| Oil Prices Are Surging Again |
| Oil prices continued their furious rally on Tuesday, with West Texas Intermediate crude futures rising another 18% to $23.97. Brent crude was up 11% to $30.23. West Texas crude has risen 86% in just the past five trading days. Brent crude is working on a six-day rally that has sent prices up 48%.
Crude is up for two reasons. One is that investors now expect demand to return for major products like gasoline and diesel as countries start loosening lockdown orders imposed to stop the spread of the coronavirus. The other is that oil companies have gotten more serious about reducing supply. U.S. oil production has already declined by almost 1 million barrels a day since it peaked in March, according to Rystad Energy. Earnings releases from U.S. oil companies show they’re prepared to make dramatic cuts. |
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| U.S. Service Sector Skidded Into Recession Last Month |
| Activity across the U.S. service sector, two-thirds of the nation’s economy, fell at the fastest pace on record during the first full month of lockdowns across much of America.
A set of reports on Tuesday show the sharp hit the coronavirus pandemic and efforts to curb its spread have had on everything from retail and hospitality to professional services in April. It’s just the latest data point to reflect the growing toll the crisis is having on nearly every segment of the economy. |
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| California Sues Uber and Lyft, Saying They Misclassified Drivers as Contractors |
| California sued Uber and Lyft for allegedly misclassifying their drivers as independent contractors instead of employees, a move that intensifies a battle between the ride-hailing giants and their home state.
California, which is suing the companies under authority granted by a new state law and under the California Competition Law, said the decision to classify drivers as contractors has deprived them of rights such as paid sick leave and unemployment insurance. |
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| Disney Earnings Fall More Than 90% as Covid-19 Wipes Out $1B in Theme-Park Sales |
| Walt Disney’s profit dove more than 90% in the second quarter, an example of the drastic effects on the company from the Covid-19 pandemic, which executives said cost the media giant more than $1 billion in sales just in its theme-parks division.
Disney reported fiscal second-quarter profit of $460 million, or 26 cents a share, on sales of $18.01 billion, up from $14.9 billion in the year-ago quarter, which included only a few days of results from Disney’s $71 billion acquisition of Fox assets. In that quarter, though, Disney reported profit of more than $5 billion, with a boost from the acquisition of a controlling interest in Hulu. |
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| Airbnb to Lay Off Nearly 25% of Workforce |
| Airbnb is slashing nearly one-fourth of its workforce, or 1,900 employees, as it grapples with a free-falling travel industry.
The cutbacks, first reported by The Information, were announced to employees by company CEO Brian Chesky on Tuesday afternoon. “We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” Chesky told employees in a note. |
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| Norwegian Cruise Line Aims to Raise $2 Billion in Fresh Capital |
| Norwegian Cruise Line Holdings is hoping to raise $2 billion of new capital through a combination of debt, equity, and an investment from a private-equity firm.
Norwegian, the smallest of the big three U.S. cruise operators, suspended its operations in mid-March due to the coronavirus pandemic along with its peers—Carnival and Royal Caribbean Cruises. There has been some disagreement about how much cash Norwegian is burning each month as its ships sit idle during the pandemic crisis. But several analysts estimated recently that Norwegian had six to eight months of liquidity remaining with no sailings. |
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| Hertz Has Reached a Deal With Lenders to Delay a Default—but Not for Long |
| Hertz has reached an agreement with its creditors to stave off a default on its debt and a liquidation of its rental fleet, at least temporarily.
The company said in a statement on Tuesday that lenders had agreed to waive some of the requirements in its debt contracts until May 22. Hertz failed to make a required lease payment to the subsidiary that owns its automobile fleet on April 27, and would have defaulted if it hadn’t reached a forbearance agreement with its lenders. |
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| United Airlines Is Planning Deep Job Cuts |
| United Airlines is planning steep layoffs as the airline prepares for a world of sharply reduced air travel. That may pave the way for United to return to profitability sooner. But the airline will still have to get through a brutal few months—and investors appear skeptical that the cost cuts will be sufficient.
United said Monday that it expected to cut its management staff by at least 30%, starting in October, according to a memo sent to employees. The cuts amount to about 3,450 workers. United is receiving $5 billion in payroll support under the government’s Cares Act program, which includes restrictions on compensation and layoffs. But the money doesn’t cover payrolls entirely and it will run out in September, giving United more flexibility to reduce its workforce. |
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| Pfizer and BioNTech Begin Giving U.S. Test Participants a Potential Covid-19 Vaccine |
| The drug giant Pfizer said Tuesday it had begun giving participants an experimental Covid-19 vaccine it is developing with the German biotech firm BioNTech.
The companies are working together on a messenger RNA-based vaccine, a novel approach in which BioNTech specializes. Pfizer is one of the world’s largest vaccine makers. |
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| WeWork Co-Founder Adam Neumann Sues SoftBank Over Abandoned Deal |
| WeWork co-founder Adam Neumann sued SoftBank Group on Monday in the Delaware Court of Chancery over the Japanese holding company’s decision to terminate a bid to buy up to $3 billion of stock in WeWork parent The We Company from a small group of shareholders.
Under the original terms of that deal, Neumann would have sold up to $970 million of stock to SoftBank. |
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