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    Airlines See a Surge in Domestic Flights, Beating Forecasts

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    U.S. carriers are reaping the rewards as a surge in domestic air travel has exceeded forecasts.The aviation recovery is gaining momentum.A summer travel bonanza is exceeding expectations, helping airlines earn profits again and brightening the outlook for the rest of the year. It’s a welcome relief for a battered industry and a sign that the rebound that began this spring appears to be here to stay.The economic upturn, aggressive cost-cutting and an enormous federal stimulus that paid many salaries have helped to improve the finances of the largest carriers, which took on vast amounts of debt and lost billions of dollars during the pandemic.This month, consumer spending on airlines briefly exceeded 2019 levels on a weekly basis for the first time since the pandemic began, according to Facteus, a research firm that monitors millions of online payments. Ticket prices have rebounded, too: In June, fares were down only 1 percent from the same month in 2019, according to the Adobe Digital Economy Index, which is similarly based on website visits and transactions.And on Sunday, the Transportation Security Administration screened more than 2.2 million travelers at its airport checkpoints, the most in one day since the start of the pandemic.“As people have gotten vaccinated and things have reopened, the demand is just very, very strong — and I think, in general, it’s stronger than people thought it would be,” said Helane Becker, an airline analyst at the investment bank Cowen. “People have money and time, and they’re using it to travel.”A full recovery rests on the return of two pillars of the business, corporate and international travel, but executives said they expected both to improve meaningfully over the coming months. And while the Delta variant of the coronavirus could still threaten the travel rebound, customers are so far undeterred.“We haven’t seen any impact at all on bookings,” Scott Kirby, the chief executive of United Airlines, said this week on a call to discuss quarterly financial results with analysts and reporters. “The most likely outcome is that the recovery in demand continues largely unabated.”His comments aligned with those of executives at American Airlines and Delta Air Lines, who said on similar calls that they had seen no drop in demand because of the variant. Both Delta and United added that a vast majority of employees and regular customers had received coronavirus vaccines, which appear to provide protection against the variant.The rising demand has prompted hiring across the industry. American said Wednesday that it planned to hire 1,350 pilots by the end of next year, a 50 percent increase over previous plans. Last week, the company announced that it planned to hire hundreds of flight attendants and bring back thousands who volunteered for extended leaves during the pandemic.Southwest Airlines said in June that it would increase its minimum wage to $15 an hour to retain and attract workers, while Delta is in the middle of hiring thousands of employees. United last month announced plans to buy 270 new planes in the coming years, the largest airplane order in its history and one that would create thousands of jobs nationwide.Southwest on Thursday reported a profit of $348 million for the quarter that ended in June, its second profitable quarter since the pandemic began. American reported a $19 million profit over the same period, while Delta last week reported a $652 million profit, a pandemic first for each airline. United this week reported a loss, but projected a return to profitability in the third quarter as its business improved faster than forecast.The financial turnaround has been buoyed by an infusion of $54 billion of federal aid to pay employee salaries over the past year and a half. Without those payments, none of the major airlines would have been able to report profits for the quarter that ended in June. The aid precludes the companies from paying dividends through September 2022.Each airline offered a hopeful outlook for the current quarter. American projected that passenger capacity would be down only 15 to 20 percent from the third quarter of 2019, while United projected a 26 percent decline and Delta forecast a 28 to 30 percent drop. Southwest, which differs from the other three large carriers in that it operates few international flights, said it expected capacity to be comparable to the third quarter of 2019.“We are just really excited about the momentum we’re seeing in the numbers,” Doug Parker, American’s chief executive, told analysts after the company delivered its earnings report.The financial results and forecasts for the rest of the summer are the latest sign of strength in a comeback that has been building for months. But the airlines have vast amounts of debt to repay — American, the most indebted carrier, announced a plan on Thursday to pay down $15 billion by the end of 2025 — and the rebound hasn’t been free of setbacks.Passenger volumes are still down nearly 20 percent from prepandemic levels, and airlines suffered widespread delays and cancellations as passengers returned in droves last month, according to data from FlightAware, a flight tracking company. About 17 percent of Delta’s flights were delayed at least 15 minutes in June, along with more than 20 percent for United, more than 30 percent for American and 40 percent for Southwest.Travelers at Miami International Airport last month. Airlines had many delays and cancellations as passengers returned in droves last month.Saul Martinez for The New York Times“While the rapid ramp-up in June travel demand provided stability to our financial position, it has impacted our operations following a prolonged period of depressed demand,” Southwest’s chief executive, Gary Kelly, acknowledged in a statement on Thursday. “Therefore, we are intensely focused on improving our operations as we restore our network to meet demand.”Carriers have also struggled to get workers in place to meet that demand. American suffered shortages of catering and wheelchair operators last month, while it also accelerated pilot training to bring more than 3,000 back from extended leaves. Last week, Ed Bastian, chief executive of Delta, said the airline had struggled to train new or long-sidelined employees.“It takes a few months, and the demand has come back at such a fast clip,” he said. “It’s taken us all a little bit of time to catch our breath. But we’ll be fully back over the next couple of months.”One form of travel, trips to visit friends or family within the United States, has generally recovered to 2019 levels, with Southwest saying such leisure travel exceeded 2019 levels in June.Surveys show that corporate travelers are increasingly eager to get back on the road this fall, when business travel typically picks up. Nearly two-thirds of companies that suspended business travel in the pandemic expect to bring it back over the next one to three months, according to a recent poll from the Global Business Travel Association, an industry association. If other companies follow Apple’s lead in delaying a return to the office, though, the corporate travel recovery could be held back.Delta said it expected domestic business trips to recover to about 60 percent of 2019 levels by September, up from 40 percent in June. Those figures roughly align with estimates from United.“The demand is recovering even faster than we had hoped domestically,” Mr. Kirby of United said on Wednesday.International travel has slowly started to recover, too, as more countries, particularly in Europe, open up to American travelers who can provide proof of vaccination or a negative coronavirus test. But airlines are lobbying the Biden administration to loosen restrictions in kind, which, they say, will allow the recovery to accelerate.“I think the surge is coming, and just as we’ve seen it on the consumer side, we’re getting ready for it on the business side,” Mr. Bastian of Delta said last week. “Once you open businesses, offices, and you get international markets opened, I think it’s going to be a very good run over the next 12 to 24 months.” More

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    Gap Sees Its Post-Pandemic Future Outside of Malls

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    The retailer’s first-quarter sales jumped 89 percent to $4 billion from a year earlier as its e-commerce continues to grow.Gap has long been among the biggest operators of mall stores in the country. But after the pandemic, it will have a much smaller presence in traditional indoor malls as it closes Gap and Banana Republic locations and bets on the expansion of its Old Navy and Athleta brands. More

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    Auto sales helped get the American economy off to a good start in 2021.

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    In the first months of 2021, what was good for the auto industry was decidedly good for the American economy.Spending on motor vehicles and parts rose almost 13 percent in the first quarter, making a big contribution to the increase in gross domestic product, the Commerce Department reported Thursday. Strong sales of new and used vehicles were propelled by consumers who had delayed purchases earlier in the pandemic and by others who — because of the virus — wanted to rely less on public transit or shared transportation services like Uber.Two rounds of stimulus payments since late December were a big factor. Low interest rates, readily available credit, rising home values and stock prices, and strong trade-in values for used models also eased the path for consumers.In fact, demand in the first quarter was robust enough that the auto industry was able to post healthy results despite a shortage of computer chips that forced temporary shutdowns of many auto plants.The number of new cars and light trucks sold increased 11 percent from the comparable period a year earlier, to 3.9 million, according to the auto-sales data provider Edmunds.com.On Wednesday, Ford Motor reported it made a $3.3 billion profit in the quarter, its highest total since 2011. While it produced 200,000 fewer vehicles in the quarter than it had planned, the average selling price of Ford models rose to $47,858, 8 percent higher than in the first quarter a year ago, Edmunds reported.The combination of strong consumer demand and tight inventories — partly a result of the chip shortage — has produced something of a dream scenario for auto retailers. At AutoNation, the country’s largest chain of dealerships, many vehicles are being sold near or at sticker price even before they arrive from the factory.“I’ve never seen so much preselling of shipments,” said Mike Jackson, the chief executive. “These vehicles are coming in and going right out.”In the first quarter, AutoNation’s revenue jumped 27 percent, to $5.9 billion, and the company reported $239 million in profit. That was a turnaround from a loss a year ago, when the pandemic crimped sales and forced AutoNation to close stores. More

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    ‘A Perfect Positive Storm’: Bonkers Dollars for Big Tech

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    The dictionary doesn’t have enough superlatives to describe what’s happening to the five biggest technology companies, raising uncomfortable questions for their C.E.O.s.In the Great Recession more than a decade ago, big tech companies hit a rough patch just like everyone else. Now they have become unquestioned winners of the pandemic economy.The combined yearly revenue of Amazon, Apple, Alphabet, Microsoft and Facebook is about $1.2 trillion, according to earnings reported this week, more than 25 percent higher than the figure just as the pandemic started to bite in 2020. In less than a week, those five giants make more in sales than McDonald’s does in a year.The U.S. economy is cranking back from 2020, when it contracted for the first time since the financial crisis. But for the tech giants, the pandemic hit was barely a blip. It’s a fantastic time to be a titan of U.S. technology — as long as you ignore the screaming politicians, the daily headlines about killing free speech or dodging taxes, the gripes from competitors and workers, and the too-many-to-count legal investigations and lawsuits.America’s technology superpowers aren’t making bonkers dollars in spite of the deadly coronavirus and its ripple effects through the global economy. They have grown even stronger because of the pandemic. It’s both logical and slightly nuts.The wildly successful last year also raises uncomfortable questions for tech company bosses, the public and elected officials already peeved about the industry: Is what’s good for Big Tech good for America? Or are the tech superstars winning while the rest of us are losing?Americans have more money in their pockets thanks to government stimulus checks and pandemic savings, and the tech giants are getting a significant share. Their combined revenue is equivalent to roughly 5 percent of the gross domestic product of the United States.Big Tech’s pandemic big bucks have an understandable root cause: We needed its services.People gravitated to Facebook’s apps to stay in touch and entertained, and businesses wanted to pay Facebook and Google, which Alphabet owns, to help them find customers who were stuck at home. People preferred to buy diapers and deck chairs from Amazon rather than risk their health shopping in stores. Companies loaded up on software from Microsoft as their businesses and work forces went virtual. Apple’s laptops and iPads become lifelines for office workers and schoolchildren.Before the pandemic, America’s technology superpowers were already influential in how we communicated, worked, stayed entertained and shopped. Now they are practically unavoidable. Investors have scooped up Big Tech shares in a bet that these companies are nearly invincible.“They were already on the way up and had been for the best part of a decade, and the pandemic was unique,” said Thomas Philippon, a professor of finance at New York University. “For them it was a perfect positive storm.”Times weren’t so good for these companies in the last economic rough patch. In the downturn from 2007 to 2009, Microsoft’s sales dropped slightly, and its stock price fell 60 percent from the fall of 2008 to March 2009, a low point for U.S. stocks. Google and Amazon each lost as much as two-thirds of their market value.One sign of how this time is different: Amazon’s revenue is growing much faster in 2021 than it did in 2009, when the company was one-fifteenth its current size. Sales in the first quarter rose 44 percent from a year earlier, and Amazon’s profits before taxes — which have never been exactly robust — more than doubled to $8.9 billion. Businesses are addicted to Amazon’s cloud computer services, where sales rose 32 percent, and shoppers can’t live without Amazon’s delivery. Investors love Amazon, too. The company’s stock market value has nearly doubled since the beginning of 2020 to $1.8 trillion.For the other tech giants, it’s as if their brief pandemic nosedive never happened. Advertising sales typically rise and fall with the economy. But as other types of ad spending shrank when the U.S. economy contracted last year, ad sales rose for Google and Facebook. The growth was even better for them in the first three months of this year.A year ago, analysts worried that Apple would be crippled as the pandemic gripped China, which is the hub of the company’s manufacturing operations and its most important consumer market. The fears didn’t last long. In the first three months of 2021, Apple’s revenue from selling iPhones increased at the fastest rate since 2012. Sales in mainland China, Taiwan and Hong Kong nearly doubled from a year earlier.Apple’s revenue from iPhone sales in the first three months of the year rose at the fastest pace since 2012.Agence France-Presse — Getty ImagesThe tech giants are not the only companies rallying in dark times. America’s big banks have also been on a tear. So have some younger technology companies, such as Snap and Zoom, the maker of the pandemic-favorite videoconferencing app. The crisis forced all sorts of businesses to go digital fast in ways that could help them thrive. Restaurants invested in online sales and delivery, and doctors went full bore into telemedicine.But the dictionary doesn’t have enough superlatives to describe what’s happening to the five biggest technology companies. It’s all a bit awkward, really. It’s rocket fuel for critics, including some regulators and lawmakers in Europe and the United States, who say the tech giants crowd out newcomers and leave everyone worse off.Big Tech companies say they face stiff competition that leads to better products and lower prices, but their bank statements might suggest otherwise. Facebook’s profit margins are higher now than they were before the pandemic.Some of their success is explained by the peculiarities of the pandemic economy. Some people and sectors are doing awesome, while other families are lining up at food banks and while companies like airlines are begging for cash. Unlike the stock market clobbering in the Great Recession, stock indexes in the United States have reached new highs.The tech superstars have also capitalized on this moment. Alphabet and Facebook have used the pandemic to cut back in places that matter less, such as promotional costs and travel and entertainment budgets. And the tech giants have generally increased spending in areas that extend their advantages.Alphabet is now spending more on big-ticket projects, like building computer complexes, than Exxon Mobil spends to dig oil and gas out of the ground. Amazon’s work force has expanded by more than 470,000 people since the end of 2019. That deepens the moat separating the tech superstars from everyone else.Big Tech is emerging from the pandemic lean, mean and ready for a U.S. economy expected to roar back to life in 2021. Meanwhile, there are still long lines at food banks. Some American workers who lost their jobs last year may never get them back. Housing advocates are worried that millions of people will be evicted from their homes. And being Big Tech is an invitation for everyone to hate you — but you do have towering piles of money. More

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    The Pandemic Sank Auto Sales. Vaccines Could Bring Buyers Back.

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    #masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccination StrategiesVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyThe Pandemic Sank Auto Sales. Vaccines Could Bring Buyers Back.Carmakers say new models should also help lift the industry in 2021, after a 15 percent decline in its slowest year since it recovered from the Great Recession.Sales of Chevrolets and other makes in the fourth quarter offset a 10 percent drop in sales of Buicks, General Motors reported on Tuesday.Credit…David Zalubowski/Associated PressJan. 5, 2021, 6:06 p.m. ETThe auto industry sputtered through its weakest year in nearly a decade in 2020 as the pandemic kept buyers away from dealerships and forced companies to shut down factories for two months last spring.But automakers are counting on a rebound in 2021, and foresee possibly strong growth in the second half, as they roll out a parade of new sport utility vehicles, pickup trucks and electric cars. Those hopes rest in large part on the expectation that the distribution of Covid-19 vaccines will accelerate this spring and summer after a slow start in recent weeks.“I am as optimistic as one can be,” Scott Keogh, president and chief executive of Volkswagen of America, told reporters in a conference call on Tuesday. “What is weighing on everything is how quickly can we get those shots rolled out.”Automakers estimate the industry sold 14.5 million cars and light trucks last year. That amounts to a 15 percent decline from 2019, and the lowest level since 2012, when the industry was still recovering from the financial crisis that forced General Motors and Chrysler to seek government assistance and bankruptcy protection.Unlike that recession, the difficulties caused by the pandemic did not hit manufacturers and different regions of the country equally. The industry was most severely affected last spring when all North American auto plants were shut down to slow the spread of the coronavirus and many consumers stayed home.But sales bounced back later in the year in part because of pent-up demand.G.M. said on Tuesday that its vehicle sales in the United States fell 12 percent in 2020, but increased 5 percent in the fourth quarter from a year earlier. The automaker reported solid performances from its Chevrolet, GMC and Cadillac brands in the final three months of the year. They offset a 10 percent drop in Buick sales.Over all, G.M. sold 2.5 million cars and light trucks in 2020, down from nearly 2.9 million a year earlier. But the company described its 771,323 sales in the final three months as its strongest fourth quarter since 2007.“We look forward to an inflection point for the U.S. economy in spring,” G.M.’s chief economist, Elaine Buckberg, said in a statement. “Widening vaccination rates and warmer weather should enable consumers and businesses to return to a more normal range of activities, lifting the job market, consumer sentiment and auto demand.”Also on Tuesday, Toyota Motor said it sold 2.1 million cars and light trucks in the United States last year, 11 percent fewer than in 2019. In December, however, its sales jumped more than 20 percent, lifted by strong demand for S.U.V.s and pickup trucks. Fiat Chrysler said that its 2020 sales fell 17 percent, to 1.8 million cars and trucks, but that the decline in the fourth quarter narrowed to 8 percent.Tesla, the world’s most valuable automaker by far, said on Saturday that globally it sold 500,000 cars in 2020, up 36 percent from the year before. The company does not break its sales down by country or continent.The Coronavirus Outbreak More

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    Marc Benioff Sets His Sights on Microsoft

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    AdvertisementContinue reading the main storySupported byContinue reading the main storyMarc Benioff Sets His Sights on MicrosoftThe Salesforce C.E.O.’s planned acquisition of Slack will have him competing directly with the Goliath that is Microsoft.“What’s that company?” Marc Benioff, Salesforce’s chief executive, said when he was asked about his rival, Microsoft.Credit…Matt Edge for The New York TimesBy More