The news at a glance
Delta in talks for Virgin stake; Citigroup cuts 11,000 jobs; The push for same-day delivery; News Corp. details breakup; Tax breaks with uncertain results
Airlines: Delta in talks for Virgin stakeDelta Air Lines is seeking to buy a 49 percent stake in Virgin Atlantic from Singapore Airlines, said Joshua Freed in the Associated Press. If successful, Delta would gain a coveted foothold at London’s Heathrow Airport, where Virgin is the second-largest airline, and be better positioned to compete with its main U.S. rivals, United and American. The biggest single destination from Heathrow is New York’s Kennedy Airport, where Delta is spending $1.2 billion to improve its facilities. “You can’t be the airline of New York if you don’t have a big presence at Heathrow,” said Ray Neidl, an airline analyst with the Maxim Group.
Heathrow landing slots aren’t the only attraction for Delta, said Clive Irving in TheDailyBeast.com. Virgin, which billionaire businessman Richard Branson launched in 1984, has long been favored by “the regular high-end pond-crossers in the media, fashion, and tech businesses,” thanks to great customer service and an attention to detail. “In terms of branding, Delta is analog and Virgin is digital.” Grabbing a slice of this lucrative niche market would be a coup for Delta. That doesn’t have Virgin loyalists excited. They know that “big just isn’t better. Or, at least, no airline has yet proved it to be so.”
Banks: Citigroup cuts 11,000 jobsCitigroup will cut 4 percent of its workforce in an effort to trim costs, said Donal Griffin in Bloomberg.com. Most of the cuts will come from the global consumer-banking business, and operations will be scaled back in some emerging markets, including Pakistan, Turkey, and Uruguay. “These actions are logical next steps in Citi’s transformation,” said CEO Michael Corbat, who took over the struggling bank in October after the board of directors engineered the ouster of the previous CEO, Vikram Pandit, for failing to cut costs more quickly.
Retail: The push for same-day deliveryLooking for a holiday-season edge, eBay and Walmart are delivering goods to customers’ doorsteps within an hour of an online order, said Greg Bensinger in The Wall Street Journal. The service is designed to compete with Amazon, which uses its network of local warehouses for speedy deliveries. EBay has hired dozens of couriers, who use cars or bicycles to deliver merchandise, while Walmart relies on its 4,000 stores. “We think we can significantly squeeze cost and times in local markets,” said eBay executive Devin Wenig.
Media: News Corp. details breakupRupert Murdoch revealed changes to his media empire this week as it prepares to split in two, said Sam Gustin in Time.com. News Corp. will put its newspapers, including The Wall Street Journal and the New York Post, in one company, and lucrative television and entertainment properties like Fox News Channel in another. Murdoch also said he would shutter The Daily, the iPad newspaper he launched with great fanfare less than two years ago. The split is a bid to appease shareholders angry over the damage caused to the rest of the media empire by its U.K. tabloids’ phone-hacking scandal.
Companies: Tax breaks with uncertain resultsGovernments give companies billions in tax breaks and rewards each year to encourage the creation of jobs that often don’t materialize, said Louise Story in The New York Times. According to a Times investigation, states, counties, and cities give more than $80 billion each year to companies in the form of cash rewards, worker training, and tax breaks. But officials typically don’t know “if the money was worth it because they rarely track how many jobs are created.” Companies often exploit the fear of outsourcing, pitting local officials “against one another to get the most lucrative packages.”