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    Mortgage rates fall sharply after negative GDP report and Fed's latest hike

    The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday.
    “This is an exceptionally fast drop!” wrote Matthew Graham of Mortgage News Daily.
    The rate fell even further Friday to 5.13%.
    The slide in mortgage rates came after a negative GDP report and the Fed’s latest interest rate hike.

    Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower.
    The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily. The rate fell even further Friday to 5.13%.

    Rates hadn’t moved much in the days leading up to the Fed meeting earlier this week, but they had been slowly coming off their most recent high in mid-June, when the 30-year fixed briefly crossed 6%.

    A sign is posted in front of a home for sale on July 14, 2022 in San Francisco, California. The number of homes for sale in the U.S. increased by 2 percent in June for the first time since 2019.
    Justin Sullivan | Getty Images

    The drop Thursday also came on the heels of the Bureau of Economic Analysis’ gross domestic product report, which showed the U.S. economy contracted for the second straight quarter. That is a widely accepted signal of recession. GDP fell 0.9% at an annualized pace for the period, according to the advance estimate. Economists polled by Dow Jones had expected growth of 0.3%.
    After the news, investors rushed to the relative safety of the bond market, causing yields to fall. Mortgage rates loosely follow the yield on the 10-year U.S. Treasury bond.

    Read more real estate coverage

    “This is an exceptionally fast drop!” wrote Matthew Graham, COO of Mortgage News Daily. “Perhaps even more interesting (and uncommon) is the fact that mortgage rates have dropped faster than U.S. Treasury yields. It’s typically the other way around as investors flock first to the most basic, risk-free bonds.”
    Graham said the big picture shift in rates over the past month has created a situation where investors greatly prefer to be holding mortgage debt with lower rates. 
    “In a way, mortgage investors are trying to get ahead of the game. If they’re holding mortgages at a higher rate, they will lose money if those loans refinance too quickly,” he added.
    The question now is whether the market is in a new range, and rates will settle where they are now.
    “If rates reverse course, volatility could be just as big going in the other direction,” Graham warned. He also noted that mortgage rates could move even lower if economic data continues to be gloomy and inflation moderates.
    Already, lower rates appear to be having a slight impact on potential homebuyers. Real estate brokerage Redfin just reported seeing a slight uptick in searches and home tours in the past month, as rates came off their recent highs.
    “The housing market seems to be settling into an equilibrium now that demand has leveled off,” Redfin’s chief economist, Daryl Fairweather, said in a release. “We may still be in for some surprises when it comes to inflation and rate hikes from the Fed, but for now an ease in mortgage rates has brought some relief to buyers who were reeling from last month’s rate spike.”
    The increase in buyer interest, however, has not translated into new contracts, nor sales. The supply of homes for sale is increasing slowly, and there are reports of more sellers dropping their asking prices.

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    Here are 4 key things to consider if you actually hit the $1.28 billion Mega Millions jackpot

    The jackpot for Mega Millions’ Friday night drawing is $1.28 billion, with a cash option of $747.2 million.
    The chance of a single ticket matching all numbers drawn is about 1 in 302.5 million.
    If you manage to beat the odds, here’s what to do first.

    Mike Segar | Reuters

    1. Breathe

    Instead of impulsively rushing to lottery headquarters to claim your prize, take a deep breath. You have some time to claim your prize — anywhere from three months to a year, depending on where you bought the ticket.

    “Take a pause before you make any big decisions,” Irwin said. “This is the quiet period before the chaos.”

    2. Protect your ticket — and your privacy

    Experts generally recommend signing the back of the ticket, taking a photo of yourself with the valuable slip of paper and then storing it safely in a lockbox or safe deposit box at your bank.
    However, it’s first worth making sure you know the rules for claiming your win in the state where the ticket was purchased.
    If you bought it in a state that requires the winner’s name to be publicly shared, you may be able to claim the prize in the name of a trust or other legal entity, thereby keeping your name out of the public eye.

    Additionally, share information about your windfall with as few people as possible, Irwin said. News has a way of traveling, and long-lost friends or family — or scammers — could show up on your doorstep.
    “Privacy is key,” Irwin said. “That provides safety to both you and your family from scammers or other individuals who can start to prey on you.”

    3. Get professional help

    Some pretty weighty financial decisions lie ahead of you, which make it worthwhile to have a team of pros assisting you. That group should include an experienced attorney, financial advisor, tax advisor and insurance expert.
    For starters, you’ll have to decide whether to accept your prize as a reduced lump sum or as annuity of 30 payments over 29 years. Either way, the IRS will take a slice before the money reaches you.

    4. Ponder what’s ahead of you

    If you’ve spent your days working at a job and plan to quit, it’s worth thinking about the long-term repercussions of doing that.
    “If you were previously working, there’s going to be a change to your day-to-day life,” Irwin said. “Consider how you will spend your days and how you can make sure you still have purpose in your life.”
    Meanwhile, the Powerball jackpot is an estimated $170 million for Saturday night’s drawing. Your chance of winning the top prize in that game is about 1 in 292 million.

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    House Democrats push for Biden’s billionaire minimum income tax

    Reps. Don Beyer, D-Va., and Steve Cohen, D-Tenn., have introduced the Billionaire Minimum Income Tax Act, calling for a 20% levy on households worth more than $100 million.
    The 20% tax applies to “total income,” including earnings and so-called unrealized capital gains, or asset growth, according to the bill.
    However, despite growing public support for higher taxes on the ultra-wealthy, billionaire tax proposals have failed to gain broad support within the Democratic Party.

    Erik McGregor | LightRocket | Getty Images

    As Democrats plow forward with a slimmed-down reconciliation package, House lawmakers are separately pushing another piece of President Joe Biden’s agenda: taxing the ultra-wealthy. 
    Reps. Don Beyer, D-Va., and Steve Cohen, D-Tenn., have introduced the Billionaire Minimum Income Tax Act, calling for a 20% levy on households worth more than $100 million, affecting roughly 0.01% of U.S. families, a congressional fact sheet outlined. 

    The 20% tax applies to “total income,” including earnings and so-called unrealized capital gains, or asset growth, with a credit to avoid double taxation and an optional payment plan, according to the bill, which was introduced with 30 co-sponsors.
    More from Personal Finance:What the Fed’s 75-basis point interest rate hikes mean for youHere’s what advisors are telling their clients as recession fears growDemocrats want to strengthen Social Security. What that means for benefits
    “While working families pay taxes on each and every paycheck or pension payment, the ultra-wealthy can make hundreds of millions of tax-free dollars a year,” Cohen said in a statement. 
    “Instead of all their billions going to buying superyachts, rocket ships, professional sports teams, and Twitter, it is time that billionaires chip in like everyone else to pay at least a base level of taxes,” he said.
    The wealthiest 400 families paid an 8.2% average federal income tax from 2010 to 2018, according to the White House. That compares to 13.03% for the average American.

    Broadly, many Americans approve higher taxes on the super-rich, a March 2022 YouGov PLC survey found, with nearly two-thirds supporting a minimum 20% tax on income of more than $100 million.

    The billionaire tax has struggled to gain traction

    This stuff can take years to incubate before it’s ready for prime time.

    Garrett Watson
    Senior policy analyst at the Tax Foundation

    Still, the latest billionaire tax proposal may be part of a “broader effort of experimenting” to see what types of taxes may get enough support, he said. 
    Some tax legislation has a “very long lead time,” with proposals discussed for five to 10 years before gaining transaction, Watson said, pointing to the Republican’s sweeping 2017 tax overhaul.
    “This stuff can take years to incubate before it’s ready for prime time,” he added.

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    We're trimming 3 stocks that we still like after they all rallied in recent weeks

    We’re selling 50 shares of Salesforce (CRM) at roughly $181.49 each, 65 shares of Danaher (DHR) at roughly $291.05 each, and 50 shares of Eli Lilly (LLY) at roughly $329.07 each. Following Friday’s trades, Jim Cramer’s Charitable Trust will own 355 shares CRM, decreasing its weighting in the portfolio to 2.20% from 2.51%, 485 shares of DHR, decreasing its weighting to 4.84% from 5.45%, and 250 shares of LLY, decreasing its weighting to 2.81% from 3.36% Friday afternoon’s three sales allow us to raise cash — because after Thursday’s broader stock market rally, the S & P Oscillator moved into an extreme overbought reading of positive 8.31%. As a reminder, any time the Oscillator moves above 4%, the market is technically said to be overbought, which means it could be due for a pullback. Of course, the Oscillator could become more overbought from here and stocks can always move higher. But at a minimum, we think an overbought Oscillator serves as a reminder that stocks have had a great run in the past few weeks and don’t be greedy. Should the market pull back a bit, we will be in a great position to buy more of our favorites that have great long-term outlook. Were trimming our position in Salesforce following the 15% run the stock has gone on since we bought 50 shares back in late May , in what happened to be right around the recent low of the stock. We aren’t making any changes to our thesis on the company. But CRM and its high price-to-earnings multiple is the type of stock that could come down hard in the event of an overbought sell-off. To protect against this type of decline, we are booking profits and downgrading our rating to a 2 . We will realize an average gain of about 38% on stock purchased in late 2018. For Danaher, we battled this stock all year and consistently added to our position when it moved against us. We stayed patient because Danaher is one of the best-run companies on the planet, with exposure to secular growth markets in health care and a large recurring revenue stream. Our patience was finally rewarded after the company delivered one of the better quarters we believe the market will see this earning season. The massive earnings beat was a catalyst for the stock, which has gained nearly 14% since reporting. But here is the thing. Our steady buying combined with the stock’s move higher has caused this position to swell into the largest in the portfolio. So we have a high-quality issue on our hands. We are never a fan of selling stock of high-quality companies purely for cash. But after a run like this, we believe the disciplined move is to take a little off and right-size the position. Danaher remains one of our favorite companies, and we consider it a fantastic long-term investment, which is why we will continue to carry a large position going forward, but we are downgrading our rating to a 2 on this comeback. With this sale, we’ll realize a loss of about 7% on stock purchased in January 2022. But we’ll lower our cost basis. For Eli Lilly, we are taking a more prudent approach to this stock despite no change in our broader thesis. Shares of this best-in-show pharmaceutical company have been a huge winner this year, gaining roughly 19% compared to the S & P 500 , which has fallen about 14% in 2022. Given the impressive run of outperformance it has had this year, we want to be sure that we are taking some chips off the table so that we can recycle that cash into other high-quality companies that have seen their stocks get crushed this year. This sale will lock in a great gain of about 26% on stock purchased in November 2021. (Jim Cramer’s Charitable Trust is long CRM, DHR and LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

    Traders work on the floor of the New York Stock Exchange (NYSE) as Federal Reserve Board Chairman Jerome Powell holds a news conference following a Fed rate announcement, in New York City, July 27, 2022.
    Brendan McDermid | Reuters More

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    How US-made mobile-rocket artillery could change the battlefield in Ukraine

    Artillery has quickly become the most important weapon in Ukraine’s war with Russia.
    Ukrainian forces have begun to use newer Western artillery, like the M777 Howitzer, in the battlefield. But a different kind of weapon has had a bigger impact. The American-made High Mobility Artillery Rocket System, aka HIMARS, has been a major high-tech upgrade for Ukraine’s military.”The introduction of the HIMARS rocket artillery to Ukraine has been significant,” said George Barros, a geospatial analyst at the Institute for the Study of War. “That has changed the battlefield quite a lot. And it really goes to show that Western aid to Ukraine is not just paper pushing or symbolic.”

    Ukrainian forces claimed to have already used the HIMARS to take out ammunition dumps, command posts and other high-value targets. Providing this high-tech system could help Ukraine blunt Russian advances and change the direction of the conflict.
    “What the United States needs to do is to have a strategy to bring this war to an early end,” said George Beebe, director of grand strategy at the Quincy Institute. “That means not only convincing the Russians that they can’t win on the battlefield but also showing them that should they make concessions at the negotiating table.”
    Watch the video above to find out more about how the high-tech, American-made mobile-rocket artillery system known as HIMARS could help Ukrainian forces repel the Russian invasion, and why some fear the potent weapon could lead to further escalation of hostilities between Russia and the West.

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    Trump in 2024: Eric Trump teases dad's third election run with golf bag at Saudi-backed tour event

    Eric Trump used a golf bag featuring the lettering “Trump 2024” under an American flag patch at the Bedminster, New Jersey, namesake club owned by his father, ex-President Donald Trump.
    The club is hosting a tournament sponsored by LIV Golf, the controversial pro tour backed by Saudi Arabia’s public investment fund.
    Donald Trump is mulling announcing a third campaign for the White House in 2024 before this fall’s midterm elections.

    A detailed view of a golf bag belonging to Eric Trump reads “Trump 2024” as seen during the pro-am prior to the LIV Golf Invitational – Bedminster at Trump National Golf Club, Bedminster on July 28, 2022 in Bedminster, New Jersey.
    Jonathan Ferrey | LIV Golf | Getty Images

    Eric Trump is more than ready for his father Donald Trump to tee off in a third bid for the White House, even if the former president himself is holding off — for now — on a campaign announcement
    Eric used a golf bag featuring the lettering “Trump 2024” under an American flag patch Thursday at Donald Trump’s Bedminster, New Jersey, club, which was hosting a tournament of LIV Golf, the controversial pro tour backed by Saudi Arabia’s public investment fund.

    The younger Trump’s cheeky public display of the logo at a pro-am competition comes as his father contemplates launching another run for the presidency sooner rather than later.
    A spokeswoman for the Trump Organization, the family business that Eric Trump leads with his brother, Donald Jr., did not immediately respond to a request for comment Thursday on the bag lettering. Donald Trump’s spokeswoman also did not immediately respond to a request for comment.

    Former U.S. President Donald Trump and son Eric Trump react to his putt on the 14th green during the pro-am prior to the LIV Golf Invitational – Bedminster at Trump National Golf Club Bedminster on July 28, 2022 in Bedminster, New Jersey.
    Cliff Hawkins | Getty Images

    Donald Trump reportedly is considering formally announcing before this November’s midterm elections that he intends to run for president in 2024.
    Trump, who lost a reelection effort to President Joe Biden, is said to be motivated at least in part, to blunt the rising popularity among Republicans of Florida Gov. Ron DeSantis, who himself reportedly is eyeing a White House run in 2024.
    But some GOP elected officials and candidates are worried that if Trump does announce he is running before November, it would hurt the party’s chances of winning majorities in both chambers of Congress this year.

    While retaining the support of many Republican voters, Trump remains a deeply controversial figure due to his refusal to accept the legitimacy of the 2020 presidential vote results, the subsequent Jan. 6, 2021, Capitol riot, and other issues.

    CNBC Politics

    Read more of CNBC’s politics coverage:

    On Wednesday, ABC News reported that a Republican National Committee official told that news outlet that the RNC would stop paying legal bills for Trump as soon as he announces he is a candidate, “because the party has a ‘neutrality policy’ that prohibits it from taking sides in the presidential primary.”
    ABC noted that since October, the RNC has paid almost $2 million to law firms that represent Trump in lawsuits filed against him, and investigations by government entities.
    This weekend’s event at Trump’s New Jersey golf club has generated controversy on multiple fronts.
    The Saudi-backed LIV Golf is challenging the PGA Tour’s dominance in professional golf, which has led the PGA to suspend more than 20 players from its events for participating in LIV events without receiving releases for “conflicting event and media rights.”
    LIV Golf also has been accused of being yet another “sports-wash” effort by the Saudi Arabia to improve its international reputation, which has suffered for decades because of internal government repression and human rights abuses.
    Trump, who is from New York City, has been strongly criticized in recent weeks by families of the victims of the Sept. 11, 2001, terror attacks for hosting the Saudi-backed event at his club.
    Of the 19 hijackers of four planes that day, 15 were Saudi nationals. Two of the planes that were hijacked slammed into the Twin Towers at the World Trade Center in lower Manhattan, which collapsed soon afterward. The Saudi government has long denied connection to the attacks.
    “How much money to turn your back on your own country?” asked a woman in an ad created by 9/11 survivors and relatives and directed at Trump that began airing this week.
    The ad also features a man saying, “This golf tournament is taking place 50 miles from Ground Zero.”
    When asked about that Thursday, Donald Trump replied, “Well, nobody’s gotten to the bottom of 9/11, unfortunately, and they should have.”
    But six years ago, during his first White House run, Trump said on an appearance on Fox News’ “Fox & Friends:” “Who blew up the World Trade Center? It wasn’t the Iraqis, it was Saudi — take a look at Saudi Arabia, open the documents.”

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    Saudi-backed LIV Golf envisions franchises in its future, executive says

    LIV Golf, the Saudi-backed league that has the blessing of former President Trump and Phil Mickelson, aims to build franchises.
    “We’re building 12 teams with franchise values, just like any other sport that we fully expect down the road to have a valuation to be sold,” LIV executive Atul Khosla told CNBC.
    Family members of those who perished in the Sept. 11, 2001, terrorist attacks are protesting the league and the event this week at Trump’s New Jersey golf club.

    BEDMINSTER, N.J. — LIV Golf is just three tournaments in, but the Saudi-backed upstart league is already thinking big about its future.
    In an interview with CNBC, LIV Golf Investments President and COO Atul Khosla said the future of LIV Golf is teams and creating franchises that can one day be sold. The organization is holding an event this weekend, starting Friday, at former President Donald Trump’s namesake golf club here.

    “We’re building 12 teams with franchise values, just like any other sport that we fully expect down the road to have a valuation to be sold,” he said. “All of those things will happen in golf that happen in every other sport.”
    Khosla says the company came to the conclusion from their first two tournaments in London and Portland, Oregon, that fans love golf as a team sport. He says the team merchandise sales sold out the first day during the tournaments. “The team concept is really resonating with our fans,” he said.
    The new golf league is financed by Saudi Arabia’s Private Investment Fund. The kingdom’s fund has set its sights on the sports sector as another investment piece in its portfolio and has invested a reported $2 billion into LIV Golf.
    Read more: Eric Trump teases dad’s potential 2024 run with golf bag at Saudi tour event
    LIV is spending top dollar to lure golf pros from the PGA Tour, offering equity in the league, generous prizes and guaranteed money. So far, it has signed big name players like Phil Mickelson, Dustin Johnson and Bryson DeChambeau. They’ve also snagged top golf commentator David Feherty away from Golf Channel and reportedly had their sights on bringing on TNT’s Charles Barkley. (Barkley told The New York Post that he decided to stay with Turner Sports and not join LIV, according to a story published Friday.)

    “We do have a longer runway,” Khosla said. “But our investor definitely wants to see returns at the end of the day.”
    The Saudi support has created some controversy for LIV, however. Family members of those who perished in the Sept. 11, 2001, terrorist attacks are protesting the league. Fifteen of the 19 hijackers that day were from Saudi Arabia, and Osama Bin Laden, the attacks’ mastermind, was born in the country. U.S. officials concluded that Saudi nationals helped fund the terrorist group al-Qaida, although investigations didn’t find that Saudi officials were complicit in the attacks.

    South Africa’s Charl Schwartzel of the Stinger team in action as he putts for a birdie on the 18th hole during the second round, June 10, 2022.
    Paul Childs | Reuters

    Trump on Thursday defended hosting the event, falsely claiming that “nobody’s gotten to the bottom of 9/11.”
    The group 9/11 Justice protested near Trump’s course, which is less than 50 miles of the Ground Zero site in lower Manhattan.
    “To see a former president pretending that he doesn’t know what the Saudis did, or saying that he doesn’t know about the 9/11 story, it’s just the worst form. It’s the worst feeling you can get,” the group’s president, Brett Eagleson, told CNBC. He was 15 when he lost his father when the Twin Towers collapsed after hijackers crashed airliners into them.
    Sen. Richard Blumenthal, D-Conn., sided with the protesters. “I support the 9/11 families’ pursuit of justice and remain committed to holding Saudi Arabia accountable for its actions,” he said in a statement Friday.
    Khosla also defended LIV. He said the league isn’t the only one with ties to Saudi Arabia. “There are about 23 PGA Tour partners today that have ties to the multibillion-dollar business in Saudi Arabia. I’m not telling the PGA Tour to not have sponsors,” he said.
    “It’s an interconnected global economy so just because a bunch of golfers took a little bit of money, I just don’t think you need to get all worked up,” he added.

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    A toxic culture and ‘race to the bottom’: Pilots open up on why air travel is in chaos

    Just this week, German carrier Lufthansa canceled nearly all its flights in Frankfurt and Munich, stranding some 130,000 travelers due to a one-day walkout by its ground staff striking for better pay.  
    London’s Heathrow Airport and Amsterdam’s Schiphol Airport, two of the largest travel hubs in Europe, slashed their passenger capacity and demanded that airlines cut flights to and from their airports.
    Many working in the industry say airlines are playing a role in staff shortages as well as airports, and that the situation is becoming dire enough that it could threaten safety. 

    The chaos engulfing many major airports in North America and Europe since summer began hasn’t abated much, and news outlets and social media users continue to report on hordes of impatient travelers and mountains of misplaced suitcases.
    Source: Getty Images

    Canceled flights. Long lines. Staff walkouts. Missing luggage. 
    Sound familiar? The chaos engulfing many major airports in North America and Europe since summer hasn’t abated much, and news outlets and social media users continue to report on hordes of impatient travelers and mountains of misplaced suitcases.

    Just this week, German carrier Lufthansa canceled nearly all its flights in Frankfurt and Munich, stranding some 130,000 travelers due to a one-day walkout by its ground staff who were on strike for better pay.  
    London’s Heathrow Airport and Amsterdam’s Schiphol Airport — two of the largest travel hubs in Europe —slashed their passenger capacity and demanded that airlines cut flights in and out of their airports, which angered both travelers and airline managers.
    Carriers in the U.S. have also canceled and delayed tens of thousands of flights due to staffing shortages and weather issues. 
    Airlines are vocally laying the blame on airports and governments. On Monday, the chief financial officer of low-cost European carrier Ryanair, Neil Sorahan, complained that airports “had one job to do.”

    Uncollected suitcases at Heathrow Airport. The U.K.’s biggest airport has told airlines to stop selling summer tickets.
    Paul Ellis | Afp | Getty Images

    But many of those working in the industry say airlines are partly responsible for staff shortages as well, and the situation is becoming dire enough that it could threaten safety. 

    CNBC spoke to several pilots flying for major airlines, all of whom described fatigue due to long hours and what they said was opportunism and a desire to cut costs as part of a toxic “race to the bottom” culture pervading the industry and worsening the messy situation that travelers are facing today.
    All the airline staff spoke anonymously because they were not authorized to speak to the press.   

    ‘Absolute carnage’

    “From a passenger point of view, it’s an absolute nightmare,” a pilot for European low-cost carrier easyJet told CNBC. 
    “Leading into the summer, it was absolute carnage because airlines didn’t know what they were doing. They didn’t have a proper plan in place. All they knew they wanted to do was try and fly as much as humanly possible – almost as if the pandemic had never happened,” the pilot said. 
    “But they forgot that they’d cut all of their resources.”
    The ensuing imbalance has “made our life an absolute mess, both cabin crew and pilots,” the pilot added, explaining how a shortage of ground staff since the Covid pandemic layoffs — those who handle baggage, check-in, security and more — has created a domino effect that’s throwing a wrench into flying schedules.

    A bit of a toxic soup … the airports and the airlines share an equal level of blame.

    Emirates Airline

    In a statement, easyJet said that the health and well-being of employees is “our highest priority,” stressing that “we take our responsibilities as an employer very seriously and employ our people on local contracts on competitive terms and in line with local legislation.”
    The industry is now hobbled by a combination of factors: not having enough resources for retraining, former staff not wanting to return, and poor pay that has largely remained suppressed since pandemic-era cuts, despite significantly improved revenue for airlines. 
    “They’ve told us pilots we are on pay cuts until at least 2030 — except all the managers are back on full pay plus pay rises for inflation,” a pilot for British Airways said. 

    “Various governments with their restrictions and no support for the aviation sector” as well as airport companies are in large part to blame for the current chaos, the pilot said, adding that “some airlines took advantage of the situation to cut salaries, make new contracts and lay people off, and now that things are back to normal they can’t cope.”
    While many airports and airlines are now recruiting and offering better pay, the required training programs and security clearance processors are also severely cut back and overwhelmed, further hobbling the sector.  

    ‘They are shocked, which is incredible’

    British Airways ground staff were set to strike in August over the fact that their full pay had still not been reinstated — something especially stinging at a time when the CEO of BA’s parent company, IAG, was given a £250,000 ($303,000) gross living allowance for the year. 
    But this week, the airline and workers’ union agreed on a salary increase to call off the planned strike, though some staff say it’s still not a full return to their pre-pandemic pay.  

    Nicolas Economou/NurPhoto via Getty Images

    In a statement, British Airways said: “The last two years have been devastating for the entire aviation industry. We took action to restructure our business to survive and to save jobs.”
    The company also said, “the vast majority of redundancies during this time period were voluntary.”
    “We’re completely focused on building resilience into our operation to give customers the certainty they deserve,” the airline said.
    IAG CEO Luis Gallego, whose company owns BA, forfeited his £900,000 bonus in 2021 and took voluntary salary reductions in 2020 and 2021, and did not receive his 2020 bonus.

    They just want the cheapest labor to produce their own big bonuses and keep shareholders happy.

    British Airways

    One pilot flying for Dubai’s flagship Emirates Airline said that a short-term mindset that took employees for granted had for years been laying the groundwork for today’s situation.
    The airlines “were happy to try and depress wages for lots of people in the industry for years, on the assumption that nobody had anywhere else to go,” the pilot said. “And now that people are exercising their right to go somewhere else, they are shocked, which is incredible. I’m shocked that they’re shocked.”

    A safety risk?

    All this stress for airline staff comes on top of the often ignored issue of pilot fatigue, all the pilots interviewed by CNBC said.
    The legal maximum limit for a pilot’s flying time is 900 hours per year. But for many airlines, “that wasn’t seen as the absolute maximum, it was seen as the target to try and make everybody’s workload as efficient as possible,” the easyJet pilot said.
    “That’s the big worry with us is that we’ve got a fairly toxic culture, an inordinate amount of work,” the Emirates pilot echoed. “That all adds up to potentially reducing the safety margin. And that’s a big concern.”

    All this has been combined with low pay and less attractive contracts, the pilots say, many of which were rewritten when the pandemic turned air travel on its head.
    “A bit of a toxic soup of all of those, the airports and the airlines share an equal level of blame. It’s been a race to the bottom for years,” the Emirates pilot said. “They’re only going to ever try and pay as little as they can get away with paying.”
    Emirates Airline did not reply to a CNBC request for comment. 

    ‘Race to the bottom’

    “Crony capitalists. Rat race to the bottom. No respect for skilled workforce now,” the BA pilot said of the industry’s corporate leadership. “They just want the cheapest labor to produce their own big bonuses and keep shareholders happy.”
    The International Air Transport Association said in response to these criticisms that “the airline industry is ramping up resources as quickly as possible to safely and efficiently meet the needs of travelers.” It acknowledged that “there is no doubt that these are tough times for the industry’s workers, particularly where they are in short supply.”
    The trade group has issued recommendations “to attract and retain talent in the ground handling sector,” and said in a statement that “securing additional resources where deficiencies exist is among the top priorities of industry management teams around the world.”
    “And in the meantime,” it added, “the patience of travelers.” More