the trial concludes after proceedings that are expected to last two years. He has denied the charges.
No witnesses were scheduled to testify Wednesday. Prosecutors were expected to spend most of the day reading a 92-page indictment, which details how Audi engineers developed software beginning in the early 2000s that could detect when regulators were testing a car’s emissions.
The software adjusted the emissions controls so that the car appeared to be compliant. Other times, the car polluted far more than allowed.
Initially, Audi wanted to spare customers the loud noise that diesel engines made while the emissions control system was warming up. Later, to avoid inconveniencing customers, Audi used the software to limit how often owners would have to refill a tank on the car with a fluid, known as AdBlue, that was necessary for the emissions system to work properly.
Engineers at Volkswagen, the parent company, adapted the illegal software in 2006 when they ran into problems developing a diesel engine that could meet U.S. pollution standards, which are stricter than in Europe.
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Ben van Beurden, the chief executive of Royal Dutch Shell, said Wednesday that he was speeding up a reorganization of the company that will result in the loss of up to 9,000 jobs by the end of 2022.
In an interview published on Shell’s website, Mr. van Beurden said the company needed to be reshaped to meet its targets of net zero carbon emissions by 2050. At the same time, Shell is under pressure to cut costs because of lower demand for oil and gas because of the coronavirus pandemic.
Europe’s major oil companies, including Shell, Total and BP, are shifting under pressure from society and government to reduce emissions in order to tackle climate change.
Mr. van Beurden said the job cuts would help Shell shed up to $2.5 billion in operating costs. He said that 1,500 people had already left the company on voluntary redundancy packages this year. Shell has about 83,000 employees.
By 2050, Mr. van Beurden said, Shell’s business lines would differ markedly from today. He said that Shell would still sell some oil and gas but that its products by midcentury would be “predominantly low-carbon electricity, low carbon biofuels,” as well as hydrogen and other “solutions.” The company is expected to present more details of its plans in February.
More than 8,100 blazes have burned nearly four million acres across California this year. The Glass Fire that broke out this week near Napa, which is only 2 percent contained, is ravaging parts of the famous winemaking region in the middle of the harvest season, and the effects may linger long after it and other fires are extinguished.
Grapes untouched by flames can be tarnished by ash or smoke taint, and the extent of the damage is revealed only in the fermentation process. (Because red wines are fermented along with their skins, which bear the brunt of smoke taint, they are more affected than whites.) There is a testing backlog, so the extent of the taint is not yet known, Gladys Horiuchi of the lobbying group Wine Institute told the DealBook newsletter.
Most California wine grapes are sold in advance, so vineyards and wineries are negotiating to mitigate the impact of the fires, Ms. Horiuchi said. The goal is to avoid any smoke-tainted wine ever going on sale. That means, for now, drinkers are unaffected, sipping wines from prior harvests. But even if consumers don’t notice any difference in flavor or pricing down the line, behind the scenes, supply chains and longstanding industry relationships are already coming under strain.
Some wineries are offering growers reduced payments to keep them in business but avoid potentially tainted grapes, while major buyers like Constellation Brands warn that contracts could be voided for elevated taint. And wineries previously concerned about oversupply because of the pandemic’s effect on restaurant sales are looking to the bulk market to cover a potential shortfall.
The San Francisco Chronicle is keeping a running list of wineries and vineyards in Napa that have been hit by the Glass Fire, with extensive damage reported at Castello di Amorosa (although its famous castle survived), Chateau Boswell and LVMH-owned Newton Vineyard, among others.
Treasury Secretary Steven Mnuchin said on Wednesday that he was giving stimulus talks “one more serious try” and that he would present House Speaker Nancy Pelosi with a counteroffer later in the day that lays out the Trump administration’s proposal.
“I think we’re hopeful that we can get something done,” Mr. Mnuchin said at a conference sponsored by CNBC.
The Treasury secretary said that the proposal would be similar to the one unveiled by the House Problem Solvers caucus this month and that it would be about $1.5 trillion.
Mr. Mnuchin said that it would include liability protections for schools and businesses, more economic impact payments, support for airlines and relief money for emergency workers in states.
“More fiscal response will help the economy,” Mr. Mnuchin said.
Mr. Mnuchin indicated that it would be clear in the next day or two if a deal was possible. He said he did not anticipate a stand-alone bill to help the airline industry but said that he would be briefing airline executives on Wednesday afternoon on progress and had been encouraging them to hold off on planned layoffs.
The Treasury Department said Tuesday that it had completed loans for seven passenger airlines, drawing from the $25 billion set aside for the industry under the March stimulus law known as the CARES Act.
“The payroll support and loan programs created by the CARES Act have saved a large number of aviation industry jobs, and kept workers employed and connected to their health care, during an unprecedented time,” Treasury Secretary Steven T. Mnuchin said in a statement. “We are pleased to conclude loans that will support this critical industry while ensuring appropriate taxpayer compensation.”
In exchange for the loans, the airlines are subject to requirements like limiting executive compensation, refraining from stock buybacks and issuing warrants or equity to the federal government. The recipients are Alaska Airlines, American Airlines, Frontier Airlines, JetBlue Airways, Hawaiian Airlines, SkyWest Airlines and United Airlines.
American announced last week that it had completed a $5.5 billion loan from the Treasury, but expected that to rise to $7.5 billion after the agency reallocates funding set aside for other carriers, like Delta Air Lines and Southwest Airlines, that declined the loans. That amount, $7.5 billion, is the maximum any airline will receive, the Treasury said.
For six months, Disney has kept tens of thousands of theme park workers on furlough with full health-care benefits in hopes that a light at the end of the pandemic tunnel would appear. On Tuesday, Disney conceded that none was coming.
The company said it would eliminate 28,000 theme park jobs in the United States, or about 25 percent of its domestic resort work force.
“As heartbreaking as it is to take this action, this is the only feasible option we have in light of the prolonged impact of Covid-19 on our business, including limited capacity due to physical distancing requirements and the continued uncertainty regarding the duration of the pandemic,” Josh D’Amaro, chairman of Disney Parks, Experiences and Products, said in an email to “cast members,” which is how Disney refers to theme park workers.
About 67 percent of the layoffs will involve part-time jobs that pay by the hour. However, executives and salaried workers will be among the laid off. Disney’s theme parks in California and Florida employed roughly 110,000 before the pandemic. The job cuts, which will come from both resorts, will reduce that number to about 82,000.
Disneyland in California has remained closed because Governor Gavin Newsom has refused to allow theme parks in the state to restart operations. About 31,000 people work at the Disneyland complex and the majority are unionized and have been furloughed.
Mr. D’Amaro said in a statement that the layoffs were “exacerbated in California by the state’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
Walt Disney World in Florida reopened on a limited basis in mid-July. But attendance has been weaker than Disney expected, with concern about coronavirus safety a major factor.
Disney will now begin negotiations with unions that represent the bulk of the affected employees. About 20,000 unionized Disney workers have been called back to work at Disney World. Roughly 20,000 more remain on furlough, a stoppage that began in mid-April. Disney World employed more than 70,000 workers before the pandemic.