Raphael Stevens

United, American, JetBlue and other carriers charge passengers more to check bags at the airport than to purchase the service online in advance.
Airlines have been raising baggage fees this year to cover higher costs.
Executives say travelers who purchase checked bags ahead of time can free up congestion at the airport.

Travelers arrive for flights at O’Hare International Airport in Chicago on March 16, 2021.
Scott Olson | Getty Images News | Getty Images

Airlines are raising their prices to check a bag — again. Just how much you it will cost you, however, depends on when you pay for the service.
United Airlines, American Airlines and JetBlue Airways are among the carriers that have raised the price to check bags this year. Each of them charge customers more if they check their bags at the airport or close to their departure compared with paying to check a bag online in advance.

Carriers are encouraging customers to pay to check their bags ahead of their flight, an approach the airlines argue will free up employees at check-in areas and get travelers to their gates faster.
Earlier this week, American Airlines raised its checked bag fees for the first time in more than five years and adopted the two-tiered strategy that United, JetBlue and several budget airlines already have.
American Airlines customers traveling in coach will pay $35 to check a first bag for domestic flights if the service is booked online in advance, or $40 if they purchase the option at the airport, the carrier said Tuesday. American Airlines previously charged $30 for either service.
There are exemptions. Customers who have certain airline or other rewards credit cards, are traveling in a top-tier class or have elite frequent flyer status generally can check at least one bag for free on domestic or short international flights.

Why does it cost less to check a bag in advance?

“It allows our team members to spend more time with customers who require additional assistance with their travel journey,” an American Airlines spokeswoman told CNBC.

American this week also said it is reducing fees for slightly overweight bags, which used to force some travelers to remove items from their bags last-minute at the airport to meet the threshold.
The different fee tiers is an approach ultra-low-cost airlines already had to luggage fees.
“It incentivizes people to get the transaction out of way. It’s easier for them, and honestly, it’s easier for us,” said Frontier Airlines CEO Barry Biffle. “There are people who need legitimate assistance” at the airport.
The prices differ depending on demand and other factors. Most travelers who add on baggage pay the fee ahead of time, Biffle said.

United first started charging customers more for paying for checked bags at the airport in 2020. On Friday, the carrier said it was raising bag fees by $5 for most flights in North America to $35 if customers prepay online at least 24 hours before their flight, or $40 otherwise, starting with bookings made on Feb. 24. A second checked bag will cost $50, or $45 at least 24 hours in advance.

Why are airlines raising baggage fees?

Luggage fees are a big moneymaker for airlines. In the first nine months of 2023, U.S. airlines brought in more than $5.4 billion from baggage fees, up more than 25% from the same period of 2019, according to the Transportation Department’s latest data.
Airlines have argued that higher costs such as labor and fuel, their biggest expenses, mean they had to raise bag fees.
“While we don’t like increasing fees, it’s one step we are taking to get our company back to profitability and cover the increased costs of transporting bags,” JetBlue said in a statement about its latest increases. “By adjusting fees for added services that only certain customers use, we can keep base fares low and ensure customer favorites like seatback TVs and high-speed Wi-Fi remain free for everyone.”

Ground operations employees load baggage onto a Southwest Airlines Boeing 737 aircraft on the tarmac at John Wayne Airport in Santa Ana, California.
Patrick T. Fallon | Bloomberg | Getty Images

Southwest Airlines is an outlier among the large U.S. airlines. It allows customers to check two bags for free. “That’s the way it’s going to stay,” Chief Operating Officer Andrew Watterson said.
“It does not cost us $35, $40 … to handle a bag,” Watterson said in an interview. Many customers on major airlines bring carry-on bags to avoid bag fees, but Watterson said that could slow down the operation, a big deal for Southwest, which he said tries to turn aircraft around for the next flight in 45 minutes, and even less for some of its smaller Boeing planes.
“It does smooth the operation for people to check it rather than bring it on,” he said. “Overall, we think the benefit is a combination of some efficiencies but also customers coming back to us. A repeat customer business cannot be overstated. And when you treat your customers well, give them a fair policy, they come back over and over again.”Don’t miss these stories from CNBC PRO: More

Intuitive Machines’ cargo moon lander known as “Odysseus” became the first privately developed spacecraft to land on the lunar surface.
The company’s stock jumped 16% in trading Friday.
“This validates the company’s technology and adds significant credibility to the business,” Cantor Fitzgerald analyst Andres Sheppard wrote in a note to investors.

Intuitive Machines’ Nova-C lunar lander on display at NASA’s Marshall Space Flight Center.

Shares of Intuitive Machines jumped 16% in trading Friday after the company’s successful first moon landing.
Intuitive Machines’ Nova-C cargo moon lander known as “Odysseus” on Thursday became the first privately developed spacecraft to land on the lunar surface — as well as the first U.S. spacecraft to soft-land on the moon in more than 50 years.

The company, based in Houston, Texas, confirmed that the IM-1 mission lander was standing upright and sending data back to Earth.
“Odysseus has found his new home,” Tim Crain, Intuitive Machines’ CTO and IM-1 mission director, said Thursday evening from the company’s mission control.
Intuitive Machines stock initially ripped 40% higher before paring gains with heavy trading volume to close at $9.59 a share. The company has a market valuation of about $1 billion.

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The company’s stock has been rallying over the past month as excitement built in the lead-up to and progress of the IM-1 mission. Intuitive Machines went public via a SPAC a year ago and shares had steadily slid to all-time lows near $2 in January.

Stock chart icon

Intuitive Machines stock over the last 5 days.

Wall Street analysts emphasized to CNBC ahead of the landing that the unprecedented nature of the event could lead to volatile momentum trading.

“We’ve never witnessed a publicly traded company go through [a moon landing attempt]. So this is new, not just for investors, but for us analysts as well,” Cantor Fitzgerald’s Andres Sheppard said before the landing.
In a note to investors after the landing, Cantor Fitzgerald increased its price target on Intuitive Machines’ stock to $13 a share from $4 a share.
“In our view, this validates the company’s technology and adds significant credibility to the business. As such, we believe Intuitive Machines is now very well positioned to continue to capitalize on the growing commercial space economy, and on subsequent launches,” Sheppard wrote in the note.

The IM-1 lander “Odysseus” in lunar orbit on Feb. 21, 2024.
Intuitive Machines

Intuitive Machines, in a statement Friday morning, said that “Odysseus is alive and well,” noting that the lander is charging its solar panels.
“Flight controllers are communicating and commanding the vehicle to download science data,” the company said.
The company and NASA plan to hold a press conference at 5 p.m. ET on Friday.
The Odysseus lander carried 12 government and commercial payloads — six of which are for NASA under a $118 million contract through the agency’s Commercial Lunar Payload Services, or CLPS, initiative.
Intuitive Machines has already won two more CLPS contracts for future lander missions, with IM-2 expected to launch as early as the second half of this year.
Additionally, the company has part of a five-year $719 million contract to provide engineering services to NASA’s Goddard Space Flight Center in Maryland. Analysts expect the Goddard contract is worth about $11 million per month in revenue for Intuitive Machines, with Cantor Fitzgerald estimating the company will bring in about $338 million in fiscal year 2024 revenue. More

Warner Bros. Discovery CEO David Zaslav has harped on free cash flow generation, but it’s unclear investors care.
Warner Bros. Discovery on Friday said it ended the year with $6.2 billion in free cash flow, up 86% from a year prior.
But the company’s shares fell 10% on Friday, and are down about 45% in the past year.

The “Bobs” from the film Office Space
Source: 20th Century Fox | YouTube

Listening to Warner Bros. Discovery Chief Executive Officer David Zaslav speak on Friday’s fourth-quarter earnings calls, I couldn’t help but think of a scene in the movie “Office Space.”
An employee named Tom meets with two consultants, both named Bob (together, The Bobs), who have been tasked with deciding which employees at the company should be promoted or fired.

When The Bobs press Tom on what he does at the company after they don’t initially understand, Tom snaps, screaming, “I have people skills! I am good at dealing with people! Can’t you understand that?! WHAT THE HELL IS WRONG WITH YOU PEOPLE?!”
Warner Bros. Discovery investors are The Bobs, Chief Executive Officer David Zaslav is Tom and the disconnect he’s worked up about is free cash flow.
Warner Bros. Discovery on Friday said it generated $3.3 billion in free cash flow during the fourth quarter and ended the year with $6.2 billion in free cash flow, up 86% from a year prior. Yet it missed analyst estimates for revenue and profit, and its shares fell 10%.
For more than year, Zaslav has repeatedly told the investment community that his priority is to boost free cash flow to improve the health of the company and to pay down debt. Warner Bros. Discovery has paid down $12.4 billion in debt in less than two years since announcing the merger of Discovery and WarnerMedia.
He led with that message again on Friday during his company’s earnings conference call.

“Our top priority this year was to get this company on solid footing and on a pathway to growth, and we’ve done that,” Zaslav said. “We said we’d be less than four-times levered, and we are. We’re now at 3.9 times and expect to continue to delever in 2024. We’ve significantly enhanced the efficiency of the organization with a long runway still to go. We said we were going to generate meaningful free cash flow. … And we’ve exceeded our goal with $6.2 billion for the year.”

David Zaslav attends the world premiere of “The Flash”, in Hollywood, Los Angeles, California, U.S., June 12, 2023.
Mike Blake | Reuters

Warner Bros. Discovery’s board of directors has been so intent on boosting cash that it last year changed Zaslav’s compensation to tie his bonus to cash flow generation.
So, why did the shares slump Friday, down now 45% in the past 12 months?
Perhaps investors didn’t like the company’s wishy-washy answer on free cash flow generation in 2024, fearing the positive momentum there could be short-lived.
CFO Gunnar Wiedenfels refused to give guidance, citing the company’s unknown earnings performance with the vicissitudes of the advertising market and increased content spend on Max now that strikes by Hollywood writers and actors are over.
But it’s more likely, given the stock’s consistent underperformance in the past year, that investors simply don’t care about free cash flow in the way Zaslav wants them to. (Remember, that Netflix fairly recently tried, and failed, to refocus investor sentiment onto its preferred metrics. Shares only started rising when Netflix returned to subscriber growth, from which Netflix tried to redirect.)
Legacy media needs a growth narrative. It’s needed one for the past year. Cutting spending, trashing films, licensing programming to Netflix, laying off employees, saving money because of strikes — these aren’t growth stories.
If earnings and revenue miss estimates, and if the company isn’t adding tens of millions Max subscribers, there’s not all that much for shareholders to get excited about.
Zaslav’s argument is his company’s balance sheet must be in good shape before growth can begin. But it’s unclear where that growth will occur. Boosting free cash flow and paying down debt may make Zaslav richer, but they’re not clear catalysts for multiple expansion for a company saddled with slowly dying cable networks and associated declining advertising revenue.
Just because Zaslav wants investors to focus on free cash flow instead of metrics like streaming service subscriber additions, profit and revenue doesn’t mean they’ll listen.
Just because a worker says he’s a people person doesn’t make him a people person, no matter how many times, or how loudly, he repeats it.
WATCH: Investors are surprised by Warner Bros. Discovery’s lack of full-year guidance

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Health officials are trying to find ways to ensure equitable access to the breakthrough, high-cost gene therapies for sickle cell disease.
The disease, which can cause bouts of debilitating pain, affects an estimated 100,000 Americans, most of whom are Black people or people of color.
The Biden administration will negotiate discounts for the federal and state Medicaid programs with the makers of the treatments, Vertex Pharmaceuticals and Bluebird Bio.

The approval of two gene therapies to treat sickle cell disease has given hope to patients who suffer from the debilitating disease, which overwhelmingly affects Black people and people of color.
Health officials now face a challenge in finding a way to provide equitable access to the costly treatments.

The crippling episodes of pain from the genetic blood disorder make life unpredictable for patients like Michael Goodwin. Sickle cell has forced him to leave his job and at times taken him away from his family.
“I can be in the hospital 20 days out of the month sometimes,” said the 36-year-old Goodwin. “I’ve been in hospital a lot more as I’ve gotten older, which hurts me, because I have a son now and I’m married.”
Still, he’s hesitant to try the new one-time gene therapies because they require months of intensive medical preparation, including chemotherapy, to prepare patients’ bone marrow stem cells for extraction and gene editing.
Goodwin also worries about the cost. Vertex Pharmaceuticals’ gene therapy Casgevy lists for $2.2 million, while Bluebird Bio’s treatment Lyfgenia lists for $3.1 million.
“I do have insurance, but … I already have medical bills,” he said.

The therapies were cheered as a long-awaited breakthrough to treat the disease when they were approved in December. But the hurdles toward ensuring equitable access, and the lack of infrastructure in place to administer the nascent treatments, have raised questions about just how many people will benefit from them.

Blood sample of patient positive tested for sickle cell.
Kitsawet Saethao | Istock | Getty Images

Goodwin’s hesitancy to pursue treatment is no surprise to Dr. Julie Kanter, director of the Adult Sickle Clinic at the University of Alabama at Birmingham.
“My guess is even if we opened the gates today to everybody getting this therapy, at most only 10% of those individuals affected by sickle cell would want this therapy,” said Kanter, who also serves as the president of the National Alliance of Sickle Cell Centers. “And even that would be too much for us to manage right this second.”
More than 100,000 Americans have sickle cell disease, according to Centers for Disease Control and Prevention estimates, and between 50% and 60% of them covered are covered by the federal and state insurance program Medicaid.
Kanter said it will take time to ramp up capacity and to set up facilities across the country to treat patients at scale.
“We really hope that having the National Alliance of Sickle Cell Centers will allow us to strengthen our centers to generally care better for people living with this disease, which we haven’t been able to do before because the cost is a problem,” she said.

High cost brings a new payment model

As they figure out how to ramp up treatment capacity, state and federal officials are grappling with how to provide access to the costly new treatments for the thousands of patients covered by the Medicaid safety net program.
“It’s giving us an opportunity to respond to folks with medical conditions for which there have not been very satisfying treatments. But I think the immediate consideration is the cost is very high. And state budgets simply cannot manage that on their own,” said Kate McEvoy, executive director of the National Association of Medicaid Directors.
A University of Washington analysis found that at a price of $2 million or less, the one-time gene therapy treatments would provide an acceptable value, offsetting the lifetime medical and quality-of-life costs for acute sickle cell patients. Many who suffer from the disease require multiple hospitalizations and blood transfusions, which can leave them unable to work.
But the researchers concluded that a lower price closer to $1 million would help ensure greater access.
The Biden administration is launching negotiations in the coming weeks with Vertex and Bluebird Bio to obtain discounts for state Medicaid plans, with payments linked to patient health outcomes. It is part of the Centers for Medicare & Medicaid Services’ Cell and Gene Therapy Access Model, which aims to make new high-priced treatments easier to obtain. Approval of the sickle cell treatments prompted the administration to begin implementing the new payment demonstration program one year early, starting in January 2025.
“There are probably about 100 therapies in the pipeline at the FDA in an advanced stage of application … so this is a real-time priority in terms of developing strategies that are going to undergird Medicaid programs capacity to cover the treatments,” said McEvoy.
The direct talks with the sickle cell drugmakers come as large pharmaceutical firms like Merck, Eli Lilly and others are suing the Biden administration over the Inflation Reduction Act Medicare price negotiations, which got underway in February. Those talks could see sharply lower price offers on the first 10 drugs selected for negotiation.
But on Vertex’s quarterly earnings call this month, executives expressed confidence about the negotiation process in this case. They said discussions with individual state Medicaid agencies will help ensure wide access and address long-standing inequities of care in the sickle cell disease community.
“We’re not waiting for the demo before we secure access for patients who are covered by Medicaid,” Steve Arbuckle, Vertex executive vice president and chief operating officer, told analysts. “If you look at the profile of Casgevy, it is so incredibly strong that really we’re talking about an outcomes-based agreement which is looking at whether a very, very small number of patients may not respond.”

Employers are taking note

Private employer health plans are also grappling with how to pay for an increasing number of novel treatments with seven-figure price tags, said Morgan Health CEO Dan Mendelson, whose firm focuses on workplace health programs.
“Many employers look at cell and gene therapies, see the costs, and are carving them out of their benefits. They know the therapies are valuable,” Mendelson said. But for smaller companies, “one case could exceed the cost of insuring an entire population in the course of a year and the employer doesn’t even know if the employee is going to stick around.”
Morgan Health is exploring new risk-sharing payment models that could help small- and medium-sized businesses cover the rising costs of specialty treatments coming onto the market.
Goodwin is covered under his wife’s employer health insurance. He hasn’t explored what kind of coverage her plan will provide for the new sickle cell treatments, because he’s still not sure whether they’re right for him.
“If they could guarantee me the outcome — that I wouldn’t have sickle cell … I would do it in a heartbeat. In a heartbeat,” he said.
In addition to discussions over payments, Vertex and Bluebird Bio are taking steps to educate doctors and patient communities about the benefits of their new treatments.
Vertex expects its first commercial patient to begin treatment in the coming weeks. Bluebird said it anticipated its first patient would start Lyfgenia in the first quarter. More

American, JetBlue and Alaska have all raised baggage fees this year.
Carriers have changed the price to check a bag depending on whether travelers pay for it in advance or at the airport.
Airlines and other companies have been grappling with how to grow profits while reining in costs, such as new labor contracts.

United Airlines planes at Denver International Airport.
Leslie Josephs | CNBC

United Airlines is raising the price to check bags, becoming the latest carrier this year to hike a fee that generated more than $5 billion for airlines in the first nine months of 2023 alone.
United economy passengers who book domestic tickets starting Feb. 24 will pay $40 for a first checked bag, or $35 if they prepay online at least 24 hours before their flight, an increase of $5. A second checked bag will cost $50 at the airport, or $45 in advance, up $5 for both options.

The changes apply to most flights throughout North America, a United spokeswoman said.
In 2020, United raised the price to check a bag at the airport by $5 to $35 but kept it steady at $30 if travelers paid for the service in advance.
Certain credit card holders, frequent flyers with elite status, active military and travelers in top-tier classes can still check a bag for free, United said.
Earlier this week, American Airlines raised its fee to check a first bag on domestic flights to $35 if purchased in advance and $40 at the airport. Both options were previously $30. A second checked bag will go up from $40 to $45.
Airlines and other companies have been grappling with how to grow profits while reining in costs, such as new labor contracts, while pricing power has waned.

JetBlue and Alaska Airlines have also raised bag fees this year.
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Carvana posted strong results and its first-ever annual profit in an earnings report Thursday.
Wall Street analysts upgraded the stock citing profit trends and a positive retail sales forecast.
Shares of the company surged 30% Friday.

Vehicles are seen on display at a Carvana dealership in Austin, Texas, on Feb. 20, 2023.
Brandon Bell | Getty Images

Carvana shares surged 30% Friday after posting its first-ever annual profit and receiving a pair of upgrades by Wall Street analysts.
The used-car retailer has been trimming inventory and expenses as it rebounds from the fall off from a pandemic peak. After the Covid-19 pandemic drove increased demand for online car sales, the company’s stock soared. But after that demand wore off, Carvana was forced to begin aggressive restructuring and cost cutting.

In its after-hours earnings report Thursday, the company posted its first annual profit with a net income of $450 million for 2023 compared with a loss of $1.59 billion in 2022.
CEO Ernie Garcia told CNBC’s “Money Movers” on Friday morning that the company is in an “incredible competitive position.”

The company is currently in step two of a three-step restructuring plan, which includes breaking even on an adjusted EBITDA basis, driving the business to significant positive unit economics and returning to growth.
Its total gross profit per unit more than doubled to $5,283, up from $2,219 in the year-ago period, according to the quarterly report.
The company noted in its earnings report that the macroeconomic car-selling environment remains uncertain, though it expects to grow retail units sold during the first quarter and for 2024.

Analysts at Raymond James upgraded their rating on the stock to market perform on Friday, highlighting the encouraging GPU trends. The analysts wrote that investor sentiment is “aligning more closely with the narrative of Carvana’s long-term market potential.”
The company’s stock surged last year and now trades for about $70 per share, still well off its pandemic high of $370 per share, notched in 2021. The stock lost nearly all of its value in 2022, prompting bankruptcy concerns that have since been abated by signs of recovery.
William Blair analysts also upgraded Carvana’s rating, to “outperform,” because of the profit increases and unit growth, noting that they believe the company is “now poised for a further breakout” with the encouraging 2024 forecast.
Garcia said on CNBC that Carvana, with its 1% market share, is still focused on its current inventory despite the past year’s growth and profit.
“I think we’ve got to see through what we’re currently working on,” Garcia said. “There’s no question that in the medium run, growing our inventory to give our customers even more selection is going to be a big part of our strategy. I think our goal is to be in a place where customers come to get the simplest experience, to get the best price and the best selection.”Don’t miss these stories from CNBC PRO: More