✈️ Delta’s pilot payout

Tuesday, December 6, 2022 by Robinhood Snacks |
Delta’s jumbo pay day (Michael M. Santiago/Getty Images)

Delta’s jumbo pay day (Michael M. Santiago/Getty Images)

Delta’s jumbo pay day (Michael M. Santiago/Getty Images)

Delta’s jumbo pay day (Michael M. Santiago/Getty Images)

Yesterday’s Market Moves
Dow Jones
33,947 (-1.40%)
S&P 500
3,999 (-1.79%)
Nasdaq
11,240 (-1.93%)
Bitcoin
$16,952 (-1.05%)

Hey Snackers,

Streaming services aren’t known for their creative names (just stick “+” at the end). Warner Bros. Discovery, which plans to merge its HBO Max and Discovery+ streamers in the spring, seems to have finally landed on a game-changing streaming name: “Max.”

Stocks slid deep into the red yesterday as investors digested Friday’s stronger-than-expected labor market data, which could muddy the Fed’s plan to ease rate hikes.

Land

Extra Biscoff cookies for everyone… Yesterday Delta agreed to boost its pilots’ pay by at least 31% in a $7B+ deal that could end years of contract-negotiation clashes. In October, Delta pilots voted to strike if their union and the airline couldn’t reach an acceptable pay agreement. If the salary boost is approved, it’d be the first new pilots’ contract at a big airline since the pandemic began.

  • New terms: Delta pilots would receive an 18% pay bump as soon as the contract is signed, with the rest paid over the next three years.
  • New horizons: If the deal is OK’d, it could become the industry standard for contracts negotiated at rivals like American, United, and Southwest. Meanwhile, travelers may end up paying higher fares for longer.

Failure to launch… US travel is booming again, but pilots have been in short supply after thousands retired during the pandemic. As the industry returns to profitability and daily life gets pricier, pilots want higher comp. But negotiations have been turbulent: last month American Airlines pilots rejected a 19% pay-hike proposal, saying it wasn’t enough. In September, pilots from United, JetBlue, Spirit, Delta, and other airlines picketed at major airports for better pay and more reliable schedules.

THE TAKEAWAY

Higher pay could carry higher risks… Labor costs and fuel are airlines’ two biggest expenses, and most carriers’ costs have ballooned since the pandemic started. Locking in multiyear pay hikes could help keep pilots happy, but could have consequences for airlines if travel demand sinks again in 2023 or ’24, especially with a recession expected on the horizon.

SPACKED

SPAC to square one… Yesterday USDC stablecoin issuer Circle said it was bailing on plans to go public on the NYSE by merging with a special purpose acquisition company, aka SPAC. Circle is well known in crypto circles: its main stablecoin, USDC, tracks the US dollar (1 USDC = $1), and the company says it’s 100% backed by cash and US Treasuries. It’s the second-largest stablecoin by market cap (after Tether) with $43B in circulation. But now Circle’s walking back from its SPAC merger, possibly because it failed to receive the required SEC sign-off.

In love and crypto… timing’s everything. Circle first announced its SPAC plan last year when crypto was booming. Earlier this year, the merger could’ve valued Circle at up to $9B and made it one of the few publicly traded crypto companies. But times have changed:

  • TerraUSD, an algorithm stablecoin, blew up in May (unlike “fully reserved” USDC, it wasn’t backed by cash), and crypto prices have plunged further since FTX’s collapse.
  • While Circle said it had minimal financial exposure to FTX, the SEC might be hesitant to approve crypto-related deals as it sifts through the bankrupt exchange's wreckage.
THE TAKEAWAY

Contagion might not spare the strong… Circle's decision to scrap its public debut reflects the radically changed environment it now finds itself in. Some have asked whether the SEC could’ve done more to prevent FTX's loss of billions in customer funds, and officials are pressuring for stricter regulation. That a profitable, regulated, US-based company chose to walk back its billion-dollar debut shows just how far contagion has apparently spread.

DEFI(NE)

🧑‍🤝‍🧑 If the dollar had a twin who grew up in blockchain country, and spoke fluent crypto…

Stablecoins are a type of cryptocurrency pegged to real-world assets, like the USD. They let people transact on the blockchain while avoiding crypto’s infamous price swings. Some stablecoins are fully reserved, meaning they're 100% backed by cash or cash equivalents. Algorithmic stablecoins, on the other hand, are typically not fully backed, and what backing they do have is usually crypto.

What else we’re Snackin’

  • iDown: Foxconn, which assembles most iPhones, said its sales dropped 11% from last year after shipments from its biggest plant, in Zhengzhou, China, were hampered by a Covid outbreak.
  • Swifties: Dozens of T. Swift fans are suing Live Nation’s Ticketmaster over last month’s ticketing fiasco, which left many unable to snag tour seats. The suit accuses Live Nation of “anticompetitive conduct.”
  • GenAI: Adobe says it’s planning to sell stock images created with generative AI programs like Dall-E and Stable Diffusion, Axios reports. Rival Getty Images has said it won’t accept GenAI images, citing copyright risks.
  • Post: New Zealand says it’s going to require platforms like Google and Meta to pay news publishers for content. It’s similar to legislation already in place in Australia (and that has been proposed in Canada).
  • Out: Nike cut ties with NBA star Kyrie Irving and said it wouldn’t release his new sneakers. Irving was first suspended by the Brooklyn Nets after promoting a movie espousing antisemitic conspiracies and Holocaust denials.

Snack Fact of the Day

Americans now expect they’ll need $1.2M to retire comfortably, up from $1M last year

Tuesday

  • Earnings expected from: AutoZone, MongoDB, HealthEquity, Toll Brothers, Dave & Buster’s, and Stitch Fix

Authors of this Snacks own: shares of Delta and Google

ID: 2624815