An American Airlines Boeing 737-800, equipped with radar altimeters that may conflict with telecom 5G technology, can be seen flying 500 feet above the ground while on final approach to land at LaGuardia Airport in New York City, New York, U.S., January 6, 2022.
Bryan Woolston | Reuters
The leaders of the country’s biggest airlines learned a hard lesson this summer: it’s easier to make plans than to keep them.
The three biggest U.S. carriers — Delta, United and American — are dialing back their flight growth ambitions, an effort to fly more reliably after biting off more than they could chew this year as they chased an unprecedented rebound in travel, despite a host of logistical and supply chain constraints as well as staffing shortages.
The cuts come as airlines face elevated costs that they don’t see easing significantly just yet, along with the possibility of an economic slowdown and questions over spending by some of the country’s biggest corporate travelers.
United Airlines estimated it would restore 89% of 2019 capacity levels in the third quarter, and about 90% in the fourth. In 2023, it will grow its schedule to no more than 8% above 2019’s, down from an earlier forecast that it would fly 20% more than it did in 2019, before the Covid-19 pandemic hamstrung travel.
“We’re essentially going to keep flying the same amount that we are today, which is less than we intended to, but not grow the airline until we can see evidence the whole system can support it,” United CEO Scott Kirby said in an interview with CNBC’s “Fast Money” after reporting results Wednesday. “We’re just building more buffer into the system so that we have more opportunity to accommodate those customers.”
American Airlines CEO Robert Isom also spoke of a “buffer” after reporting record revenue on Thursday. That carrier has been more aggressive than Delta and United in restoring capacity but said it would fly 90%-92% of its 2019 capacity in the third quarter.
“We continue to invest in our operation to ensure we meet our reliability goals and deliver for our customers,” Isom wrote in a staff note, discussing the airline’s performance. “As we look to the rest of the year, we have taken proactive steps to build additional buffer into our schedule and will continue to limit capacity to the resources we have and the operating conditions we face.”
Delta, for its part, apologized to customers for a spate of flight cancellations and disruptions and said last week said it would limit growth this year. It earlier announced it would trim its summer schedule.
On Wednesday, Delta deposited 10,000 miles into the accounts of SkyMiles members who had flights canceled or delayed more than three hours between May 1 through the first week of July.
“While we cannot recover the time lost or anxiety caused, we are automatically depositing 10K miles toward your SkyMiles account as a commitment to do better for you going forward and restore the Delta Difference you know we are capable of,” said the email to customers, a copy of which was seen by CNBC.
By trimming schedules airlines could keep fares firm at sky-high levels, an important factor for their bottom lines as costs remain elevated, though bad news for travelers.
“The more airlines limit capacity the higher airfare they can charge,” said Henry Harteveldt, founder of Atmosphere Research Group and a former airline executive.
Preserving the bottom line is key with economic uncertainty ahead.
“They’re not going to get another bailout,” Harteveldt said. “They’ve squandered a lot of their goodwill.”
More disruptions, higher revenue
Since May 27, the Friday of Memorial Day weekend, 2.2% of flights by U.S.-based carriers were canceled and nearly 22% were delayed, according to flight-tracker FlightAware. That’s up from 1.9% of flights canceled and 18.2% delayed in a similar period of 2019.
Staffing shortages have exacerbated routine problems that airlines already faced, like thunderstorms in spring and summer, leaving thousands of travelers in the lurch because carriers lacked a cushion of backup employees.
Airlines received $54 billion in federal payroll aid that prohibited layoffs, yet many of them idled pilots and urged staff to take buyouts to cut costs during the depths of the pandemic.
Airport staffing shortages at big European hubs have similarly led to flight cancellations and capacity limits. London Heathrow officials last week told carriers that it needed to limit departing passenger capacity, forcing some airlines to cut flights.
“We told Heathrow how many passengers we were going to have. Heathrow basically told us: ‘You guys are smoking something,'” United CEO Kirby said Wednesday. “They didn’t staff for it.”
A representative for Heathrow didn’t immediately comment.
Still, the big three U.S. carriers all posted profits for the second quarter and were upbeat about strong traveler demand throughout the summer.
For American and United it was their first quarter in the black since before Covid, without federal payroll support. Revenue for both airlines rose above 2019 levels.
Each carrier projected third-quarter profit as consumers continue to fill seats at fares that far exceed 2019 prices.
Walmart strikes exclusive streaming deal to give Paramount+ to Walmart+ subscribers
In this photo illustration, a woman’s silhouette holds a smartphone with the Walmart logo displayed on the screen and in the background.
Rafael Henrique | Lightrocket | Getty Images
Starting in September, customers who belong to the retailer’s program will get free access to an ad-supported plan on Paramount+, which includes movies and shows such as “Star Trek,” “Paw Patrol,” “The Godfather” and “SpongeBob Squarepants.”
Walmart launched Walmart+ nearly two years ago to drive sales and deeper customer engagement. The program costs $98 per year, or $12.95 per month, and is the company’s answer to Amazon Prime, but with a different set of perks. It includes free shipping of online purchases, free grocery deliveries for orders of at least $35 and discounts on prescriptions and gas.
Now it will also include access to the “essential tier” of Paramount+, which typically costs $4.99 per month and includes commercials. Paramount also sells a premium product without ads for $9.99 per month.
“With the addition of Paramount+, we are demonstrating our unique ability to help members save even more and live better by delivering entertainment for less, too,” Chris Cracchiolo, general manager of Walmart+, said in a news release.
Walmart said in a news release on Monday that it has had positive membership growth every month since its launch in September 2020. But since launching the service, the retail giant has declined to share its subscriber total.
According to estimates by market research firm Consumer Intelligence Research Partners, Walmart+ had 11 million customers as of July — the same as in the April. A survey by equity research firm Morgan Stanley pegged the subscriber count higher at about 16 million members as of May.
Paramount+ is one of the many services that compete for eyeballs in the streaming industry. Paramount Global announced earlier this month that Paramount+ has 43.3 million subscribers around the world. The company aims to reach 100 million subscribers by 2024.
The deal with Walmart will give Paramount+ a new distribution channel to add subscribers as well as a branding boost. Paramount+ is the only streaming service that has struck a deal with Walmart and wanted to launch exclusively to get full marketing attention, according to a person familiar with the deal who was not authorized to speak publicly about it.
Jeff Shultz, chief strategy officer and chief business development officer of Paramount Streaming, said the two companies have worked closely together for years by selling consumer products in Walmart’s stores.
The Wall Street Journal first reported the news of the deal.
Walmart will report its second-quarter earnings on Tuesday.
WATCH: Walmart+ members to get access to Paramount+
People are spending lots of money on makeup and beauty, and retailers are cashing in
Target has added new brands to its beauty department. At a growing number of stores, it also has mini Ulta Beauty shops with prestige brands.
Melissa Repko | CNBC
As prices creep up, some people have decided against getting a new outfit, delayed big purchases like TVs or cancelled Netflix accounts.
But for now, they’re still splurging on beauty.
For retailers, the beauty category has become a rare bright spot as people pull back on spending amid surging inflation. Often seen as an affordable luxury, it is the only discretionary retail category with rising unit sales in the first half of the year, according to The NPD Group, which tracks categories including clothing, tech and toys, as well as beauty products at specialty and department stores.
“You may not be able to go out to eat out as much, but you can buy yourself a lipstick,” said Olivia Tong, an analyst for Raymond James.
This spring, Target called out the strength of its beauty sales, even as it twice cut its profit outlook for the year. Walmart is also investing in the category and rolling out new beauty displays to hundreds of stores, despite its warnings that shoppers are skipping over discretionary categories like apparel.
Other factors work in the industry’s favor, too. Weddings and parties have picked up again. More people are heading back to the office, and can no longer hide behind their Zoom filters. And during the pandemic, some people got in the habit of pampering themselves at home with face masks, hair treatments and other beauty products.
Larissa Jensen, a beauty analyst for NPD, called it the return of the “lipstick index” — a term made famous by Leonard Lauder, chairman of the board of Estee Lauder, to explain climbing sales of cosmetics during the recession in the early 2000s.
As consumer sentiment has fallen, lipstick sales volume has climbed, Jensen said. That increase has carried over to other beauty products. Makeup sales, including lipstick, are up 20%, skincare is up 12%, fragrance is up 15% and hair care is up 28% for the first half of the year — and they are all growing in units, as well as dollars, she said.
Much of the beauty category’s growth is coming from households that earn over $100,000 a year, and Jensen said discounters may have a tougher time capitalizing on the trend. Still, beauty’s resilience could provide some cushion for big-box retailers in a slowdown − if they can figure out how to cash in.
Beauty at $3, $5, $9
Walmart and Target both cut their profit forecasts after having to mark down prices on apparel, home goods and other products that aren’t selling. Yet both companies are refreshing their beauty departments and adding new brands to attract customers.
A year ago, Target began opening hundreds of Ulta Beauty shops inside of its stores with brands including MAC Cosmetics and Clinique. The company plans to add more than 250 this year and eventually have the shops at 800 locations, representing about 40% of its U.S. footprint.
And after seeing fragrance become the biggest sales-driver in prestige beauty during the last holiday season, it also added popular fragrance brands to the Ulta shops, including Jimmy Choo Man, Juicy Couture and Kate Spade New York.
Since January, Target has introduced more than 40 brands to its stable of beauty products, including “clean” products that are free of certain ingredients and Black-owned and Black-founded brands.
On an earnings call in mid-May, CEO Brian Cornell said beauty saw double-digit growth in comparable sales in the fiscal first quarter versus the year-ago period. That broke from other categories, besides food and beverage and essentials, which saw a noticeable slowdown.
Walmart has added about a dozen prestige beauty brands to select stores. It struck a deal with British beauty retailer, Space NK, to add the assortment and develop a private label.
Melissa Repko | CNBC
At Walmart, new beauty displays were set up this summer at 250 of the company’s locations, featuring Mario Badescu, Patchology and other brands typically found at specialty beauty shops or department store makeup counters.
A more affordable display called “Beauty Finds” also began rolling to nearly 1,400 stores, offering shoppers lip glosses, lotions and more for $3, $5 or $9.
Walmart has also struck exclusive deals with direct-to-consumer companies like Bubble, a skincare brand with colorful packaging and focus on Gen Z and young millennial customers. For the past few quarters, it has seen double-digit growth in its cosmetics business, said Creighton Kiper, Walmart’s vice president of merchandising for beauty.
“Beauty is this fascinating category where it’s not like food and it’s not like health and wellness, but yet the customer interacts and engages with it every day,” he said in an interview earlier this summer. “You’ve got this mental wellness component to it around confidence and feeling good about yourself.”
When budgets get tighter, Kiper said customers might also fall back on skills they gained during the pandemic — such as doing their nails or hair color at home — and go to Walmart to shop for an at-home twist on the salon.
Ashley Marie Lemons, a stay-at-home mom in suburban Atlanta, said her family is eating out less often because they’re spending more on groceries, diapers and other necessities. She said she cooks more meatless meals and buys hot dogs instead of pricier meats, such as ribs.
But she said she still allows herself to spend about $50 a month on beauty products like eyeshadow pallets and mascaras.
“It’s an outlet for me,” she said. “Some people like art. It’s a creative way for me to express myself.”
Salman Rushdie reportedly on a ventilator and unable to speak after he was stabbed
Author Salman Rushdie is reportedly on a ventilator and unable to speak after being attacked while on stage in western New York on Friday.
State troopers confirmed in a press conference Friday afternoon that Rushdie was stabbed at least once in the neck and at least once in the abdomen while on stage for a panel in Chautauqua in western New York.
Staff and audience members rushed to the stage and pinned the assailant to the ground following the attack, state troopers said. A state trooper who was present took the suspect into custody with the assistance of a local sheriff’s deputy.
Rushdie was treated by a doctor who was in the audience before emergency medical services arrived and airlifted him to a local trauma center.
After hours of surgery, Rushdie was reportedly on a ventilator and unable to speak on Friday evening.
“The news is not good,” Andrew Wylie, his book agent, wrote in an email reported by Reuters. “Salman will likely lose one eye; the nerves in his arm were severed; and his liver was stabbed and damaged.”
Author Salman Rushdie is tended to after he was attacked during a lecture, Friday, Aug. 12, 2022, at the Chautauqua Institution in Chautauqua, NY.
Joshua Goodman | AP
The state police department identified the suspect as Hadi Matar, age 24, from Fairview, NJ. The New York State Police is collaborating with the FBI and local police for the investigation.
A preliminary review of Matar’s social media accounts by law enforcement showed him to be sympathetic to Shia extremism and the causes of the Islamic Revolutionary Guard Corps, a law enforcement person with direct knowledge of the investigation told NBC News. Law enforcement officers reportedly found images of Solemani and an Iraqi extremist sympathetic to the Iranian regime in a cell phone messaging app belonging to Matar, according to NBC News.
There are no definitive links to the IRGC but the initial assessment indicates he is sympathetic to the Iranian government group, the official said.
The New York State Police released a statement immediately following the incident:
“On August 12, 2022, at about 11 a.m., a male suspect ran up onto the stage and attacked Rushdie and an interviewer,” the statement read. “Rushdie suffered an apparent stab wound to the neck, and was transported by helicopter to an area hospital. His condition is not yet known. The interviewer suffered a minor head injury. A State Trooper assigned to the event immediately took the suspect into custody.”
A spokesperson from the Chautauqua Institution, where the panel was being held, told CNBC that the organization was coordinating with emergency officials on a public response after the attack.
The Wylie Agency, which represents Rushdie, did not immediately respond to a request for comment.
Rushdie’s book “The Satanic Verses” forced him into hiding after it was banned in Iran and a $3 million bounty was put on his head. The Iranian government has distanced itself from the bounty, according to The Associated Press, but the fatwa has been continued by a semiofficial religious organization, which raised the bounty to $3.3 million.
Rushdie has been awarded many of the top literary prizes, including two Whitbread Prizes for best novel. He was knighted in 2007 while Tony Blair was prime minister. Blair released a statement on the attack.
Author Salman Rushdie at the Blue Sofa at the 2017 Frankfurt Book Fair on October 12, 2017 in Frankfurt am Main, Germany.
Hannelore Foerster | Getty Images
“My thoughts are with Salman and all his family,” Blair wrote on Friday. “A horrible and utterly unjustified attack on someone exercising their right to speak, to write and to be true to their convictions in their life and in their art.”
Rushdie was scheduled to sit on a panel alongside Henry Reese, president of City of Asylum in Pittsburgh, an organization that provides sanctuary to writers exiled under threat of persecution.
“We ask for your prayers for Salman Rushdie and Henry Reese, and patience as we fully focus on coordinating with police officials following a tragic incident at the Amphitheater today,” the Chautauqua Institution said in a tweet Friday. “All programs are canceled for the remainder of the day. Please consult the NYS Police statement.”
The institution’s website described the panel as “A discussion of the United States as asylum for writers and other artists in exile and as a home for freedom of creative expression.”
Rushdie was the former president of PEN America, a nonprofit that defends freedom of expression and supports persecuted writers. PEN America CEO Suzanne Nossel released a statement in the wake of the attack.
“Just hours before the attack, on Friday morning, Salman had emailed me to help with placements for Ukrainian writers in need of safe refuge from the grave perils they face,” Nossel wrote. “Salman Rushdie has been targeted for his words for decades but has never flinched nor faltered. He has devoted tireless energy to assisting others who are vulnerable and menaced.”
New York Gov. Kathy Hochul thanked the New York State Police for their response to the attack on Rushdie.
“Our thoughts are with Salman & his loved ones following this horrific event,” wrote the governor. “I have directed State Police to further assist however needed in the investigation.”
Hochul later said Rushdie is alive.
“It was a state police officer that stood up and saved his life,” the governor said during an event about gun violence, adding that the event moderator was also attacked. “We’re monitoring the situation, but he’s getting the care he needs at the local hospital.”
This is the latest in a series of onstage attacks against public figures, including Rep. Lee Zeldin, R-N.Y., in a town near Rochester, New York, earlier this summer, Dave Chappelle at the Hollywood Bowl, and Chris Rock during the Oscars.
NBC News contributed to this report
Correction: Rep. Lee Zeldin, R-N.Y., was attacked in a town near Rochester, New York, earlier this summer. An earlier version misspelled his name and misstated the location.
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