Delta to retire the Boeing 777, the plane that helped it become global.
Delta Air Lines plans to retire all its Boeing 777 jets, a fleet that helped it become a global airline, as it prepares to shrink its network for up to three years to ride out what is expected to be a long and choppy recovery, especially for international travel.
“Retiring a fleet as iconic as the 777 is not an easy decision; I know it has a direct impact on many of you who fly, crew and service these jets,” Delta’s chief executive, Ed Bastian, told employees in a note. “The 777 played an important role with Delta since 1999, allowing us to open new long-haul markets and grow our international network as we transformed into a global airline.”
Delta said it would retire its 18 wide-body 777s by the end of the year. Once demand for international travel recovers, the airline plans to use newer, more fuel-efficient aircraft on long flights.
Delta is losing about $50 million a day, a figure that it hopes to bring to zero by the end of the year. It has already moved up plans to retire two other fleets, the MD-88 and MD-90, and has idled more than 650 jets in all.
Other airlines have made similar decisions, choosing to let go of older planes years ahead of schedule in anticipation of a slow, painful recovery. Delta has paid out $1.2 billion in ticket refunds since the crisis began, and more than 41,000 employees have agreed to take some form of unpaid leave of absence.
White House economic adviser says jobless claims indicate economy is recovering.
Nearly three million more Americans filed for unemployment benefits last week, continuing a devastating stretch of new jobless claims, but White House economic adviser Kevin Hassett told reporters on Thursday that Trump administration officials saw signs of an economic rebound in the numbers.
Mr. Hassett called the Labor Department’s report of jobless claims “better than expected” and said it likely showed improving economic strength in states where officials have begun to ease restrictions on economic activity imposed as the coronavirus outbreak spread rapidly over the last two months.
The claims totaled 2.98 million in the week through May 9, Thursday’s data showed. That’s down from the prior week, but still worse than what many economists had expected.
“The fact that we came in under 3 million suggests that the turning on of the economy is beginning, and it’s beginning to show up in the data,” Mr. Hassett said.
The coming weeks, Mr. Hassett said, should begin to show the degree to which activity is resuming in states that lift lockdowns, compared to states that keep them in place.
“My fear is that the places that stay closed could have skyrocketing claims” for jobless benefits, he said, while “the places that turn back on will have claims go back down toward normal.”
Many analysts did not share Mr. Hassett’s optimistic read of the new data.
The number of new claims exceeded the consensus forecast, which had been 2.5 million for the week. A research note from Pantheon Macroeconomics declared the number “a smaller drop than we hoped for,” and the researchers said they now expect the number of new claims will not fall below 1 million a week until the end of June, a delay from their previous forecast of mid-June.
Energy agency sees a steadying in the oil markets.
Fatih Birol, the chief of the International Energy Agency, said on Thursday that he saw “signs of a gradual rebalancing” in the oil market that has been ravaged by the coronavirus pandemic, but that the process of bringing supply in line with demand was still “fragile.”
Mr. Birol, discussing the agency’s monthly report, said that this year would most likely prove to be “the worst” in history for the oil market, with April probably the worst month.
Global demand for oil fell in April to about 25 percent below its normal level, the agency said, but is expected to slowly recover as more countries ease lockdown measures. The agency estimated that by the end of May, 2.8 billion people would be living under “some form of confinement,” down from a peak of four billion people.
At the same time, oil producers are making deeper and more rapid supply cuts than some analysts had expected. The agency forecast that demand may substantially outpace supply in the second half of this year, working off some of the massive glut that has built up.
Oil prices have recovered in recent days with Brent crude, the international benchmark, trading around $30 a barrel, well above its low of about $19 a barrel in late April but still down more than 50 percent for the year. The American standard, West Texas Intermediate, which briefly fell into negative prices, is trading about $26 a barrel.
Mr. Birol praised Saudi Arabia’s recent decision to cut an additional one million barrels a day beyond an agreement made on April 12, when OPEC members, Russia and other major producers agreed to 9.7 million barrels a day in cuts. The United Arab Emirates and Kuwait have also said they will chip in with modest trims.
New jobless claims reflect the pandemic’s economic misery.
Although the weekly count of new unemployment claims has been declining since late March, job losses from the coronavirus pandemic continue to mount. The two month tally of workers who joined the U.S. unemployment rolls is now over 36 million.
Michelle Meyer, head of U.S. economics at Bank of America, said that even with businesses reopening in some states, she doubted that callbacks to work outnumbered additional layoffs from other sectors. The slowdown has been rippling beyond the early shutdowns in retail and hospitality to professional business services, manufacturing and health care.
“In a sense, it’s a rolling shock,” she said.
Jerome H. Powell, the Federal Reserve chair, said Wednesday that Fed research being released Thursday would show that in households making less than $40,000 a year, about 40 percent of those working in February lost their jobs in March.
State unemployment insurance and emergency federal relief were supposed to tide households over during the shutdown. But several states have a backlog of claims, and applicants continue to complain of being unable to reach overloaded state agencies.
Stocks are unsteady amid concern for slow recovery.
Stocks fell on Thursday, as investors continued to assess the lasting damage they face from the coronavirus pandemic.
The S&P 500 was about half a percent lower, having recovered from an early drop of nearly 2 percent. Shares in Europe and Asia fell sharply.
Stocks have been declining this week as investors heard a drumbeat of warnings about the pandemic and its long-term impact.
On Tuesday, Dr. Anthony S. Fauci about the serious risk of a new outbreak if the economy is reopened too quickly. On Wednesday, Federal Reserve chair, Jerome H. Powell warned of permanent damage to the economy if Congress and the White House do not provide sufficient financial support to prevent a wave of bankruptcies and prolonged joblessness.
On Thursday, the government’s latest report on unemployment claims showed that millions of workers in the U.S. are still losing their jobs.
The recent declines mean this week could be the worst for U.S. stocks since mid-March, although it isn’t nearly as dramatic as it was then. The S&P 500 is down about 4 percent this week, compared with a 15 percent drop in the week ended March 20.
That’s in part because unprecedented efforts by the Federal Reserve and lawmakers in Washington, including a $2 trillion economic rescue package, have helped calm investors’ nerves.
Housing officials clear up question on mortgage forbearance payments
Homeowners who have temporarily paused their federally backed mortgages because of virus-related hardships have been wondering if they could push those missed payments to the end of their loan. On Wednesday, federal regulators provided an answer: Yes.
Borrowers who reach their final payoff date and still owe the unpaid amount will have to pay it in a lump sum at that time, according to the Federal Housing Finance Agency, which oversees mortgages guaranteed by Fannie Mae and Freddie Mac. If they sell or refinance their homes, they’ll have to pay what they owe then.
Under the CARES Act, homeowners whose mortgages are backed by the federal government are permitted to skip their payments for up to a year.
Homeowners owe the skipped amount in full, and the agency is encouraging borrowers to pay it as soon as they’re able. But even if they have to push the payment to the end of their loan, homeowners will not be charged extra fees or interest on the balance.
There is one caveat: Housing officials said borrowers who were not current on their loans, or were more than 31 days delinquent before March 1, will not be eligible.
The pandemic ruined Tesla’s momentum, and Elon Musk is livid.
A few months ago, everything seemed to be going Elon Musk’s way.
After a turbulent start to 2019, Tesla, the electric car company he co-founded, had reported profits two quarters in a row and its stock was surging. Mr. Musk claimed vindication by defeating a defamation lawsuit and was staying out of trouble on Twitter. Tesla was on a tear.
But the coronavirus set Mr. Musk off. His dreams of dominating the car industry were put on hold when Alameda County, Calif., forced Tesla’s Fremont plant, which brings in most of the company’s revenue, to shut down in late March.
That frustrated Mr. Musk, who had long dismissed the seriousness of the coronavirus — promoting unproven research, suggesting that Covid-19 deaths were overstated and predicting that there would be zero new cases in the United States by the end of April. (There were almost 32,000.)
His anger boiled over last week, as he threatened to move the factory out of California and sued the county in federal court, Niraj Choksi reports. This week, Mr. Musk officially reopened the plant, to the frustration of some workers and county officials who had been negotiating a reopening plan with Tesla for weeks.
As the plant reopened, Mr. Musk thanked employees for making “the factory come back to life.”
“I have vastly more respect for someone who takes pride in doing a good job,” he said in an email, “whatever the profession, than some rich or famous person who does nothing useful.”
The pandemic hit Sony’s electronics business hard.
Shares of the Japanese electronics and entertainment giant Sony closed nearly 4 percent lower on Thursday following its announcement the day before that its operating profits could fall by 30 percent or more in the current fiscal year.
The coronavirus has hit Sony’s electronics business hard, while giving a boost to some of its entertainment offerings, as people stuck at home seek to keep themselves busy.
But the strength of the company’s film and music properties was not enough to offset the damage the pandemic has wrought: The company recorded a 57 percent drop in operating profits to 35.4 billion yen in the three months ending in March, Sony said in its annual earnings report released on Wednesday.
Annual operating profit fell 5 percent to 845.5 billion yen from the previous year, it said.
Some of the company’s new movie and music releases have been pushed back because of the pandemic, and ticket sales are down as theaters remain closed. The damage has been offset by increased streaming, the company said, with revenues from its music and pictures segments growing year on year in the three-month period that ended in March.
Catch up: Here’s what else is happening.
Nissan said the head of its North American operation, José Luis Valls, had resigned for “personal reasons” and will leave the company on June 15. Nissan has struggled with anemic sales in the United States, its most important market after China. Jérémie Papin, the senior vice president for finance at Nissan North America, will replace Mr. Luis Valls, the company said.
Leslie H. Wexner, the longtime chief executive officer and chairman of L Brands, stepped down from both roles on Thursday as expected, though he will retain a board seat. Mr. Wexner, 82, the longest serving C.E.O. in the S&P 500 recently faced serious questions about his leadership because of issues with the company’s culture and his relationship with the disgraced financier Jeffrey Epstein, a convicted sex offender.
L Brands, which owns Bath & Body Works and Victoria’s Secret, recently ended a deal to sell most of Victoria’s Secret to Sycamore Partners, a private equity firm, which backed away due to the pandemic’s effect on retailers.
J.C. Penney might file for bankruptcy as soon as Friday after skipping two interest payments on its debt in the past month, according to two people familiar with the matter. The company is in talks to secure about $450 million in debtor-in-possession financing, which would allow it to keep operating the business, according to the people, who spoke on condition of anonymity because discussions were confidential.
Reporting was contributed by Patricia Cohen, Tiffany Hsu, Stanley Reed, Niraj Chokshi, Li Yuan, Ben Dooley, Carlos Tejada, Jeanna Smialek, Tara Siegel Bernard Jim Tankersely, Matt Phillips, Sapna Maheshwari, Michael J. de la Merced and Kevin Granville.