The daily business briefing: May 28, 2020

1.

Boeing said Wednesday that it would lay off more than 6,000 employees this week to reduce costs as the coronavirus crisis hammers the air travel industry. The cuts are part of a push to trim 10 percent of the company’s 160,000-plus workforce through voluntary departures and layoffs. CEO Dave Calhoun said in a note to employees that Boeing had finished the voluntary-layoff phase, with 5,520 people choosing to go. “And now we have come to the unfortunate moment of having to start involuntary layoffs,” he said. “We’re notifying the first 6,770 of our U.S. team members this week that they will be affected.” Thousands more will be let go over the next several months. [CNBC]

2.

Secretary of State Mike Pompeo on Wednesday notified Congress that the Trump administration no longer considers Hong Kong to enjoy a meaningful degree of autonomy from China. Pompeo is required under a 2019 law to certify that Hong Kong maintains sufficient freedom to justify keeping the special trading status that has helped the former British colony remain a global financial hub since it returned to Chinese rule in 1997. Pompeo’s decision also raises the possibility of sanctions against Chinese officials. China’s National People’s Congress on Thursday approved a proposed security law that would let Beijing more overtly control Hong Kong. Thousands of people gathered outside Hong Kong’s legislature on Wednesday to protest the security law and a proposal to criminalize disrespect for China’s anthem. [The Washington Post, The New York Times]

3.

U.S. stock index futures rose ahead of the start of trading Thursday, leaving them poised to add to two days of strong gains. Futures for the Dow Jones Industrial Average were up by 0.4 percent. The S&P 500 was flat and Nasdaq futures edged down several hours before the opening bell. On Wednesday, the Dow surged by 2.2 percent. The S&P 500 and the Nasdaq rose by 1.5 percent and 0.8 percent, respectively. The Dow went into Thursday up 4.4 percent since trading resumed after the long Memorial Day weekend as states continued lifting coronavirus lockdowns, boosting hopes of an economic rebound. [CNBC]

4.

Economists expect the Labor Department to report Thursday that more than 2 million Americans filed initial applications for unemployment benefits for the 10th straight week. Analysts are watching the report for indications of how quickly the economy can recover from two months of widespread business shutdowns due to the coronavirus pandemic. The numbers appear to be remaining high because state and local governments are being forced to cut staff as some businesses make a second round of layoffs. “If that is the case, given the pace of reopening, we could be in for an extended period of extraordinary high unemployment,” said Joel Naroff of Naroff Economics in Pennsylvania. “And that means the recovery will be slower and will take a lot longer.” [Reuters]

5.

American Airlines on Wednesday notified employees that it planned to cut its management and administrative staff by 30 percent. The company is trying to reduce costs to shore up its finances after demand fell due to the coronavirus crisis. American plans to eliminate more than 5,000 of its 17,000 management and support jobs. The company will let volunteers take buyouts through June 10, then make forced cuts if necessary. In a letter to employees, Elise Eberwein, American’s executive vice president of people and global engagement, wrote that the company “must plan for operating a smaller airline for the foreseeable future.” American will keep the employees on its payroll through the end of September under the terms of the billions of dollars’ worth of federal aid it has received. [The Wall Street Journal, CNBC]

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