8th November 2021
Good morning The world's richest man may be about to lose a chunk of his wealth. On Sunday Elon Musk asked his followers on Twitter whether he should sell 10% of his Tesla stock, worth around $21bn, to pay taxes. It comes as the US government considers a “billionaires’ tax” which would see super-wealthy people pay taxes on assets like stocks and shares, whether or not they have been sold.
Over 3.5m people voted with 57.9% in favour of Musk selling his shares.
- Travel rebound – US reopens billion-dollar door to Brits
- Back pedalling – Peloton loses $8bn in value as gyms reopen
US reopens billion-dollar door to Brits
What’s going on?
From today, after more than 18 months, British travellers will be allowed back into the US. Pre-pandemic the London Heathrow to New York John F. Kennedy route generated $1bn in revenue to British Airways.
Why is this important?
It’s been 600 days since Brits could easily fly across the pond. In March 2020, under President Trump’s administration, the US imposed strict restrictions on most foreign nationals that meant travel could only happen with through a complicated visa process. But in September this rule was revoked by the Biden administration.
This was welcome news to British Airways which is pinning its hope of returning to profitability on the reopening of the transatlantic route.
US booking rates soared by 167% since the November 8 reopening was announced, with new North Atlantic bookings already at 96% of 2019 levels.
The US is BA’s largest market and before Covid generated $1bn in revenue from the Heathrow to JFK route alone.
The closure of the route has driven huge losses in BA’s parent company IAG which says it expects to make a €3bn loss this year amid the continued pandemic travel disruption.
BA cut around a third of its workforce – 10,000 jobs – last year but is getting ready to recruit more staff in preparation for summer 2022.
BA said flights to the US this week are nearly full and that it would restore more services in the coming weeks.
The reopening of the US border to international travellers today is a crucial moment for the airline industry. But with the key summer period in the past and the next one still almost a year away, the question will be who can make it through the slower winter months and survive.
Peloton loses $8bn in value as gyms reopen
Fitness equipment company Peloton was a clear lockdown winner as the closure of gyms led people to work out at home using their products.
The big question was whether the pandemic would lead to a structural change in the way we exercised.
The early answer seems to be that post lockdown people are keen to go back to gyms and work out with others.
Peloton’s revenue grew just 6% over last year, missing targets, and sales for its bikes and treadmills also fell 17% annually.
The company downgraded its revenue forecasts which led to its share price to drop by a third or $8bn, after already falling by over 40% so far this year.
On top of that, existing customers are using Peloton products less. Subscribers finished an average of 16.6 workouts/month last quarter, compared to 20.7 last year.
Peloton blamed rising vaccination rates and the easing of Covid-related social distancing restrictions that encouraged people to go back to gyms, as reasons for the lukewarm results.
Like almost every company now, Peloton is also dealing with supply chain constraints. The global shortage in microchips and rising transport costs have impacted the production and delivery of its bikes, denting profitability.
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