United Airlines said on Wednesday that it could furlough as many as 36,000 workers, or nearly 40 percent of its staff, starting Oct. 1 if travel remained weak and if enough employees did not accept buyout and early retirement packages.
Airlines have been warning workers for months that they could start making significant cuts once federal stimulus funds expire. United received about a fifth of the $25 billion Congress authorized in March to help airlines pay employees as long as the companies made no significant cuts through Sept. 30.
The Oct. 1 furloughs would include about 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance employees, and 2,250 pilots, among others. Those numbers could be smaller if ticket sales pick up significantly or if many thousands of workers apply for reduced hours or voluntary leave before a mid-July deadline United has set for buyouts and early retirement packages, the airline said in a memo to its employees. United is also cutting almost a third of management and administrative employees.
“The United Airlines projected furlough numbers are a gut punch, but they are also the most honest assessment we’ve seen on the state of the industry,” said Sara Nelson, president of the Association of Flight Attendants union, which represents nearly 50,000 workers at 19 airlines, including United.
In a statement, Ms. Nelson called on Congress to extend the stimulus funding “to avoid hundreds of thousands of layoffs from an industry that normally drives economic activity.”
Most workers will know if they are being furloughed by the end of August. Most of those who are furloughed will be eligible to return to their jobs when air travel picks up.
Air travel had started to rebound after falling about 96 percent in April, but the recovery has been choppy and is expected to remain uneven. On Tuesday, United announced that it was revising the August schedule it announced only last week because bookings had begun sliding again amid a surge in virus cases in the Sunbelt and after Connecticut, New Jersey and New York said they would require travelers from states with rising infection rates to quarantine themselves for two weeks.
On Tuesday, about 642,000 people went through federal airport security checkpoints, about a quarter of the foot traffic from the same time last year. — Niraj Chokshi
Technology stocks led Wall Street higher on Wednesday, but trading was unsteady as investors considered the spreading coronavirus outbreak and new friction between the United States and China.
After swinging from gains to losses and back again, the S&P 500 rose less than 1 percent. The technology heavy Nasdaq composite fared better, rising nearly 1.5 percent, as shares of companies including Amazon, Microsoft, Facebook and Apple rallied. All four of those stocks, and the broader Nasdaq composite, hit record highs on Wednesday.
Technology stocks, favored by investors who see them as insulated from the worst of the coronavirus pandemic, have rallied since late June amid a surge of cases of the virus across the United States. The companies have cash stockpiles that will protect them from any downturn, and products that are in higher demand as the pandemic keeps workers at home.
More broadly, stocks have been climbing recently even as the number of coronavirus cases in the United States surge and governments begin to reinstate restrictions on gatherings and other activity in an effort to contain the virus. That’s in part because of data showing that the economy is rebounding from its lows earlier this year.
But it also puts markets at risk of a sharp pullback if leaders take more drastic action, or investors are confronted with evidence of the toll the pandemic is taking on corporate profits.
Wall Street’s advance on Wednesday stood in contrast to a drop in global markets. Shares in Europe and Asia were mostly lower.
— Kevin Granville and Mohammed Hadi.
Brooks Brothers, the clothier best known for men’s wear that traces its roots back to 1818, filed for bankruptcy on Wednesday, as the brand buckled under the pressure from the coronavirus pandemic following years of declining sales.
The company, founded and based in New York, filed for Chapter 11 restructuring proceedings in the U.S. Bankruptcy Court for the District of Delaware. Claudio del Vecchio, the Italian industrialist who bought the brand in 2001 and still owns the company, told The New York Times in May that he would not rule out Chapter 11 as a possibility for the company.
Brooks Brothers said in an emailed statement that the filing would allow it to obtain additional financing and ease a sale to a new owner.
The bankruptcy represents the latest big retail casualty during the pandemic, which has caused widespread store closures and sales declines, and pushed major names like J.C. Penney, Neiman Marcus and J. Crew into Chapter 11 proceedings since May. All of the chains, including Brooks Brothers, plan to keep operating, though likely in a pared-back fashion.
Brooks Brothers, with its preppy men’s wear, has been hit especially hard by the pandemic in an era of remote work and job interviews through Zoom, and the postponement of celebrations like weddings, bar mitzvahs, graduations and more.
The company, which is the oldest apparel brand in continuous operation in the United States, said on Wednesday that it had decided to close 51 U.S. stores of its roughly 250 locations in North America. Earlier this year, Brooks Brothers said it would close its three U.S. factories, which are in Queens, Haverhill, Mass., and Garland, N.C., spurring concern around the health and the future of the brand.
Brooks Brothers has a rich connection to American heritage and culture. It has dressed all but four U.S. presidents and its overcoats have been worn for the inaugurations of Abraham Lincoln, Barack Obama and Donald J. Trump, among others. It has outfitted Clark Gable, Andy Warhol and Stephen Colbert, and even Ralph Lauren started out as a salesman at Brooks Brothers in New York. — Sapna Maheshwari and Vanessa Friedman
The Federal Reserve Bank of Boston on Wednesday released a list of lenders that have signed up for the central bank’s mid-size business lending program and are willing to make loans to new customers through the initiative.
Noticeably absent from the list are most of the nation’s biggest banks. Only Bank of America has so far agreed to participate and take on new clients, based on the Boston Fed’s map, while lenders like J.P. Morgan Chase, Citigroup, Wells Fargo are not listed.
The data released Wednesday was restricted to banks who are willing to lend to new customers. Most states have only a handful of open lenders, with seven listed in California and nine in New York, based on the Boston Fed’s release.
Banks can also participate in the program by making loans to existing clients. While thousands of banks are eligible to sign up, only about 300 had signed up to participate in total, Fed officials have previously said. The Fed has not released a full list of all banks participating in the program.
The Fed’s mid-size business lending program, called the “Main Street” program, opened for lender registration in June and became fully operational on Monday. While the Fed first said that it would set up a Main Street program in late March, it has never attempted to support mid-sized businesses before and Chair Jerome H. Powell has said that designing the program was a challenge. — Jeanna Smialek
Warren Buffett announced on Wednesday that he had donated $2.9 billion worth of stock to nonprofit groups, following through on his pledge to give away nearly all his fortune to philanthropic causes before he dies.
Mr. Buffett, 89, said in a statement that he had given shares in Berkshire Hathaway, the conglomerate that he has run for decades, to five organizations: the Bill and Melinda Gates Foundation; the Susan Thompson Buffett Foundation, the nonprofit named for his late wife; and three groups founded by his children.
It was his 15th annual donation since 2006. Over that time, he has gifted about $37 billion worth of Berkshire stock. The stock that Mr. Buffett still holds is worth around $67 billion.
That Mr. Buffett has given money to Mr. Gates is no surprise: The two are close friends, with Mr. Gates sitting on Berkshire’s board — and serving as a regular bridge partner to Mr. Buffett. Among the Gates Foundation’s philanthropic focuses is the coronavirus; it has poured money into development of Covid-19 vaccines and paid to help distribute them to poorer countries.
Mr. Buffett and Mr. Gates founded the Giving Pledge, a nonprofit that encourages fellow tycoons to promise to give away at least half of their wealth over their lifetimes. — Michael J. de la Merced
The U.K. government’s top financial official announced a host of tax and spending measures on Wednesday to preserve and create jobs in Britain as the country anticipates a wave of layoffs caused by the pandemic.
Rishi Sunak, chancellor of the Exchequer, unveiled to Parliament a 30 billion pound ($37.7 billion) proposal that included tax cuts, employment coaching and even a 50 percent discount for diners who go to restaurants and pubs.
“Despite the extraordinary support we’ve already provided, we face profound economic challenges,” Mr. Sunak said. “Taken together in just two months, our economy contracted by 25 percent, the same amount it grew in the previous 18 years.” With more job losses forecast, he added: “I will never accept unemployment as an unavoidable outcome.”
But he said Britain’s furlough program, which has paid up to 80 percent of the wages of 9.4 million workers since March, would end in October, as previously announced. Keeping it longer, he said, would provide “false hope” to workers. Instead, employers will receive £1,000 for each employee they bring back to work through January.
Among the initiatives Mr. Sunak introduced:
£2 billion to pay the wages for up to six months for young people aged 16 to 24 offered new jobs.
A temporary cut to Britain’s VAT, a type of sales tax, for the hospitality and tourism industries to 5 percent from 20 percent.
An “Eat Out to Help Out” discount, cutting in half the cost of meals eaten in restaurants and pubs, up to £10 per person.
A reduction in the stamp duty, which is a tax paid on home purchases.
£3 billion targeted at creating green jobs by funding vouchers to pay for home insulation and making public buildings more energy efficient. — Eshe Nelson
United Airlines said on Tuesday that it was cutting back on the August flight schedule it announced just last week because travel demand was sliding again as coronavirus cases surged across much of the country.
United management told employees this week that it expected to fly about 35 percent as many flights next month as it did last August, down from the 40 percent it announced a week ago, the airline said in a securities filing released after the market close.
The airline said its flight schedule for the rest of the year was likely to look much like its reconfigured August plan because the recovery would remain choppy. The airline does not expect demand to recover fully until a “widely accepted” treatment or vaccine for the virus is available. United had operated about 12 percent as many flights in June as it did last year and expects to operate about 25 percent as many flights in July compared with the same month last year.
Demand for flights started to fall as the recent increase in cases nationwide — and the associated travel and quarantine restrictions — made flying less appealing, United said. Bookings for upcoming flights at the airline’s Newark hub, for example, had started to recover in the first half of June only to reverse course after Connecticut, New Jersey and New York, said on June 24 they would require travelers visiting from states with rising infection rates to quarantine for 14 days.
The airline also said that it planned to send out legally required notices to workers by mid-July warning of possible layoffs once federal aid to the aviation industry expires at the end of September. Those affected could be notified as soon as next month, United said. — Niraj Chokshi
West Elm said on Wednesday that it had committed to the 15 Percent Pledge, an initiative recently formed to urge major retailers to commit 15 percent of their shelf space to Black-owned businesses. The chain followed Sephora and Rent the Runway in taking the pledge, which spread rapidly on social media last month. West Elm said that it would increase its design collaborations with Black designers, artists and Black-owned brands to at least 15 percent of its total collaborations, raise the share of Black employees in its corporate work force to at least 15 percent and make a multiyear donation to the 15 Percent Pledge, which has become a nonprofit organization. The group, which has been asking major chains like Target and Nordstrom to sign on, will work with West Elm on “accountability measures” to help it hit its benchmarks.
The industrial giant Alcoa said on Wednesday that gains in productivity and cost savings in the second quarter had helped offset lower aluminum prices caused by falling demand during the pandemic. The company, based in Pittsburgh, forecast that its net loss in the quarter that ended June 30 would to narrow to $190 million to $205 million, from a loss of $402 million in the same period a year ago. Alcoa will release its financial results July 15.