Business

NEW YORK — United Airlines reached an agreement to purchase 25 more Boeing 737 MAX aircraft for delivery in 2023, the carrier said on Monday, in a sign of an expected post-coronavirus travel industry recovery.

The contract brings United's total order book on the MAX to 188 and also represents a vote of confidence in the jet, which was grounded for 20 months following two fatal crashes, but cleared by regulators to resume service late last year.

United also plans to move up deliveries of 40 previously ordered MAX planes to 2022 and five others to 2023, the company said a securities filing.

The contracts come amid a prolonged industry downturn during COVID-19 restrictions.

Passenger volumes are still under 50 per cent from year-ago levels, according to government statistics. That marks a big improvement from the worst days of the pandemic, but carriers are still burning cash. 

Both United and American Airlines have notified thousands of employees of possible lay-offs at the end of March when federal payroll support funding from Congress runs out.

United is advocating in Washington for additional federal funding to sustain the jobs, said Chief Operating Officer Andrew Nocella in a note to employees announcing the MAX orders.

"We need to make aircraft orders more than a year in advance of taking delivery," Nocella said. "And as the end of the pandemic nears and vaccines continue to roll out, today's fleet announcement helps position us to meet the demand we expect to see in 2022 and 2023 and puts us on a path toward more opportunities for our employees in the future."

"Choosing the right investment opportunities at the right time helps us secure that brighter future and is a down payment on our future success," Nocella added.

Shares of United surged 5.3 per cent to $55.44 in early trading, while Boeing surged 6.9 per cent to $226.48.

By Glenn Chapman
Agence France-Presse 

SAN FRANCISCO — Twitter plans to offer a subscription service in which users would pay for special content from high-profile accounts, part of an economic model to diversify its revenue, the company said on Thursday.

The globally popular social media platform announced the potential new Super Follows service at its annual investor meeting, as it searches for new revenue streams beyond targeted advertising.

"Exploring audience funding opportunities like Super Follows will allow creators and publishers to be directly supported by their audience and will incentivize them to continue creating content that their audience loves," a Twitter spokesperson noted.

Top Twitter executives discussed Super Follows while outlining goals and plans for the near future during the streamed presentation.

"We are examining and rethinking the incentives of our service — the behaviours that our product features encourage and discourage as people participate in conversation on Twitter," the spokesperson said.

Super Follows was described during the presentation as a way for Twitter audiences to financially support creators and receive newsletters, exclusive content and even virtual badges in exchange.

Twitter, which currently makes money from ads and promoted posts, might be able to add additional revenue via the Super Follows transactions.

Creative Strategies analyst Carolina Milanesi was not convinced people will be inclined to pay for special content on Twitter.

Such a model makes sense for content on platforms like YouTube, where hours of craftsmanship might be devoted to producing entertaining videos, but it is debatable whether the same could be said for tweets on Twitter, she said.

No timeline was given for when Super Follows might become a feature, but it is expected that the tech giant will make further announcements in the coming months.

Building communities 

Twitter is also considering allowing users to join communities devoted to topics via a feature seemingly similar to Facebook's "groups".

Twitter aims to reach a milestone of 315 million "monetizable" users in 2023, a steep increase from the 192 million it had at the end of last year, according to a filing with US financial markets regulators at the Securities and Exchange Commission.

The San Francisco-based firm defined monetizable users as people who log in daily and can be shown ads.

Twitter, like Google and Facebook, makes most of its money from digital advertising.

The company said it is aiming for $7.5 billion in revenue in 2023, more than double the $3.7 billion it took in last year.

Twitter also plans to double "development velocity", meaning the number of new features it releases per employee to get people to engage more with the service.

Apple bite? 

Twitter revenue product lead Bruce Falck told analysts that the tech company was mindful of a potential crimp in revenue that could be caused by new privacy labels Apple is mandating for apps on its mobile devices.

App makers are concerned that the labels will discourage users from allowing collection of data used to more effectively target ads.

"It's still too early to tell exactly how this will impact the industry, but it will be felt by the entire industry," Falck said, adding that Twitter was innovating to soften the blow.

Twitter's plan to boost revenue also includes getting more involved in online commerce.

"Imagine easily discovering and quickly purchasing a new skincare product, or trendy sneaker from a brand new follow with only a few clicks," a Twitter executive told analysts.

An area where Twitter is additionally looking to make money is Fleets, a recently added feature where posts and conversations vanish after a day.

MILAN — The G-20 looked closer to an agreement on Friday on a global digital tax after a change of heart from the United States removed a key stumbling block in the discussions. 

Under previous president Donald Trump, the US had insisted on a so-called safe harbour clause that would have effectively allowed big tech companies to comply voluntarily with a digital tax, blocking progress on a deal.

But in a videoconference with G-20 colleagues, new US Treasury Secretary Janet Yellen said her country "will engage robustly" in the talks and "is no longer advocating for 'safe harbour'", a Treasury official said.

A global digital tax would target US Internet giants such as Amazon, Facebook and Google, which have long been accused of exploiting loopholes to minimise their tax bills. 

Negotiations on the issue, held under the auspices of the Organisation for Economic Cooperation and Development, have been deadlocked, with the United States and European Union on opposing sides of the argument.

Yellen's announcement suggests that a deal by mid-2021, as pledged by a G-20 summit in Saudi Arabia last year, is now possible, the French and German finance ministers both said.

Italian Economy Minister Daniele Franco — whose country holds the G-20 presidency — said a deal could "hopefully" be struck at a July 9-10 meeting of G-20 finance ministers and central bank chiefs in Venice.

Vaccines and debt problems 

Friday's video conference had a broader purpose of aligning G-20 countries' plans to relaunch their economies after the coronavirus pandemic and to limit the harm to the worst-off nations shut out of the race for vaccines.

Washington urged wealthy G-20 countries to launch a truly global, coordinated vaccination campaign.

"Without access to vaccines, low-income countries in particular will experience further tragic loss of life and needlessly delay their economic recoveries," Yellen wrote in an open letter to her G-20 finance counterparts.

Yellen also signalled openness to issuing new so-called Special Drawing Rights at the International Monetary Fund (IMF) to less developed countries, reversing another Trump position.

Several G-20 countries have already suggested the move, after the financial instruments — which can be exchanged for US dollars, euros, Chinese renminbi, Japanese yen or British pounds — proved their worth as crisis firefighting tools in 2009.

But Italy's Franco said there was no substantive progress on this front. He also signalled there was no decision on a further extension of a moratorium on debt interest payments for the poorest countries, currently set to expire on June 30. 

According to World Bank President David Malpass, the moratorium has so far been less effective than hoped, because the private sector and the China Development Bank have not come on board.

So far, just 46 of the 73 eligible countries have delayed debt interest payments worth a total of $5.7 billion.

Threat of 'Great Divergence' 

The debt question concerns minuscule amounts compared with the $14 trillion mobilised by G-20 countries to reboot their own pandemic-hit economies.

The recovery "from the worst recession since World War II" will be "long and uncertain", IMF chief Kristalina Georgieva warned in an interview with Italy's La Stampa newspaper.

"The prospects for recovery are diverging dangerously across countries", against the backdrop of "a slow rollout of vaccines even as new mutations are spreading", she said.

"So, my deepest concern is that the Great Lockdown of 2020 could morph into a Great Divergence in 2021 and beyond," Georgieva added. 

The IMF has forecast a 5.5 per cent rebound in worldwide gross domestic product this year, followed by 4.2 per cent growth in 2022.

The G-20 gathering also covered international finance issues, because even though markets have proved resilient through the health crisis, borrowing costs have risen sharply since early February.

The European Central Bank, however, issued a reassuring message on Friday, as its executive board member Isabel Schnabel said it could broaden its support for the economy in case of a sharp rise in interest rates. 

SYDNEY — Australian carrier Qantas reported on Thursday a $5.5 billion plunge in revenue during the second half of 2020 and said international passenger flights would not resume until October as the pandemic continued to devastate the industry.

The country's biggest airline said it suffered an underlying pre-tax loss of Aus$1.03 billion ($814 million) in the six months to December 31, with statutory losses climbing to Aus$1.47 billion.

"These figures are stark, but they won't come as a surprise," said Qantas CEO Alan Joyce.

"A year ago, none of us knew just how big an impact Covid would have on the world, or on aviation. It's clearly worse than anyone expected," he said.

"Border closures meant we lost virtually 100 per cent of our international flying and 70 per cent of our domestic flying -- three-quarters of our revenue -- around Aus$7 billion -- went with it."

Joyce noted that the company had already seen revenue fall Aus$4 billion during the first half of 2020, bringing the total impact of the pandemic to Aus$11 billion.

"That is a massive number, probably a bigger number than any other company in Australia is experiencing because of Covid," he told a news conference.

Joyce pushed back the expected resumption of international passenger flights from July to the end of October, but said the cost of keeping those planes on the ground was largely being offset by increased freight operations.

With Australia's successful containment of the pandemic, Qantas flagged a return to 60 per cent of pre-Covid domestic capacity by the end of March and 80 per cent by the end of June.

Qantas had posted a $1.9-billion loss for the year ending June 30 as the coronavirus pandemic gripped the global economy.

Joyce said a total of 8,500 staff would lose their jobs due to the crisis, and another 7,500 would remain suspended until the resumption of international flights.

Around 100 planes have also been grounded as part of a Aus$10 billion cost-cutting blitz and restructuring effort that Qantas said would save it Aus$1 billion a year from 2023.

LONDON — London's Heathrow airport dived into a pre-tax loss of £2 billion last year, a result that "underlines the devastating impact of COVID-19 on aviation", it said on Wednesday.

The loss, equivalent to $2.8 billion or 2.3 billion euros, reflected a 73 per cent plunge in passenger numbers, Heathrow said in a statement.

The airport, one of the world's busiest hubs, recorded a pre-tax profit of £546 million in 2019.

Heathrow Chief Executive John Holland-Kaye, who said passenger levels shrunk in 2020 to levels last seen in the 1970s, voiced optimism for the year ahead with Britain vaccinating millions of adults and preparing to exit its virus lockdown.

"We can be hopeful for 2021, with Britain on the cusp of becoming the first country in the world to safely resume international travel and trade at scale," he said in the earnings statement.

"Getting aviation moving again will save thousands of jobs and reinvigorate the economy."

Heathrow last year had 22 million passengers compared with 81 million in 2019.

More than half of the 22 million travelled in the first two months of last year, before the pandemic took hold and governments worldwide implemented national lockdowns.

Heathrow's revenue meanwhile tumbled 62 per cent to £1.2 billion in 2020, while cargo volumes slid 28 per cent.

Heathrow said it has £3.9 billion of liquidity, enough to see it through until 2023. 

The airport's last financial year was notable also owing to Britain's supreme court ruling that it could build a third runway. 

The court in December struck down a Court of Appeal ruling that the UK government had failed to take into account climate change commitments when in 2018 it approved the new runway.

Heathrow on Wednesday said it remains "focused on de-carbonising aviation".

The airport is owned by a consortium led by Spanish construction giant Ferrovial.

It also includes sovereign wealth funds from China, Singapore and Qatar as well as North American shareholders.

Despite remaining one of the world's largest airports, Heathrow was last year overtaken by Paris Charles de Gaulle as Europe's top hub in terms of passenger numbers — blaming its relegation on delayed coronavirus testing and travel restrictions.

By Andrew Beatty 
Agence France-Presse

SYDNEY — Facebook said on Tuesday it will lift a ban on Australian news and pay local media companies for content, after a last-gasp deal on pending landmark legislation.

Australia's Treasurer Josh Frydenberg announced a face-saving compromise that will see Google and Facebook plunge tens of millions of dollars into the struggling local news sector.

In return the US digital firms will, for now, avoid being subjected to mandatory payments that could cost them vastly more and create what they see as an alarming global precedent.

Just hours after the compromise was unveiled, Facebook announced its first proposed deal with an Australian media company, Seven West, and was said to be pursuing commercial deals with other local news organisations.

The company is expected to use the content to launch a dedicated news product in Australia later this year.

"As a result of these changes, we can now work to further our investment in public interest journalism, and restore news on Facebook for Australians in the coming days," said Will Easton, managing director of Facebook Australia.

The social media firm sparked global outrage last week by blacking out news for its Australian users in protest at the proposed legislation, and inadvertently blocking a series of non-news Facebook pages linked to everything from cancer charities to emergency response services.

Prime Minister Scott Morrison had angrily accused Facebook of making a decision to "unfriend" Australia.

Google has already brokered deals worth millions of dollars with local media companies, including the two largest: Rupert Murdoch's News Corp. and Nine Entertainment.

Commentators described the eleventh-hour amendments — which came as parliament looks set to pass the law this week — as "a reasonable compromise".

"Everybody can walk away saying, well we got what we wanted," University of New South Wales business professor Rob Nicholls said

Both companies now have an additional two months to reach further agreements that would stave off binding arbitration.

Precedent-setting 

The tech firms had fiercely opposed the legislation from the get-go, fearing it would threaten their business models.

In particular, the companies objected to rules that made negotiations with media companies mandatory and gave an independent Australian arbiter the right to impose a monetary settlement.

That process will now be avoided if companies are deemed to have made a "significant contribution" to the Australian news industry through unspecified "commercial agreements".

"We now face the strange possibility that the news media mandatory code could be passed by parliament and it applies to precisely no one," said Marcus Strom, head of the Media Entertainment and Arts Alliance, a union.

"It will just sit in the Treasurer's [drawer] as a threat to misbehaving digital companies."

Google was also keen to avoid creating a precedent that platforms should pay anyone for links, something that could make their flagship search engine unworkable.

Facebook — which is much less reliant on news content — had initially said being forced to pay for news was simply not worth it and shut down content.

"There is no doubt that Australia has been a proxy battle for the world," said Frydenberg.

Critics of the law say it punishes innovative companies and amounts to a money grab by struggling but politically connected traditional media.

Thousands of journalism jobs and scores of news outlets have been lost in Australia alone over the past decade as the sector watched advertising revenue flow to the digital players. 

For every $100 spent by Australian advertisers today, $49 goes to Google and $24 to Facebook, according to the country's competition watchdog.

Tech insiders see the legislation as driven, in particular, by Rupert Murdoch's News Corp., which dominates the local media landscape and has close ties with Australia's conservative government.

A new provision in the law gives Facebook and Google more discretion over who they do deals with, and what the sums involved would be.

"We have come to an agreement that will allow us to support the publishers we choose to, including small and local publishers," said Facebook Vice President for Global News Partnerships Campbell Brown.

Facebook and Google could still face the prospect of having to replicate deals with media worldwide, as the European Union, Canada and other jurisdictions move to regulate the sector.

Since their emergence around the turn of the century, Google and Facebook have been largely unregulated and have grown into two of the world's largest and most profitable companies.

But a string of scandals about misinformation, privacy violations, data harvesting and their virtual monopoly on online advertising has triggered the attention of watchdogs.