Business

United joined Delta in forecasting a 2022 profit thanks to a resurgence in travel demand.
United and other carriers are seeing a surge in fuel costs but fares are keeping apace.
The airline expects to fly a schedule that’s 87% of 2019 levels in the second quarter.

United Airlines expects to turn a profit in 2022 for the first time since before the pandemic as bookings rise and passengers appear willing to pay more to fly.
United’s shares rose more than 7% in after-hours trading Wednesday after it releasing an upbeat outlook.

The forecast suggests airlines are at a turning point in the pandemic recovery, as a drop in Covid cases has spurred renewed demand for travel and a public that hasn’t yet shied away from higher ticket prices, despite inflation hitting household budgets.
“I’ve never seen in my career, and I’ve been in this industry a long time … such a hockey stick increase of demand,” CEO Scott Kirby told CNBC Wednesday, referring to both business travel and leisure bookings.

Boeing 777ER United Airlines. Aircraft to Fiumicino Leonardo da Vinci Airport.
Massimo Insabato | Mondadori Portfolio | Getty Images

For the second quarter, United is forecasting a 10% operating margin, and the highest quarterly sales in its history, with revenue per passenger mile up 17% over 2019, as higher fares help cover an increase in expenses.
The Chicago-based airline is the second major U.S. carrier to report results and provide an outlook for the peak spring and summer travel season, when airlines generate the bulk of their annual revenue. Delta Air Lines last week reiterated that it foresees a return to profitability this year.
Despite strong demand, United is challenged to add capacity. Its 52 Pratt & Whitney-powered Boeing 777s, some of the biggest planes in its fleet have been grounded since an engine failure in February 2021 and won’t return until mid-May at the earliest, CNBC reported earlier this month. And deliveries of new Boeing 787 Dreamliners have been suspended for much of the past 18 months because of manufacturing flaws.

The airline is also facing a pilot shortage, particularly at regional carriers that feed its hubs, a problem across the sector.
Here’s how United performed in the first quarter compared with what Wall Street expected, based on average estimates compiled by Refinitiv:

Adjusted loss per share: $4.24 versus an expected $4.22.
Total revenue: $7.57 billion versus expected $7.68 billion.

United posted a loss of $1.4 billion in the first quarter on revenue of $7.57 billion. That revenue level is well off the $9.59 billion it reported three years earlier but more than double the $3.22 billion from a year ago.
Adjusting for one-time items, it posted a loss of $4.24 per share.
The company paid $2.88 a gallon for fuel in the first quarter, up from $2.05 in 2019 and $1.74 last year. Excluding fuel, its costs jumped 18% over the same period of 2019.
For the second-quarter, United expects costs excluding fuel to rise 16% versus 2019.
Airline bookings, broadly, surged after Covid cases peaked and then subsided this winter, easing the rocky start to 2022 for carriers. Airline executives expect that after more than two years of pandemic, many travelers who were cooped up will continue to fuel travel demand, even though fares have climbed.
United plans to fly 87% of its 2019 schedule during the second quarter. Along with Delta, United has been more cautious on adding capacity compared with rivals like American Airlines and fast-growing budget airlines like Spirit Airlines.
“As the company’s Pratt & Whitney-powered Boeing 777 aircraft are expected to gradually return to service, the company will continue to add back capacity based on its ability to best serve customers and will take a long-term view of profitability by not sacrificing operational reliability,” United said in an earnings release.
Some carriers, however, like Spirit, Alaska Airlines and JetBlue Airways are trimming spring and summer schedules for wiggle room to navigate disruptions like bad weather or staffing shortages.
American Airlines’ new CEO Robert Isom told staff last week that reliability is paramount this season. Customers on American and other carriers faced massive deals and cancellations last year after carriers struggled with routine disruptions and staffing shortfalls.
United executives will discuss results with analysts and media on a 10:30 a.m. ET call Thursday. American Airlines will report its results before the market opens Thursday and hold a call at 8:30 a.m. ET.

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A federal judge knocked down the Biden administration’s public transportation mask mandate on Monday.
Flight attendants have faced the brunt of opposition to the mandate and are showing relief that they won’t be tasked with enforcement.
But not everyone agrees that the change is a positive one.

Passengers at LaGuardia Airport on April 19, 2022.
Leslie Josephs | CNBC

The Biden administration’s transportation mask mandate was one of the most divisive policies of the Covid pandemic. Its sudden end this week has been just as contentious.
A federal judge in Florida on Monday struck down the mandate, which for more than a year required that travelers in the U.S. wear masks on planes, trains and other shared modes of public transportation, as well as at airports and rail and bus stations, in an effort to help slow the spread of Covid-19.

The rule was due to expire after May 3, though the Biden administration said it plans to appeal this week’s court ruling if the U.S. Centers for Disease Control and Prevention deems masks still necessary on public transportation.
Still, the abrupt reversal stemming from Monday’s decision threw travelers, airlines and crews into a gray area.
The Transportation Security Administration said it would no longer enforce the rule and airlines quickly said face masks would be optional, effective immediately. Some pilots announced the decision midflight, to applause.
Some airports and public transportation systems such as those in New York and Philadelphia will still require masks even though they wouldn’t be required to do so by airlines or the federal government.

Divisive issue

In the two days since the ruling, views are varied on whether the change is a good or a bad thing.

An AP-NORC poll, conducted from April 14 to April 18 and published Wednesday, showed 56% of people strongly or somewhat strongly support face mask requirements for transportation, while 24% oppose it and 20% neither favor nor oppose it.
“I was disheartened to hear,” Scott Reeves, 71, a musician and retired music professor, said at LaGuardia Airport in New York on Tuesday. Reeves said he will “absolutely” continue to wear a mask when he flies, saying it’s “not a big deal. Being sick is a big deal.”
Armanda Marin, 36, arrived at LaGuardia from Dallas on Tuesday, her first maskless flight of the pandemic.
“I really don’t care, as long as everyone has a vaccination,” she said.
Lucas Dietrich, a 39-year-old insurance salesman, said he was relieved to leave the masks behind.
“I can’t stand them,” he said, adding that he feels safe given the benefits of aircraft-filtration systems. “It feels like we’re coming to the end of this thing.”

Flight attendants ditch mask police role

One group is feeling a particular relief. Flight attendants have faced the brunt of public opposition to the mandate and now won’t be tasked with enforcement.
“We are done enforcing it,” said an American Airlines flight attendant, who declined to give his name because he isn’t permitted to speak with the media.
The Federal Aviation Administration last year received a record number of reports of unruly travelers on planes. More than 70% of the incidents were tied to disputes over masks. Flight attendants have reported verbal abuse and passenger disputes while they worked, some even rising to physical violence, throughout the pandemic.
The FAA last year instituted a zero tolerance policy that promised stricter consequences like hefty fines for unruly passenger behavior, in place of softer responses like warnings or counseling. On Wednesday, it said the policy will continue despite the end to the mask mandate.
“We fully recognize that enforcement of the mandate has placed an incredible burden on flight attendants,” the Association of Professional Flight Attendants, the union representing American Airlines flight attendants, told its members on Monday.
Lyn Montgomery, president of TWU Local 556, which represents Southwest Airlines flight attendants, wrote to the Biden administration prior to this week’s ruling advocating for an end to the mandate.
“It’s not that we’re antimask,” she told CNBC on Tuesday. But the decision to end the mandate is a “step toward normalcy” for flight attendants whose jobs during the pandemic have been “exhausting and stressful.”
Sara Nelson, international president of the Association of Flight Attendants-CWA, the country’s largest flight attendant union, said while there are cabin crews in favor of ending the policy, others aren’t on board.
Crew members with young children who aren’t vaccinated, for example, or who are immunocompromised, aren’t necessarily cheering the change.
“The only reason this has been an issue is because it was so politicized,” Nelson said on CNBC’s “Squawk Box” Tuesday. “We did not take a position on extending the mask mandate.”

Passengers and crews can still wear masks if they prefer.
“If there’s anything we’ve learned from this it has to be about common courtesy and recognizing that you might not have the same situation someone else has,” Nelson said.

Banned passengers to return

Airlines, for their part, have repeatedly pushed the Biden administration to end the mask mandate, as well as the predeparture Covid test requirement for arriving international passengers, which is still in place.
Airlines required passengers to wear masks starting in spring 2020, just as the pandemic took hold and quickly began banning passengers who refused to comply. That, too, is in the process of changing.
Alaska Airlines said it has banned more than 1,700 travelers for failing to follow masking policies, but many of those passengers will now be welcomed back.
“Now that the mask policy has been overturned, guests who were banned solely for mask noncompliance will be allowed to purchase tickets on our flights,” the airline said in a statement. “However, some guests whose behavior was particularly egregious will remain banned.”
United Airlines issued a similar update: “On a case-by-case basis, we will allow some customers who were previously banned for failing to comply with mask-related rules to fly United again — after ensuring their commitment to follow all crew member instructions on board,” the company said.
Delta Air Lines said it plans to allow customers it banned for failing to follow masking rules now that they are optional “only after each case is reviewed and each customer demonstrates an understanding of their expected behavior when flying with us.
“Any further disregard for the policies that keep us all safe will result in placement on Delta’s permanent no-fly list,” Delta said. “Customers who demonstrated egregious behavior and are already on the permanent no-fly list remain barred from flying with Delta.”
American Airlines declined to comment but will likely address that topic when it reports quarterly results Thursday morning.

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Starbucks filed two complaints with the National Labor Relations Board on Wednesday alleging that the union organizing its baristas broke federal labor law.
Workers United has filed dozens of complaints against Starbucks with the NLRB.
Rossann Williams, president of Starbucks’ North American operations, wrote in a letter to workers that the company filed the complaints to protect workers’ physical safety and well-being.

Michelle Eisen, a barista at the Buffalo, NY, Elmwood Starbucks location, the first Starbuck location to unionize, helps out the local Starbucks Workers United, employees of a local Starbucks, as they gather at a local union hall to cast votes to unionize or not, Wednesday, Feb. 16, 2022, in Mesa, Ariz.
Ross D. Franklin | AP

Starbucks filed two complaints with the National Labor Relations Board on Wednesday alleging that the union organizing its baristas broke federal labor law.
This marks the coffee chain’s first time on the other side of accusations around lawbreaking behavior amid the union battle.

Workers United, an affiliate of the Service Employees International Union, has filed dozens of complaints of its own against Starbucks with the NLRB, alleging that the company has illegally retaliated against, harassed and fired organizers in cafes across the country.
The government agency has similarly filed three complaints against Starbucks, according to Workers United, alleging in part that in Phoenix it threatened employees and fired organizers in retaliation. Starbucks has denied all allegations of union busting.
More than 200 of the coffee chain’s locations have filed paperwork to unionize under Workers United since August. To date, 24 stores have voted to unionize, with only two locations so far voting against.
In the complaints filed with the NLRB, Starbucks alleges that Workers United “unlawfully restrained and coerced partners in the exercise of their rights,” citing incidents that occurred at two cafes in Denver and Phoenix.
Starbucks claims in the filings that organizers physically blocked the entrances and exits of those stores, made threats and physically intimidated baristas who didn’t support the union drive.

The complaint alleges that organizers also yelled profanity at customers and hit cars with a picket sign as they tried to enter and exit the Denver location. The complaint does not detail when that incident occurred, but workers at the Denver cafe named in the filing held a strike March 11 to protest what they called unfair working conditions.
The Phoenix location mentioned in the filings is the same cafe that is at the center of some of the NLRB’s complaints against Starbucks.
Starbucks Workers United said the allegations are a “continuation of Starbucks’ war against its own partners.”
“It takes a lot of gall for a company that’s launched one of the most aggressive & intense anti-union campaigns in modern history to file these charges,” the union said in a statement to CNBC.
Rossann Williams, president of Starbucks’ North American operations, wrote in a letter to employees viewed by CNBC, said the company was filing the claims to protect its workers.
“We’re doing this to protect the physical safety and emotional wellbeing of our partners and to make it very clear that the behavior we’re seeing from some union organizers is not acceptable and we won’t tolerate it,” Williams said. “I want every partner to know we respect and honor all their rights — the right to choose a union, and the right to choose to speak for themselves.”

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Motif asked the U.S. Patent and Trademark Office to revoke a patent held by Impossible protecting the company’s heme technology.
Impossible sued Motif in March, claiming that the start-up’s heme-based beef alternative too closely imitates its own version.
Both companies are privately owned, although Impossible is much larger, with a valuation of $9.5 billion.

Plant-based burgers developed by Impossible Foods Inc. are seen at the 2nd China International Import Expo (CIIE) at the National Exhibition and Convention Center on November 6, 2019 in Shanghai, China.
China News Service | Getty Images

Plant-based meat maker Impossible Foods could be at risk of losing a key patent as part of an ongoing legal dispute with competitor Motif FoodWorks.
Motif asked the U.S. Patent and Trademark Office to revoke a patent held by Impossible protecting the company’s heme technology. Impossible sued Motif in March, claiming that the start-up’s heme-based beef alternative too closely imitates its own version.

Impossible’s beef and pork substitutes use soy leghemoglobin, which is produced from genetically modified yeast, to imitate the taste and aroma of real meat.
Both companies are privately owned, although Impossible is much larger, with a valuation of $9.5 billion. Along with publicly traded Beyond Meat, Impossible has helped rejuvenate the market for vegetarian burgers. Losing its patent on heme could mean even stiffer competition within the meat alternative market.
Motif filed a petition with the USPTO’s Patent Trial and Appeal Board on Wednesday to ask a panel of judges to review Impossible’s patent and weigh whether it should be revoked.
“We are confident the Patent Trial and Appeal Board will agree with our view that the patent never should have been issued and revoke it,” a Motif spokesperson said in a statement to CNBC. “Our industry should work together to grow the plant-based category for the greater good — to benefit people and the planet. Competition is healthy. And it should play out in the marketplace, not the courts.”
An Impossible spokesperson told CNBC in a statement the company is confident in the strength of its patent and that its expects to prevail in court and before the patent office.

“Motif’s stunt is a baseless and meritless attempt to distract from the fact that they have infringed on our patent and are unlawfully using our technology to build their business,” the spokesperson said.
Motif has raised $343.5 million from investors including Bill Gates and was valued at $1.23 billion last year, according to Pitchbook. It was spun out of biotech start-up Ginkgo Bioworks.
When Motif launched in 2019, Ginkgo co-founder and CEO Jason Kelly told CNBC that Impossible’s success inspired the formation of Motif, which develops key ingredients for making plant-based proteins and leaves the rest to food companies.
Impossible alleges that Motif’s Hemami product infringes on its patent for a beef replica using heme, a molecule found in traditional beef burgers that Impossible and Motif both use as an ingredient. Motif’s version uses bovine myoglobin as its heme source.
In its original complaint, Impossible said its patent covers the invention of a beef substitute that uses a muscle replica including a heme-containing protein, at least one sugar compound and one sulfur compound. It also protects against the invention of a meat alternative that mimics meat through a fat tissue replica that uses at least one plant oil and a denatured plant protein.

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Netflix finds itself in an unusual place with slowing growth and an eye on advertisement: following legacy media.
Netflix announced Tuesday it’s exploring adding a lower-priced, advertising-based tier to its service.
Instead of legacy media shares soaring as they imitate Netflix, the industry has brought Netflix down to a degree.

Reed Hastings, co-CEO of Netflix, participates in the Milken Institute Global Conference on October 18, 2021 in Beverly Hills, California.
Patrick T. Fallon | AFP | Getty Images

We must be living in the Upside Down. Legacy media has disrupted Netflix.
Netflix announced Tuesday it’s exploring adding a lower-priced, advertising-based tier to its service. The decision has put the world’s largest streaming video service in a peculiar place: following legacy media’s lead.

Comcast and Disney-owned Hulu is the founding father of advertising-supported streaming. In recent years, Warner Bros. Discovery’s primary streaming services (HBO Max and Discovery+), NBCUniversal’s Peacock and Paramount Global’s Paramount+ all launched with ad-based tiers for a lower price than their commercial-free products. Disney said last month Disney+ will offer an advertising-supported product.
The legacy media industry has spent the past four years overhauling their businesses to compete with Netflix. All of legacy media decided Netflix’s streaming-only model was the future of entertainment consumption. The companies saw Netflix trade at sky-high multiples, leading to a soaring stock price, no matter how much it spent on content.
The result was a pack of enormous companies shifting focus to compete directly against Netflix instead of protecting the pay TV bundle, long the jewel of the industry.
In the streaming world, Netflix looks like the incumbent — struggling with saturation and an aging core service. That may not be good news for the entertainment companies striving to gain market share.
The optimistic goal for legacy media companies has been to attain the same type of trading multiples as Netflix — an “everybody wins” scenario. But, at least for now, it appears entertainment rivals have pulled down Netflix, which acknowledged during its first-quarter earnings update that growing competition has led to its slowing growth.

Netflix shares fell more than 35% on Wednesday, dragging its market capitalization to $100 billion for the first time since 2018.
When a company trades on subscriber gains, like Netflix, it’s inevitable the music will eventually stop. No company can sustain subscriber growth forever. Saturation kicks in.
That appears to have happened for Netflix, which lost subscribers for the first time in more than 10 years during the first quarter and is projecting a further loss of 2 million subscribers during the second quarter.
The situation is so dire, on the surface, that Netflix CFO Spencer Neumann jumped in just before the end of the company’s earnings conference call Tuesday to reassure investors that Netflix will still be up in terms of subscribers for the full year — a telling consolation when you consider that most analysts expected Netflix to add nearly 20 million net subscribers in 2022.
“There will be paid net add growth,” Neumann said. “I just want to make sure that that’s understood.”

What now?

A shrinking Netflix isn’t good for Hollywood, which has benefited not just from the streamer’s willingness to spend but also the subsequent arms race from competitors.
A version of Netflix that needs to tamp down spending because it no longer has a ballooning market value forces the entire industry to figure out what’s next. If Netflix is embracing ads after years of resisting them, will the company next get into live sports?
Co-CEO Ted Sarandos said he didn’t see a profitable path into sports on Tuesday’s conference call, but Netflix seems to be getting into the habit of changing long-held beliefs. Netflix ignored password sharing for many years — and that’s changing now too.
If Netflix looks and acts like all other entertainment companies, it sets itself up to be disrupted too. It’s unclear video gaming, which the company has repeatedly touted as an area for innovation, will be enough to separate Netflix from the pack.
The industry now seems a lot more unsettled than it did a year ago, when “trading like Netflix” was actually a goal. There’s rampant speculation the streaming wars will lead to more consolidation, but it’s unclear regulators would allow those deals to take place.
Media companies could have rallied around protecting the pay-TV bundle, but they risked ceding the future to Netflix and other giant technology companies. Whether that decision was right or not, that ship has sailed.
And following Netflix into streaming hasn’t led to the multiple expansion the legacy companies were hoping for. As Netflix falls, its newly defined peers do too. Paramount Global dropped more than 8% Wednesday. Warner Bros. Discovery dropped more than 6%. Disney fell 5.6%.
Legacy media may have brought down Netflix to a degree. But in doing so, it created an existential crisis for the entire entertainment industry. What do we do now?
WATCH: Netflix has not monetized 500 million viewers, says Jim Cramer

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC.

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The U.S. Department of Justice announced criminal charges against two people in California in a scheme that allegedly made $144 million in false and fraudulent health claims to federal programs for unnecessary Covid-19 tests.
The DOJ also announced criminal cases against 19 other defendants, among them doctors, a nurse, medical business executives and others, for an additional $8 million in false Covid-related billings.
One man charged allegedly bragged about selling fake coronavirus vaccine cards to Olympic team members.

Signage is seen at the United States Department of Justice headquarters in Washington, D.C., August 29, 2020.
Andrew Kelly | Reuters

The U.S. Department of Justice on Wednesday announced criminal charges against two people in California in a scheme that allegedly made $144 million in false and fraudulent health claims to federal programs for unnecessary Covid-19 tests.
The DOJ also announced criminal cases against 19 other defendants, among them doctors, a nurse, medical business executives and others, for an additional $8 million in false Covid-related billings to federal health programs and theft from federally funded pandemic assistance programs. Prosecutors also allege some defendants sold fake vaccination cards and bogus coronavirus cures.

The cases span nine federal court districts.
“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Luis Quesada, assistant director of the FBI’s Criminal Investigative Division.
“These health care fraud abuses erode the integrity and trust patients have with those in the health care industry, particularly during a vulnerable and worrisome time for many individuals,” Quesada said.
In the major California case, the owners of a clinical laboratory, Imran Shams and Lourdes Navarro, both age 63, of Glendale, were charged with a health-care fraud, kickback and money laundering scheme that involved the fraudulent billing of over $214 million for laboratory tests.
More than $125 million of those billings allegedly involved fraudulent claims for Covid and respiratory pathogen tests that “were submitted without regard to medical necessity,” according to prosecutors.

“Shams and Navarro fraudulently concealed Shams’s role in the lab and his prior health care-related criminal convictions,” according to the DOJ. Shams has been barred from participating in the federal Medicare program for decades.
“The indictment also alleges that Shams and Navarro paid kickbacks to marketers who obtained specimens and test orders, and laundered the proceeds of the scheme through shell companies Navarro controlled, including by making expenditures on real estate, luxury items, and personal goods and services,” the Justice Department said.
In Washington state, a 53-year-old Parker, Colorado, resident, Robert Van Camp, was accused of using blank Covid-19 vaccination cards to forge and sell hundreds of fake vaccine record cards, which he sold to buyers and distributors in at least a dozen states, according to the DOJ.
“Van Camp allegedly told an undercover agent that he had sold cards to ‘people that are going to the Olympics in Tokyo, three Olympians and their coach in Tokyo, Amsterdam, Hawaii, Costa Rica, Honduras,'” the DOJ said in a news release.
Van Camp also allegedly told that agent, “I’ve got a company, a veterinary company, has 30 people going to Canada every f—— day, Canada back. Mexico is big. And like I said, I’m in 12 or 13 states, so until I get caught and go to jail, f— it, I’m taking the money, (laughs)! I don’t care,” the DOJ said.

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Other defendants include a U.S. Postal Service worker, Lisa Hammell of Turnersville, New Jersey. Hammell is charged with creating fake Covid vaccine cards and printing them while at work.
Hammell, 39, is accused of selling at least 400 bogus vaccination cards to people who had not actually received Covid shots.
In separate cases in Maryland and Long Island, New York, owners of medical clinics are accused of obtaining confidential information from patients seeking coronavirus tests at drive-thru sites and in brief office visits, then submitting bogus claims to Medicare, Medicaid and other insurers for much longer office visits that did not actually happen.
In the Long Island case, Dr. Perry Frankel, 64, of Roslyn, N.Y., was charged with health-care fraud for more than $1.3 million in claims billed during the Covid pandemic.
Frankel’s lawyer Timothy Sini, in an emailed statement, called him a “respected cardiologist in the Long Island region who has saved lives by providing vital mobile medical screenings to law enforcement, school districts and many communities across Long Island and the five boroughs.”
“When the COVID-19 pandemic hit, Dr. Frankel stepped up and brought much needed COVID-19 testing to the community. He has been recognized for his service by many, including the White House,” Sini said.
“The Government, as part of a larger initiative, is targeting healthcare providers who supposedly took advantage of the pandemic to benefit themselves financially. Nothing could be further from the truth here,” the lawyer said. “Dr. Frankel provided a much needed service during a public health crisis and an extremely challenging time. It is unfortunate that the government’s claims seek to undermine the positive nature of Dr. Frankel’s work. We look forward to pursuing justice for Dr. Frankel and clearing his name in the medical community.”
In the Maryland case, Ron Elfenbein, a 47-year-old from Arnold, was charged with health care fraud related to more than $1.5 million in claims that were billed in connection with COVID-19 testing.
In Utah, a former employee of the preflight Covid testing service XpresCheck in the Salt Lake City International Airport terminal was charged with wire fraud for giving counterfeit negative test results to people traveling through that airport.
The worker, 28-year-old Linda Tufui Toli of Salt Lake City, “allegedly intercepted calls from travelers who were seeking COVID testing services from XpresCheck prior to traveling to destinations such as Hawaii, Israel, and other locations which required travelers to provide negative COVID test results prior to departure,” the DOJ said.
“Toli allegedly canceled the travelers COVID tests through XpresCheck and arranged for travelers to purchase counterfeit negative COVID tests directly from her, and accepted payment for the counterfeit test results using electronic mobile payment services,” according to the DOJ.

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President Joe Biden and Vice President Kamala Harris have released their 2021 tax returns, and there are a few key takeaways for the average American.
Their returns were similar to 2020, putting both couples in the top 1% of filers, according to IRS data.
“It seems like they’re conservative in the way they do their taxes,” said Sharif Muhammad, founder and CEO of Unlimited Financial Services.

President Joe Biden and Vice President Kamala Harris after Biden signed H.R. 55, the “Emmett Till Antilynching Act,” in Washingtonon March 29, 2022.
Samuel Corum | Bloomberg | Getty Images

President Joe Biden and Vice President Kamala Harris have released their 2021 tax returns, and there are a few key takeaways for the average American, experts say.
The president and first lady Jill Biden reported a joint adjusted gross income of $610,702, paying $150,439 in federal income tax at a 24.6% effective tax rate.

Vice President Kamala Harris and her husband, Douglas Emhoff, showed roughly $1.7 million in earnings, paying $523,371 in federal taxes at a 31.6% tax rate.   
Both returns were similar to 2020, putting them in the top 1% of filers, according to IRS data. By comparison, the average American paid a 13.3% tax rate in 2019, according to the Tax Foundation.
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“They’re both overpaying, particularly Kamala and her husband,” said Eric Pierre, an Austin, Texas-based certified public accountant, owner of Pierre Accounting and co-host of the CPA Huddle podcast.
For example, Harris earned more than $450,000 in gross earnings as a writer in 2021 and skipped the chance to save on payroll taxes by structuring her business as an S-corporation.

After paying employee shareholders reasonable compensation, owners may also take distributions without the combined 15.3% for Social Security and Medicare taxes.
“She’s probably going to make a lot more than her husband when she’s not in office,” he said, adding how an S-corporation may provide significant future savings.
There also may be missed opportunities for Emhoff, who received nearly $600,000 in partnership income in 2021, Pierre said.

The Bidens trimmed their self-employment tax bill by receiving some wages through their company structured as an S-corporation, which provided significant savings for the couple’s book deals and speaking gigs in 2017 and 2018.  
They could further reduce their bill by padding retirement savings with contributions to a solo 401(k) or SEP individual retirement account, said certified financial planner Sharif Muhammad, founder and CEO of Unlimited Financial Services in Somerset, New Jersey.
Overall, both returns show modest tax-reduction strategies compared to private citizens with similar earnings, Pierre said.
But they receive other perks, such as the president’s $50,000 annual expense account, housing, transportation and more. In the corporate world, these benefits may be taxable compensation, he explained.

It seems like they’re conservative in the way they do their taxes.

Sharif Muhammad
Founder and CEO of Unlimited Financial Services

“It seems like they’re conservative in the way they do their taxes,” said Muhammad.
What’s more, the Bidens have significant withholdings from their W-2 earnings in lieu of estimated tax payments for their self-employment income, he pointed out.  
“It’s kind of a set-it-and-forget-it type of approach,” Muhammad said. 
Both couples may also consider estate tax planning strategies, particularly with provisions from the Tax Cuts and Jobs Act scheduled to sunset in 2026, Pierre said. While the current exemption for federal estate taxes is more than $12 million per person for 2022, it will revert to an estimated $6 million. 

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Breeze Airways is planning eight new routes from Westchester County Airport in New York.
The airline is focusing Breeze on smaller cities in a bet on suburbanite travelers.
The announcement comes a month after the airline said it would double its network.

A Breeze Airways airplane on the tarmac at Tampa International Airport (TPA) in Tampa, Florida, U.S., on Thursday, May 27, 2021.
Matt May | Bloomberg | Getty Images

Breeze Airways plans to add eight flights, including service to California, from Westchester County Airport in New York, a bet that the start-up can win over suburbanites seeking to avoid a trip to the New York City area’s large hubs.
The airline, launched by JetBlue Airways founder David Neeleman, is offering nonstop routes from Westchester to Los Angeles; San Francisco; Charleston, South Carolina; Jacksonville, Florida; Savannah, Georgia; and Norfolk, Virginia. It will also offer a flight with one stop to New Orleans.

The announcement comes a month after Breeze Airways said it would nearly double its network this year. The Westchester flights are part of a strategy from upstarts like Breeze and Avelo Airlines to capitalize on demand from travelers in smaller cities.
“They want to go nonstop, and they want to do it more efficiently,” Breeze CEO Neeleman said in an interview.
Neeleman said the strategy is focused on leisure travelers, noting that many business travelers prioritize airlines that offer multiple frequencies as well as frequent flyer status.
Breeze Airways plans to use its Airbus A220-300s on the cross-country routes, which include 36 first-class seats.
The carrier is also adding service from Hartford’s Bradley International Airport to Las Vegas, its eighth route from the Connecticut airport.

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