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US companies face widening income gap as wealthy spend and budget shoppers struggle
The consumer economy in America is moving in opposite directions. This gulf in opinion is becoming more apparent among C-suite executives. Premium?brands are benefiting from wealthy customers, while value-focused companies struggle to compete with cash-strapped families. The results of companies such as Ralph Lauren, Tabby, Tapestry handbags, American Express and airlines like United and Delta exceeded expectations for the latest?quarter?. Their affluent consumers spend freely on high-margin products and services. PepsiCo has also reported that Kraft Heinz, PayPal, and PepsiCo are all under pressure from consumers who want to save money and stretch their budgets. The dynamics reflect a deeper K-shaped recovery, where spending power is concentrated at the top. C-suites want to capture that wealthy consumer. According to a Moody's Analytics study based on federal statistics, the top 10% of U.S. households account for almost half of consumer spending. In the early 1980s, these earners accounted for just a little over one-third of U.S. consumers' spending. Many are worried that middle-income households are also starting to fall behind. Bank of America analysts stated that "Middle income households' wage gains appear to have slowed, while higher-income gains continue to be resilient." The split is explained by a simple arithmetic. The inflation has been more severe for lower-income families because they spend a larger portion of their budget on necessities like food, gasoline and rent. This leaves less money for discretionary spending and less cushion for unexpected expenses. In February, the Consumer Sentiment Index at University of Michigan increased to 57.3, its highest level since August last year. The index is still about 20% below the level of January 2025. Joanne Hsu is the director of Surveys of Consumers. She said that "Sentiment surged among consumers who had the biggest stock portfolios. It stagnated for consumers without stockholdings and remained at a dismal level." Companies Shifting Focus The U.S. airline industry is a good example of a sector where big players have shifted their profit engines to the front of the aircraft, by relying on corporate travel and loyalty programs, as well as perks such lie-flat seats, champagne, and other perks. Delta Air CEO Ed Bastian stated that "the strength of the consumer sector lies at the upper end of the curve." The lower-end consumers are struggling. "We are fortunate to not live there." The companies that cater to the mass market will do anything to protect their market share. Steve Cahillane, CEO of Kraft Heinz, said that the "consumer sentiment" has deteriorated. Industry trends have weakened and there's an increase in volatility within the geopolitical environment. PepsiCo has cut the price of snacks like Lay's or Doritos by up to 15 percent after consumers complained about several rounds in which prices were raised. Rachel Ferdinando is the CEO of PepsiCo in the United States. She said, "We have spent the last year listening closely to the consumers and they have told us that they are feeling the strain." Newell Brands cut prices on certain brands as well last week. CEO Chris Peterson stated that the spending cutbacks were particularly harsh on 18-24 year olds who cut back on spending on kitchen storage, stationery and other items. Peterson, Marriott's CFO Leeny Ough and Peterson were among the?executives that expected little to change in the near-term in the K shaped pattern. Mark Zandi is chief economist at Moody's Analytics. He said that the gap between spending by well-off households (the top 20%) and lower- and middle-income families has never been greater and continues to grow. WAGE GROWTH DISARRITY Bank of America's deposit data for January showed that after-tax wage growth was lagging?for lower- and middle income households, with only 0.9% and 1.6% respectively, year-over-year, compared to 3.7% for households of higher income. In a recent note, BofA analysts explained that "while the gap between wage growth for lower-income workers and those with higher incomes isn't growing any more, it is also not shrinking." American Express, which has a wealthier cardholder base, described the demand for premium goods as "very strong." PayPal, on the other hand, noted pressure among its retail merchants, especially those with lower and middle incomes.
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Stellantis warns 225,000 US older vehicles to "Do not drive"
Stellantis, the parent company of Chrysler, issued a "Do not drive" warning for approximately?225,000 older cars in the United States that are fitted with defective Takata airbag inflators. This?warning is for older 'Dodge Ram, Durango and Dakota, Chrysler Aspen, 300 and Magnum, Jeep Wrangler, and Mitsubishi Raider cars that have not been repaired from various model year 2003 through 2016. Since 2009, Takata airbag inflators have caused hundreds of injuries in vehicles made by various automakers. These inflators can explode and release metal shrapnel that can kill or injure drivers. Stellantis?said that the action was taken to speed up the repairs of remaining affected?vehicles in order to protect owners, their family members and the public from serious injury or even death. This stop-drive directive focuses on completing the repairs of?the remaining population," said?Stellantis. The company has completed repairs on over 6.6 million cars, or 95%, that were recalled in excess of a decade. The National Highway Traffic Safety Administration reported that 28 deaths in the U.S. were caused by crashes that involved defective Takata inflators. They also warned that "minor accidents can lead to Takata exploding airbags that can cause death or life-altering and gruesome injury." In the last decade, Takata's airbag inflators were fitted to more than 100 million vehicles worldwide, including 67 million in the United States. This was the largest recall in American history. Honda confirmed in 2024 that 20?U.S. Takata airbag problems have caused deaths in Honda and Acura cars. The problem is attributed to propellants that break down over time after being exposed to high temperatures and humidity. Automakers are urging owners of older vehicles to stop driving until the inflators have been replaced. Stellantis, in November 2022 urged owners to stop driving their older U.S. cars immediately. (Reporting and editing by Alexander Smith; David Shepardson)
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Fuel crisis forces Russia to suspend its airline operations and fly tourists out of Cuba
Rosaviatsia, the aviation regulator in Russia, said that Russia will 'fly its tourists out of Cuba within the next few days and then suspend all flights till a jet-fuel shortage subsides. Both airlines have said that they will only operate passenger flights in order to bring tourists home from Cuba. The?administration of U.S. president Donald Trump has declared Cuba a "unusual and exceptional threat" to U.S. security, and announced that the communist-run Island will no longer be receiving oil from Venezuela. Washington has threatened?impose tariffs on other fuel suppliers like Mexico if they continue to supply fuel to the island. Cuba has warned international airlines that jet fuel will no longer be available in the island from Tuesday. The Russian economy ministry on Wednesday urged tourists to stop all travel to Cuba until the situation is normalized. They also told Russian tour operators that they should suspend sales. (Reporting and Writing by Anastasia Teterevleva, Editing by Andrew Osborn).
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As Valentine's Day flowers arrive, the US trucking industry shows signs of a recovery.
David Armellini, owner of a Florida trucking firm, is paying an extra 20% for each additional driver he hires to transport fresh-cut Valentine's Day Flowers to wholesale florists and grocery distribution centers across the country. If sellers pass on the increased cost, it could result in a slight increase in price for a bouquet at this weekend. Armellini believes that it could be an indication of the end of the U.S.'s longest and deepest trucking slump. Shippers across the United States are paying more to truck flowers, ?fresh ?produce, and other temperature-sensitive cargo, after deep cold this winter hiked demand for the temperature-controlled trucks called reefers needed to protect them from extreme temperatures. According to industry experts, job cuts caused by trucking company bankruptcy and increased immigration checkpoints has also led to a reduction in the number of drivers. Where have all the trucks disappeared? "Where have all the trucks gone?" Rates for Refrigerated Trucks JUMP DAT data revealed that the average January spot rate for moving goods in a refrigerator trailer was $2.81 per miles, an increase of 10% from the previous year and the highest since December 2022 when the pandemic boom in trucking ended. Since April 2022, reefer contract rates were higher than spot rates, but they reached parity in the month of January, signaling a balance between supply and demand. Croke reported that the average increase in off-contract rates for routes departing from Miami, which is the main port of entry for Valentine's Day Flowers, was 40% last week. Around 90% of Valentine's Day Flowers sold in the U.S. are shipped from Ecuador and Colombia, to Miami International Airport. This typically generates around 4,500 chilled truckloads?in the weeks leading up until February 14. Over the past three years, more trucks than there were loads to be carried, lowered rates and erased profits. Armellini said that the trend is changing. "We are starting to see larger?shippers wanting to submit full-year offers, which is an indication that they have seen the market turn. They are locking in prices because they expect them to rise," said Armellini who relies primarily on contracts. Some trucking executives and industry analysts say the strength of the'reefer market may only last a short time once the weather is back to normal. They also point out that the trucking industry as a whole still suffers from low demand by domestic manufacturers and builders. Avery Vise is the vice president for trucking at FTR Transportation Intelligence. DRIVER CRACKDOWN, BITTER COLD The recent Arctic blast boosted the demand for reefers, as shippers of cosmetics, beverages and latex painted used them to shield their cargo from freezing. This left fewer trucks and driver to haul Valentine's Day Flowers. The trucks are also known as refrigerated reefers, but they can keep the cargo warm even when temperatures outside plummet. "The driver pool this year is more selective or picky than last," said Carlos Oramas CEO of Florida's Gems group, which grows flowers and imports them for the?U.S. Grocers Kroger, Wegmans and Walmart. Oramas says that flower shippers are planning ahead to meet their special needs, and they have experienced marginal, but not disruptive, rate increases. The cold weather has reduced the availability of drivers at a time that trucking companies are failing and there is a federal crackdown against immigrant driver. FTR estimates that there are currently 3.5 million heavy-duty truckers in the U.S. This is down by 110,000 from the peak of the industry in early 2023. Truck drivers are included in the Trump administration's crackdown on immigration, which includes efforts to enforce English language proficiency and commercial license?requirements. Texas, Oklahoma Wyoming, and Florida are among the states that have the strictest enforcement. U.S. Customs and Border Protection said it did not have any information on the number detained drivers. CBP is part of Homeland Security and does not share this information. Some drivers are afraid to work Some 'drivers' have been discouraged to work because their colleagues are swept away. Attorneys advise drivers with valid work permit to limit their travel or to stay off the roads to avoid being detained,? said Mannirmal Kaur senior federal policy manager of the Sikh Coalition. The coalition estimates that there are approximately 150,000 Sikhs drivers in the U.S. A California independent long-haul trucker who asked to remain anonymous for fear of repercussions said that increased enforcement has led him to stop driving outside his state. "We can't go because we are afraid of ICE," he stated, referring specifically to U.S. Immigration and Customs Enforcement (ICE), which is overseen by the Department of Homeland Security. Armellini, who is based in Florida, said that he supports efforts to remove unsafe or unqualified motorists from the road. He also believes he stands to gain from the crackdown on regulations. His company, which has about 150 trucks in the U.S. and operates all over the country, hasn't lost any drivers as a result of the crackdown. He said that he received a number of calls from California shippers asking us to transport loads to Florida because many of their carriers would not go to Florida any longer.
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Frontier's outlook for 2026 points to a potential profit from deep cost reductions
Frontier Group, the parent company of Frontier Airlines, issued a forecast on Wednesday that indicated a potential profit for '19, while analysts expected a loss. It is betting on tighter cost controls. The shares of the airline?rose by 4.4% during early trading after it announced it would cancel certain aircraft leases and delay deliveries of some jets in order to reduce capacity and conserve cash. According to the airline, a range of losses ranging from 40 cents to 50 cents per a share in 2026, adjusted, was forecast, with a 5 cent profit at the midpoint. According to data compiled from LSEG, analysts on average predicted a 'loss' of 1 cent per share. Frontier's wide forecast range shows how difficult it is for airlines to predict near-term demand. This is especially true for economy class seats as budget-conscious travelers pull back in the face of a challenging economic environment. Even though rivals who offer premium fares are able to charge higher fares, budget airlines still struggle with high maintenance costs, fuel and crew costs. Frontier's earnings have been boosted by network changes, capacity reductions and better product offerings. The Denver-based airline's adjusted profit per share for the fourth quarter was 23 cents. Street estimates were 12 cents. Frontier has also reached an agreement with AerCap, a lessor of aircrafts to terminate the leases for 24 jets that are currently in service and were otherwise due to expire within two to eight years. It?also struck a deal to delay the introduction of 69 A320neo aircraft, which had been contractually scheduled to be delivered between 2027 to 2030. Frontier finished 2025 with total liquidity of $874 million, including $220 from an expanded revolving loan facility. The airline plans to introduce first-class seating early in 2026, as part of its effort to offer a broader range of?higher margin products than its current all-economy configuration. The airline said that it aims to double its revenue from loyalty to $6 per passenger at the end of 2026. (Reporting and editing by Shilpi Magumdar in Bengaluru)
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AirAsia orders small jets and drops Airbus A330neo
AirAsia X will 'place a large order for small aircraft as it expands its routes and services for 'Asia’s earliest travellers. It has also cancelled the order for 15 Airbus A330neo larger planes. Tony Fernandes said that the choice of regional Airbus or Embraer models will be announced in less than a month, and it is larger than originally reported. Sources in the industry said that it was supposed to be announced by the end of last month. However, they claimed that this order had been 'held up' while budget carrier finished talks about financing or outside investments. Fernandes said, "I believe we are nearing the end of this journey and?within the month we will announce the winning campaign." AirAsia is planning to order 100 Airbus's smallest A220 jets with an option for another 50. Sources claim that the deal may now include 150 firm orders. Fernandes stated that AirAsia was also in the process?of confirming an order for 50 Airbus A321XLR narrow-body long-distance jets. In an interview, the airline entrepreneur spoke after announcing plans for a new Middle East hub with low-fares in Bahrain. Fernandes stated that AirAsia was prepared to resume its growth, but "not by sacrificing margins". FUNDING OPTIONS FOR BOOSTING FLEET Fernandes, when asked how the airline will pay for hundreds new aircraft after it has emerged from financial difficulties said that they would use a combination sale-and leaseback deals and bank loans but would own their fleet rather than leasing them. Sale-and-leaseback agreements, in which lessors buy planes and then rent them back to airlines, have resulted in significant profits for some fast-growing carriers. "That's certainly not my goal." Fernandes replied, "There's a great deal of equity value in there. But I'm doing this not to leverage or trade planes." AirAsia is continuing to reshape the order book. Airbus cancelled an order of 63 A330neo aircraft in 2022 to relieve financial pressure on its largest customer. Fernandes’ decision to cancel a remaining order for 15 A330neos is a reflection of a focus on narrow body jets. However, he didn't rule out the possibility of a future look at Airbus A350 and Boeing 787 jets. Fernandes, who is based in Dublin, acknowledged that the aircraft leasing industry had been through a difficult time, but he dismissed any concerns about funding. He 'confidently' portrays a new chapter for growth, he said. "When you look at what we've achieved, I think it is nothing less than remarkable. In time, I believe those who have suffered a lot - including us - will forget. Profitability can change many things. Airbus refused to comment on negotiations for aircraft. (Reporting and editing by Bernadette B. Baum, Anil D. Silva and Bernadette H. Baum)
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At least 31 people are killed by the Cyclone Gezani that ravages Madagascar.
The country's disaster-management office reported that?Fierce winds? left a?trail?of destruction on Madagascar after?Tropical? Cyclone Gezani struck the island. At least 31 people were killed and another four are still missing. In an updated report, the BNGRC (National Bureau for Risk and Disaster Management) reported that 29 of the deaths occurred in Toamasina - the island nation's second largest city and the most impoverished in the Indian Ocean. Two other deaths occurred in a nearby district. Residents of Toamasina and the surrounding area described scenes as chaos when the cyclone hit land late Tuesday. "I've never felt winds like this before... "The doors and windows, which are made of metal but are violently shaking," said Harimanga Ranaivo. Gezani has also caused at least 36 serious injuries. As a precaution, more than 2,740 residents were evacuated after the cyclone hit coastal communities and then moved inland. BNGRC reported that the cyclone’s aftermath caused?another 6,870 displaced people. A total of 250,406 disaster victims were also classified, according to BNGRC. According to the U.N. humanitarian office, it was the second tropical cyclone that hit Madagascar in the past year. Tropical Cyclone Fytia had killed 14 people and forced over 31,000 to flee their homes just 10 days earlier. DANGEROUS WINDS AND RISING SEA LEVELS Gezani's peak winds were 185 km/h (115 miles/h), with gusts reaching 270 km/h. This was powerful enough to tear metal sheets from roofs and uproot large trees. Before the arrival of the cyclone, officials closed schools and prepared?emergency housing. The BNGRC had warned that the rising sea level in Toamasina was already flooding streets. The wind blew down roofs, walls, and power lines, leaving neighbourhoods in darkness. On Wednesday morning, Madagascar’s Meteorological Service reported that Gezani was downgraded to a moderate tropical cyclone and had moved westward into the interior, approximately 100 km north of Antananarivo. The service reported that "Gezani" will move out into the Mozambique Channel tonight or this evening after crossing the central highlands today from east to western. (Reporting and writing by Lovasoa Rabary; editing by Ros Russel and Aiden Lewis)
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Passenger describes panic aboard plane that crashed landed in Somalia
A 70-year old passenger described the horror and panic that was felt on board the plane before it made a dramatic 'landing' in knee-deep water. All crew members?and passengers were unharmed. Starsky Aviation's?Fokker50? suffered an unspecified problem shortly after takeoff Tuesday. The plane was forced to return Mogadishu’s Aden Adde International Airport where it skidded of the runway and only came to a halt near the seashore. Social media showed pictures of passengers walking out of the plane in shallow water, after the pilot had urged them to do so in the event of a fire. Somali Civil Aviation Authority reported that all?55 passengers were transported to a hospital nearby for medical care and evaluation. The airline praised the pilot for his quick-thinking and?for staying calm. Mohamed Hussein Odowa, a passenger on the flight, said that it had only been a few moments since the plane took off when the captain informed the passengers the flight was returning to the airport because of unspecified defects. He recalled that the crew of the plane told passengers to "stay calm and tighten your belts." He said that as the engines began to sputter terrified passengers started reading the Quran. He said, "It landed on the runway, but then sped up madly, and we understood that the pilot couldn't stop the plane because he had no brake control." The aircraft continued to fly even as one of its wings hit a hillock. It finally stopped at the'seashore. Odowa stated that the plane had stopped in the ocean, at knee-deep water. The two doors were opened. The pilot shouted "Get out fast... "I was one of the 'oldest passengers, but I found myself outside with my bag. Thank God." The Civil Aviation Authority did not provide any further information on the cause of this incident. (Reporting and writing by AbdiSheikh; Writing and editing by Vincent Mumo Nzilani, Aidan Lewis; Ammu Kanampilly)
Lufthansa: Thursday's pilots strike was an unnecessary escalation
Lufthansa, a German airline, has criticised the unions over a planned walkout on Thursday. It said that it had no financial flexibility to meet their demands.
German pilots’?union VC called a 24-hour walkout?on Friday?at Lufthansa’s main airline and freight division LufthansaCargo over pensions.
The strike could affect up to tens thousands of passengers. It is also a sign that Lufthansa has been in conflict with unions for a long time, as it tries to "cut costs" and become more profitably.
Michael Niggemann, the head of human resources at Niggemann Human Resources on Wednesday said that the conflict can only be resolved through a dialogue.
Niggemann criticized the demands around the airline's brand core as excessive and said it "simply had no financial leeway".
Lufthansa declined on Wednesday to provide a forecast of?how many flight it would?cancel? or which airports will be most affected, pointing out that the situation is "constantly changing".
The departure boards at Frankfurt Airport and Munich Airport, Lufthansa hubs in Germany showed a number of cancelled flights on Thursday. This included long-haul connections.
The airline has said that it will try to rebook passengers affected on flights operated by other members of the group or partners.
In a ballot held last year, the union members announced their willingness to strike to pressurize Lufthansa to grant'more generous retirement benefits.
The talks have resumed, but they have been inconsistent and without results.
VC?released a statement saying that the pilots' strike would affect all flights departing German airports Thursday.
Separately the UFO union called for its members to strike on Thursday against the planned shutdown of CityLine's flight operations, and the "refusal of the employer to negotiate a social collective plan". (Reporting Klaus Lauer; writing Thomas Seythal; editing Miranda Murray and Alex Richardson).
(source: Reuters)