Delta’s $5.4 Billion Loss Underscores Airline Industry’s Painful Way Forward

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Delta Air Lines lost $5.4 billion in the three months through September, and its operating revenue plunged 79 percent from the year before, as the industry weathered a deep and sustained crisis caused by the coronavirus pandemic.

The results, reported by the company on Tuesday, are an improvement over the second quarter of the year, when Delta reported a slightly larger $5.7 billion loss and an 88 percent decline in revenue, but with the peak summer travel season behind them, Delta and other airlines are bracing for a weak fall and winter.

“With a slow and steady build in demand, we are restoring flying to meet our customers’ needs, while staying nimble with our capacity in light of Covid-19,” Delta’s president, Glen Hauenstein, said in a statement. “While it may be two years or more until we see a normalized revenue environment, by restoring customer confidence in travel and building customer loyalty now, we are creating the foundation for sustainable future revenue growth.”

The airline said it would retire nearly 400 planes ahead of schedule by 2025, including more than 200 this year. It also said it has cut back on plans to buy more than $5 billion worth of aircraft through 2022.

Because of the slowdown in travel, Delta has parked or retired about 40 percent of its fleet of planes, cutting fuel and maintenance costs by about three-quarters. Delta said salary and benefit expenses in the quarter fell by about a third after about 18,000 employees made sacrifices, including taking early retirement, buyouts, unpaid leave or reduced hours. The airline ended September with about $21.6 billion in cash on hand.

Air travel is down more than 60 percent, as of Monday. Airlines had hoped to secure a second round of federal stimulus aid last month, but despite bipartisan support, the effort fell through.

United Airlines is expected to report its quarterly performance later this week, with American Airlines and Southwest Airlines scheduled to follow suit next week.

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Legions of small businesses are struggling to stay afloat in the United States and 12 million people are unemployed, but robust activity in the financial markets is helping big banks continue to earn billions of dollars.

JPMorgan Chase and Citigroup reported declines in consumer loans and credit card sales in the third quarter this year, but their Wall Street trading businesses boomed, highlighting how Americans’ fortunes have continued to diverge as the coronavirus pandemic rages on.

JPMorgan earned $9.44 billion for the quarter, compared with $4.76 billion last quarter and $9.08 billion in the same period a year ago. Its revenue was $29.94 billion.

Its consumer business earnings were 9 percent lower than last year, thanks to a dip in the amount of money it was able to earn from maintaining customers’ bank accounts, combined with a drop in credit card sales and new home loans.

But JPMorgan’s Wall Street operations revealed a different trend: Revenue rose 21 percent this year compared with the same period last year, and its corporate and investment banking earnings were 52 percent higher than last year. The bank attributed the growth to higher investment banking fees.

Citi’s earnings were $3.2 billion for the quarter, compared with $4.9 billion a year ago, on revenue of $17.3 billion. Its consumer banking revenue fell 13 percent compared with last year, while its revenue from trading and investment banking services rose 5 percent.

JPMorgan’s chief executive, Jamie Dimon, said that the bank was not changing its plans for new headquarters in New York, but it was likely that more employees would be working from home, at least part time, in the future.

“I do think it will ultimately reduce the space you need for your employees,” he said on a conference call with journalists on Tuesday. About 20 percent of its work force in New York and London has returned to the office.

Citigroup’s chief financial officer, Mark Mason, said a recent survey of New York-area employees revealed that around 30 percent wanted to return to their offices, at least part time.

But the bank is moving slowly to bring employees back, Mr. Mason said, because it wants to monitor employees’ safety and make sure they stay protected from the virus. So far, he said “a small percentage” of employees in North America have returned to their offices.

JPMorgan has been stockpiling cash to prepare for future losses, but it only added $611 million to its reserves during the third quarter, a big drop from the previous quarter, when it added $11 billion. It had to spend almost as much covering losses, which kept the size of its pool of reserves the same, at $34 billion.

Citigroup also sharply cut its addition to its loss reserves, increasing its pool by just $149 million, a drop from the $5.6 billion it set aside during the second quarter this year.

Mr. Dimon and Mr. Mason both said another round of federal aid for struggling Americans would help keep the country’s economy on track to recover.

“The longer we go without some type of vaccine that’s been tried and tested, the greater the need for an additional stimulus,” Mr. Mason said.

Mr. Dimon said a “double-dip” recession would have severe ramifications. The bank is expecting a wave of loan charge-offs during the second half of 2021.

As far as the forecast for the bank’s performance is concerned, Mr. Dimon said, “If the better outcomes happen, we are over reserved by $10 billion, and if the bad outcomes happen, we are under-reserved by $20 billion.”

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Almost 4,000 tech and corporate workers at Amazon have signed an internal proposal asking the company to give all its workers, including those in its warehouses, a paid day off to vote, according to organizers and screenshots of the effort viewed by The New York Times.

“Voting during the pandemic means hourslong lines and confusion over where and how to vote,” the internal proposal said. “Amazon has an opportunity to raise the bar and help ensure that every Amazon worker’s vote will be counted.”

Amazon has more than 600,000 workers in the United States. A company spokeswoman, Jaci Anderson, said that in states with in-person voting, workers can request time off at the start or end of their shifts to vote, but how many hours, and whether it is paid, varies based on what state law.

Many states require employees to be excused and paid for a few hours if voting conflicts with work schedules, but several battleground states, including Florida and Pennsylvania, do not require employers to provide paid time off for elections.

A growing number of retailers, including Walmart, offer paid time off nationwide, and some, like Best Buy and Patagonia, are closing for a few hours on Election Day, Nov. 3, so employees have time to vote.

On its internal website, Amazon recently encouraged warehouse workers to register and make a plan to vote.

Credit…Damon Winter/The New York Times

BlackRock, the world’s biggest money manager, reported a strong third quarter on Tuesday morning, as investors continued to look for lucrative ways to manage their money during a turbulent time.

In the third quarter, as U.S. stocks rallied back from their spring lows, BlackRock’s assets under management — the overall amount of money it manages for clients — rose to $7.8 trillion, a 12 percent lift from the same period last year. Revenue climbed to $4.37 billion and profit rose to $1.36 billion, surpassing Wall Street analysts’ expectations.

The gains came from a mix of businesses, but were particularly buoyed by fees from the company’s iShares exchange-traded funds business, which manages investment vehicles that track baskets of individual companies or bonds, as well as from individual investors.

“Our diverse platform saw inflows across all asset classes, investment styles and regions,” BlackRock’s chief executive, Laurence D. Fink, said in the company’s earnings release. He noted that more than half of BlackRock’s newer long-term investors came from clients in Europe and Asia.

The pandemic accelerated BlackRock’s growth opportunities and drove a greater focus among clients on issues of climate change and responsible investing, company executives said on a conference call with investors. They added it had also prompted them to consider the advantages of remote work.

Only 6 to 7 percent of BlackRock’s 16,000 workers are in the office, the company said, and executives hope to bring more back soon.

At the same time, said Mr. Fink, “many large companies including BlackRock have learned that, yes, we can work remotely without much in terms of degradation of operational efficiencies.”

Going forward, he envisions allowing 30 to 40 percent of BlackRock’s employees to work remotely, a policy that could reduce traffic congestion in cities, help the environment and allow workers to invest additional time not only on their jobs but also potentially on exercise and their families.

In those ways, Mr. Fink said, the “horrific-ness of Covid” could prove a “blessing.”

BlackRock shares were up nearly 4 percent in trading.

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The International Monetary Fund said on Tuesday that the world economy is beginning its ascent from the worst downturn since the Great Depression but that the deep recession caused by the coronavirus pandemic will leave scars on labor markets for years to come.

In its latest World Economic Outlook report, the I.M.F. projected that the global economy would contract 4.4 percent in 2020. The forecast was a slight improvement from its midyear projection, as the easing of lockdowns and robust fiscal and monetary policy support have helped output recover more quickly than previously expected. But the global economy is not yet out of the woods.

“This crisis is, however, far from over,” Gita Gopinath, the I.M.F.’s chief economist, wrote in a memo accompanying the report. “The ascent out of this calamity is likely to be long, uneven, and highly uncertain.”

Ms. Gopinath urged countries not to withdraw policy support prematurely and warned that the crisis is intensifying inequality. Labor markets remain well below their prepandemic levels, and women, the young and low-income workers have been hit the hardest. National debt levels are swelling as tax bases shrink.

The recession is hammering both advanced and emerging economies. The United States economy is expected to contract 4.3 percent this year, and the eurozone economy is projected to shrink 8.3 percent, led by sharp contractions in Spain and Italy.

The lone exception this year is China, where the virus was first detected. China’s economy is projected to expand 1.9 percent in 2020, as its aggressive measures to contain the virus have allowed economic activity to resume more quickly.

The I.M.F. expects the global economy to expand 5.2 percent next year and then slow to a rate of 3.5 percent over the next several years. Compared with the group’s prepandemic projections, the world will lose $28 trillion in total output through 2025.

Significant uncertainty remains.

Continued aggressive fiscal support is not a given, considering mounting government debt. In the United States, for example, lawmakers have struggled to agree on another stimulus package amid political gridlock and concerns about spending.

The economic forecasts are also highly dependent on the trajectory of the virus and on the ability to combat it. Successful vaccines and more effective therapies will be required in order for countries to ease social distancing requirements and allow businesses to resume normal activity next year.

A resurgence of the virus and subsequent national lockdowns would mean more economic turmoil, the I.M.F. warned.

Credit…Pool photo by Michael Clubb

Speaker Nancy Pelosi of California defended her unwillingness to accept anything less than a broad coronavirus stimulus package in negotiations with the administration, on the same day that President Trump called on Twitter for negotiators to “go big or go home!!!”

Senate Republicans, meanwhile, are heading toward a vote to advance a scaled-down package that Democrats are unlikely to support.

In a heated CNN interview, Ms. Pelosi chastised Wolf Blitzer, the CNN anchor, and his colleagues as “apologists for the Republican position” after Mr. Blitzer noted that some Democrats, including Andrew Yang and Representative Ro Khanna of California, have urged her in recent days to cut a deal with the administration. Steven Mnuchin, the Treasury secretary, last put forward a $1.8 trillion framework in negotiations.

“Honest to God, I can’t get over it,” Ms. Pelosi said, who muscled a $2.2 trillion proposal through the House earlier this month. “Andrew Yang, he’s lovely. Ro Khanna, he’s lovely. They are not negotiating this situation. They have no idea of the particulars. They have no idea of what the language is here.”

The interview on Tuesday further underscored Ms. Pelosi’s unwillingness to accept a scaled-down bill, even as Senator Mitch McConnell of Kentucky, the majority leader, announced the Senate would vote to advance such a package when the full chamber returns later this month. Senate Democrats have also accused their Republican counterparts of prioritizing a Supreme Court confirmation over negotiating a stimulus bill.

The scaled-down package, Mr. McConnell said at an event in his home state of Kentucky, is likely around $500 billion and containing funds for hospitals, schools, enhanced unemployment benefits and the Paycheck Protection Program, a popular federal loan program for small businesses that has expired without congressional action.

It is unlikely that such a package would secure the necessary Democratic support needed to clear the chamber, a reality further highlighted by the combative CNN interview with Ms. Pelosi. When Mr. Blitzer pressed her again to not let perfect be the enemy of the good, given the mounting toll of the pandemic, she said the administration’s offer was “not even close to the good.”

In a private caucus call before the interview, she and her top lieutenants on Tuesday continued to rail against the administration’s latest offer was inadequate.

“We really need to have an agreement, but we cannot have an agreement by just folding,” she said. “I don’t think our leverage has ever been greater than it is now.”

Ms. Pelosi pushed back on the suggestion that she should accept anything less than the latest $2.2 trillion Democratic proposal, after coming down from the original $3.4 trillion proposal the House approved in May.

“I appreciate, shall we say, a couple people saying, Take it, take it, take it,” Ms. Pelosi said. “Take it? Take it? Even the president is saying, ‘Go big or go home.’”

But the $1.8 trillion offer also faced additional resistance among the majority of Senate Republicans, who lashed out at top administration officials on Saturday for putting forward a counteroffer that they felt to be too expensive and veering toward catering too much to Democratic priorities.

  • Stocks fell on Tuesday, a lull after a stretch of gains, as investors began to consider the latest round of earnings reports, and a major vaccine trial was paused.

  • The S&P 500 declined 0.6 percent, after a rally that had lifted the benchmark by 5 percent this month. Shares in Europe also ended lower.

  • Among companies reporting third-quarter results on Tuesday, JPMorgan Chase shares fell even after the bank reported a surge in trading revenue. Delta Air Lines said it lost more than $5 billion during the quarter — and its shares were more than 2 percent lower.

  • Apple dropped more than 2 percent, as the company showcased its newest iPhone models and other new products.

  • Eli Lilly fell nearly 3 percent on Tuesday after a government-sponsored clinical trial of an antibody coronavirus treatment developed by the company was paused because of a “potential safety concern.” Late on Monday, Johnson & Johnson said that it had paused the late-stage clinical trial of its coronavirus vaccine because of an “unexplained illness” in one of the volunteers. The company did not say whether the sick participant had received the experimental vaccine or a placebo. Its shares fell more than 2 percent.

  • Shares of the Walt Disney Company climbed 3 percent after Bob Chapek, the new chief executive, reorganized the entertainment company to put more focus on its streaming service

Credit…Daniel Becerril/Reuters

The coronavirus pandemic will slash global energy demand this year by 5 percent, according to an International Energy Agency forecast issued on Tuesday. The decline would be the largest over the last century except for those during the two World Wars and the Great Depression.

In its annual World Energy Outlook, the agency said demand for the most carbon-intensive fuels, oil and coal, had slumped the most, while renewables had been affected the least. All told, the agency expects a 7 percent reduction from 2019 in energy-related carbon-dioxide emissions linked to climate change.

The report said continued declines in demand and emissions were uncertain. “If 2020 is to mark a turning point for the energy sector,” it said, “then it will be government policies and recovery strategies that drive the necessary changes. There is a strong case to build energy and sustainability into the recovery strategies that governments are now putting together.”

The agency said coal demand might never return to pre-pandemic levels. The big winner will be solar power, which the agency says is becoming cheaper than electricity produced by fossil-fuel generators in most countries. As for oil demand, the agency said it was too early to foresee a significant decline without aggressive policy initiatives.

  • Consumer prices increased in September, driven by strong demand for used cars and trucks. Prices for used vehicles were up 6.7 percent last month, the largest increase since February 1969, with the gains in this category accounting for most of the monthly overall increase in consumer prices. The Consumer Price Index rose 0.2 percent in September on a seasonally adjusted basis, slowing from a 0.4 percent increase in August, the Labor Department reported on Tuesday.

  • AMC Entertainment has resumed operations at 494 of its 598 theaters in the United States, representing about 83 percent of its total U.S. theaters, the company said Tuesday in a regulatory filing. Because of delays in upcoming movie releases and the fact that some of the AMC’s “most productive” movie theaters remain closed, the company said that its existing cash resources would be largely depleted by the end of 2020 or early 2021. AMC said it would require additional sources of liquidity or increases in attendance levels to meet its financial obligations moving forward.

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In March, companies told their employees they’d be out of the office for weeks. Weeks turned into September, then January, and now, with the virus still surging in some parts of the country, a growing number of employers are keeping employees out of the office until the summer of 2021.

And workers said they were in no rush to go back, with 73 percent of U.S. employees fearing that being in their workplace could pose a risk to their personal health and safety, according to a study by Wakefield Research commissioned by Envoy, a workplace technology company.

Google was one of the first to announce that July 2021 was its return-to-office date. Uber, Slack and Airbnb soon jumped on the bandwagon. In August, DocuSign said its 5,200 workers would be able to stay home until June.

In the past week, Microsoft, Target, Ford Motor and The New York Times said they, too, had postponed the return of in-person work to next summer.

In May, Facebook was one of the first to do so. Twitter, Coinbase and Shopify have also said they would do so. On Friday, Microsoft announced it would also be part of that shift.

Ford last week said its decision to push back in-person office work through June 2021 would apply to its roughly 32,000 employees in North America who are already working remotely. The company, which has around 188,000 employees in total, said the policy does not apply to factory staff. When Target announced its decision about June 2021 in a letter to staff last week, it said it would apply just to employees at its headquarters in Minneapolis. The company said that a small number of employees who rely on the headquarters facilities would continue to work on-site. In-store employees will work in retail stores as usual.

Last month, Goldman Sachs and JPMorgan Chase sent send some workers back home after employees who had returned to the office tested positive for the virus.

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