fortune--2020-03-30--Bailouts vs. bankruptcy: Coronavirus lessons from the 2008 financial crisis

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The economic collapse of 2008 triggered some of the most high-profile bankruptcies in U.S. history, including those of Lehman Brothers, General Motors, and Washington Mutual. Now, in the face of the even larger crisis brought about by the coronavirus, other big companies are bracing for a similar fate.
“Bankruptcy lawyers across the country and the world are preparing for an onslaught,” says Marc Levinson, senior counsel at the law firm Orrick.
The full onslaught is several months away, predict Levinson and other experts, who say companies and lenders are still trying to assess the magnitude of the current crisis, as well as the government response to it. But the nature of the coronavirus means financial catastrophe is inevitable for many companies in sectors like travel, hospitality, and entertainment.
Some of the hardest-hit companies may be forced to liquidate. But more are likely to opt for Chapter 11 bankruptcy. Under Chapter 11, a company can renegotiate the terms of its debts and contractual obligations with suppliers and employees, through a process overseen by a federal bankruptcy judge. A successful Chapter 11 reorganization can prevent a company from having to go out of business if its revenue plummets—making it a potentially invaluable tool during a crisis like the current one.
The good news is that government policymakers and the U.S. bankruptcy regime are better prepared than in 2008–09 to weather the impending wave of business failures. But the current crisis will also present political leaders with hard choices about whether to bail out certain industries with grants and loans—as Congress is set to do for the airline industry—or instead rely on Chapter 11 in hopes of restoring them to financial health.
Different from Lehman
The sudden bankruptcy of the investment bank Lehman Brothers on Sept. 15, 2008, became one of the signature moments of the financial crisis, casting shocked traders in expensive suits abruptly onto the streets of Manhattan. Lehman’s chaotic collapse also helped spur the broader economic upheaval that became known as the Great Recession.
“The consensus among most bankruptcy scholars is the handling of Lehman was bungled,” says Ed Morrison, a law professor at Columbia University. “It was allowed to fail in a spectacular way, and created uncertainty about the other banks.”
Morrison says the chaos of Lehman’s collapse came about because policymakers were slow to address the underlying cause of the bank’s distress—the seizing up of credit facilities, which created a liquidity crisis that meant Lehman couldn’t meet its borrowing obligations. Government dithering also produced a climate of uncertainty that exacerbated the economic fallout.
Eventually, the Federal Reserve and the Treasury Department devised tools—primarily in the form of backstops for lending—to prevent the collapse of other banks, and to ensure liquidity in the markets. But by the time those tools were deployed, the wider economy had been battered.
In the present crisis, the Federal Reserve has been nimble in deploying the policy tools it developed in 2008 to mitigate the economic fallout. These include emergency lending facilities that will buy up student and corporate debt, as well as mortgage-backed securities.
All of this—along with post-2008 “stress tests” that have required banks to maintain larger cash reserves for emergencies—have helped forestall a Lehman-style meltdown in the financial sector.
This has been doubly important since some Chapter 11 “safe harbor” provisions, which prevent creditors from seizing a bankrupt company’s assets, don’t extend to financial firms. “The bankruptcy code is not very good for saving banks. When Lehman filed, bankruptcy offered little shelter, and creditors were free to rip it apart,” Morrison says.
This is not the case for the likes of retailers, movie theaters, casinos, and vacation providers—all of which face exposure to bankruptcy in the coming months if they are unable to source new liquidity, according to Gary Holtzer, who cochairs the restructuring practice at Weil Gotshal & Manges.
Holtzer says his phone is already ringing constantly with big companies inquiring about how to terminate contracts, deploy lines of credit, and, more generally, brace for what’s to come.
The case for bankruptcy
Congress has prepared a $2 trillion rescue package for the U.S. economy, which includes hundreds of millions of dollars in aid for airlines and other distressed industries. While the plight of these businesses is obvious, not everyone believes aid from Congress is necessary.
“It’s a mistake for policymakers to be as averse to bankruptcy as they seem to be,” says Morrison, the Columbia law professor. “Why do we need bailouts when we have a ready-made solution to airline distress called Chapter 11?”
Morrison notes that an orderly bankruptcy allows firms to maintain operations and clean up their balance sheets and, in many cases, become profitable in the future. He cites the 2009 bankruptcy of General Motors as the “poster child” for Chapter 11, notwithstanding the influence of politicians and unions on the process.
Jared Ellias, a bankruptcy scholar at UC Hastings College of the Law, points to another Chapter 11 filing from 2009—that of mall operator General Growth Properties—as particularly instructive for the present crisis. He describes GGP at the time as a “best in class” company and explains that its $30 billion bankruptcy filing shielded it from opportunistic creditors who hoped to foreclose on its properties and sell them for a markup when the financial crisis passed. Instead, GGP weathered the crisis by means of Chapter 11, reducing its debt load and spinning off some of its assets into a new company.
In the current crisis, Ellias suggests that GGP’s successful bankruptcy process could provide a road map for ski resorts, cruise operators, hotels, and other industries facing devastating financial losses. Meanwhile, recent changes to the bankruptcy code mean a streamlined version Chapter 11 is available to many more small businesses. According to Levinson, the Orrick attorney, the small-business regime is available to companies that don’t report to the SEC and have less than $2 million in debt.
In the case of big companies, there may also be a moral case for using Chapter 11 rather than government bailouts to weather the coronavirus shock. Morrison points out that government-backed rescues for the airlines and other industries would stick every American taxpayer—including low-income ones—with any losses that arise. By contrast, a bankruptcy filing typically means it is shareholders who absorb the losses. Morrison suggests the latter outcome is more fair, since shareholders signed on for such a risk in the first place.
Morrison and others also point out that airlines, casinos, and other companies currently facing the coronavirus shock have gone through bankruptcy before and could do so again.
But despite the practical and moral arguments in favor of letting big companies go bankrupt, there are powerful political ones against doing so. These include the job losses and other disruptions that Chapter 11 typically entails. Meanwhile, Morrison notes that the current President has pegged much of his administration’s success to the stock market indexes—and that those indexes would decline if a series of major American companies were to file for bankruptcy.
What lies ahead
While the bankruptcies of the last financial crisis provide lessons for the current one, experts note that there is simply too much uncertainty right now to make confident predictions. Part of this uncertainty, of course, relates to the extent of the economic damage the virus will inflict, while part of it surrounds the response of the U.S. government—though details of that response, including the massive stimulus package, have become clearer in recent days.
There is a further source of uncertainty, however, that makes the future fate of troubled companies even harder to predict. This relates to the possibility that some of the changes wrought by the pandemic and social distancing will permanently alter how consumers live, work, and shop.
Ellias, the UC Hastings professor, notes that demand for everything from office space to seats at restaurants could be very different once the coronavirus has passed. This means that creditors and restructuring experts, who rely on evaluating the future value of assets, will be skittish about pushing companies to enter bankruptcy until they can assess what their revenues might look like after the crisis.
Another factor that makes the current crisis different from the last one is the degree to which big companies have globalized their operations, says Holtzer, the Weil lawyer. He predicts the coronavirus crisis could lead firms to consolidate production in parts of the world where governments offer favorable economic terms and declare bankruptcy, or simply pull out of other regions.
A combination of bailouts and bankruptcy are likely to help most of the hardest-hit companies survive the coronavirus crisis. But their businesses may also look very different in the future.
“It’s hard to know what’s on the other side. History teaches us that when things are snapped together, they won’t look like they did when all this began,” says Ellias.
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fortune--2020-03-30--Coronavirus could put 47 million people out of work, says the Fed

Macy ’ s has ‘ lost the majority of our sales ’ and will furlough most employees

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The coronavirus pandemic may result in more than 47 million people losing their jobs by the end of June, according to the St. Louis branch of the Federal Reserve.
An analysis from economist Miguel Faria-e-Castro estimates the nation could see an unemployment rate of 32.1% in the second quarter of 2020, which would handily top the Great Depression’s peak of 24.9%.
The only bright spot in those numbers? Experts say they expect the downturn would be brief in comparison.
The numbers, which Faria-e-Castro calls “back of the envelope” estimates, focus on two categories: the 808 occupations considered high-risk, including sales, production, and food services (employing an estimated 66.8 million people) as well as the 27.3 million who work in jobs that require proximity to others, such as hairstylists and flight attendants.
The 47 million figure was an average of the two categories.
“This negative shock does not equally affect all businesses, sectors, or occupations. Many workers in professional services, for example, are able to work from home and continue their activities with minimal disruption,” he writes. “Others—who work in occupations that involve direct physical contact with customers, such as restaurant waiters—are likely to see their jobs affected by social-distancing measures.”
There are some caveats, such as businesses potentially sending workers home with pay instead of laying them off, as well as the impact of any fiscal changes (such as those to unemployment insurance) between now and June.
“These are very large numbers by historical standards,” said Faria-e-Castro. “But this is a rather unique shock that is unlike any other experienced by the U.S. economy in the last 100 years.”
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fortune--2020-03-30--The Coronavirus Economy: How the private jet business changed overnight

Mark Green, the CEO of British private-jet charter agent Volanteus, has been in the business for 25 years. During that time, he has experienced two significant dips—after 9/11 and during the 2008 financial crisis—but nothing like the coronavirus crisis.
Fortune spoke with Green for a new series, The Coronavirus Economy, to ask about how COVID-19 has affected his business, now completely reorienting its efforts, and to get a sense of how he has been handling this news, both emotionally and financially.
Mark Green, the CEO of British private-jet charter agent Volanteus, has been in the business for 25 years and has experienced significant dips but nothing like the coronavirus crisis. Courtesy of Mark Green
Fortune: What has changed in your business since the crisis struck?
Green: The dynamic changed almost overnight. Historically, it doesn’t take a genius to work out that the private jet sector is used by high-net-worth individuals, and commercial jet chartering has historically been larger groups—such as football fans. [Now] everything we are doing, literally everything, is the repatriation of citizens of various nations going home, whether that be cruise ship staff flying home to the Philippines, or gas workers flying to London from Africa or Aberdeen.
Even leisure travelers—we had about 25 passengers at a golf tournament down in Marrakech. They had all their flights canceled at Marrakesh Airport. We repatriated them back to the U.K. All those scheduled flights were canceled. Everything we’re doing at the moment is repatriation, for a thousand different reasons.
So would you say your niche is doing well at the moment?
In the short term, our charter industry is doing a lot better because those scheduled services have curtailed a lot of their routes, and some airlines have even stopped flying entirely. We’re then able to step in and use those airlines’ [planes].
For example, British Airways may have stopped a lot of their flying, but the Foreign and Commonwealth Office have been using those airplanes to repatriate people. Our industry is able to utilize that spare capacity. Historically, British Airways tends not to have a great deal of availability, whereas now…the availability is much greater.
What is the outlook in the medium term?
In the short term, it is very busy. In the midterm, I think it will be able to slow down. There will still be a lesser need for medical supplies, pharma—humanitarian flying. That business is still going to be there, but I think there will be quite a dramatic slowdown. In my personal opinion, it will be two or three months before the slowdown begins to pick up again.
We’re an agent, which means we charge a fixed, commissionable rate. We are finding with a lot of the private jet companies, because they know it’s going to slow down, the aggregate price has risen considerably. They realized they can sell their aircraft [capacity] right now, but in two to three weeks probably not.
They still have crew to pay for, maintenance and so on. The government won’t be bailing them out. So the prices of the private jets have gone up over the last few weeks—but we see this all the time. In summertime, the prices go up; in winter the air companies are coming to us asking for business.
Are the current price rises in line with that typical seasonal bump?
Maybe a bit higher. On average, in winter it’s minus 10%, in summer plus 10%. Now it’s possible just a little over 10% [up].
Do you think you’ll see wealthy individuals hiring more private jets because regular services are grounded?
That could be a thing. There’s an awful lot of new business coming out of this crisis. For example, an oil company that historically wouldn’t charter a private jet for second-tier or third-tier or even menial workers—those people are struggling to get themselves home, so they charter a couple of flights.
You could call it corporate or certainly employee responsibility, chartering a private jet to ferry six or seven people home. It may be costing them 10,000 pounds [$12,230] a seat, but what’s it going to cost to keep them down there? Obviously a company spending 60,000 pounds on bringing six workers back from Africa to the U.K. has to have certain level of wealth, but it also shows character and common sense and goodwill.
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fortune--2020-03-30--Macy’s has ‘lost the majority of our sales’ and will furlough most employees

Coronavirus could put 47 million people out of work , says the Fed

The coronavirus nightmare is only getting worse for Macy’s.
The department store chain said on Monday that it was keeping its stores closed until further notice and would furlough most of its 130,000 employees starting this week as the pandemic’s outbreak continues to batter its business.
“We have lost the majority of our sales due to the store closures,” Macy’s said in a statement, noting that staffing will be kept at the levels of “the absolute minimum workforce needed to maintain basic operations.” Macy’s, which also owns Bloomingdale’s and Bluemercury, gets about 25% of revenue online and noted that its online teams would see proportionally fewer furloughs.
A Cowen & Co analysis of Macy’s finances last week estimated the company’s monthly labor costs were $227 million (about evenly split between stores and corporate offices) and that the company had enough cash to withstand five months without revenue from stores.
The company closed its stores on March 18 and had hoped to reopen them on Tuesday, but they will remain closed until “we have clear line of sight on when it is safe to reopen,” Macy’s said.
Across the country, many state and local governments have ordered nonessential retailers to close in the hopes of curbing the spread of the virus, while many malls have shuttered too. On Sunday, President Trump extended the voluntary shutdown through April 30.
In the past two weeks, Macy’s has taken steps to shore up its liquidity, such as halting dividends and share buybacks and tapping its line of credit, as well as working with vendors to cancel some orders and negotiate new terms. But the situation has become dire: Macy’s has had to do more, given the alarming drop in revenue.
Even at a company like Target, which is open for business, sales of clothing and accessories like shoes fell 20% this month, as shoppers have focused on essentials rather than the fashion items that are Macy’s bread and butter.
The crisis comes at a fraught time for Macy’s and adds to an already painful attempt at reinventing itself: Last month it announced a turnaround plan that included laying off 2,000 corporate office workers (10%) and closing 125 namesake stores (20%).
The company suffered the indignity of having its corporate debt downgraded last Thursday by Moody’s Investor Services because of the disruption brought on by the virus and its impact on Macy’s already wobbly balance sheet.
Still the largest U.S. department store company despite its problems, Macy’s saw comparable sales fall 0.8% last fiscal year, suggesting continued market losses. The company had initially expected sales by that metric to fall between 1.5% and 2.5% as it implemented its turnaround, but it has withdrawn that forecast due to the uncertainty in its business.
Macy’s said in early February it planned to reinvent several of its own store brands with ambitions to make them billion-dollar labels. It also unveiled a new prototype store in Dallas about one-eighth the size of a regular Macy’s more focused on trendy clothes and serving food. But with its increasingly compromised finances, any project requiring capital investments is now threatened.
The growing doubts about Macy’s prospects have slammed its shares, which are down 79% from their levels a year ago.
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fortune--2020-03-30--Johnson & Johnson hopes to have its promising coronavirus vaccine approved by early 2021

Johnson & Johnson stock rocketed up 7% in early Monday trading after the company announced its experimental coronavirus vaccine could be used for human testing by September—and possibly approved under emergency authorization by early 2021.
“Based upon our early data, we feel confident that we have got a very good candidate,” Johnson & Johnson CEO Alex Gorsky told Fortune.
J&J’s COVID-19 vaccine sprang from a partnership with the Biomedical Advanced Research and Development Authority (BARDA), an arm of the federal Department of Health and Human Services. The two groups have pledged $1 billion toward coronavirus vaccine development.
Gorsky said the vaccine also came from a development platform the company had invested in a decade ago. “The underlying technology turn out to have much broader application than we anticipated,” he said.
Johnson & Johnson hopes to move into early-stage trials by the fall, gathering initial data by the end of the year, and have doses available for wider use by early 2021 under a Food & Drug Administration (FDA) emergency use authorization.
To prepare for that possibility, Gorsky said the company is also significantly scaling up its manufacturing capabilities for the coronavirus vaccine candidate.
“For us to have an impact in a meaningful time, we have to start ramping up our production. That’s what we are doing in the U.S.,” he said.
As for pricing? The company says that its vaccine would be provided affordably to the public “on a not-for-profit basis for emergency pandemic use.”
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fortune--2020-03-30--Social distancing creates $8 trillion in economic benefits, study says

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As the coronavirus pandemic continues to worsen, some people are worried that continued forced social distancing could be disastrous for the U.S. economy. But a pair of researchers at the University of Chicago say it could ultimately save the country $8 trillion.
Michael Greenstone and Vishan Nigam, in a working paper on the university’s Becker Friedman Institute for Economics’ website, base their estimate on a simulation of the spread of COVID-19. That model, from Imperial College London, projects social distancing could save 1.7 million lives between March 1 and Oct. 1.
“Using the projected age-specific reductions in death and age-varying estimates of the value of a statistical life (VSL), we find that the mortality benefits of social distancing are over $8 trillion or $60,000 per U.S. household,” the researchers say.
Even if the virus ultimately proves to be less aggressive than models suggest, the benefits remain. The researchers say if the peak of daily death rates is 60% below the Imperial College model, social distancing will still have benefits totaling $3.6 trillion.
To put the numbers in perspective, $8 trillion is more than one-third of the U.S. gross domestic product—and larger than the current federal budget. And the economists note that the figure likely underestimates the benefits of social distancing, since it doesn’t account for other variables, like the spread of other illnesses beyond the coronavirus.
Greenstone and Nigam do concede, though, that there is some guesswork in their estimate, but that’s because there’s a lack of hard data to analyze at present.
“While it is tempting to undertake a full cost-benefit analysis of social distancing, this would require reliable estimates of its substantial costs,” they wrote. “We are unaware of comprehensive estimates of these costs, and their development is beyond the scope of our analysis, so the paper cannot go further than developing an estimate of the gross benefits of social distancing.”
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—The $2 trillion coronavirus stimulus package isn’t green, but it helps
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—WATCH: World leaders and health experts on how to stop the spread of COVID-19
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fortune--2020-03-30--A startup is building computer chips using human neurons

One of the most promising approaches to artificial intelligence is to try to mimic how the human brain works in software.
But now an Australian startup has gone a step further. It’s actually building miniature disembodied brains, using real, biological neurons embedded on a specialized computer chip.
Cortical Labs, based in Melbourne, is hoping to teach these hybrid mini-brains to perform many of the same tasks that software-based artificial intelligence can, but at a fraction of the energy consumption. Currently, the company is working to get its mini-brains—which so far are approaching the processing power of a dragonfly brain—to play the old Atari arcade game Pong, Hon Weng Chong, the company’s cofounder and chief executive officer, said.
The benchmark is significant because Pong was among the early Atari games that DeepMind—the London-based A.I. company known for its work with artificial neural networks, software that in some ways mimics the functioning of human neurons—first used to demonstrate the performance of its A.I. algorithms in 2013. That demonstration helped lead to Google’s purchase of DeepMind the following year.
Cortical Labs uses two methods to create its hardware: It either extracts mouse neurons from embryos or it uses a technique in which human skin cells are transformed back into stem cells and then induced to grow into human neurons, Chong said.
These neurons are then embedded in a nourishing liquid medium on top of a specialized metal-oxide chip containing a grid of 22,000 tiny electrodes that enable programmers to provide electrical inputs to the neurons and also sense their outputs.
Right now, Cortical Labs is using mouse neurons for its Pong research.
“What we are trying to do is show we can shape the behavior of these neurons,” Chong said.
Although it is starting with Pong, a task Chong said he thinks Cortical Labs will be able to master by the end of the year, he added that the company’s hybrid chips could eventually be the key to delivering the kinds of complex reasoning and conceptual understanding that today’s A.I. can’t produce.
The company’s method, if it proves scalable, also offers a potential solution to one of the most vexing problems facing deep learning: It is extremely energy intensive.
AlphaGo, the deep-learning system DeepMind created to play Go and which beat the world’s best human player in that ancient strategy game in 2016, consumed one megawatt of power while playing the game, enough to power about 100 homes for a day, according to an estimate by technology company Ceva. By contrast, the human brain consumes about 20 watts of power, or 50,000 times less energy than AlphaGo used.
Karl Friston, a neuroscientist at University College London renowned for his work on brain imaging, as well as the theoretical underpinnings of how biological systems, including collections of neurons, self-organize, saw a demonstration of Cortical Labs’ technology earlier this year and said he is impressed with the company’s work.
Aspects of Cortical Labs’ system are based on Friston’s work and the research of some of his students, but the neuroscientist has no affiliation with the Australian startup.
Friston said he always assumed his ideas about how neurons organize would be used to build more efficient neuromorphic computer chips—hardware that tries to mimic how the brain processes information much more closely than today’s standard computer chips do. The idea of trying to integrate biological neurons with semiconductors is not, Friston said, an idea he’d anticipated.
“But to my surprise and delight they have gone straight for the real thing,” he said of Cortical Labs’ use of real biological neurons. “What this group has been able to do is, to my mind, the right way forward to making these ideas work in practice.”
Using real neurons avoids several other difficulties that software-based neural networks have. For instance, to get artificial neural networks to start learning well, their programmers usually have to engage in a laborious process of manually adjusting the initial coefficients, or weights, that will be applied to each type of data point the network processes. Another challenge is to get the software to balance how much it should be trying to explore new solutions to a problem versus relying on solutions the network has already discovered that work well.
“All these problems are completely eluded if you have a system that is based on biological neurons to begin with,” Friston said.
Chong, a former medical doctor who had founded a previous health technology company, began researching ways to create hybrid biologic-computer intelligence systems about two years ago, along with his cofounder and chief technology officer, Andy Kitchen.
Chong said the pair were interested in the idea of artificial general intelligence (AGI for short)—A.I. that has the flexibility to perform almost any kind of task as well or better than humans. “Everyone is racing to build AGI, but the only true AGI we know of is biological intelligence, human intelligence,” Chong said. He noted the pair figured the only way to get human-level intelligence was to use human neurons.
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fortune--2020-03-30--USPS warns it might have to shutter by June as $2 trillion coronavirus stimulus package provides no

USPS warns it might have to shutter by June as $2 trillion coronavirus stimulus package provides no funding

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
Fifty years ago, a postal worker strike halted mail delivery. The eight-day strike, carried out by 150,000 letter carriers across 30 cities, prompted then-President Richard Nixon to declare an emergency and send in the National Guard to deliver mail.
“The United States Postal System is a vital element of our entire communications system. The poor depend heavily upon it for medical services and also for government assistance,” Nixon said in an address to the nation. “Veterans depend on it for their compensation checks. The elderly depend on it for their Social Security checks.”
Today, the Postal Service is just as essential: It delivers about 1 million lifesaving medications each year and serves as the only delivery link to Americans living in rural areas. Working with other delivery services like UPS, the agency supports $1.7 trillion in sales and 7.3 million private sector workers year, and this year will prove essential to delivering the 2020 Census to citizens as well as any vote-by-mail initiatives. The USPS is the federal government’s most favorably viewed agency, with an approval rating of 90%.
Yet once again, the USPS is in crisis mode.
With a negative net worth of $65 billion and an additional $140 billion in unfunded liabilities, the USPS originally expected to run out of liquidity by 2021 without intervention. That has accelerated rapidly because of COVID-19. Fewer people and businesses are sending mail because of the outbreak, which could hasten the decline of the Postal Service and close its doors as early as June, officials warned.
“The coronavirus crisis is wreaking havoc on the Postal Service. Without immediate action by Congress and the President, the Postal Service—a vital staple of American society since 1775—could cease to exist by this summer,” House Committee on Oversight and Reform chairwoman Carolyn Maloney (D-N.Y.) told Fortune by email. “This is a national emergency. We cannot afford to wait until June.”
Without government intervention, the post office is facing the same hurdle as other businesses are right now: There’s not enough cash to keep operations going.
First class and commercial mail volume, which brought in about $41 billion in revenue in fiscal year 2019, has dropped at a rapid clip since the virus spread across the U.S., according to the Postal Service. This downward trajectory is expected to continue, with mail volume falling lower than it did during the 1930s Depression. USPS estimates total revenue losses between $8 billion and $17 billion between now and the end of fiscal year 2020 as a result of the crisis.
While package delivery has increased during the crisis, “revenue growth in our package business will never be enough to offset imbalances in the Postal Service’s business model,” said Postmaster General and CEO Megan Brennan in November.
But the USPS has also been hemorrhaging money, largely owing to a piece of 2006 legislation, championed by the George W. Bush administration and congressional Republicans, that requires the Postal Service to pre-fund all future retiree health benefits, amounting to at least $5.5 billion annually. That edict, according to Brennan, has led to 80% of the agency’s losses. As a result of the lack of revenue, the Trump administration has suggested on multiple occasions that parts of the postal service be sold to private industry.
While the post office has not been funded by taxpayer dollars since the early 1980s, some in Congress—on both the left and the right—pushed for a bailout of the Postal Service as part of the recently passed $2 trillion stimulus package, the largest relief package in U.S. history. The original House bill included a $25 billion appropriation intended to help fund the agency and eliminate its $11 billion in outstanding debt. The measure would also eliminate the USPS’s $3 billion annual borrowing cap.
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While the plan passed through the House, the Republican-majority Senate rejected the funding, and the final bill, signed by the President on Friday, only granted the USPS access to a $10 billion Treasury loan—no direct cash.
“A collapse of the Postal Service at this crucial moment would severely undermine both our fight to defeat the COVID-19 virus as well as the effort to stabilize our economy,” said the National Association of Letter Carriers, a postal worker union, in a statement.
Just last week, President Donald Trump said that the Postal Service was essential to keeping goods flowing to households who were self-quarantining. In many areas of rural America, the USPS is the only mail option and provides last mile delivery for private companies. That means that the Postal Service alone will have the ability to adequately distribute the individual stimulus checks that Congress approved for Americans in the bailout package.
“Republicans pressed for hundreds of billions of dollars in massive bailouts to all kinds of large businesses and corporations, including $17 billion to Boeing and other companies. Yet they refused to give the Postal Service anything but increased borrowing authority,” said Maloney. “The White House and Senate Republicans…have wanted to privatize the Postal Service for years, but exploiting the coronavirus crisis in order to do so [is] a new low.”
In total about $500 billion was handed out to private corporations, with no money going to the Postal Service.
A closure of the Postal Service is uncharted territory, but it’s not impossible, said USPS spokesman David Partenheimer in a statement. “The Postal Service remains concerned that this measure will be insufficient to enable the Postal Service to withstand the significant downturn in our business that could directly result from the pandemic,” he said. “Under a worst-case scenario, such [a] downturn could result in the Postal Service having insufficient liquidity to continue operations.”
The USPS currently employs about 630,000 workers, and without funding there could be massive layoffs and the closing of certain offices in rural areas. Congress could also mandate that certain parts of the service be sold to private industry, as the Trump administration has suggested on numerous occasions.
“What would happen tomorrow in the wake of this pandemic if the Postal Service announced tomorrow that they were going out of businesses and they were laying off all their workers?” Rep. Gerry Connolly (D-Va.) asked in a statement.
There is talk of a fourth stimulus package, and Mark Dimondstein, president of the American Postal Workers Union, which represents about 250,000 postal workers, is holding out hope that there will be some support included in the next round of funding.
“It’s absolutely necessary that it include funds—as House proposals earlier this week did—to keep the mail and e-commerce moving until the economy begins to recover,” he said in a statement. “Simply having access to more debt from the Treasury—at the Secretary’s discretion—as included in the third stimulus, is an inadequate solution.”
The Postal Service Board of Governors will convene in a virtual meeting on Wednesday, where they are expected to discuss borrowing more money and how they intend to stay afloat amid COVID-19.
Postal employees are considered essential and will continue to work as the virus spreads across the country.
“It’s outrageous that the stimulus bill passed by Congress doesn’t include any financial support for the USPS, including needed funds to provide for the safety of workers and the mailing public,” said Dimondstein.
As of Friday, the USPS confirmed that 111 of its employees had tested positive for COVID-19. In a letter to its 270,000 members, the National Association of Letter Carriers noted that it had received at least 3,000 complaints from postal workers who did not feel as though their safety was being taken seriously.
Correction, March 31, 2020: A previous version misstated the 2019 revenue for first class and commercial mail.
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—What the coronavirus shutdown means for immigrant workers
—The Supreme Court has shunned technology. Could coronavirus change that?
—Are cash handouts, tax holidays, and bond purchases the global economy’s best hope?
—The workers the U.S. government deems “essential” amid the coronavirus pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-03-30--The pandemic is highlighting the privacy risks of public health

During the Civil War, Abraham Lincoln suspended the writ of habeas corpus, which, if your childhood civics lessons are hazy, entailed temporarily enabling the government to imprison suspected criminals without charging them. I recall being taught Lincoln had acted wisely under dire circumstances. In the dark days after 9/11, when George W. Bush’s government hit pause on various civil liberties to pursue terrorists, critics cast doubt on Lincoln, and Bush, for overreacting and using the crisis an excuse to grab power.
The technology industry is about to be thrust into the middle of the great civil liberties debate of our day: the pandemic-provoked tension between privacy and public health. In a nutshell, everything from cellphone location data to facial recognition to compulsory geolocation apps can be used in various ways to combat the plague. But each represents in some fashion a threat to consumer privacy far greater than the now-quaint debates of the past few years over election meddling and other democracy-endangering nefariousness.
In the way our news cycle flows from Epidemiology 101 to ventilator manufacturing to economic tradeoffs, privacy is about to be all the rage. Fortune’s David Meyer got ahead of the curve last week by comprehensively explaining how different jurisdictions are approaching the issue. Academics weighed in over the weekend in The New York Times and The Wall Street Journal. The Economist opined that “rules with sunset clauses and scrutiny built in can help stop” government overreach.
It’s worth reminding ourselves—and ambitious tech companies—that America’s sixteenth president eventually re-established the constitutional right he suspended. It’s a lesson that plague fighters, who should be given every possible weapon, will need to remember.
***
Have you been confused between Zoom Video Communications, which has brought Brady Brunch-style calls into homes and offices everywhere, and Zoom Technologies, a tiny Chinese distributor of communications equipment? If so, you’re not alone. The latter’s stock has traded wildly alongside the phenomenal rise of the former’s widespread adoption. The U.S. Securities and Exchange Commission has put an end to that by suspending trading in Zoom Technologies. So much for rational markets.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Jonathan Vanian.
NEWSWORTHY
Is this needed or is this “covidwashing?” Government officials are now collecting cellphone location data gleaned from the mobile advertising industry to create an online portal that could help authorities track and manage the spread of the coronavirus, The Wall Street Journal reported, citing unnamed sources. Although the location data has been anonymized, the report cited privacy advocates who are worried that the location-data industry was "‘covidwashing’ what are generally privacy-invading products.”
Big tech lends a hand to the U.K. The United Kingdom’s National Health Service is working with Microsoft, Google, Palantir, and London-based Faculty AI to create a large data repository to help authorities manage the coronavirus pandemic. Amazon will also be contributing cloud computing resources the project, the BBC reported. Digital rights advocates are concerned about the data-collection project, the report said, but the NHS said that once the health crisis alleviates, “data will either be destroyed or returned in line with the law and the strict contractual agreements that are in place between the NHS and partners.”
The potential downsides of the Internet’s makeover. The Chinese government, along with telecom giant Huawei and other Chinese companies, has shown a proposal to the United Nations for a new Internet standard called “New IP,” intended to spur the development of self-driving cars and other cutting-edge tech, The Financial Times reported. Because the proposed technology standard would vastly reshape the Internet, some Western governments including the U.S. are worried that it “would splinter the global internet and give state-run internet service providers granular control over citizens’ internet use.”
Lend some tech support to the elderly. Some older citizens are struggling to adapt to the technological demands brought on by the coronavirus, such as using video-conferencing tools to keep in contact with loved ones, The New York Times reported. The article quoted Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, who said, “If you have an elderly neighbor or family member who might have trouble with their laptop or their phone for this purpose, make yourself available to help.”
FOOD FOR THOUGHT
China has created a large propaganda machine via thousands of fake Twitter accounts and other activities on the social messaging service, a ProPublica investigation found. The goal is for the fake accounts to amplify certain storylines favorable to the Chinese government, with the coronavirus pandemic as one such exploited topic.
ProPublica’s research tracked how the government-linked influence accounts that had targeted political dissidents and the Hong Kong protests turned their focus to the coronavirus outbreak. During the height of the epidemic in China, many of them became cheerleaders for the government, calling on citizens to unite in support of efforts to fight the epidemic and urging them to “dispel online rumors.”
With the epidemic spreading across the world, these accounts have sought to promote the Chinese government’s image abroad and shore up its support at home. One typical recent tweet in Chinese proclaimed: “We were not scared during the outbreak because our country was our rearguard. Many disease-fighting warriors were thrust to the front lines. Even more volunteers helped in seemingly trivial yet important ways.”
Another post in English trumpeted aid the Chinese government recently provided to Italy. It came from the Twitter handle @RNA_Chinese, an account that appears to have been an attempt to fool the casual reader into believing it was coming from the U.S. government-funded broadcaster Radio Free Asia (@RFA_Chinese).
IN CASE YOU MISSED IT
How re-commerce players like Poshmark and eBay are adapting to the coronavirus By Phil Wahba
Apple releases COVID-19 screening app, website By Chris Morris
Instacart workers plan a big nationwide strike on Monday for coronavirus protection By Danielle Abril
Crowdsourcing vs. coronavirus: Inside the global push to 3D-print masks and ventilator parts By Alyssa Newcomb
Apple focuses on what’s next amid coronavirus outbreak By Don Reisinger
Fujifilm antiviral drug emerges as a promising underdog in the coronavirus treatment race By Naomi Xu Elegant
BEFORE YOU GO
If being isolated at home has forced you to start cooking after years of eating out, celebrity chef and “barefoot contessa” Ina Garten is here to help. The endearing cook has been posting numerous food-preparation-and-storage tips via her Instagram account that should come in handy to even those who have forgotten how to make PB&J sandwiches. Her posts include nifty tips like letting food cool to room temperature before packing it in containers, labeling those containers prior to freezing them, and making sure you “defrost food in the fridge overnight rather than on the counter.”
Jonathan Vanian
@jonathanvanian
jonathan.vanian@fortune.com


fortune--2020-03-30--Exclusive: WeWork is selling Meetup to AlleyCorp for a fraction of its 2017 price

WeWork is selling Meetup, the social network that encourages people to get together in person, to AlleyCorp and a team of private investors, the coworking company has confirmed to Fortune.
The sale comes just days after WeWork’s majority owner, SoftBank, announced a $41 billion asset sale to help it weather the downturn in the global economy because of the spread of the coronavirus. Both WeWork and AlleyCorp declined to share the purchase price, but several sources privy to the discussions say it was a fraction of the $156 million that WeWork paid for Meetup in 2017.
“Our decision to divest Meetup aligns with WeWork’s renewed focus on the company’s core workspace business and marks a positive step forward for both WeWork and Meetup,” WeWork’s head of corporate development, Rohit Dave, said in a statement provided to Fortune.
According to AlleyCorp CEO Kevin Ryan, during the past month of the coronavirus pandemic the Meetup brand has become “more important.”
“This is terrible now, but we are going to get in rooms together in the future,” Ryan says. “Also, I have spent lots of quality time with my family the last few weeks, and I am ready to meet other people!”
To wit, as much of the world has stayed inside during the pandemic, Meetup—which was founded in the aftermath of 9/11 as a way for people to connect with their communities—has pivoted to online gatherings, a first in the company’s 18-year history.
“At the end of the day, we wanted someone who was aligned with our mission and deeply cares about human connections,” Meetup CEO David Siegel tells Fortune. “Secondly, [we wanted] someone who could make Meetup stronger from a tech standpoint.”
More than 100,000 niche Meetup topics, ranging from exotic dancing to Javascript tutorials, are now being run online. Siegel said the company had its highest revenue and first profitable month in five years in February, and he believes the business will continue to strengthen as people seek more human connection during a time of crisis.
“Cities are going to open up, and as they open up we will message our organizers and members and say we want you to set a goal for 10,000 Meetups,” Siegel says. “We are going to empower our organizers to get people back out, city by city.”
Siegel says he met with more than 50 prospective buyers before he recommended AlleyCorp, which has launched Internet companies including Business Insider, MongoDB, and DoubleClick, to name a few.
In contrast to WeWork’s growth-at-all-costs mantra, Meetup took a slow and steady approach to expansion, raising $18.3 million over 11 years before it was acquired by the coworking company. WeWork has raised nearly $13 billion since the company got off the ground in 2010. It also took a $9.5 billion bailout from SoftBank last October.
In a letter to investors last week that was obtained by Fortune, WeWork said it “has a strategic plan and a sound financial position.” As of Dec. 31, 2019, the company had $4.4 billion in cash and cash commitments, leaving the company with the “financial resources and liquidity to execute our plan through 2024,” the letter said.
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—Everything you need to know about the coronavirus stimulus checks
—Close to retirement and panicking? How to avoid locking in losses
—How to defer your student loan payment due to coronavirus
—What to do if you’re worried about getting laid off
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-30--Wall Street is quietly telling companies not to draw their loans

The biggest U.S. banks have been quietly discouraging some of America’s safest borrowers from tapping existing credit lines amid record corporate drawdowns on lending facilities, according to people familiar with the behind-the-scenes conversations.
For Wall Street, it’s not an issue of liquidity so much as profitability. Investment-grade revolvers—especially those financed in the heyday of the bull market—are a low margin business, and some even lose money. The justification is that they help cement relationships with clients who will in turn stick with the lenders for more expensive capital-markets or advisory needs.
That’s fine under normal circumstances when the facilities are sporadically used. But with so many companies suddenly seeking cash anywhere they can get it, they’re now threatening to make a dent in banks’ bottom lines.
So far, it seems some corporations are willing to oblige, turning instead to new, pricier term loans or revolving credit lines rather than tapping existing ones. McDonald’s Corp. last week raised and drew a $1 billion short-term facility at a higher cost than an existing untapped revolver. The rationales will vary from borrower to borrower, but market watchers agree that for most, staying in the good graces of lenders amid a looming recession is important.
“The banker is coming at it trying to manage two things—the relationship profitability and their portfolio of risks and assets,” said Howard Mason, head of financials research at Renaissance Macro Research. “Bankers have some cards to play because they can talk to their clients that have undrawn credit lines. The sense is that there’s a relationship involved, so relationship pricing and goodwill apply.”
That’s not to say that liquidity doesn’t factor into the equation for banks at all. While there’s little concern that they won’t be able to meet all the funding needs of their corporate clients, there’s also little appetite to push the envelope.
To that end, U.S. financial institutions have sold almost $50 billion of bonds over the past two weeks to bolster their coffers, and corporate bankers are advising companies not to hoard cash unless they urgently need it. Some are even telling certain clients to hold off on seeking new financing to avoid overstressing a system already stretched to its limits operationally as bankers are inundated with requests while stuck at home because of the coronavirus pandemic.
“The banks are open, but if everybody asks at the same time then it’s going to be difficult from a balance sheet perspective,” Bloomberg Intelligence analyst Arnold Kakuda said in an interview.
Still, the significant capital requirements needed to fund tapped facilities and the strain mass drawdowns put on profitability as bank funding costs rise and the macro backdrop worsens remain the main driver, said the people familiar with the matter.
“The corporate banker doesn’t want everybody to take a hot shower at the same time in the house,” said Marc Zenner, a former cohead of corporate finance advisory at JPMorgan Chase. “They want to use their capital where it’s most beneficial.”
Extra liquidity
Wall Street mainstays including JPMorgan, Bank of America, Citigroup, and Wells Fargo are among the biggest players in the market for investment-grade company loans.
Representatives from all four banks declined to comment.
McDonald’s signed a new revolver and immediately tapped the full $1 billion as a “precautionary measure” to reinforce its cash position, the company said in a regulatory disclosure Thursday. It also priced $3.5 billion of bonds last week as part of its broader liquidity management strategy.
A representative for McDonald’s referred Bloomberg to the company’s recent filings while declining to comment further.
Corporations have other reasons for turning to new, more expensive facilities rather than tapping undrawn revolvers as well.
In addition to the benefit of maintaining extra liquidity via the unused credit lines, it also signals to suppliers and investors that they continue to have access to bank financing.
Paid first
Of course, not every company sees it that way given the current global economic uncertainty.
Many investment-grade borrowers, even ones not directly affected by the COVID-19 outbreak, want as much cash on hand as possible in case credit conditions worsen.
Strains in the market for commercial paper, a type of short-term financing that companies use to make payroll or purchase inventory, are prompting corporations to tap both new and backup credit lines.
Companies in the U.S. have drawn $162 billion from revolving facilities and received $26.1 billion in new revolvers and term loans since March 9, according to data compiled by Bloomberg. General Motors drew down a record $16 billion from its revolvers.
For some, the thinking is “it’s ‘better safe than sorry,” said Jesse Rosenthal, an analyst at CreditSights Inc. “They might believe with all their hearts that the bank has all the liquidity they need, but it’s just fiduciary duty, due diligence, and prudence in a totally unprecedented situation.”
Bankers are including provisions in new deals that ensure they’ll be among the first to be paid back when companies regain access to more conventional sources of financing, said the people familiar with the deals, who asked not to be identified because they’re not authorized to speak publicly.
And for those insisting on drawing down revolvers now, Renaissance Macro’s Mason says banks will ultimately seek to recoup the costs down the line.
“The message to corporate clients is, ‘You can continue to do this, but we are looking at profitability on a relationship business, so if we don’t make our hurdles here we need to make them somewhere else,’” Mason said.
More must-read stories from Fortune:
—Everything you need to know about the coronavirus stimulus checks
—The quickest way to boost the economy isn’t even being considered. Why?
—How does America pay for the coronavirus relief bill? With two shiny coins
—Will the “Great Cessation” be worse than the Great Recession?
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-30--SoftBank’s ambitious internet-via-satellite investment falls to Earth

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As SoftBank seeks to sell some $41 billion in assets to weather through doubters, yet another portfolio company is coming down to earth.
London-based OneWeb raised $3.4 billion from the likes of SoftBank, Airbus, and Qualcomm with an ambitious goal of delivering cheaper internet to the world through satellites. On Friday, it filed for Chapter 11 bankruptcy protection.
“Our current situation is a consequence of the economic impact of the COVID-19 crisis,” Adrian Steckel, CEO of OneWeb said in a statement. OneWeb says it cut 90% of its workforce from 531 to 74 and halted all nonessential operations in filings.
That comes following reports that OneWeb had been in talks with SoftBank to raise as much as $2 billion in funding before the coronavirus outbreak, according to the Financial Times citing sources (which appear to match at least timing wise, in court papers).
According to court filings, OneWeb had been seeking funding as early as 2019. As the coronavirus continued to spread, existing investors told the company on March 12 that they would not commit to a “long-term solution” that could solve OneWeb’s cash crunch. Days later, an attempt to pull together bridge financing also fell through.
According to documents, Softbank is its largest creditor and shareholder, owed $913 million and owning 37.4% of the company.
The spread of coronavirus has been unlucky timing for SoftBank, which is already under intense scrutiny from investors following the unravelling of some major bets last year. Even an activist investor has thrown itself into the fray.
And as many of SoftBank’s other bets suffer (Didi, Uber, WeWork, Oyo, Ola), they will come asking for cash. Which ones SoftBank chooses to back will be defining for its strategy to come.
A double OneWeb burn: CocaCola (yes, that giant soft drink maker) invested in OneWeb in 2015.
At the time, CocaCola spun it as a sustainability play, helping the company reach customers in “some of the world’s remote areas.”
But then roughly a year ago, OneWeb, which had also been touting itself as a way to beam cheap internet to small businesses and schools in developing regions, said it would largely defer that strategy in favor of providing internet access to those that could pay higher fees for such a costly system, at least in the near term: chief among them airlines and cruise operators, per the Wall Street Journal. And we all know how those businesses have fared in the coronavirus times.
Coca Cola’s equity in OneWeb comes up to roughly 1.29%, per the filing.
Strike three and you’re out: A network of thousands of Instacart workers say they plan to strike, frustrated that the company has not provided stronger protection against the outbreak. They say that management has repeatedly ignored their demands, which include company-provided personal safety gear, $5 hazard pay for each order, and access to sick pay for at-risk workers and those who have coronavirus symptoms.
Meanwhile, Amazon employees at a New York fulfillment center plan to strike at noon.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Tiger Global has built a stake in ByteDance, the Chinese maker of viral video app TikTok, per the Financial Times. ByteDance backers include SoftBank and Sequoia Capital. Financial terms weren't disclosed.
- DataGuard, a Munich, Germany-based privacy and compliance software company, raised $20 million in funding, from One Peak.
- Bright.md, a Portland, Oregon-based virtual conference healthcare company, raised $8 million in Series C funding. B Capital and Seven Peaks Ventures co-led the round.
- Air Doctor, a Tel Aviv-based outpatient network that connects travelers with local doctors, raised $7.8m Series A funding. Kamet Ventures led the round.
- IRIS, a London-based maker of headphones, raised £2.5 million ($3.5 million) in funding. Its first round of investors include Mansour Ojjeh, CEO of TAG Group, Roger Taylor, the drummer from band Queen, and Concord.
- Nohbo, a Melbourne, Florida-based sustainable beauty and personal care technology company, raised $3 million in seed funding. Material Impact led the round and was joined by investors including Safer Made and existing investor Mark Cuban’s Radical Investments.
- Lanistar, a London-based fintech company offering debit cards, raised £2 million in seed funding.
PRIVATE EQUITY
- Genstar Capital partnered with insurance industry executives to form Obsidian Insurance Holdings, Inc., a fronting insurance holding company, with $100 million of capital.
- Calera Capital acquired Thayer Power & Communication, a Columbus, Oh.-based repair, maintenance, and upgrade services for the utility and telecommunications industries. Financial terms weren't disclosed.
Private equity firms including KKR and Apollo are showing interest in Germany's national soccer league, DFL, which is exploring options to avoid a liquidity crunch per Bloomberg. Read more.
OTHERS
- The Gauselmann Group, an Espelkamp, Germany-based gaming company, acquired a majority stake in Bede Gaming, a Newcastle upon Tyne, UK-based online gaming platform. Financial terms weren't disclosed.
- Tink, a Stockholm-based open banking platform, acquired Eurobits Technologies, a Madrid-based provider of account aggregation services, for €15.5 million ($19.2 million).
- Glen Eagle Resources Inc. (TSX.V: GER), a Montreal-based company, raised $25 million from GEM Global Yield.
- Pfizer Inc. (NYSE: PFE), the biopharmaceutical giant, said it completed a $1.25 billion ten-year “sustainability” bond paying interest semi-annually of 2.625 percent and maturing April 1, 2030.
- Tegna (NYSE: TGNA), a Tysons, Va.-based station broadcasting group, confirmed that two potential acquirers withdrew offers, citing coronavirus-related market volatility. Gray Television and Apollo Global were the parties that walked away, Reuters reports citing sources. Both offers would have valued the company at about $8.5 billion. Read more.
IPOs
- WeDoctor, one of China’s biggest online health-care startups, has reportedly selected JPMorgan Chase & Co., Credit Suisse Group AG and CMB International to lead its Hong Kong IPO, Bloomberg reports citing sources. The company reportedly hopes to raise $500 million and as much as $1 billion. Read more.
EXITS
- Thomson Reuters agreed to acquire Pondera Solutions, a Folsom, Calif.-based cloud-computing solution addressing fraud, waste, and abuse in government programs, from Serent Capital. Financial terms weren't disclosed.
F + FS
- Riverwood Capital Partners raised $1.2 billion for its Riverwood Capital Partners III fund. Read more.
- L Squared Capital raised $397 million of a $500 million target for its third PE fund. Read more.
- Vickers Venture Partners raised roughly $285.5 million (US$200 million) for its target $713.69m (US$500m) Fund VI. Read more.
- Acorn Bioventures raised $199.5 million for its fund. Read more.
- Founders Fund raised $101.5 million for its Growth Principals fund. Read more.
PEOPLE
- The Chan Zuckerberg Initiative has hired Stas Sokolin as a Principal in the Ventures group.
- Mark Chou, an early employee at Away, left to launch an early stage startup advisory and investing practice, Bradhurst Ventures. Chou plans to invest with his own capital.


fortune--2020-03-30--Tokyo Olympics rescheduled for July 23-Aug. 8 in 2021

The Tokyo Olympics will open next year in the same time slot scheduled for this year’s games.
Tokyo organizers said Monday the opening ceremony will take place on July 23, 2021 — almost exactly one year after the games were due to start this year.
“The schedule for the games is key to preparing for the games,” Tokyo organizing committee president Yoshiro Mori said. “This will only accelerate our progress.”
Last week, the IOC and Japanese organizers postponed the Olympics until 2021 because of the coronavirus pandemic.
This year’s games were scheduled to open on July 24 and close on Aug. 9. But the near exact one-year delay will see the rescheduled closing ceremony on Aug. 8.
There had been talk of switching the Olympics to spring, a move that would coincide with the blooming of Japan’s famous cherry blossoms. But it would also clash with European soccer and North American sports leagues.
Mori said a spring Olympics was considered but holding the games later gives more space to complete the many qualifying events that have been postponed by the virus outbreak.
“We wanted to have more room for the athletes to qualify,” Mori said.
After holding out for weeks, local organizers and the IOC last week postponed the Tokyo Games under pressure from athletes, national Olympic bodies and sports federations. It’s the first postponement in Olympic history, though there were several cancellations during wartime.
The Paralympics were rescheduled to Aug. 24-Sept. 5.
The new Olympic dates would conflict with the scheduled world championships in track and swimming, but those events are now expected to also be pushed back.
“The IOC has had close discussions with the relevant international federations,” organizing committee CEO Toshiro Muto said. “I believe the IFs have accepted the games being held in the summer.”
Muto said the decision was made Monday and the IOC said it was supported by all the international sports federations and was based on three main considerations: to protect the health of athletes, to safeguard the interests of the athletes and Olympic sport, and the international sports calendar.
“These new dates give the health authorities and all involved in the organisation of the Games the maximum time to deal with the constantly changing landscape and the disruption caused by the COVID-19 pandemic,” the IOC said. “The new dates … also have the added benefit that any disruption that the postponement will cause to the international sports calendar can be kept to a minimum, in the interests of the athletes and the IFs.”
Both Mori and Muto have said the cost of rescheduling the Olympics will be “massive” — local reports estimate billions of dollars — with most of the expenses borne by Japanese taxpayers.
Muto promised transparency in calculating the costs, and testing times deciding how they are divided up.
“Since it (the Olympics) were scheduled for this summer, all the venues had given up hosting any other events during this time, so how do we approach that?” Muto asked. “In addition, there will need to be guarantees when we book the new dates, and there is a possibility this will incur rent payments. So there will be costs incurred and we will need to consider them one by one. I think that will be the tougher process.”
Katsuhiro Miyamoto, an emeritus professor of sports economics at Kansai University, puts the costs as high as $4 billion. That would cover the price of maintaining stadiums, refitting them, paying rentals, penalties and other expenses.
Japan is officially spending $12.6 billion to organize the Olympics. However, an audit bureau of the Japanese government says the costs are twice that much. All of the spending is public money except $5.6 billion from a privately funded operating budget.
The Switzerland-based International Olympic Committee is contributing $1.3 billion, according to organizing committee documents. The IOC’s contribution goes into the operating budget.
IOC President Thomas Bach has repeatedly called the Tokyo Olympics the best prepared in history. However, Deputy Prime Minister Taro Aso also termed them “cursed.” Aso competed in shooting in the 1976 Olympics, and was born in 1940.
The Olympics planned for 1940 in Tokyo were canceled because of World War II.
The run-up to the Olympics also saw IOC member Tsunekazu Takeda, who also headed the Japanese Olympic Committee, forced to resign last year amid a bribery scandal.
More coronavirus coverage from Fortune:
—Why Iceland’s approach to coronavirus testing may be better than America’s
—Everything you need to know about the coronavirus stimulus checks
—Glow sticks to surgical masks: Businesses pivot to tackle coronavirus shortages
—The world’s largest coronavirus lockdown is off to a rocky start
—The oil sector is quickly running out of storage for its unprecedented surplus
—The $2 trillion coronavirus stimulus package isn’t green, but it helps
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: World leaders and health experts on how to stop the spread of COVID-19
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-03-30--How GM’s ventilator plan went from Trump praise to doghouse within days

Twelve days ago, General Motors put hundreds of workers on an urgent project to build breathing machines as hospitals and governors pleaded for more in response to the coronavirus pandemic.
But President Donald Trump, claiming the company wasn’t moving fast enough, on Friday invoked the Defense Production Act, which gives the government broad authority to direct companies to meet national defense needs.
Experts on managing factory production say GM is already making an extraordinary effort for a company that normally isn’t in the business of producing ventilators.
“That is lightning-fast speed to secure suppliers, learn how the products work, and make space in their manufacturing plant. You can’t get much faster than that,” said Kaitlin Wowak, a professor at the University of Notre Dame who focuses on industrial supply chains.
GM expects to produce ventilators at a rate of 10,000 per month starting in mid-April. The company is working with Ventec Life Systems, a small Seattle-area ventilator maker, and both say the Defense Production Act of 1950 doesn’t change what they’re doing because they’re already moving as fast as they can, fronting millions in capital with an uncertain return.
“I don’t think anybody could have done it faster,” said Gerald Johnson, GM’s global manufacturing chief.
Peter Navarro, Trump’s assistant for manufacturing policy, said Saturday that invoking the act was needed because GM “dragged its heels for days” in committing to the investments to start making ventilators at an automotive electronics plant in Kokomo, Indiana.
As usual with “this” General Motors, things just never seem to work out. They said they were going to give us 40,000 much needed Ventilators, “very quickly”. Now they are saying it will only be 6000, in late April, and they want top dollar. Always a mess with Mary B. Invoke “P”. — Donald J. Trump (@realDonaldTrump) March 27, 2020
It was only a few days earlier that Trump had been holding up GM and Ford as examples of companies voluntarily responding to the outbreak without the need for him to invoke the act. Then on Friday, he slammed GM on Twitter and during his daily briefing for foot-dragging. On Sunday, he was back to praising the company during another briefing: “General Motors is doing a fantastic job. I don’t think we have to worry about them anymore.”
But GM says it had been proceeding on the same course all along.
The company got into the ventilator business on March 18 after being approached by stopthespread.org, a coalition of CEOs trying to organize companies to respond to the COVID-19 disease that has already claimed more than 30,000 lives globally. The organization introduced GM to Ventec, which makes small portable ventilators in Bothell, Washington.
The automaker pulled together manufacturing experts, engineers and purchasing specialists, and the next day had people at Ventec’s facility, a short distance from a nursing home where the virus killed at least 35 people.
They worked on speeding up Ventec’s manufacturing. A few days later, GM assigned more engineers and purchasing experts to figure out how it could make Ventec’s machines. Some Ventec parts makers couldn’t produce enough widgets fast enough, so GM went to its own parts bin to find suppliers to do the job, Johnson said.
Erik Gordon, a University of Michigan law and business professor, said he thought Trump would commend GM and use it as an example for other manufacturers in the coronavirus fight.
“What came out was a smack on the head,” he said.
Gordon, who teaches a class in commercialization of biomedical goods, said Trump likely will claim credit when GM starts making the machines. “This is an election year, and on all sides you’re going to see political theater,” he said.
Critics have urged Trump to invoke the Defense Production Act broadly to control the production, supply and distribution of ventilators and protective gear for hospital workers who are running short. That’s what the act was meant to do, and it was not for use against a single company, Gordon said.
Even with increased production from all ventilator makers, however, the U.S. might not have enough of the life-saving machines. U.S. hospitals have about 65,000 of the ventilators that are sophisticated enough to treat critical coronavirus patients. It could probably cobble together a total of 170,000, including simpler devices, to help with the crisis, one expert says.
A doctor at the University of Nebraska Medical Center estimates that 960,000 people in the U.S. will need to be on ventilators, which feed oxygen into the lungs of patients with severe respiratory problems through a tube inserted down the throat. Doctors hope social distancing will stop a huge number of people from getting sick simultaneously, flattening the curve of the illness so they can use one ventilator to treat multiple patients.
Trump, in several appearances Friday, accused GM of promising 40,000 ventilators, then reducing the number to 6,000. He also said the company wanted higher prices than previously discussed.
Ventec, which is negotiating with the government to provide more ventilators, said it only changed numbers and prices at the request of government agencies, which asked for a range of quantities and prices. The company said it’s selling the ventilators, which can treat severe virus patients, at distributor cost, and it has offered scaled down versions for a lower price.
Up until late Sunday, Ventec and GM hadn’t known how many ventilators the government would buy but those details are now being worked out.
Ventec isn’t sure if it will make any money on the devices, which generally sell for $18,000 — far less than ventilators used in hospital intensive care units that can cost $50,000. Johnson says GM has no intention of making a profit.
Ventec will need government money to help pay parts suppliers and ramp up its own production from 200 per month to 1,000 or more, said CEO Chris Kiple.
Invoking the Defense Production Act “shined a light” on the need for ventilators, he said, but Ventec can’t move any quicker.
“We’re still moving full speed ahead,” Kiple said. “We know there’s a shortage of ventilators.”
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—WATCH: U.S. tax deadline moved from April 15 to July 15
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fortune--2020-03-30--What kids think about working at home alongside their parents

Good morning, Broadsheet readers! President Trump spars with GM CEO Mary Barra, Dr. Deborah Birx’s history fighting AIDS gives us insight into her coronavirus plan, and kids have thoughts about working from home with their parents. Have a productive Monday.
Today’s guest essay comes to us from Fortune senior writer Michal Lev-Ram.
– Kids’ eye view. The struggle of working from home with three children is real. Just ask my kids.
While plenty of articles have been written about how hard this new, COVID-19 reality is for parents—some days it feels downright impossible to get work done and change diapers (and homeschool!) full-time—not as much attention has been paid to how our children feel about their new day-to-day.
So I decided to find out what they’re thinking, using my kids as my not-so-scientific sample. And guess what? They’re not that thrilled about being home with us either.
“It is hard to study at home because you have 0% friends,” wrote my 10-year-old daughter, a fourth-grader (and yes, I made my children write down their answers so I could justify it as part of “homeschooling”). “When you want to be with your parents, they are working and you get bored very easily.”
My 8-year-old daughter, a third-grader, had a similar take: “Sometimes I wish my mom wasn’t working so she could help me more, but I know her work is important so I don’t mind.” (I’m not proud of it but yes, in a recent moment of desperation, I told her my work is very important. I guess it stuck.)
My third child, a 21-month-old boy, is a little young for writing assignments—and topics that don’t center on snacks or trains. But if I can decipher anything from the fact that his once-normal nap and nighttime schedule has vanished faster than he can chug a bowl of Goldfish crackers, it’s this: He too is having a hard time adjusting to his new, daycare-free reality.
Like us adults, our kids’ lives have been upended. An estimated 55 million American children are suddenly home all day, disconnected from their teachers and friends because of massive school closures. Those lucky enough to dial in to classes via videoconference still have a lifeline to their former routine (an estimated 14% of U.S. families with school-age children don’t have internet access, so online tools don’t help them at all, socially or academically.) But even Zoom can’t give my 10-year-old daughter what she truly craves: throwing a football around at recess.
It’s not only their daily routines that have changed drastically and abruptly. Many children could be internalizing the stress they now feel about the dangers of the virus and worries for their parents or grandparents—they get it, even if they don’t say it.
To be sure, kids also have a delightful way of looking at the bright side.
“I do have more time with my family and my new pet tortoise,” wrote my 8-year-old. (Despite my job being very important, we do get to go on a daily bike ride. As for the timing of the new tortoise, any questions can be referred to her dad.) “And I’m looking forward to spring vacation!”
That reminds me… Anyone read any good parenting articles on how to master spring break while on lockdown? Asking for my kids.
Michal Lev-Ram
michal.levram@fortune.com
@mlevram
Today’s Broadsheet was produced by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Relief response. President Trump signed a $2.2 trillion coronavirus economic relief package on Friday, after Congress rushed to respond to the economic side of the crisis. Everyone from Rep. Liz Cheney to Rep. Alexandria Ocasio-Cortez eventually backed the bill. "This pathogen does not recognize party lines, and no partisan solution will defeat it," Cheney said. Fortune
- Will she save us? Can Dr. Deborah Birx save us from the coronavirus pandemic? That's the question posed by this in-depth profile, which examines Birx's data-driven approach to fighting the AIDS crisis (the story was written by reporter Emily Bass, who's writing a book about the history of the anti-HIV program Birx ran); her unique commitment to domesticity; and gendered criticism she has faced. Washington Post
- Messing with 'Mary B.' President Trump accused General Motors of "wasting time" as the automaker attempts to produce ventilators for the coronavirus crisis, name-checking CEO Mary Barra on Twitter. ("Always a mess with Mary B.") The president invoked the Defense Production Act to require GM to produce ventilators. The company says its commitment to building the supplies "has never wavered." Fortune
- Resale risks. Apparel resale platforms—like Poshmark, co-founded by Tracy Sun, and The RealReal, headed by CEO Julie Wainwright—are facing the sting of the coronavirus crisis, reports Fortune's Phil Wahba. And at The RealReal, warehouse employees worried about their safety are questioning what qualifies as "essential work" during a pandemic, according to the New York Times.
MOVERS AND SHAKERS: The Fox Business Network let go anchor Trish Regan, who said on air in early March that the coronavirus crisis was "an attempt to demonize and destroy" President Trump. The British Museum's appointment of classicist Mary Beard as a trustee, overriding Downing Street's veto, is now official.
IN CASE YOU MISSED IT
- Governors governing. Governors continue to lead the way on coronavirus response plans. Michigan Gov. Gretchen Whitmer is still battling with President Trump and fighting for resources for her state after he said he had a "big problem" with the "young... woman governor" because of her criticism of the federal crisis response. In Rhode Island, Gov. Gina Raimondo instructed state police to enforce strict quarantines of anyone coming to the state from New York.
- Authentically Ayanna. Rep. Ayanna Pressley reflects on her decision to go public with her diagnosis of alopecia and to stop wearing wigs to cover up her hair loss. "It is disconcerting, for many, the presentation of a bald woman," she says in this interview. "But, this feels the most authentically me at this time." Washington Post
- Reading corner. We sent you into the weekend with lots of book recommendations on Friday, but how about a few more? Fortune staff share our current favorites here. The Medium publication Zora offers up 10 books by black women to read in times of uncertainty. The LA Times reviews The Herd, a new mystery by author Andrea Bartz set at a parody of The Wing. And in Vogue, an appreciation of the upcoming Judy Blume film and TV renaissance.
ON MY RADAR
Everyone is home right now, but who’s doing all the 'home' work? Harper's Bazaar
Divorced with kids during a pandemic The Cut
Hello, Dolly! totally gets how much you miss your favorite restaurant Elle
More movies need an Oscar-winning actress reacting emotionally to opera New York Times
PARTING WORDS
"Rather than asking when I’ll get my job back, I’m asking how I can be better."
-Hamilton cast member Justice Moore on Broadway's closure


fortune--2020-03-30--Amazon workers in New York warehouse set to strike Monday on coronavirus safety fears

About 100 Amazon.com Inc. employees at a New York fulfillment center plan to go on strike at noon on Monday, alleging management has been unresponsive to safety concerns and the spread of the coronavirus at the facility.
Employees are demanding that the Staten Island site be closed for at least two weeks and sanitized. The e-commerce giant closed a warehouse in Queens for cleaning after an employee tested positive, as reported by The Atlantic. In addition, they’re asking for workers to be paid during this time, as well as retroactively compensating those who had already stayed home out of fears for their health and safety.
Chris Smalls, a management assistant at the site known as JFK8 and lead organizer of the strike, has worked at Amazon for five years at three buildings in the New York tri-state area. Colleagues began falling ill after Amazon managers came back from a trip to Seattle, Washington, the initial epicenter of the virus in the U.S., according to Smalls.
He left work in the second week of March out of concern for his health. Smalls returned last week to rally support for a work stoppage among the building’s 4,500 employees and reiterate his concerns and recommendations to management.
“What are we waiting for?” he said he told the site’s general manager and head of human resources. “Someone to die?”
He says the company has not been transparent about how many employees at the Staten Island location have tested positive for Covid-19 and have taken insufficient safety precautions, including allowing one of his colleagues to return to work while awaiting her test results.
New York Governor Andrew Cuomo said total deaths for the state as of Sunday reached 965 up from 728 a day earlier. At a briefing in Albany, Cuomo said thousands of state residents will die from the virus, although he did not have precise projections.
“At JFK8, we are working long, crowded shifts in the epicenter of a global pandemic, and Amazon has failed to provide us with the most basic safeguards,” Rina Cummings, a worker at the warehouse, said in a statement. “We are walking out to protest the impossible choice of coming to work at a toxic workplace and possibly spreading the virus or going unpaid during an economic crisis.”
News of the planned strike was first reported by CNBC. Amazon did not immediately reply to an emailed request for comment.
“People need to be held accountable, even Jeff Bezos himself,” Smalls said in a telephone interview. “These buildings all across the globe need to be shut down. We are the breeding ground for the coronavirus.”
Employees have taken to Facebook and Instagram groups to organize the details of the work stoppage and share stories of working conditions, he said.
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—Why Iceland’s approach to coronavirus testing may be better than America’s
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—Glow sticks to surgical masks: Businesses pivot to tackle coronavirus shortages
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—WATCH: World leaders and health experts on how to stop the spread of COVID-19
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fortune--2020-03-30--Where do clothing rental and subscriptions like Rent the Runway fit in a world that works from home?

This article is part of a Fortune Special Report: Business in the Coronavirus Economy—a look at the impact of the pandemic on more than 50 industries.
After signing up for Rent the Runway Unlimited in February, Margit Malcreda quickly became a clothing rental convert. As a public relations professional in New York City, she started using the service for the same reason most of its customers do: to access thousands of designer items for the low cost of $159 a month, or even less with one of the brand’s many promotions. Malcreda would swap her inventory six times a month, receiving up to four new pieces of her choosing with each exchange, and she loved almost everything, so the membership was entirely worth it.
But when the coronavirus pandemic broke out in mid-March and the 26-year-old was ordered to work from home, she began wondering if it made sense to keep paying for the service. “I don’t have a huge use for it at home, and I find myself feeling nervous about where the clothes have been, who has been in them, and the potential for a contaminated garment bag,” she says. “So, I’m really considering pausing, if not canceling, my subscription until the dust settles here in New York.”
Malcreda is far from alone in feeling this way, and in fact, many of the hundreds of thousands of people who use clothing rental services like Rent the Runway are ditching their memberships, or contemplating doing so, during this unprecedented global crisis. With many people nationwide (and around the world) now working remotely and concerns over saving money mounting as the economy continues to take a hit, clothing rental can seem like an unnecessary expense—and one some customers have no problem dropping. Key players in the billion-dollar clothing rental market are aware of this growing trend, and they’re already making attempts to ease members’ anxieties. But even as the threat of cancellations looms, they appear adamant that demand for their services won’t stop.
Even before COVID-19 cases in the United States started to rise, Rent the Runway anticipated that its customers would likely have some questions surrounding the company’s cleaning protocols. In an email sent to members on March 4, the company stated its intent to “proactively provide details and additional transparency” around its cleaning process, noting that all of its garments are steamed at temperatures between 248 degrees and 302 degrees Fahrenheit, a level that kills flu viruses according to the CDC. Rent the Runway also updated the FAQs page on its website to include information about its practices as they relate to COVID-19, and it announced on March 14 that it would close its five brick-and-mortar locations across the country until further notice. The company acknowledges some of its customers may still opt out of its rental services for the duration of the pandemic, instead offering discounts and incentives for those who pause their memberships rather than cancel them outright.
Nuuly is a monthly rental subscription service for women’s apparel. Courtesy of Nuuly
Nuuly, another popular clothing rental service, has taken similar measures, adding details of its COVID-19/coronavirus precautions to its site, with particular emphasis on the 250-degree steaming process that all garments undergo. Nuuly has yet to communicate this information directly to customers. The brand says, however, that it has made it easy to cancel or pause memberships. “Users can choose to pause their subscriptions for one, two, or three months, and they can extend it on a month-to-month basis,” a Nuuly representative tells Fortune. “We know our subscribers are navigating uncertainty right now, so if they choose to pause, we will be here with open arms when they are ready to resume the service. The comfort and safety of our consumers are always a top priority.”
While the rental space has been hit hard by the coronavirus pandemic, other membership-based clothing services have witnessed unexpected changes in their business over the last month. Trunk Club, an online personal shopping platform from Nordstrom that pioneered the try-on model in men’s clothing, sends users a curated selection of up to 10 items on a monthly, bimonthly, quarterly, or on-demand basis and lets them choose which to buy and which to send back. Because customers can adjust the frequency of their trunks at any time and the service itself is free of charge, the company hasn’t really experienced actual cancellations, but it has noticed other emerging trends. “We have seen a lot of customers ask us for more loungewear and athleisure that they can wear while they are working from home,” a Trunk Club spokesperson says. “And some of our stylists are also helping their customers clean out their closets through video chat.”
As more and more studies come out claiming the benefits of getting dressed—even when it’s easier to wear the same pair of sweatpants for days on end—clothing rental companies and stylist services hope that their products will provide a beacon of normalcy to members. Rent the Runway, for example, says that many of its customers are using their rentals for this very reason and that its services can actually be an emotional and mental benefit.
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Carolyn Hsu, who serves as the head of content for Seattle tech company RealSelf, says that her Rent the Runway Unlimited subscription has come in particularly handy during Zoom calls and virtual meetings. “I’m in Zoom meetings throughout the day and usually keep the video on so I feel like I’m in the room with the rest of the team,” she explains. “Regardless of whether I’m physically in the office or in virtual meetings, I usually like to wear something that makes me feel confident in a professional setting.”
Hsu says the coronavirus outbreak has made her rethink some of her consumption behaviors, and she’s been renting clothing at a slower pace and holding onto items for longer as a result. For the time being, though, she says compliments on her top or jumpsuit during Zoom calls still make her unlimited membership worth it.
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—How to get a refund on your Broadway tickets after coronavirus shut down
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—Some of the most extreme ways companies are combating coronavirus
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—Coronavirus may not be all bad for tech. Consider the “stay at home” stocks
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