Business

United says it is opening up more seats on aircraft to families traveling with children younger than 12.
The airline will give access at time of booking to “preferred” location seats to those travelers.
The change comes as the Biden administration and some lawmakers are seeking to tamp down airline passenger fees.

A United Airlines plane departs the Newark International Airport, in Newark, New Jersey, on January 11 2023.
Kena Betancur | Afp | Getty Images

United Airlines said Monday that new technology will open up more seats on its flights so children can sit with an adult in their party without paying a fee, a type of charge that’s drawn scrutiny from the Biden administration in recent months.
United will show parents or other adult travelers accompanying a child younger than 12 to access “preferred” seats as well as regular economy seats, if needed, at the time of booking so they can sit together.

The change applies to travelers with standard and basic economy tickets and will be fully in effect next month, although United has already increased some of the seat availability.
The airline also won’t charge customers a fare difference if they switch to a flight to the same destination that has adjacent seats.
Airlines in recent years have been charging travelers to book “preferred” location seats on flights. They don’t come with extra legroom or other perks but are often in front of the plane, though they can cover a significant number of seats of an aircraft.
President Joe Biden has called on lawmakers to “fast-track the ban on family seating fees,” the White House said earlier this month. In July, the Transportation Department told U.S. airlines to “do everything in their power” to ensure travelers under age 13 are seated next to an accompanying adult without additional charges.
“Baggage fees are bad enough,” Biden said during his State of the Union address earlier this month. “Airlines can’t treat your child like a piece of baggage.”

Such seats usually vary in price. On a roundtrip between Newark, New Jersey, and Los Angeles in August, preferred seats on a United flight showed as $37 each way for one person.
Delta Air Lines said it blocks certain rows of seats so families can sit together.
“Delta does not charge family seating fees and regardless of the ticket class purchased, will always work with customers on a case-by-case basis to ensure their family seating needs are met,” a spokesman said in a statement on Monday.
American Airlines’ booking platform will automatically search for available seats together at the time of booking for main cabin and basic economy passengers. Preferred seats and its extra legroom section, Main Cabin Extra, open up the day of departure if they’re needed, a spokesman told CNBC.

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The Terraces was just listed for $200 million, making it the most expensive home in the Caribbean.
The sprawling estate spans 17 acres and nine structures, and it features three swimming pools. 
It’s located on the small private island of Mustique, where Mick Jagger and Tommy Hilfiger have homes.

A palatial estate in the Caribbean was listed for a whopping $200 million Sunday evening, making it the most expensive home to ever hit the market in the region and one of the priciest homes for sale in the entire world.  
The Terraces, as the estate is called, spans 17 acres and nine structures. It’s located on the small private island of Mustique, which lies in the southern Caribbean nation of St. Vincent and the Grenadines. It is north of Trinidad and Tobago and about 45 minutes west of Barbados, if you’re taking a private plane.

“The Terraces in Mustique is the most expensive single residential home to publicly come to the open market in the Caribbean region,” said Edward de Mallet Morgan, head of international super-prime sales at Knight Frank, who represents the mega-listing.

The estate sits atop Endeavor Hill, one of Mustique’s highest summits.
Knight Frank

The majestic residence commands one of Mustique’s highest elevations, overlooking landscaped gardens and wild tropical grounds with panoramic views over the Atlantic and Caribbean coastlines. The estate’s 41-page marketing brochure boasts nine ensuite bedrooms in the main house, an 80-foot-long swimming pool and “the largest entertaining space on the entire island.”

The view from one of the estate’s three swimming pools.
Knight Frank

“Mustique is an island where incredibly high profile people go for incredibly low profile holidays,” said de Mallet Morgan, who declined to disclose the identity of the seller.
Mustique has a storied past. In 1958, Lord Glenconner, Colin Tennant, bought the entire island, which at the time had no roads and no running water, for £45,000. That’s about $1.2 million in today’s money, when adjusted for inflation. Tennant gifted a plot to his friend Princess Margaret, who built a villa there and helped spark a rush of rich and famous buyers who followed the royal and built their own homes, according to the island’s website.

The palatial mood and domed ceiling inside one of the main villa’s nine bedrooms.
Knight Frank

Decades later, it’s still an exclusive playground for titans of industry and rock stars. Tommy Hilfiger and Mick Jagger have homes on the isle. From its health clinic to security, the island is wholly managed by the Mustique Company, a private operation owned by the island’s homeowners. The website states: “The company oversees every aspect of island life as well as the management of the villas on behalf of the shareholders and the safeguarding of the island.”

The view from the pool deck.
Knight Frank

Natural beauty and unrivaled privacy make the island a perfect destination for the ultra wealthy to kick back and relax.
“Paparazzi are banned on Mustique, and the easy, relaxed interaction of royal families, rock stars, celebrities, business moguls and entrepreneurs is really unique to Mustique,” said de Mallet Morgan.
“It is a place where doors are not locked and no one bats an eye when you arrive at dinner barefoot.” 

The view from above the estate’s 80-ft long swimming pool.
Knight Frank

De Mallet Morgan shared data with CNBC from Knight Frank’s upcoming Wealth Report, which shows that out of 100 key city, sun and ski destinations around the world, Mustique was the 12th best performing market. The ranking puts the remote island on par with Sardinia, St. Bart’s and Provence.  
According to the report, luxury residential prices on Mustique rose by 12% in 2022, making the island the fifth best performing market in the Americas after Aspen, Miami, Bahamas and the Hamptons.
Record sales during the pandemic led to tighter inventory. Last year, Mustique’s largest transaction was recorded at about $35 million, according to de Mallet Morgan.
Here’s a closer look at the most expensive home to ever hit the market  in the Caribbean.

A fountain in the courtyard entrance of the main home.
Knight Frank

Built in 1986, the mega villa is clad in a pale peach-colored stone facade with loggias that wrap around each side of the more than 16,000-square-foot residence. According to marketing materials, the Terraces was designed by architect Tom Wilson, who pays homage to the architecture of 16th century Italian palaces.

A dining area in the main residence.
Knight Frank

Inside there are hand-painted ceilings and mural-covered walls painted by French artist Jean-Claude Adenin in a project that spanned three years.

A bedroom in the main home.
Knight Frank

The mega-villa’s palatial rooms, gilded furniture and painted domed ceilings are decidedly more Versailles than beach chic.

A grand salon in the main house.
Knight Frank

“The Terraces, being the largest and most visually prominent property on the island is not just one of the Caribbean’s foremost houses, but arguably one of the world’s foremost homes,” de Mallet Morgan told CNBC.

The main home’s infinity-edged pool appears to spill into the estate’s lush green landscape.
Knight Frank

A floor plans shows a 60-foot tunnel connecting the main villa to a structure just below called the Annex. The two buildings are also connected by exterior pathways. The Annex spans over 12,000 square feet and is dedicated to games and entertainment. It houses a grand event hall and a game room with ping-pong, billiards and chess. Just outside, there’s a wraparound terrace that features the estates second swimming pool with an infinity edge that appears to send water cascading down the hillside.

The Terrace’s Annex is in the foreground just below the main villa, together the two structures span about 28,000 sq ft.
Knight Frank

Other structures on the property include guest cottages that span 2,600 square feet and include four more bedrooms, as well as the estate’s third swimming pool. 

The Bali Cottages house four more guest bedrooms and surround the estate’s third swimming pool.
Knight Frank

There’s also a chapel, laundry facilities and two more buildings to accommodate staff. De Mallet Morgan said the estate is currently operated by 18 staff. The estate’s webpage breaks it down further to a property manager, two butlers, three chefs, six housekeepers and six gardeners.

Tennis court and pavillion.
Knight Frank

Across a rolling lawn is a pavilion that overlooks a sun-drenched tennis court.   

The terrace and pool at the Annex.
Knight Frank

The interior square footage of the entire estate tops 38,000. It climbs to almost 53,000 square feet when you add all of its covered outdoor areas.
De Mallet Morgan told CNBC if a foreign buyer wants to purchase the trophy property he or she can expect to pay taxes and fees of about 12% on the purchase price, adding around $24 million to the $200 million price tag.

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Disney and Marvel Studios’ “Ant-Man and the Wasp: Quantumania” tallied $104 million in domestic ticket sales during its opening weekend.
Internationally, “Quantumania” took in $121 million, bringing its estimated global haul for the three-day spread to $225 million.
Notably, 28% of ticket buyers opted for premium format theaters, paying an average of $4.29 more per ticket.

Paul Rudd is Scott Lang, aka Ant-Man, alongside Johnathan Majors as Kang the Conqueror in “Ant-Man and the Wasp in Quantumania.”

Disney and Marvel Studios’ “Ant-Man and the Wasp: Quantumania” scored an estimated $104 million at the domestic box office during its opening weekend.
The 31st Marvel Cinematic Universe film kicked off phase five of the 15-year-old franchise and established the next overarching villain for the series — Kang (Jonathan Majors). The character was first seen in the Disney+ series “Loki.”

“Quantumania’s” domestic haul is nearly double what the first standalone Ant-Man film opened to in 2015 and marks the 31st consecutive MCU release to debut at number one at the domestic box office.
“Marvel has perhaps been more under the microscope in post-Endgame times than they’re used to with several films and streaming series occasionally not registering as well with critics and/or audiences as the brand is used to, which made this release even more important as it promises to kickstart Phase 5,” said Shawn Robbins, chief analyst at BoxOffice.com.
“Although some critics didn’t take to the third Ant-Man entry, audiences still turned out for the film in strong numbers to the tune of more tickets sold on opening weekend than for any prior Ant-Man release,” he said.
Internationally, “Quantumania” took in $121 million, bringing its estimated global haul for the three-day spread to $225 million.
“The power of the Marvel brand to drive moviegoers to the multiplex is undeniable and the excitement surrounding phase five of the MCU makes ‘Ant-Man and the Wasp: Quantumania’ essential viewing for any fan looking to jumpstart their enthusiasm for this new era in the ongoing Marvel saga,” said Paul Dergarabedian, senior media analyst at Comscore.

The film is expected to drive more than seven million patrons to theaters this weekend, according to data from EntTelligence. That’s more than double what Sony’s “Uncharted” lured in during last year’s Presidents Day weekend.
“This Presidents weekend boasts the first true blockbuster opener of 2023,” said Comscore’s Dergarabedian. “‘Ant-Man and the Wasp: Quantumania’ sets into motion what looks to be week after week of solid moviegoing and creates momentum for a solid summer movie season.”
Additionally, 28% of ticket buyers opted for premium format theaters, paying an average of $4.29 more per ticket.
Higher foot traffic and higher ticket spending are good signs for the overall movie theater industry, which suffered considerably during the pandemic and is still recovering.
“We often talk about dates circled on the calendar as potential inflection points, and this weekend was the latest for the movie industry,” said Robbins of BoxOffice.com. “After a brief dip in tentpole releases following the holidays, a better-than-expected January and this healthy result from ‘Quantumania’ pave the way for a significant pick-up in high-profile theatrical content once March begins.”
“All told, 2023 is still in its infancy but is thus far living up to expectations as a year theaters and studios can be enthused about,” he said.

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Fox News executives vetoed Trump from going on air Jan. 6, 2021, when hundreds of his supporters invaded the U.S. Capitol., court papers show.
The information comes from evidence unveiled this week in documents filed in Dominion’s $1.6 billion defamation lawsuit against Fox News.
The documents also revealed that Fox Corp Chairman Rupert Murdoch told CEO Suzanne Scott its on-air personalities should tell viewers the night before Jan. 6 that Joe Biden won the election.

Republican presidential candidate Donald Trump participates in a debate sponsored by Fox News at the Fox Theatre on March 3, 2016 in Detroit, Michigan.
Chip Somodevilla | Getty Images

On Jan. 6, 2021, the day a violent mob breached the U.S. Capitol in support of then-President Donald Trump, executives at Fox Corp vetoed Trump’s attempt to appear on the network’s air, according to court documents filed Thursday.
The documents allege that the former president dialed into on-air personality Lou Dobbs’ show the afternoon of Jan. 6, but that executives shut down Trump’s efforts to appear on air.

“Fox refused to allow President Trump on air that evening because ‘it would be irresponsible to put him on the air’ and ‘could impact a lot of people in a negative way,'” the filings said.
Scores of Trump’s supporters attacked the Capitol in a bid to prevent Congress from confirming Democrat Joe Biden’s victory in the 2020 election. Trump, a Republican, has repeatedly made false claims that the election was rigged against him. The events of Jan. 6 and Trump’s involvement in various attempts to block Biden’s win are the subject of multiple criminal investigations. Trump has dismissed the probes as part of a “witch hunt.”
The documents were publicly released for the first time this week as part of Dominion Voting Systems’ $1.6 billion lawsuit against Fox Corp and its cable TV networks. Dominion brought the defamation lawsuit against Fox and its right-wing cable networks, Fox News and Fox Business, arguing the networks and its anchors made false claims that the company’s voting machines rigged the results of the 2020 election. The suit is pending at the Delaware Superior Court.
Dominion, Fox Corp and Fox News filed their motions for summary judgment this week, which unveiled evidence from months of discovery and depositions that had been private until this point. Fox News anchors, as well as top Fox Corp brass including Rupert Murdoch and Lachlan Murdoch, were questioned in recent months.
The evidence also showed that Fox News’ top anchors, including Tucker Carlson, Sean Hannity and Laura Ingraham, expressed disbelief in the claims of fraud being made against Dominion that it rigged the election. The anchors in particular doubted fraud claims by pro-Trump attorney Sidney Powell and Trump’s attorney Rudy Giuliani.

Ingraham said in a message to Carlson: “Sidney is a complete nut. No one will work with her. Ditto with Rudy,” according to the documents.
Fox and its networks have rigorously denied the claims. In court papers Thursday, Fox Corp said it had “no role in the creation and publication of the challenged statements – all of which aired on either Fox Business Network or Fox News Channel.” 
Meanwhile, Fox News reiterated in court papers that it “fulfilled its commitment to inform fully and comment fairly” on the claims that Dominion rigged the election against Trump. 
“There will be a lot of noise and confusion generated by Dominion and their opportunistic private equity owners, but the core of this case remains about freedom of the press and freedom of speech, which are fundamental rights afforded by the Constitution and protected by New York Times v. Sullivan,” Fox said in a statement issued Thursday. 
Dominion said in court papers that Fox and its hosts felt pressure from the audience backlash on the 2020 election night when it called the state of Arizona for Biden. That pressure was evident in text messages between Fox’s top personalities in the weeks following the election, which continued through Jan. 6.
The night before Jan. 6, Rupert Murdoch told Fox News CEO Suzanne Scott, “It’s been suggested our prime time three should independently or together say something like ‘the election is over and Joe Biden won,'” according to court papers. Saying so “would go a long way to stop the Trump myth that the election was stolen,” he added.
On the evening of Jan. 6, Carlson texted his producer, calling Trump “a demonic force. A destroyer. But he’s not going to destroy us,” court papers show.
The lawsuit has been closely followed by First Amendment watchdogs and experts given libel lawsuits are often centered around one falsehood but in this case, Dominion cites a long list of examples of Fox TV hosts making false claims even after they were proven to be untrue. Media companies are often broadly protected by the First Amendment. 
The trial is slated to begin in mid-April.

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Peloton used to be the toast of Wall Street, but after a pandemic-fueled boom for its Bikes and Treads, its sales and stock price plummeted.
The fitness company is now a year into an aggressive turnaround plan under CEO Barry McCarthy that has altered the company’s identity.
CNBC spoke to 16 current and former Peloton employees about the highs, the lows and the company’s attempt at a comeback story.

Illustration by Gene Kim

On the night of Sept. 26, 2019, hours after Peloton shares went public, employees dined on seafood and sipped champagne in the glittering halls of Hudson Yards as they discussed what they’d spend their newfound paper fortunes on.
During a lavish fete in the company’s soon-to-be New York City headquarters, some talked about the new car they’d buy, the second home they’d always longed for, the student loans they’d finally be able to pay off. 

“It felt like nothing could get in the way of all that,” said a former engineer who attended the party. 
It was the beginning of what former employees described as Peloton’s age of “opulence” — a brief era fueled by blind optimism and hubris that took its stock to dizzying heights only for the company to suffer a stunning fall from grace a little over two years later. 

Peloton’s IPO party at Hudson Yards the night they went public, Sept. 26, 2019.
Obtained by CNBC

Since reaching a peak intraday share price of $167 in December 2020, Peloton’s stock has crumbled to $13.60 a share. That’s about half of its opening share price of $27, after the IPO was priced at $29. Its market cap, which once surged to more than $45 billion, has shrunk to about $4.7 billion. Shares are up about 71% so far this year, however.
The connected fitness company carved its way into the mainstream as a solution to shuttered gyms during the early days of the Covid pandemic. But then it made the critical error of planning for that demand to last, even as the virus waned and lockdowns lifted.
The company has been gutted by plummeting sales, a shift in consumer demand and a scandal after a six-year-old died and dozens of others were injured in incidents involving the Tread+, leading to a costly recall. 

The cascading problems led co-founder and CEO John Foley to step down just over a year ago. He was replaced by Barry McCarthy, a former Spotify and Netflix executive, who ushered in an aggressive turnaround plan and a new era of fiscal rigor.
Since McCarthy took the helm, he’s managed to bring the company back from the brink of extinction by improving its free cash flow levels from negative $747 million to negative $94 million as of the end of its most recent fiscal quarter.
In the three months that ended Dec. 31, Peloton’s net losses shrank to $335.4 million, the narrowest loss it has marked since its 2021 fiscal fourth quarter. The company celebrated the quarter as its best performance since McCarthy took over. In an upbeat letter to shareholders, he offered a glimmer of hope that a comeback could be on the horizon. 
But the company is still losing hundreds of millions of dollars each quarter, and demand for its signature connected fitness products continues to fall. It has all but stopped manufacturing the machines as it works to offload $1.05 billion in inventory as of the end of its most recent fiscal quarter. Between July and December last year, Peloton spent $0 on work-in-process inventories, or products that are actively being manufactured, securities filings show.
Under McCarthy’s leadership, Peloton is pivoting away from hardware and transforming into a software-first company that’s focused on its content — and the sticky subscription revenue that it brings.

Barry McCarthy speaks during an interview with CNBC on floor of the New York Stock Exchange (NYSE), October 28, 2019.
Brendan McDermid | Reuters

But the jury’s still out on whether that will be enough to save the business.
For this report, CNBC spoke with 16 current and former Peloton employees, the majority of whom declined to be identified because they are not permitted to speak publicly about the company. Peloton did not provide a formal comment for the story but did provide access to executives.
Foley, meanwhile, spoke briefly with CNBC by phone, saying that while Peloton’s stock has fallen, the company has not.
“It is a fantastic company and a fantastic team and a fantastic community,” Foley told CNBC. “And I like their chances.” He declined to comment further.

Rising to the top

When Foley, a former Barnes & Noble executive, created Peloton in 2012, he sought to capture the popularity of spin classes such as SoulCycle and bring them to the living rooms of busy high-earners. 
At first, the company’s stationary spin bike that came with virtual classes developed a loyal following, but it was small. That changed when the Covid pandemic hit in early 2020, triggering lockdowns and shuttering gyms.
Demand for Peloton’s bikes skyrocketed far beyond its expectations, and it was seeing sudden growth it had initially hoped to experience over five to seven years. The company became a Wall Street darling and a household name. 

Peloton CEO John Foley celebrates at the Nasdaq MarketSite before the opening bell and his company’s IPO, Thursday, Sept. 26, 2019 in New York.
Mark Lennihan | AP

During virtual all-hands meetings, Foley would tell staff the company’s explosive growth was just the beginning and the stock price would reach $1,000 a share, three former employees said. 
“There was a lot of blind trust … We all were like, okay, let’s go,” recalled the former engineer. “They always had this blind optimism where they were like … we’re going all the way to the top.”
Peloton set off on a hiring spree, developed new connected fitness products and spent whatever it took to get bikes delivered to homes. Field operators were offered thousands in hazard pay to keep delivering bikes through the pandemic’s darkest days. In some regions, the company was spending nearly $500 per final mile delivery, not counting how much it cost to get the equipment shipped from overseas, a former field operations supervisor said. The goal was to keep final mile delivery rates around $250 per delivery in some regions, the supervisor said.

A Peloton stationary bike for sale at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.
Adam Glanzman | Bloomberg | Getty Images

Demand for Peloton’s equipment continued to explode as the pandemic trudged on. So did its stock, making some of its employees and executives suddenly very wealthy, at least on paper. 
“The majority of us, we weren’t naive to the fact that, especially in New York, there were people outside in refrigerated trucks because they didn’t have enough room in the morgue, but at the same time, we’re looking at our Morgan Stanley accounts and now we’re all worth, you know, millions,” said a former designer, whose net worth reached $5 million at the height of Peloton’s success. “I don’t think any of us were rooting for the pandemic to continue, but as long as it was going on, it was obviously good for business, and it was good for a lot of people’s bank accounts.”

‘Sold down the river’

In November 2020, Peloton said its sales surged 232% to $757.9 million compared with the prior-year period. By the end of the holiday season that year, the company was celebrating its first $1 billion sales quarter and a rare profit — $63.6 million. 
While demand stayed strong, worldwide supply chain constraints made it difficult to keep up. Customers began to complain about monthslong delivery delays, as well as issues with the bikes once they finally arrived.
In response, Peloton spent $420 million to acquire fitness company Precor and its U.S. manufacturing capabilities. Later, it pledged another $100 million to airlift products to avoid clogged ports — a move widely criticized internally as a horrible decision, according to numerous former staffers. 
“They were like, we have so much money, we’re unstoppable,” said the former engineer. “We just need to deliver the bikes, we just need to get the bikes into homes, we just need to do this.”

Source: Peloton

Peloton’s staff became so bloated, the former engineer said, it felt as if the company was hiring as a form of “empire building” that didn’t “feel based in real need.” One former employee said there wasn’t enough work to stay busy and there was nothing to do half the time.
“I think all of us were drunk on the growth that Covid brought, and no one paused to say like, hey, maybe this is a game of musical chairs, and what happens when the music stops?” said the former designer. “Like, we can’t keep expecting people just to stay inside and not go to the gym.”
In May 2021, the company announced a $400 million investment into Peloton Output Park — a sprawling factory it sought to build in Ohio to shore up its U.S. manufacturing capabilities and reduce its reliance on overseas partners.

Maggie Lu uses a Peloton Tread treadmill during CES 2018 at the Las Vegas Convention Center on January 11, 2018 in Las Vegas, Nevada.
Ethan Miller | Getty Images

Behind the scenes, though, the company was hemorrhaging money. Revenue had begun to slow dramatically as Covid vaccines became widely accessible and people began venturing out again.
“We were trying to catch up and spending, spending, spending to catch up, and by the time we finally caught up, demand fell off,” said the former field operations supervisor. “Over time we kind of saw how the company responded to the pandemic and then misread the pandemic. It was kind of like, wow, it kind of feels like we got sold down the river.”
Peloton’s stock price was slowly sliding down, and employees began to panic as they saw their paper wealth evaporate. “People lost everything,” the former engineer said. “People lost their dreams.”
Colleagues with children who planned to use their earnings to buy houses and grow their lives saw those hopes dashed, the person said.
“We always had millions of loyal subscribers who loved the product, just like love it, and it was hard to understand always how we f—ed that up so badly considering the loyalty and the cult-like nature of the whole thing, you know?” the former engineer said. “It was like, wait, what?”
By the end of March 2022, the company’s net losses reached $757.1 million, which is more than the company lost between the 2017 and 2021 fiscal years combined, according to securities filings.
By June 30, the end of Peloton’s fiscal year, the company’s full-year net loss ballooned to $2.83 billion. 

Rising from the ashes?

When McCarthy took over as CEO last February, some worried the company would be so focused on dollars and cents, it would lose its innovative spirit. But others breathed a sigh of relief to have what felt like an adult in the room, someone who’d be able to clean up a multibillion-dollar mess. 
“He seemed the polar opposite of John,” said a former manager on the production team who worked under McCarthy for several months. “I think everyone was kind of like, OK, this is a real legitimate business guy with a solid background.”
“We were all hopeful,” the former manager said. “I was certainly hopeful with his acumen and experience, but I knew it was going to come with some very hard decisions.”
Soon, the company pulled the plug on Peloton Output Park, shifted logistics and manufacturing to third-party suppliers, tried to sell Precor, and cut its workforce by more than half. 
Since the beginning of July, the company has closed or committed to shuttering 52 of its 136 global retail stores, and workers who can’t be absorbed into other stores are still being laid off, the company said.
While McCarthy has said at least twice that job cuts were finished, the company has also made clear its retail restructuring is ongoing and will take time.
Since he took over, McCarthy has developed a reputation for being very hands-on. A new refrain — “Barry says” — has begun echoing through its Slack channels and emails.
“They’ll be like, ‘OK, we need to get this done because Barry said we needed to do this,'” said a designer who works at the company. “I’ve worked for companies the same size as Peloton before, and usually the CEO is not saying to do something.” McCarthy, on the other hand, is “very involved in the product and has been really pushing the business forward,” this person said.

A person walks past a Peloton store on January 20, 2022 in Coral Gables, Florida.
Joe Raedle | Getty Images

The turnaround plan, mass layoffs, constant media coverage and upheaval in the company’s C-suite have left some employees stunned. Others, though, were quick to come to the company’s defense. 
“Current strategy is spot on, things are going well, morale is high, Barry is a visionary, we’re excited for the upcoming year,” one manager said in a LinkedIn message. 
Peloton’s chief content officer, Jennifer Cotter, who joined the company in 2019, said becoming the CEO of a founder-led company would be a “daunting” challenge for anyone, but she was “amazed at how quickly [McCarthy] zeroed in on the areas we needed to focus on.”
“Barry came in at a time when that was the leader we needed,” she told CNBC. 
Peloton’s stock soared 26% on Feb. 1, when the company announced its fiscal second-quarter results, which indicated some progress in McCarthy’s turnaround plan. For the last three quarters, subscription revenue has outweighed hardware sales. About half of the people who pay for Peloton’s digital app are using it on other companies’ hardware, a notion that was once anathema to the company’s vision. McCarthy previously told CNBC that Peloton may be at a “turning point.” 
Instead of developing new connected fitness products, Peloton’s product team is focused on improving the hardware they already have by adding new features, and employees have felt a shift of focus toward the company’s content and app.
Cotter, the brains behind Peloton’s content machine, was told to keep doing what she was doing when McCarthy took over and to not “let anyone get in your way,” she recalled. She also noted content is “pretty interconnected” with product and there is a “real symbiosis” between both sides.
While the apparent shift has led to some friction between Peloton’s product and creative teams — one employee said the company was experiencing an “identity crisis” — McCarthy appears to be leaning into the core of what has always made Peloton special: its virtual fitness classes. 
“Fitness has been pretty literal in the world, and there’s tons of people that have been systemically left out of fitness, and we intend to make those individuals feel included in whatever that means for them,” Cotter said. “I bet my whole career on the fact that this rise is happening, so, it’s happening.”

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Walmart and Home Depot will kick off retail earnings season this week.
Industry-watchers expect companies to strike a more cautious tone as inflation lingers.
Healthier profit margins could be a silver lining, as some costs come down.

Shoppers walk past a Bloomingdale’s store in the SoHo neighborhood of New York, US, on Wednesday, Dec. 28, 2022.
Victor J. Blue | Bloomberg | Getty Images

After benefitting from a pandemic-era shopping spree, retailers are preparing for a reality check.
Walmart and Home Depot will kick off retail earnings season Tuesday by sharing holiday-quarter results. Other big-name retailers will follow, including big-box players like Target and Best Buy, and mall staples like Macy’s and Gap.

The companies’ reports will come as recession fears cloud the year ahead. Americans are more worried about inflation now than they are about Covid. People are choosing to spend more on dining out, traveling and other services while cutting back on goods. Higher interest rates threaten the housing market.
A slowdown in sales growth also seems likely after the sharp increases of the past three years.

For investors, the end of retail’s sugar high brings a mixed picture. Companies may share modest sales outlooks. Yet healthier profit margins could be a silver lining, as freight costs fall and retailers have less excess merchandise to mark down. Plus,walmar companies may have more cautious spending plans, such smaller inventory orders and slowed-down hiring. That could boost profit margins, even if consumers don’t spend as freely.
“The world is focused on top-line momentum,” said David Silverman, a retail analyst at Fitch Ratings. “So many market participants are focused on what revenue is what revenue is what revenue is.”
But, he added, “it’s the operating profit that could bounce back nicely from a difficult 2022.”

Silverman said retailers’ strategies have flipped from a year ago. Then, they bet on sky-high sales becoming the new normal and made riskier bets, from placing bigger orders to paying extra to expedite shipments. That hurt companies’ margins, as unsold merchandise wound up on the clearance rack and costs crept up, along with sales.

A dose of reality over the holidays

Already, retailers have gotten a dose of reality. Walmart, Target and Macy’s are among the companies that have spoken about a more careful consumer.
Several retailers already previewed holiday results. Macy’s warned that holiday-quarter sales would come in on the lighter side of its expectations. Nordstrom said weaker sales and more markdowns hurt its November and December results. Lululemon said its profit margins would be lower than anticipated, as the athletic apparel retailer juggles excess inventory.
Industry-wide holiday results fell below expectations, too, according to the National Retail Federation. Sales in November and December grew 5.3% year over year to $936.3 billion, below the major trade group’s prediction for growth of between 6% and 8% over the year prior. In early November, NRF had projected spending of between $942.6 billion and $960.4 billion.
Retail leaders have looked closely for clues, as they gear up for the coming fiscal year. (Most retailers’ fiscal years end in January.)
Macy’s CEO Jeff Gennette told CNBC last month that the department store operator noticed fewer holiday shoppers buying items for themselves while shopping for gifts. He said those lower purchases “more than offset the good news that we were getting on gifting and occasion.”
The company’s credit card data flashed warning signs, too, he added: Customers’ balances on Macy’s, Bloomingdale’s and co-branded American Express credit cards are rising and more of those balances are getting carried to the next month rather than paid off.
“When we look at our credit portfolio, you’ve got a customer that’s coming under more pressure,” he said.

Tough calls, cautious outlooks

Some retailers have already made some difficult moves to prepare for what could be a tough year. Luxury retailer Neiman Marcus and Saks.com, the e-commerce retailer spun off from Saks Fifth Avenue stores, have both had recent layoffs. Stitch Fix laid off 20% of its corporate workforce. Wayfair laid off 10% of its global workforce. Amazon began cutting over 18,000 employees, including many in its retail division.
Bed Bath & Beyond, which has warned of a potential bankruptcy, recently cut its workforce deeper as it also shutters about 150 of its namesake stores.
Target in November said it would cut up to $3 billion in total costs over the next three years, as it warned of a slower holiday season. It did not provide specifics on that plan. The company will report its fourth-quarter results Feb. 28.
Many retail leaders said they anticipate cost-cutting measures for their workforces in the next 12 months, too, such as hiring temporary workers rather than full-time employees, according to a survey of 300 retail executives in December by consulting firm AlixPartners. Thirty-seven percent said they expect slowing raises or promotions and 28% said they expect cutting benefits at their companies in the coming year.
Of those surveyed, 19% said layoffs had happened at their companies in the last 12 months and 19% said they expect layoffs to happen in the next 12 months.
Marie Driscoll, an analyst covering beauty, luxury and fashion for retail advisory firm Coresight Research, said she expects companies to give other line items a closer look, such as free shipping and returns, as well as digital marketing expenses.
As interest rates rise, she said retailers may “find operating religion.”
“Retailers are looking at their businesses and saying not every sale is worth having,” she said. “The fact that there is a real cost of money is changing the way that companies are looking at their business.”
Yet some factors still work in retailers’ favor, she said. The tight labor market could give consumers confidence to spend, even as inflation remains hot. People are dressing up and buying fragrances as they go out again, a factor that may have lifted January retail sales along with more spending at bars and restaurants.
She said the earnings season will bring surprises and show which companies can navigate choppier waters. Nike, for instance, raised its outlook after topping Wall Street’s expectations in December.
“A lot of it is dependent on their consumer and the strength of their brand,” Driscoll said. “There’s strength out there.”

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Southwest Airlines has committed to over $1 billion in spending on technology as a response to the cascade of systems issues during holiday season extreme weather that led to nationwide flight cancellations.
Aviation experts who recently spoke to CNBC’s Technology Executive Council say systems fixes could take at least a year and there is no guarantee they can be in place before another major storm hits.
JetBlue’s former top tech officer told the CNBC TEC that an industrywide solution may be required to replace hundreds of operational systems in use by airlines today.

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Will the majority of travelers forgive Southwest Airlines and start buying tickets on the major U.S. air carrier again?
To answer the question, it helps to have a deep knowledge in commercial aviation information technology operations, which safe to say, is not something most travelers possess or travel websites offer to consumers researching the latest airfares.

Southwest Airlines accepted the blame for its technological meltdown during the holidays, and it has committed over $1 billion to fixing it. The airline conceded what critics had ben saying for years and after the crisis were able to say even more forcefully — and to a much wider, angrier audience. It had not invested enough in scheduling software and as a result didn’t have staff in place properly, and couldn’t catch up once the system started cascading with flight cancellations.
According to airline experts who took part in a recent CNBC Technology Executive Council Town Hall, there’s been some signs of panic from the airline in answering this question itself.
“People have been booking away from Southwest in January and February. Southwest is, from my perspective, in a moderate state of panic,” said Henry Harteveldt, Atmosphere Research Group president and a travel industry analyst and advisor who formerly worked in airline marketing. He pointed to $29 fare sales, “something I haven’t seen Southwest offer in a long time,” he said. Bonus offers and other incentives to sign up for credit cards, and companion passes for frequent fliers, are other examples of great benefits for passengers worth considering as a return traveler to Southwest, he said, but added, “These are not the actions of an airline that is seeing business flow across the transom at the level they expect.”
Leisure travelers will return if the airline can prove its return to a former level of reliability, he said, but business travelers may be more reluctant, he added, depending on where they live and what other flight options they have. The biggest problem, though, isn’t the front-facing consumer efforts but that even a billion-plus dollars on operations spending can’t guarantee that Southwest steers clear of another tech meltdown in the future. Another very bad storm could produce similar results before an effective tech solution can be implemented.

Part of the issue is industrywide. While Harteveldt said there are examples of airlines doing a better job of investing in specialized systems required for the largest operators, it is only a few of the over 5,000 airlines worldwide that are making the necessary investments. In the U.S., he highlighted United Airlines, and globally, he pointed to like Singapore, Emirates, Air France, KLM group, IAG and Qantas, “that are doing a lot of smart things.” But he also said, “Every airline is just one bad storm, one major event, away from a disruption.”

“I don’t see a path for them to recover from complex, irregular operations like this on a normal day, with 100 to 200 flight cancellations,” said Eash Sundaram, JetBlue Airways former chief digital and technology officer. “I feel the pain of what the Southwest team went through. It’s not going to be easy for them to manage that kind of a one-off storm that hit them hard.”
Southwest declined an opportunity to take part in the Town Hall, but offered emailed comments from a spokeswoman afterwards addressing concerns voiced by the aviation experts, including the following:
“Over the past five years, we implemented numerous large-scale technology and business projects. This year, we have planned a $1.3 billion spend on upgrades and maintenance of our IT systems. The recent disruption accelerated plans to enhance our processes and we are heavily focused on assuring our customers experience Southwest’s 51-year history of safe, reliable, and hospitable air travel.”
Here are some of the highlights from the TEC conversation in which the aviation experts explained the reasons for their ongoing wariness.
Why $1 billion can’t buy confidence in Southwest
Part of the problem is within the company. This is a criticism that you don’t need to be an aviation expert to now know after all of the headline attention and hearings on Capitol Hill. Southwest’s plan to invest more than $1 billion in technology upgrades is a start, but Harteveldt told TEC members it is hard to have much confidence in Southwest as a tech company given the longer history.
“Southwest Airlines has a culture of kicking the technology can down the road for all 52 years of its history, started under Herb Kelleher, who is a great guy, great personality, but hated to spend money on anything that didn’t fly or bring a customer in,” he said.
Harteveldt noted that until 2017, Southwest was running on a reservation system “whose guts belong to Braniff,” an airline that went out of business in 1980s. “They have failed, summarily and consistently,” he said. “You can spend $1.3 billion on tech, but if it’s not spent on the right systems in the right way, you’re still going to have problems,” he added.
He also noted the recent warning signs ultimately went unheeded. In October 2021, there were air traffic control systems issues in Jacksonville that led to a temporary shut down, and “a little bit of bad weather that threw Southwest off for days and cost them $75 million. They didn’t choose to learn from that,” he said.
How the airline talks about technology is part of the problem
Helane Becker, airlines analyst at Cowen & Co, has covered the industry for decades and watched Southwest grow from being a small airline within the state of Texas to the largest domestic U.S. airline with about 21% market share.
Becker says that the way Southwest runs its network, a “point to point” approach that can send a Southwest Airlines’ plane from Fort Lauderdale to Dallas, LA to San Francisco to Denver to Dallas, “in a day” without a hub being used like a United Airlines’ plane out of Newark, makes its network unique when it comes to crew management.
“They were under investing in crew scheduling,” she said.
The Southwest spokeswoman said the airline has a long history of innovation and pioneering technology in the airline industry. “As one of the first airlines to issue paperless tickets, launch a website, introduce a mobile app and more, we’ve continued to invest in modernizing our operations,” she said.
But Becker said the focus on the consumer-facing technology is part of the problem given the complex nature of its hub-less network. “They did a lot of investment in customer facing things, making it easier to book on the app, making it easier to book through the web, and so on. Joining Amadeus and joining Sabre, making it easy for business people to book. They didn’t make it very easy for their employees. That’s the part that’s been missing,” she said.
Where there’s never enough money spent on airline IT
Sundaram said having been an airline chief tech executive, it’s important to understand there is always a budget challenge in place when it comes to investment in operations tech relative to commercial systems.
“Living the life of an airline CIO, CTO for 10 years, there was never enough money to spend,” he said. “There’s always a constrained budget. The commercial systems always take the priority because that’s the obvious visible stuff.”
“Historically, the operations space is the least invested,” Sundaram added.

BALTIMORE, MD – DEC 27: Hundreds of passengers wait in line to handle their baggage claim issues with Southwest Airlines at Baltimore/Washington International Thurgood Marshall Airport in Baltimore, Maryland on December 27, 2022.
The Washington Post | The Washington Post | Getty Images

There is also the issue of the sheer number of systems in use. Airlines don’t run on one big system, or two big systems split between operations and commercial. JetBlue had hundreds of different systems, he said, “that talk to each other to get that plane flying and customers checked in.” And the systems were developed over 50-plus years of advancements in aviation, as far back as things built in 1970s that communicate in the aviation industry.
From crew management to crew scheduling and crew communication, “it’s a whole ecosystem of multiple systems. It’s not just one big system that runs it. At JetBlue, we tried to extensively scan the marketplace, and there isn’t one single provider that actually could fit the needs of JetBlue,” he said.
Airlines also don’t like to change the systems not seen by consumers. Unlike a commercial system, which can be changed multiple times a year, “the operations folks, whether it’s crew scheduling or flight planning or communication, there is regulation surrounding these technologies that are like kind of rigid, and that you don’t want to change every day,” he said.
Combine that with the lack of return on investment from IT, and based on his experience at JetBlue, Sundaram said it’s an issue that may require airlines to work together rather than pointing to Southwest as the problem.
The complexity and the lack of ROI have historically pushed many companies to say, “We’ll wait for the next person to build this,” but he added, “Somebody needs to take a look at it as a macro industry and say we’re gonna invest in this platform and serve 100-plus airlines. … It’s too expensive to build one-off tooling for a Southwest or JetBlue or an American. And it’s going to take way too long unless the industry comes together.”  
A chief information officer decision that is questioned
Harteveldt pointed to an organizational reason why he remains less than confident in leaving this problem to Southwest.
As part of its post-crisis decisions, Southwest named a new chief information officer, Lauren Woods, but she is not a direct report to the CEO. Woods reports to chief administration & communications officer Linda Rutherford. “They’re having the person report to the executive who also runs PR. That’s not how you structure it,” Harteveldt said. “Every CIO on this call knows the CIO needs to report to the CEO or at least the president of the company.”
The Southwest spokeswoman called that a mischaracterization of Rutherford’s role. “The Chief Information Officer position has reported to various Leaders over the years, including the position that Linda Rutherford currently holds. Linda Rutherford’s role as Chief Administration and Communications Officer brings together technology work happening throughout the Company,” she wrote. 
But many tech executives agree with Harteveldt. In the current business world, regardless of industry, technology is so fundamental to operations that the top tech officer needs a direct line to the CEO. The Southwest issues are a good, cautionary tale for top tech officers to take into the CEO’s office, Harteveldt said. “If you don’t have strong technology, infrastructure, if you are not innovating or at least testing things, you will not have a strong P&L. You will not have a strong balance sheet.” 
That’s an argument that a CTO or CIO can win, though it may take time, and not having a direct line to the CEO won’t help. One transportation executive told peers on the Town Hall — TEC members, unlike guest speakers, participate under Chatham House rules so they can speak freely — that three years ago his CEO pushed back against his requests for investment and told him something similar to what contributed to the Southwest issues: to focus on the technology for the company’s consumer-facing products, “and not the other side.” 
“It took me three years to convince him that we are now a technology company. And we should focus on technology first,” the executive said.
What ultimately led to the CEO’s agreement: seeing all of the company’s competitors placing these technology aims at the top of the list.
Avoiding the next flight system meltdown may take too long
Even with over $1 billion to spend on technology, Becker estimates it will take at least a year to a year-and-a-half, sometime between now and 2025, for Southwest to do what it can on the IT end. And between now and then, there is no guarantee another set of issues, weather and systems related, won’t result in a similar situation for travelers.
“I’m not saying the same thing will repeat,” Sundaram said. “We’ve all learned from our past mistakes,” he said, noting JetBlue experienced at least a handful of major storms, not all of which resulted in “complete meltdowns,” though the airline did experience meltdowns, too. Procedurally, he said there are other things airlines can do while IT investments are falling short, with workforce management and cancellation policies as examples, to “mitigate some of this risk.”
But he was clear about the high hurdle to a quick tech fix: “You’re not going to find a system in the next 12 months to solve this. And the likelihood they’re going to have a storm in the next 12 months is pretty much there.”
“The question is, how long does it take to invest in a comprehensive crew management ecosystem? There is none today that addresses the need of a large airline like Southwest,” Sundaram said. “If they had one out of the box available, they would have gone and bought that. This is multiple years to go build it and with Southwest taking the risk of building it all by themselves. Or should the industry say we have 100-plus commercially viable airlines which can use this and somehow figure out a way to invest in building that?”   More

Smart Tax Planning

If you sold a profitable home in 2022, it’s possible you’ll owe capital gains taxes on that windfall.
However, you may exclude up to $250,000 from capital gains as a single seller or $500,000 for married couples filing together, as long as you meet certain IRS rules.
If your gain exceeds these thresholds, you can reduce your taxes by adding “capital improvements” to your home’s purchase price and you can subtract selling costs from your profit, experts say.

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Despite the cooling market, many homeowners made money selling their property in 2022 — and part of that windfall may be taxable.
Home sellers made a $112,000 profit on the typical sale in 2022, a 21% increase from 2021, and a 78% jump from two years ago, according to ATTOM, a nationwide property database. 

While most sellers fall under the thresholds for capital gains taxes, high-dollar home sales or long-term ownership can trigger an unexpected bill, experts say.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Here’s how it works: Home sales profits are considered capital gains, with federal tax rates of 0%, 15% or 20%, depending on your 2022 taxable income. (You calculate “taxable income” by subtracting the greater of the standard or itemized deductions from your adjusted gross income.)
As a single home seller, you can exclude up to $250,000 of your profit from capital gains taxes and you can shield up to $500,000 as a married couple filing together, assuming you meet certain IRS rules.

However, you may owe capital gains taxes if your home profit exceeds those thresholds.
“It can be a pretty sizable tax burden for people who are not aware of it,” especially those with a lot of appreciation and embedded gains, said certified financial planner Anjali Jariwala, founder of FIT Advisors in Redondo Beach, California. She is also a certified public accountant.

How to qualify for $250,000 or $500,000 exemptions

Most sellers’ profits fall under the $250,000 or $500,000 capital gains exemptions, but there are specific rules to qualify, said Mark Steber, Jackson Hewitt’s chief tax information officer.
The first rule: You must meet the “ownership test,” he explained, which requires that you’ve owned the property for at least two of the last five years before the sale.

There’s also a “residence test” that says the home must have been your “primary principal residence” for at least two of the past five years. But “it doesn’t have to be continuous,” Steber said.
“You get this break as many times as you want,” he said, as long as it’s been at least two years since the last time you claimed the exemption.
The IRS does have some exceptions to the eligibility tests, including specific guidance for cases of separation or divorce, widowed taxpayers, service members and more, outlined here.

Increase your home’s ‘basis’ to reduce tax liability

Many home sellers don’t realize there’s potential to reduce profits — and possibly lower capital gains — by increasing their property’s purchase price, known as “basis,” according to Jariwala.
“Your purchase price of the home is the starting point for your basis,” she said, explaining you can tack on the cost of “capital improvements.”
“If someone has had their home for 10 years and they’re selling it, they may have forgotten improvements they’ve made,” such as replacing the roof or putting in new floors, Jariwala said.

It’s really important to make sure you are keeping documentation of all the things you’ve done to your home over the years.

Anjali Jariwala
Founder of FIT Advisors

“It’s really important to make sure you are keeping documentation of all the things you’ve done to your home over the years,” she said.
However, you can’t include repairs and maintenance, like painting or fixing leaks, because these activities don’t add value or prolong the home’s life.
And when you’re calculating your home sales profit, you can back out the expenses incurred to sell your home, such as the agent’s commissions or costs to fix up the property before selling, Jariwala said.

If you’re planning to sell in the future, you can start getting organized with receipts to determine exactly which expenses may reduce your profits, she suggested. Otherwise, you may be scrambling to figure out your basis before the tax deadline. 
“You just may not have enough time to gather everything you want, and then you’re leaving money on the table,” she said.
Of course, if you’re expecting a sizable gain, you may also consider the timing of the sale based on your expected income for the year or leverage strategies to offset the tax liability. “You really have to look at the [tax] return holistically,” Jariwala added. More