Raphael Stevens

Automaker Stellantis plans to once again reduce its U.S. employee headcount through a broad voluntary buyout, as the company attempts to reduce costs and boost profits.
The company, which reported disappointing first-half results last week, said that if not enough employees participate in the buyout, involuntary terminations could follow.
In an email to employees Tuesday morning, Stellantis said it would offer a voluntary separation program to nonunion U.S. employees at the vice president level “and below in certain functions.”

CEO of auto giant Stellantis Carlos Tavares speaks to journalists during a joint media event by Stellantis and Leapmotor in Hangzhou, in eastern China’s Zhejiang province on May 14, 2024. 
– | Afp | Getty Images

DETROIT — Automaker Stellantis plans to once again reduce its U.S. employee headcount through a broad voluntary buyout, as the company attempts to reduce costs and boost profits.
In an email to employees Tuesday morning, the company said it would offer a voluntary separation program to nonunion U.S. employees at the vice president level “and below in certain functions.”

The company, which reported disappointing first-half results last week, said that if not enough employees participate in the buyout, involuntary terminations could follow. The message said eligible employees will be sent an email in mid-August with instructions on how to access their individualized offers.
Stellantis confirmed the buyout program, which was first reported by Automotive News, early Tuesday afternoon.
“As Stellantis continues to address inflationary pressures and, importantly, provide consumers with affordable vehicles at the highest quality, we remain focused on taking the necessary actions to reduce our costs to protect the long term sustainability of the company,” the company said in an emailed statement.
Stellantis CEO Carlos Tavares has been on a cost-cutting mission since the company was formed through a merger between Fiat Chrysler and France’s PSA Groupe in January 2021. It’s part of his “Dare Forward 2030” plan to increase profits and double revenue to 300 billion euros ($325 billion) by 2030.
The cost-saving measures have included reshaping the company’s supply chain and operations as well as previous headcount reductions.

“With our commitment to executing our Dare Forward 2030 strategy, we must continue to adapt by streamlining operations and finding efficiencies that will enhance our competitiveness to ensure our future sustainability and growth,” the company said in the email Tuesday, which was viewed and verified by CNBC.
Several Stellantis executives previously described the earlier cuts to CNBC as difficult but effective. Others, who spoke on the condition of anonymity due to potential repercussions, described them as grueling to the point of excessiveness.
Tavares last week pushed back on the claim that the company’s massive cost-cutting efforts had created problems.
“When you don’t deliver for any reason … you may want to use a scapegoat. The budget cut is an easy one. It’s wrong,” Tavares said.
Stellantis has reduced headcount by 15.5%, or roughly 47,500 employees, between December 2019 and the end of 2023, according to public filings. Additional job cuts this year involving thousands of plant workers the U.S. and Italy have drawn the ire of unions in both countries.
The automaker last conducted a voluntary buyout program in November, offering the deals to roughly half of its U.S. white-collar employees.
Automakers have been attempting to lower costs and boost profits and cash reserves to pay for new technologies such as all-electric vehicles.
For example, GM last year offered voluntary buyouts to a “majority” of its U.S. white-collar employees.
For its part, Ford Motor last year conducted involuntary layoffs, primarily affecting engineering jobs in the U.S. and Canada, as the automaker sought to cut billions in a restructuring of its business operations.

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Spirit Airlines, known for its discount fares and fees for add-ons like cabin baggage, is introducing new classes of service next month.
The carrier plans to bundle services like Wi-Fi, cabin baggage, snacks and drinks for its highest classes.
The struggling airline is trying to increase revenue and compete with larger rivals like United.

A Spirit commercial airliner prepares to land at San Diego International Airport in San Diego, California, U.S., January 18, 2024. 
Mike Blake | Reuters

Free Wi-Fi? Free checked bag? Free snacks? On Spirit?
The Florida-based carrier that is practically synonymous with budget air travel in the U.S. said Tuesday that it plans to offer packages for its highest-priced tickets, wrapping in perks it used to charge for a la carte. It’s a bid to increase revenue as it struggles with the aftermath of a U.S.-blocked takeover by JetBlue, engine recalls, an oversupplied domestic market, and larger rivals who have capitalized on premium and cost-conscious travelers alike.

Starting late next month, Spirit will offer four categories of service:

“Go Big” Tickets will include a spot in one of the airline’s Big Front Seats, its roomy seats at the front of its Airbus planes. Instead of upselling travelers for the seat alone, the assignment will come with free Wi-Fi, a checked bag, one piece of cabin luggage, and, CEO Ted Christie told CNBC, “unlimited” snacks and drinks, including alcoholic beverages.
Below that package is “Go Comfy,” which will offer travelers a seat with standard legroom but a blocked middle seat for extra space. That offer also includes earlier boarding, one snack, one nonalcoholic beverage, and checked baggage and a carry-on.
“Go Savvy” fares come with either a checked bag or a carry-on.
Then there’s just “Go,” essentially Spirit’s original product, with just a seat and fees for checked bags, cabin luggage, seat selection, Wi-Fi and snacks.

The options will be available to book Aug. 16, and all four will be available on flights from Aug. 27.
Spirit is competing with larger airline rivals like United that have capitalized on cost-conscious travelers with their own bare-bones products but still offer higher-priced options like extra legroom and first class.

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“What we realized now is that we were sort of ceding other markets to other airlines,” Christie said in an interview. “Now we’re saying, no, we can still do what we were doing before, but we’re also going to compete for people who are willing or want a little bit more of a premium feel and and would pay for that. They just didn’t have it on us.”
Spirit earlier this month warned of a wider-than-expected loss after nonticket revenue — what it collects in the form of fees — came in lighter than it had previously forecast. The carrier has also warned pilots about potential furloughs in the coming months.
Spirit isn’t the only carrier looking to increase its upmarket seats to attract more customers. Southwest Airlines, also under pressure to raise revenue, last week said it plans to ditch open seating and offer “premium” seats with more legroom, the biggest overhaul in the airline’s more than 50 years of flying. Frontier Airlines in March said it would start offering blocked middle seats at the front of the plane for a higher price.

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Merck reported second-quarter revenue and adjusted earnings that topped estimates as it saw strong sales from its blockbuster cancer drug Keytruda as well as other treatments in its oncology and vaccines portfolios and a new cardiovascular drug. 
The pharmaceutical giant also raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion, however it lowered its adjusted profit guidance to between $7.94 and $8.04 per share.
The results come as Merck prepares to offset losses from Keytruda’s patent expiration in 2028 with a handful of new deals under its belt and key drug launches. 

The exterior view of the entrance to Merck headquarters in Rahway, New Jersey, on Feb. 5, 2024.
Spencer Platt | Getty Images

Merck on Tuesday reported second-quarter revenue and adjusted earnings that topped Wall Street’s expectations as it saw strong sales from its blockbuster cancer drug Keytruda as well as other treatments in its oncology and vaccines portfolios and a newly launched cardiovascular drug. 
The pharmaceutical giant also raised its full-year sales forecast to a range of $63.4 billion to $64.4 billion on increased demand for key products, particularly its oncology treatments. That’s only slightly higher than the $63.1 billion to $64.3 billion guidance the company provided in April. 

Merck lowered its adjusted profit guidance to a range of $7.94 and $8.04 per share, from a previous forecast of $8.53 to 8.65 per share. That updated outlook reflects one-time charges of 26 cents and 51 cents per share for the company’s acquisitions of Harpoon Therapeutics and EyeBio, respectively, Merck said.
Shares of the company were down nearly 2.8% in premarket trading.
Here’s what Merck reported for the second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: $2.28 adjusted vs. $2.15 expected
Revenue: $16.11 billion vs. $15.84 billion expected

The drugmaker posted net income of $5.46 billion, or $2.14 per share, for the second quarter. That compares with a net loss of $5.98 billion, or $2.35 per share, during the year-earlier period, which included a charge related to its acquisition of Prometheus Biosciences.
Excluding acquisition and restructuring costs, the company earned $2.28 per share for the three-month period.

Merck reported $16.11 billion in revenue for the quarter, up 7% from the same period a year ago. 

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The results come as Merck prepares to offset losses from Keytruda’s patent expiration in 2028 with a handful of new deals under its belt and key drug launches. 
That includes Winrevair, a medication approved in the U.S. in March to treat a progressive and life-threatening lung condition. Some analysts expect that worldwide sales of Winrevair could reach $5 billion by 2030. 
It also includes Capvaxive, a vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and lung infection. The shot was approved in the U.S. last month. 

Pharmaceutical unit sales top estimates

Merck’s pharmaceutical division booked $14.41 billion in revenue during the second quarter, up 7% from the same period a year ago. The unit develops a wide range of drugs for a variety of disease areas. 
The company’s immunotherapy Keytruda recorded $7.27 billion in revenue during the quarter, up 16% from the year-earlier period. Analysts had been expecting $7.12 billion in Keytruda sales, according to estimates from StreetAccount. 
Sales of Gardasil, a vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., were nearly flat. 
Gardasil brought in $2.48 billion in sales, up just 1% from the second quarter of 2023. Merck said that growth was driven by higher prices in the U.S. but hampered by lower sales in China due to shipment timing. 
The segment results were slightly below the $2.51 billion that analysts expected, according to StreetAccount. 

Source: Merck

Winrevair posted $70 million in revenue for the second quarter following its approval in March. Analysts had expected the treatment to book $59.4 million in sales. 
Meanwhile, the company’s Type 2 diabetes treatment, Januvia, saw $629 million in sales, down 27% from the same period a year ago. Merck said the decline was primarily due to lower demand and prices of the drug, along with generic competition in several countries. 
Januvia is one of 10 drugs targeted in ongoing Medicare drug price negotiations, a policy that aims to make costly medications more affordable for seniors. Those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, will end at the beginning of August.
Sales of Merck’s Covid antiviral pill, Lagevrio, also fell, down 46% to $110 million during the quarter. Still, that topped analysts’ expectations of $81.5 million in sales, according to StreetAccount.  
Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.48 billion in sales for the second quarter. That is up 2% from the year-earlier period and slightly below what analysts surveyed by StreetAccount were expecting.

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Both Boeing and Airbus have faced production snarls of key aircraft parts and a shortage of skilled workers coming out of the pandemic.
Boeing’s problems after the pandemic have been compounded by its safety crisis that forced it to slow production to stamp out defects.
A roadmap of the next few months of production will come this week, when Airbus reports quarterly results on Tuesday, followed by Boeing on Wednesday.

An Airbus A321 flies at the Farnborough International Airshow, in Farnborough, Britain, July 22, 2024.
Toby Melville | Reuters

FARNBOROUGH, England — Massive airplane orders, hundreds deep in recent years, were absent from this year’s biggest air show. The focus instead was on struggles at Boeing and Airbus to ramp up airplane production while battling a hangover from the pandemic that was marked by seesawing output.
Many of the issues, particularly training new workers, will take years to fix, analysts say, meaning lingering headaches for airlines, suppliers and the manufacturers themselves — and a shortage of new, more fuel-efficient planes.

“It’s a fair sentiment on the part of the supply base and the airlines to say that we failed our commitments to them in terms of being timely, in terms of predictability,” said Ihssane Mounir, Boeing’s senior vice president of global supply chain and fabrication, during a panel at the Farnborough Airshow outside of London last week. “So obviously, people start doing their own planning and their own second-guessing.”
A roadmap of the next few months of production will come this week, when Airbus reports quarterly results on Tuesday, followed by Boeing on Wednesday. Wall Street analysts expect Boeing will post another loss for the second quarter and possibly the next. Airbus has cut its delivery targets for the year.

Modest orders

At the show, which concluded Friday, Boeing racked up 96 orders and commitments, including previously made sales that were firmed up, while Airbus had 266, far shy of the 826 orders during the Paris Air Show a year ago, according to a tally from consulting firm Ishka. Paris and Farnborough alternate hosting the expo each year.
One standout was Air Korea’s order for up to 50 Boeing wide-body planes, including the 777X, which Boeing is working toward getting certified by regulators. The carrier also has Airbus A350-1000 jets on order. As both manufacturers grapple with production strains, Air Korea CEO Walter Cho quipped during the Boeing order signing: “Whichever comes first will become our flagship, whoever’s on time.”

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The muted order tally during the show came as both manufacturers are largely sold out of narrow-body jets like the Boeing 737 Max and Airbus A321neo through much of this decade, if not longer. Boeing has an overall backlog of close to 5,500 planes, while Airbus has more than 8,000 on order. Many airlines from United Airlines to Air India have also stocked up on new jet orders as travel rebounded in the pandemic.

Boeing’s presence at the air show was notably modest — it didn’t bring any of its commercial aircraft for flight demonstrations while it focused on its safety crisis and manufacturing issues. Arlington, Virginia-based Boeing is trying to ramp up production of its bread-and-butter Max planes to about 38 a month, and investors will be looking for clues this week on when those targets could be reached.
Airbus showed off its new extra-long-range, narrow-body plane, the Airbus A321XLR, which was certified by European regulators days before the show started.

Parts shortages

Visitors to the air show usually get a glimpse of fleets that will fly for decades, but most of the industry this year was focused on output over the next few months.
Parts shortages from landing gear to engine components like high-pressure blades to ever-more-complex cabin interiors, like those with premium seating, are also in short supply. That has slowed down production, depriving airlines of more fuel-efficient planes and angering some executives along the way.

Ihssane Mounir, Senior Vice President Commercial Sales & Marketing at The Boeing Company with Peter Anderson, Chief Commercial Officer at AerCap attend the news conference at the Farnborough International Airshow, in Farnborough, Britain, July 19, 2022. 
Matthew Childs | Reuters

Airbus is taking a more hands-on approach “than we’ve ever done before,” deploying more than 200 supply chain engineers among suppliers, said Christian Scherer, chief executive of the European manufacturer’s commercial airplane business.
“What we don’t want to be seeing again in the future, whether we’re in an uplift or in a slowdown of this industry, is a situation where the supply chain does not believe what we’re telling them,” Scherer told reporters ahead of the show.
Airbus last month said it would cut its airplane delivery target for the year and said it would slow planned production increase, citing “persistent specific supply chain issues mainly in engines, aerostructures and cabin equipment.”
Boeing, meanwhile, in addition to supply chain issues, is trying to dig its way out of a safety crisis stemming from a door plug blowout in January, and a series of manufacturing defects that have slowed output.

New workers, low wages in focus

A loss of skilled workers who were either let go or opted for early retirement during Covid-19’s plunge in air travel has hampered output of new jets. The manufacturers are now left to train new workers — a major challenge.
“I think it’s a three-to-five year issue,” said Kevin Michaels of AeroDynamic Advisory, an industry consulting firm. “Wages have to be reset to make the industry more attractive” for workers.
Boeing’s Mounir acknowledged that lower wages are a problem further down the supply chain and said that Boeing itself should invest in their training.
“There’s no question about it,” he said. “I don’t expect these smaller suppliers who are essential to the ecosystem to be able to shoulder that burden. We have to do it ourselves at the higher level, again, leveraging our balance sheet. It will pay off.”
It takes more time to train workers like “bakers, butchers, people working in a very different business area” who are new to the aerospace field, said Airbus’s Delphine Bazaud, head of industrial supply chain and digital operations.
Michaels, of AeroDynamic Advisory, predicted that in the case of the U.S., more aerospace work will eventually move abroad, “to places where labor is available.” More

Pfizer reported second-quarter revenue and adjusted earnings that blew past expectations and raised its full-year outlook as the drugmaker works to slash costs.
The results come as Pfizer scrambles to stabilize its business and win back Wall Street’s favor following the rapid decline in demand for its Covid products.
The company pointed to growth from acquired drugs, recently launched treatments and other key products, which helped offset the drop in sales from its Covid business.

Kena Betancur | Corbis News | Getty Images

Pfizer on Tuesday reported second-quarter revenue and adjusted earnings that blew past expectations and raised its full-year outlook, benefiting from its broad cost-cutting program, better-than-expected sales of its Covid antiviral pill, Paxlovid, and strong non-Covid product sales.
The company now expects to book adjusted earnings of $2.45 to $2.65 per share for the fiscal year, up from its previous guidance of $2.15 to $2.35 per share. 

Pfizer also hiked its revenue outlook to a range of $59.5 billion to $62.5 billion, up from a previous revenue forecast of between $58.5 billion and $61.5 billion. That includes roughly $5 billion in expected revenue from its Covid vaccine and $3.5 billion from Paxlovid.
The pharmaceutical giant said its higher outlook reflects its strong performance in the first half of the year and its confidence in the “underlying strength” of its business. Notably, Pfizer on Tuesday posted its first quarter of topline revenue growth since the fourth quarter of 2022, when its Covid revenues peaked.
The results come as Pfizer scrambles to stabilize its business and win back Wall Street’s favor following the rapid decline in demand for its Covid products. Demand for its vaccine and Paxlovid plunged and transitioned to the commercial market in the U.S. last year as the world emerged from the pandemic. 
As revenue dried up, Pfizer in October launched a broad cost-cutting push that aims to deliver at least $4 billion in savings by the end of 2024. The company has since announced a separate multiyear plan to slash costs, with the first phase of the effort slated to deliver $1.5 billion in savings by 2027. 
Pfizer is also zeroing in on treating cancer after its whopping $43 billion acquisition of Seagen last year. 

Here’s what the company reported for the second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: 60 cents adjusted vs. 46 cents expected.
Revenue: $13.28 billion vs. $12.96 billion expected.

The company booked second-quarter net income of $41 million, or 1 cent per share. That compares with net income of $2.33 billion, or 41 cents per share, during the same period a year ago. Excluding certain items, the company posted earnings per share of 60 cents for the quarter.
Pfizer recorded revenue of $13.28 billion for the second quarter. That is up 2% from the same period a year ago.
The company pointed to growth from acquired drugs, recently launched treatments and other key products, which helped offset the drop in sales from its Covid business.
Paxlovid brought in $251 million in sales for the quarter, up 76% from the year-earlier period. That growth is mainly because of increased infection rates and demand in certain international markets during the quarter and due to favorable comparisons from the year-earlier period when Paxlovid recorded no U.S. sales ahead of its transition to the commercial market.
The segment results were higher than the $206.1 million in sales that analysts were expecting, according to estimates compiled by StreetAccount.
The company’s Covid shot booked $195 million in revenue, down 87% from the same period a year ago.
That drop was driven by lower contract deliveries and demand in international markets, and reflects the seasonality of demand for vaccinations.
Analysts expected $195 million in sales for the drug, according to StreetAccount.

Non-Covid product growth

Excluding Covid products, Pfizer said revenue for the second quarter rose 14% on an operational basis.
The company said that growth was partly fueled by Seagen’s approved cancer products, which brought in $845 million in revenue for the quarter. That includes $394 million from a targeted treatment for bladder cancer called Padcev and $279 million from Adectris, another drug that targets certain lymphomas. 
Pfizer completed its acquisition of Seagen in December. 
Revenue also got a boost from strong sales of Pfizer’s Vyndaqel drugs, which are used to treat a certain type of cardiomyopathy, a disease of the heart muscle. Those drugs booked $1.32 billion in sales, up 69% from the second quarter of 2023.
Analysts had expected that group of drugs to rake in $1.10 billion for the quarter, according to estimates from StreetAccount.  

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Pfizer said its blood thinner Eliquis, which is co-marketed by Bristol Myers Squibb, also helped drive revenue growth during the period. The drug posted $1.88 billion in revenue for the quarter, up 7% from the year-earlier period. 
That is in line with analysts expectations, according to StreetAccount. 
Sales of Eliquis could take a hit in 2026, however, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. Those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, will end at the beginning of August.
Meanwhile, Pfizer’s vaccine against respiratory syncytial virus, or RSV, saw $56 million in revenue. The shot, known as Abrysvo, entered the market during the third quarter of 2023 for seniors and expectant mothers who can pass on protection to their fetuses. 
The shot fell short of analysts’ estimates of $89 million in revenue for the second quarter, according to StreetAccount.

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