BP plans to cut about 15 percent of its work force.
BP said Monday that it planned to eliminate 10,000 jobs — nearly 15 percent of the company’s total work force — with most cuts coming by the end of the year.
The company’s chief executive, Bernard Looney, said in a companywide email that the cuts were needed to stem losses arising from the coronavirus pandemic as well as to create a leaner company to achieve his ambitions to sharply reduce BP’s carbon dioxide emissions.
Mr. Looney, 49, who became chief executive in February, wrote that because of the plunge in oil prices, BP was “spending much, much more than we make.” He said that he wanted to cut operating costs by $2.5 billion, or more than 10 percent. Capital costs will be cut by 25 percent or $3 billion.
He said that the fall in oil prices, a result of a drop in demand caused by the economic lockdowns to curb the virus, would likely accelerate an effort already underway to reorganize the company and bring in new leadership. In the email, he said that the numbers of senior level jobs would be reduced by more than half.
“I am really sorry that this will hurt a lot of people who I know love this company as much as I do,” he wrote.
Oil prices have recovered strongly from their lows in late April, helped by deep cuts in production by major producers. During a videoconference on Saturday, the Organization of the Petroleum Exporting Countries, along with Russia and some other producers, agreed to extend their agreement to cut 9.7 million barrels a day or about 10 percent of global output in normal times through July.
On Monday, Brent crude, the international benchmark, was down about 0.3 percent to about $42.16 a barrel. West Texas Intermediate, the key American crude, briefly rose above $40 a barrel before slumping to $39.10 a barrel, about 1 percent lower.
Wall Street’s rally continues, with the S&P 500 close to a break-even for the year.
U.S. stocks inched higher on Monday, adding to a rally that has put the S&P 500 close to wiping out its losses for 2020.
Indexes were lifted by shares of the biggest American airlines, which surged on signs that domestic air travel was starting to come back. American Airlines and United Airlines stock was up more than 8 percent, while Delta Air Lines shares were over 6 percent.
The S&P 500 was up slightly in early trading. In Europe, stocks in France and Germany were down, while Britain’s FTSE 100 was flat. Stocks have been on an upward trajectory for weeks as investors have responded to signs around the world that the virus was abating. Businesses are slowly returning to life and policymakers are pumping trillions of dollars into the economy and financial markets.
The stock market has risen nearly 43 percent since its low on March 23, a turnaround that started when the Federal Reserve signaled its willingness to funnel unlimited amounts of liquidity into financial markets.
Investors have plenty of reasons to be wary. As economies begin to reopen, many are watching for signs of a second wave of the coronavirus outbreak. It’s also unclear whether governments will be willing or able to keep giving the global economy a push, and how long it will take for the world’s growth engines to come back to full speed.
But the focus remains on the positive. For example, Britain’s government is reportedly considering allowing pubs and restaurants to open for outdoor drinking and dining beginning June 22, earlier than expected. On Monday, New York City will begin to reopen some businesses.
On Friday, stocks got a boost after U.S. jobs figures came in much stronger than expected, showing employers added 2.5 million jobs in May. The S&P 500 rose more than 2 percent, and is now close to recouping all of its losses for 2020 so far.
Here’s the business news to watch this week.
? Monday marks the first phase of New York City’s reopening, with retailers, construction sites and manufacturers tentatively getting back to business.
? The Federal Reserve provides a set of updated economic forecasts on Wednesday, which markets will scour for clues on how long interest rates will remain at historic lows. Few expect any hikes before late 2022, at the earliest.
?? Shares in the Chinese online gaming company NetEase begin trading in Hong Kong on Thursday, as part of a secondary listing that could raise up to $3 billion. Another Chinese business that trades in New York, the e-commerce giant JD.com, is expected to introduce a secondary Hong Kong listing this week, as growing tensions between Washington and Beijing make companies worried about their access to capital in the U.S.
? Among the earnings reports this week, Tiffany could provide an update on its takeover by LVMH, in data released Tuesday; AMC Entertainment, also Tuesday, will reveal the scope of the damage done by pandemic lockdowns to the movie theater business; and there will also be updates from Chewy (Tuesday), Adobe (Thursday) and Lululemon (Thursday).
As some of the wealthiest health care companies in the United States received billions of dollars in taxpayer funds to help them cope with lost revenue from the pandemic, they laid off or cut the pay of tens of thousands of doctors, nurses and lower-paid workers, while continuing to pay their top executives millions.
The New York Times analyzed tax and securities filings by 60 of the country’s largest hospital chains, which together have received more than $15 billion in emergency funds through the economic stimulus package in the federal CARES Act.
The hospitals — including publicly traded juggernauts like HCA and Tenet Healthcare, elite nonprofits like the Mayo Clinic, and regional chains with thousands of beds — are collectively sitting on tens of billions of dollars of cash reserves that are supposed to help them weather an unanticipated storm. They awarded their five highest-paid officials about $874 million in the most recent year for which they have disclosed their finances.
At least 36 of those hospital chains have laid off, furloughed or reduced the pay of employees as they try to save money during the pandemic.
More than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on front-line staff, including low-paid cafeteria workers, janitors and nursing assistants. They said pay cuts and furloughs made it even harder for medical workers to do their jobs, forcing them to treat more patients in less time.
‘Corporate America has failed black America.’
In the past week, it has seemed like every major company has publicly condemned racism. All-black squares cover corporate Instagram. Executives have made multimillion-dollar pledges to anti-discrimination efforts and programs to support black businesses.
Yet many of the same companies expressing solidarity have contributed to systemic inequality, targeted the black community with unhealthy products and services, and failed to hire, promote and fairly compensate black men and women, David Gelles writes.
“Corporate America has failed black America,” said Darren Walker, the president of the Ford Foundation and a member of the board of Pepsi, and who is black. “Even after a generation of Ivy League educations and extraordinary talented African-Americans going into corporate America, we seem to have hit a wall.”
With dozens of cities protesting the violent deaths of George Floyd, Ahmaud Arbery, Breonna Taylor and others, a national conversation about racism is underway. For black executives, who have spent their lives excelling at business while overcoming structural discrimination, the killings and ensuing protests have unleashed an outpouring of emotion. Many are speaking candidly about their private fears, as well as their disappointment with the corporate apparatus that made them stars.
Robert F. Smith, a private equity billionaire and the richest black man in America, said he had been overwhelmed by conflicting feelings. “I am saddened, I am angry, I am upset and I am determined,” he said. “I run through that wave of emotions every minute.”
Something remarkable is percolating in the commercial real estate market: Investors may end up losing millions in tax savings on gains from the sale of their properties because of the coronavirus pandemic.
Like-kind real estate exchanges, also known as 1031 exchanges (after the provision in the Internal Revenue Code), allow investors to sell a commercial property and pay no tax on the gains as long as the money from that sale is reinvested in other real estate. It could be a similar building, land or even air rights.
To reap the benefit, real estate investors need to identify a replacement property 45 days after the sale of the original property and close on the purchase within 180 days. If the criteria are met, the investors can defer taxes on the gains from the sale of the property. The deferral can extend until the investor’s death, at which point the capital gains tax is wiped out.
If the criteria are not met, the investors face not only an enormous tax bill for the gains but additional taxes for deductions taken while they owned the building. That can amount to millions of dollars for some properties.
As lockdowns complicated closing deals, the real estate industry lobbied the Treasury Department to get extensions on those dates. But once the relief was granted, deals began to fall apart.
Mortgage rates may be appealingly low, but people shopping for a new home this spring face a challenging market.
Demand, which was pent up during coronavirus stay-at-home orders, and a dearth of homes for sale are keeping prices high and setting off bidding wars in some areas as states continue to reopen for business. Some buyers may also find it tougher to qualify for mortgages, as lenders require higher credit scores and bigger down payments in response to higher unemployment and economic uncertainty in the pandemic.
Nationally, the median price for a home, excluding new construction, was about $287,000 in April, up more than 7 percent from a year earlier, the National Association of Realtors reported.
Now, with many states lifting restrictions on home tours, the housing market is reawakening. Shoppers are feeling more comfortable visiting properties: About two-thirds of people who attended an open house within the past year said they would attend an open house now “without hesitation,” a separate survey from the Realtors association found.
But some sellers remain cautious. They want to show homes by appointment only, and they want offers from serious buyers who have been preapproved for financing, said Lawrence Yun, chief economist with the association. “They don’t want casual shoppers,” he said.
Black Americans have always had a more difficult time in the job market. The latest evidence arrived on Friday when the government reported that 21 million Americans were unemployed in May.
The jobless rate for whites dipped to 12.4 percent, but the rate for African-Americans rose to 16.8 percent, meaning that nearly 1.4 million black men and nearly 1.7 million black women were part of the labor force but without work. The Hispanic jobless rate improved from April but was 17.6 percent.
Hiring prospects for African-American and Latino workers have long been hobbled by factors that stretch from poorer educational options and lopsided incarceration rates to outright discrimination by employers.
As Jerome H. Powell, chair of the Federal Reserve, explained at a news conference in April, “Unemployment has tended to go up much faster for minorities, and for others who tend to be at the low end of the income spectrum.” The coronavirus pandemic has only amplified the problem.
The current economic crisis has struck black and Latino families particularly hard in several ways. They are more likely to work in the service industries that were the first to be hit by layoffs, and less likely to work in white-collar jobs that can be done safely from home.
Since the pandemic, fewer than half the blacks who are 16 and older have a job. Latino unemployment rates are higher than any other racial or ethnic group.
Catch up: Here’s what else is happening.
-
Dunkin’ Donuts said on Monday that it planned to hire up to 25,000 new workers at its franchises to deal with an influx of customers as states start to reopen. Dunkin’, which has 8,500 restaurants in the United States, said about 90 percent of its locations were now open.
Reporting was contributed by Jessica Silver-Greenberg, Jesse Drucker, David Enrich, Patricia Cohen, Stanley Reed, Ben Casselman, Jason Karaian, David Gelles, Ann Carrns, Matt Phillips, Paul Sullivan, Carlos Tejada, Katie Robertson and Kevin Granville.
Credit: Source link
