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Hundreds of flights axed as US kicks off long holiday weekend

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Travelers pick up their baggage while arriving at Ronald Reagan Washington National Airport in Arlington, Virginia, on July 2, 2022
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Airlines struggling to staff their planes cancelled hundreds of US flights Saturday at the start of a long and almost certainly messy holiday travel weekend.

As of mid-afternoon, with Americans gearing up for July 4 Independence Day celebrations, more than 600 flights within, into, or out of the United States had been cancelled, and more than 3,300 were delayed, according to flight tracking service flightaware.com.

The numbers on Friday were grim as well, with 587 US flights scrapped among a global total of 3,061 cancellations, the site said. Sunday was also looking problematic, with more than 100 flights already cancelled.

The airport chaos is prompting a record level of road travel by Americans seeking to dodge flight trouble, a travel industry group said. 

For days, amid a surge in travel as summer rolls in, horror stories have abounded as travelers were stranded at airports, enduring odysseys to reach their destinations.

The airline industry was devastated in the early stages of the Covid-19 pandemic as people stayed close to home, but air travel has rebounded as health measures were eased.

And although federal Covid-19 relief spared airlines from laying off staff, tens of thousands of workers left the industry after carriers urged early retirement.

Today’s industry has about 15 percent less staff compared with the pre-pandemic period to handle around 90 percent of pre-2020 passenger volume, analysts at Third Bridge consultancy estimated.

– ‘Pilots are getting fatigued’ –

The travel chaos has drawn scrutiny from Transportation Secretary Pete Buttigieg and others in Washington.

On Saturday, Buttigieg tweeted a series of tips on what to do if one’s flight is cancelled, such as whether to accept travel points or miles as compensation, or demand a cash refund.

“You can often negotiate on this. That’s between you and the airline,” Buttigieg wrote.

The travel season is at full speed, with 2,490,490 people screened at airport checkpoints nationwide on Friday, the most since February 2020 right before the Covid shutdown in the US, the Transportation Security Administration said.

“We are back to pre-pandemic checkpoint volume,” the TSA tweeted.

Delta pilots walked informational picket lines at several airports Thursday to demand a new contract and complain of overwork, among other issues.

“Quite frankly, it’s irresponsible scheduling, over scheduling. Coming out of the pandemic, we’re scheduling more flights than we have people to fly them,” Delta pilots association union leader Jason Ambrosi told CNN on Saturday.

“The pilots are getting fatigued, quite honestly,” Ambrosi said. 

They do not want to strand travelers or crew members, he added, “but it’s a safety issue.”

Lack of pilots is the most acute problem in a broad airline industry labor crunch, said Third Bridge analyst Peter McNally.

“There’s no short-term fix,” McNally told AFP. “The issue becomes most pronounced during these seasonal peaks.”

Airlines say they’re working to address the situation, recruiting pilots and other staff and trimming summer seat capacity by 15 percent.

While acknowledging the pilot shortage, airline industry officials point to other exacerbating factors, including turbulent weather, increased staff absences due to Covid and insufficient flight traffic control personnel at some sites.

For the long Independence Day weekend, a record 42 million Americans will also travel by road at least 50 miles (80 kilometers) from home, despite soaring gasoline prices, the American Automobile Association said.

The travel hassles affecting the airline industry may be fueling the heavy road traffic, it noted.

“Traveling by car does provide a level of comfort and flexibility that people may be looking for given the recent challenges with flying,” said AAA Travel senior vice president Paula Twidale. 

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No recession in Switzerland this year: chief economist

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The Swiss economy is 'doing well' despite the impact of the war in Ukraine on energy prices, the country's chief economist said
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Switzerland does not expect to dip into recession this year despite the threat of an energy supply squeeze, the government’s chief economist said Sunday.

The Swiss economy is “doing well” despite the impact of the war in Ukraine on energy prices, Eric Scheidegger told the SonntagsZeitung newspaper.

He said it was down to companies to steel themselves for the possibility of power shortages in the winter months.

“We may have to revise our economic forecast downwards for next year. The revised forecast will be published on September 20. However, we do not expect a recession for this year,” Scheidegger said.

“We run the risk of an energy supply bottleneck in winter. If there are persistent production interruptions in the EU and we ourselves have a gas shortage, it becomes problematic.

“In our negative scenario, we expect zero growth for 2023 instead of growth of almost two percent.”

Despite the threat of power shortages and the effects of the war in Ukraine, Scheidegger does not see a serious economic crisis heading towards Switzerland.

“At present, the economy is still doing well. Current indicators show that the economy in this country also developed well in the second quarter — after the outbreak of the war in Ukraine,” he said.

“Economic support measures such as general perks or tax relief are currently therefore neither necessary nor helpful,” he added.

– ‘Foreseeable events’ –

Scheidegger said the Swiss economy was less susceptible to high energy prices than other European countries as gas accounted for only five percent of its total energy consumption.

He said the government would discuss possible measures to curb high energy prices in the coming weeks, which could involve reducing health insurance premiums for low-income households.

The State Secretariat for Economic Affairs official said the help for businesses during the Covid-19 pandemic could not become the norm during economic downturns.

“It’s been known since spring that there can be a power shortage in winter. Companies have time to prepare for this,” he said.

“Companies can, and must, take this operational risk into account… it is up to companies to prepare for foreseeable events.”

As for inflation, he said Switzerland was “an island of bliss” compared to the United States, and inflation was likely to fall before the end of the year.

“At 3.4 percent, inflation is much lower here than in other countries.  Core inflation — inflation excluding fresh food, energy and fuel — is at two percent,” he said.

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Markets struggle as strong US jobs boost Fed rate hike bets

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Attention turns to US inflation data this week after a forecast-beating jobs report put fresh pressure on the Federal Reserve to continue with its aggressive pace of interest rate hikes
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Asian markets struggled Monday and the dollar held big gains as a blockbuster US jobs report ramped up bets that the Federal Reserve will announce more sharp interest rate hikes as it tries to tame runaway inflation.

While the employment reading — which was more than twice as high as expected — indicated the world’s top economy remained resilient despite rising prices and borrowing costs, it will complicate the bank’s plans to tighten monetary policy.

Traders have hoped that with several indicators pointing to a slowdown, including GDP figures showing a technical recession, policymakers could begin to ease back on their pace of rate hikes.

Now, speculation is growing that the Fed will have to announce a third successive 75 basis-point increase next month, particularly as officials have said their decisions will be data-dependent.

“Friday’s payroll report indicates an overheated labour market that continues to tighten further,” said SPI Asset Management’s Stephen Innes.

“Hence at minimum, the markets expect another 100 basis points of Fed funds rate increases over the next three meetings… with risks skewed towards significant increases.”

All eyes are now on the release this week of US July inflation data, which is expected to show a slight slowdown from June but still at four-decade highs.

The “report seems very unlikely to offer ‘compelling evidence’ of a slowdown needed for the Fed to pull away from its aggressive inflation-fighting mode.” Innes added.

The jobs figures left Wall Street’s main indexes mixed Friday, and Asia followed suit with markets fluctuating in early trade.

However, there was some relief that tensions had calmed since Nancy Pelosi’s visit to Taiwan last week sparked a furious reaction from China that saw it conduct days of live-fire military drills around the island.

Hong Kong dipped along with Sydney, Seoul, Singapore, Taipei, Manila, Jakarta and Wellington.

Tokyo edged up and Shanghai was flat, with better-than-expected Chinese trade data offset by fresh worries about Covid lockdowns in the country that threaten the economic recovery.

The prospect of higher interest rates sent the dollar surging, and it held on to those gains in Asia.

Bets on a recession across leading economies continued to weigh on oil prices as investors worry about the impact on demand — figures last week indicated Americans were driving less now than in summer 2020 at the height of the pandemic.

A rise in US stockpiles was partly responsible for a 10 percent drop in the commodity last week, pushing WTI below $90 for the first time since February.

Both main contracts have lost all the gains seen in the wake of Vladimir Putin’s invasion of Ukraine, which led the United States and Europe to ban imports of Russian crude, hammering already thin supplies.

– Key figures at around 0230 GMT –

Tokyo – Nikkei 225: UP 0.2 percent at 28,241.09 (break)

Hong Kong – Hang Seng Index: DOWN 0.6 percent at 20,072.68

Shanghai – Composite: FLAT at 3,227.00

Euro/dollar: DOWN at $1.0181 from $1.0184 Friday

Pound/dollar: DOWN at $1.2071 from $1.2075

Euro/pound: UP at 84.35 pence from 84.32 pence

Dollar/yen: UP at 135.32 yen from 135.00 yen

West Texas Intermediate: DOWN 0.2 percent at $88.87 per barrel

Brent North Sea crude: DOWN 0.3 percent at $94.68 per barrel

New York – Dow: UP 0.2 percent at 32,803.47 (close)

London – FTSE 100: DOWN 0.1 percent at 7,439.74 (close)

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Japan’s SoftBank reports record quarterly net loss

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SoftBank's big stakes in global tech giants and volatile new ventures have made for unpredictable earnings
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Japan’s SoftBank Group on Monday reported a record quarterly net loss of $23.4 billion, after central bank interest rate hikes caused tech shares to tank.

The telecoms firm that has turned into an investment behemoth posted a net loss of 3.16 trillion yen, nose-diving from a net profit of 761.5 billion yen in the same April-June period the previous year.

A weaker yen and the “global downward trend in share prices due to growing concerns over economic recession driven by inflation and rising interest rates” contributed to the slump, it said.

Among its portfolio companies that suffered large losses for the quarter were South Korean e-commerce giant Coupang and US meal delivery platform DoorDash, SoftBank added.

SoftBank’s big stakes in global tech giants and volatile new ventures have made for unpredictable earnings, and it has lurched between record highs and lows in recent years.

In May, it reported its worst-ever full-year net loss — and a then-record quarterly loss for Q4 — after a bruising year in 2021-22 that saw its assets hit by a US tech share rout and a regulatory crackdown in China.

That came after logging Japan’s biggest-ever annual net profit in 2020-21, after people moved their lives online during the pandemic, sending tech stocks soaring.

And in 2019-20, SoftBank Group reported a then-record annual net loss of 961.6 billion yen, as the emergence of Covid-19 compounded woes caused by its investment in troubled office-sharing start-up WeWork.

Hideki Yasuda, senior analyst at Toyo Securities, told AFP the company “cannot help” big losses, “because the market is down”.

The company “faces a very tough situation in the immediate term”, Yasuda said before the earnings announcement.

“They have to wait for the market to rebound. You have to look at the company through the lens of long-term investment. It may experience one or two bad years, but over a decade or more, the world economy will keep growing and it could grow further.”

The US Federal Reserve and many other central banks have announced aggressive rate increases aimed at battling sky-high inflation linked to the Ukraine war and Covid-related supply chain woes.

But going against the grain, the Bank of Japan has stuck to its long-held monetary easing policies because it sees the latest price hikes as temporary.

This has pushed Japan’s currency down to 24-year lows against the dollar in recent months, driving down the yen value of SoftBank’s investments.

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