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Business

After Two Weeks of Flight Cancellations, Airlines Assess What Went Wrong

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At JetBlue Airways Corp., executives felt confident coming into the Christmas season. The airline had flown through Thanksgiving week with hardly any hiccups.

Then Covid-19’s Omicron variant arrived. With its headquarters in New York, which leads the country in new case counts, JetBlue was quickly overwhelmed. Daily sick calls more than quadrupled. On Dec. 21, JetBlue canceled no flights. Four days later, on Christmas Day, it scrapped 12% of its schedule.

“Because of the exponential increase, you get to a point where you exhaust all your available reserves,” Chief Executive Robin Hayes said.

Airlines are struggling through one of the most severe and persistent mass-cancellation events of the past decade, according to data compiled by FlightAware. U.S. Covid-19 infections surged too quickly for carriers to manage without upending holiday travel, wreaking havoc on already-stretched airline workforces. Now carriers are assessing how to better manage what could continue to be a difficult period, at least for the next few weeks.

Airlines scrapped more than 3,000 U.S. flights and delayed more than 5,000 on Monday. The new wave of cancellations and delays comes as the surge in Covid-19 infections in the U.S. has left the airline industry stretched thin. Photo: Chandan Khanna/AFP/Getty Images

Airlines have canceled more than 1,000 daily U.S. flights for 13 straight days, including over 2,500 on Friday as another winter storm brought snow to Boston and New York.

Flights scrubbed from Christmas Eve through Jan. 6 exceeded 24,000, roughly 7% of the number airlines had planned to fly, according to flight-tracking service FlightAware.

For airlines, the upheaval of the pandemic is heading into a new phase. Unlike in early 2020, when terrified passengers canceled trips in droves, new variants dent but don’t decimate appetite for travel. But airlines are still rebuilding their operations. The twin challenges of rising numbers of employees calling out sick after being infected or exposed to Covid-19, and a series of severe winter storms that hit major hubs from Seattle to Chicago to Washington, D.C., created the perfect conditions for travel chaos.

It became clear that a problem was brewing early in the week of Christmas, said

Sara Nelson,

president of the Association of Flight Attendants-CWA.

“Thanksgiving went off without a hitch. We had two things going for us: We didn’t have Omicron, and we didn’t have any winter storms,” she said. “No one saw Omicron coming.”

The trouble spiraled as more workers became infected. “I was getting notices that entire crews were testing positive and they’re out of the country, in a location where they don’t have other crews. There’s no way to get that aircraft back,” Ms. Nelson said.

A check-in line at Seattle-Tacoma International Airport on Dec. 27.



Photo:

LINDSEY WASSON/REUTERS

Delta Air Lines Inc.

DAL 3.63%

was the first to flag the potential for disruption. Chief Executive

Ed Bastian,

along with the airline’s chief health officer and a medical adviser, asked the director of the Centers for Disease Control and Prevention on Dec. 21 to consider halving its recommended isolation period for fully vaccinated people who come down with breakthrough Covid-19 infections. They cited potential workforce shortages and new information about the Omicron variant. JetBlue followed with its own letter a day later.

Airlines had been under pressure from both travelers and lawmakers to deliver a smooth holiday season after meltdowns last summer and fall. Carriers including

Southwest Airlines Co.

LUV 3.25%

and

American Airlines Group Inc.

AAL 4.23%

at times struggled to maintain the buffer needed to quickly recover from storms or other disruptions, resulting in thousands of canceled flights.

Delta and

United Airlines Holdings Inc.

UAL 3.53%

were among the airlines facing the toughest problems in recent weeks. But almost no airline emerged completely unscathed.

“It has been one of the most difficult operational environments we’ve ever faced, and it forced us to cancel hundreds of flights as a result,” Delta’s chief customer experience officer,

Allison Ausband,

wrote to its frequent fliers on Jan. 5. Delta said Thursday that another round of storms headed for the Northeast would likely result in hundreds more cancellations.

Airlines aren’t alone in facing shortfalls as the Omicron variant rips through workforces. Public-transit services in New York and other cities have been disrupted. Retailers, bars and restaurants have had to temporarily close or curtail hours. School closures are at their highest point of the academic year as teachers call in sick.

Airlines operate under strict safety rules that can leave them little recourse but to cancel flights when they are short of staff in the right places. Pilots aren’t always trained to fly multiple aircraft types, for example. Regulations dictate how much rest crews must get between shifts. And employees such as flight dispatchers and mechanics can take on only so much extra work safely.

William Humphrey, 35 years old, had hoped to return on New Year’s Day from a family visit to Omaha, Neb. Citing weather, United canceled his flight and rebooked him for Jan. 2. He instead took a refund and switched to a quicker route with Delta, but that flight was canceled, too, as were two more of his Delta flights on Monday.

Dr. Humphrey, a resident physician working in Burlington, Vt., worried about finding coverage at his already short-handed office. On Tuesday, when a delay in his flight from Omaha to Detroit caused him to miss his connecting flight home to Burlington, he instead booked a flight to Albany, N.Y., rented a car, and drove the rest of the way, a three-hour trip.

“It seems like it’s getting more and more chaotic,” he said.

Waiting at Newark Liberty International Airport in Newark, N.J., on Monday.



Photo:

Christopher Occhicone/Bloomberg News

Airlines are preparing for the difficulties to last at least a few more weeks.

Alaska Air Group Inc.

ALK 2.94%

said Thursday that it will reduce Alaska Airlines departures by 10% through the end of January, citing an unprecedented rate of employee sick calls due to Omicron and the need to find a way to navigate Covid-19 as a “continued reality in our business and our world.”

“This will give us the flexibility and capacity needed to reset,” the airline said in a statement.

Southwest said that through Jan. 25 it will offer pay incentives, including up to double pay for working extra shifts, to employees such as flight attendants, customer-service representatives and mechanics. Southwest canceled over 2,500 flights this week, including more than 500 on Friday—17% of the flights it planned that day, according to FlightAware, as Omicron-related sick calls made it harder to recover from severe weather such as a major snowstorm that hit Washington, D.C., early this week.

An airline spokesman said Southwest is focusing on stabilizing its operation in the wake of winter storms while maintaining sufficient staffing as Covid-19 cases jump.

Carriers typically maintain higher staffing levels as a buffer against bad weather and other unexpected events over the busy holiday season—when demand runs high and staff callouts tend to be elevated even in the best of circumstances—said

Geoff Murray,

a partner at consulting firm Oliver Wyman. Airlines are still clamoring to hire more staff, he said, with regional carriers suffering a dearth of pilots and major carriers contending with training logjams.

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“There was not a lot of slack in the system,” Mr. Murray said. “The only alternatives the airlines had were to further cut back schedules going into the holiday. With the booking levels they were looking at, that would have been very difficult to do.”

At United, the number of pilots out sick, including those with Covid-19, those awaiting test results and those with other illnesses, climbed to about 900 this week from about 500 shortly before Christmas. And the number of pilots with active Covid-19 infections more than doubled to nearly 500 during that period, according to a spokesman for the union that represents United’s pilots.

The airline rushed to bump pay for pilots willing to take on extra trips, with negotiators working past midnight on Dec. 31 to craft an incentive agreement that offers up to triple pay for certain trips. United hasn’t shortened the 10-day quarantine period for pilots and flight attendants who become ill with Covid.

While airlines are still canceling flights, they will likely get a measure of relief from the typical travel slowdown following the winter holidays. Airlines tend to operate fewer flights in January than at the end of December. Airports screened 1.5 million passengers Thursday, pulling back from daily highs of more than 2 million at the height of the holiday rush, according to the Transportation Security Administration.

“I think we’ll start seeing more people coming back to work than calling out,” said JetBlue’s Mr. Hayes. “And I think that will allow us to recover very quickly from the middle of January onwards.”

A packed Miami International Airport on Jan. 3.



Photo:

chandan khanna/Agence France-Presse/Getty Images

—Stephen Council contributed to this article.

Write to Alison Sider at alison.sider@wsj.com

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Business

Stocks Waver a Day After Hitting Record

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U.S. stock indexes were mixed Tuesday, a day after a record close for the S&P 500 amid lower liquidity in the last days of the year.

The S&P 500 swung between small gains and losses, touching a new intraday high in morning trading, after the broad-market index rallied 1.4% on Monday. It finished down 4.84 points, or 0.1%, to 4786.35. The Dow Jones Industrial Average rose 95.83 points, or 0.3%, to 36398.21. The Nasdaq Composite fell 89.5 points, or 0.6%, to 15781.72.

Stocks have been buffeted by the spread of the Omicron variant in recent weeks as governments around the world have imposed restrictions to try to curb coronavirus infections. But some recent studies have suggested the variant might result in milder illness with lower risk of hospitalization.

The Centers for Disease Control and Prevention reduced the recommended isolation period for some people who test positive to try to minimize disruptions. Still, many economists have lowered their forecasts for economic growth in the first quarter of next year.

“What is emanating from markets is the faith that Omicron won’t be able to disrupt the economic recovery,” said

Antonio Cavarero,

head of investments at Generali Insurance Asset Management. “There is no visible risk reduction.” That is partly due to lower liquidity from fewer people working around the holidays, he said.

Stock investors are keeping eyes on a phenomenon known as the “Santa Claus rally.” Indexes such as the S&P 500 have a tendency to rise in the last five days of the year and the first two days of the new year. Such a rally takes place at the end of about four of every five years, according to “Stock Trader’s Almanac.”

“It happens because people start positioning. People are reading everyone’s 2022 estimates and planning for next year,” said

Jeffrey Meyers,

a consultant to hedge funds and family offices at Market Securities.

Governments and policy advisers are showing signs of taking a lighter touch with policies regarding the rapidly spreading Omicron variant, reducing quarantine times and in some instances forgoing social-distancing restrictions as they try to keep economies moving. Vaccine makers gave up gains from earlier in the session, with

Novavax

declining 1.2% and

Moderna

down 2.2%.

The news has helped shares of travel and energy companies, with

United Airlines

up 1.6% and

Valero Energy

up 1.9%.

Cutting quarantine times is bullish for investors and prompting market participants to look beyond the Omicron surge, said

David Kotok,

chief investment officer at Cumberland Advisors. But it also risks allowing the Covid-19 virus to mutate, spread and disrupt economies, he added. He is overweight healthcare stocks.

“This ain’t over, and markets want to celebrate it being over. But the virus doesn’t care about what markets want,” Mr. Kotok said.

Oil prices ticked up, with global benchmark Brent crude climbing 0.4% to $78.94 a barrel.

The yield on the benchmark 10-year Treasury note was unchanged at 1.480%.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, showed U.S. home-price growth slowed in October. Shares of home builders edged higher during Tuesday’s session, with

D.R. Horton

advancing 0.7% and

Taylor Morrison

rising 0.8%.

U.S. companies will be entering 2022 at a very high level of corporate earnings, said Mr. Kotok. That will require companies to produce robust earnings growth next year, in the face of less fiscal and monetary policy stimulus.

“I’m a terrified bull,” he said.

Stocks have been buffeted by the spread of the Omicron variant in recent weeks.



Photo:

John Minchillo/Associated Press

Bitcoin slipped around 6.3% from its level at 5 p.m. ET on Monday, trading around $47,794. The cryptocurrency has oscillated around the $50,000 mark for the past five days.

Overseas, the pan-continental Stoxx Europe 600 added 0.6%.

The Turkish lira rose 1.3% to 11.8 to the dollar. The currency had strengthened after the government announced a new economic plan last week. President

Recep Tayyip Erdogan

“may have bought Turkey some time but it’s still not a great story,” Mr. Meyers said. Speculative investors likely closed out short positions ahead of the long holiday weekend and may now be putting them back on, weighing on the lira, he said.

In Asia, most major benchmarks rose. The Shanghai Composite Index climbed 0.4% and Hong Kong’s Hang Seng Index added 0.2%. Japan’s Nikkei 225 advanced 1.4%, led by gains in technology stocks.  

Shares of

China Evergrande Group

pared early gains bust still rose 3.8%. The heavily indebted real-estate developer said construction work had resumed at more than 90% of its stalled residential projects. It also said it was delivering apartments faster to home buyers.

Write to Sebastian Pellejero at sebastian.pellejero@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com

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US

Nations Shorten Recommended Quarantine Times for Covid-19 Patients

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Government leaders are adjusting recommended quarantine periods to minimize workforce shortages and scrambling to boost testing capacity to limit the spread of the Omicron variant of Covid-19.

New York Gov. Kathy Hochul said Friday that critical workers—including those in education, healthcare, transportation, grocery stores and sanitation—who tested positive for the virus will be allowed to return to work after five days under certain conditions.

Her move comes after some airlines canceled dozens of flights due to staffing problems and some business leaders expressed concerns that government quarantine rules could cripple crucial operations unless updated.

Under New York’s new rules, critical workers seeking to return to work five days after a confirmed case must be fully vaccinated and either they don’t have symptoms or their symptoms are resolving and they haven’t had a fever for 72 hours.

Those returning will need to remain masked, Ms. Hochul said. “We need you again, we need you to be able to go to work,” Ms. Hochul added.

New York state’s move comes after the U.K. shortened its quarantine period to seven days for vaccinated people, and some airline executives wrote to the U.S. Centers for Disease Control and Prevention seeking an adjustment in agency isolation guidelines to avoid disruptions to operations.

On Thursday, the CDC revised its isolation and quarantine guidelines for healthcare workers, partly to help hospitals have enough staff to deal with any rise in admissions due to Omicron.

Under the new CDC guidelines, healthcare workers can go back to work within seven days following a negative test, or potentially even sooner in a staffing crunch. Also, healthcare workers who are fully vaccinated and who got a booster wouldn’t need to quarantine after high-risk exposure to the virus.

To help combat Omicron, the Biden administration is opening up more Covid testing sites and delivering 500 million Covid tests to Americans. WSJ’s Daniela Hernandez breaks down why testing is still a pain point in the U.S., two years into the pandemic. Photo Illustration: David Fang

CDC said it may adjust its guidelines further as more information about Omicron emerges.

The changes suggest the march of the new strain, which has driven rapid and large increases in case counts around the U.S. and world, combined with the advent of new tools like booster shots is putting pressure on policy makers to calibrate pandemic-response measures.

Covid-19 is now on the path toward becoming endemic in the U.S., eventually dissipating into something like a regular seasonal illness, according to some public-health experts. The degree of disruption it causes will likely now depend on what level of disease—and restrictions—officials and individuals are willing to tolerate.

“It is a tug of war between society and the virus,” said Peter Chin-Hong, an infectious-disease specialist at the University of California, San Francisco.

In the U.S., the 7-day average of Covid-19 cases has eclipsed the peak during Delta’s march through the country. The average reached 182,682 as of Dec. 23, according to a Wall Street Journal analysis of Johns Hopkins University data; the last time the figure was higher was Jan. 21.

The more than 261,000 cases reported on Dec. 23 excludes states—Indiana, North Carolina, Mississippi and Kentucky—that have already started holiday blackouts for data.

U.S. airlines, including United Airlines Holdings Inc. and Delta Air Lines Inc., blamed Covid-19 as they canceled scores of flights for Christmas Eve and Christmas.

At both airlines, the cancellations account for a relatively small share of planned flying. So far, United has canceled about 182 flights scheduled for Friday, about 9% of its planned schedule, and about 111 that were slated for Saturday, according to FlightAware, a flight-tracking site.

Italy on Thursday reported its highest number of daily infections since the start of the pandemic; Milan on Friday.



Photo:

Mairo Cinquetti/Zuma Press

Delta cut about 163 flights for Friday, about 8% of its planned schedule, and another 140 planned for Saturday.

To deal with increasing demand for testing, Ohio’s National Guard is running a mass testing site in Cleveland, while Palm Beach County, Fla., is opening one on Sunday. Ms. Hochul said New York would open 13 more state-run testing sites beginning next week, including one in each borough of New York City.

Though 95% of New York residents aged 18 or older have had at least one vaccine dose, Ms. Hochul said Friday morning, the state had 44,431 new positive cases in the latest day of reporting.

She said the state will be “highly recommending” that counties and school districts adopt test-to-stay policies, which would keep more students in school when classes resume in January.

“We want healthy kids to stay in school,” she said, adding that there will be at least two million take-home tests available by the time schools start again.

Daily reported Covid-19 cases in the U.S.

Note: For all 50 states and D.C., U.S. territories and cruises. Last updated

Source: Johns Hopkins Center for Systems Science and Engineering

Omicron was first identified in South Africa just last month. Indications are mounting that the disease caused by the variant is milder than previous strains such as Delta and progresses faster, though researchers say more study is needed to make a firm determination.

A U.K. study released Thursday found that people infected with Omicron are between 50% to 70% less likely to be hospitalized than those who caught earlier strains. The U.K. Health Security Agency study follows similar findings from studies in Scotland and South Africa that also pointed to a substantially lower risk of hospitalization with Omicron than with earlier variants.

In the U.K., the head of the Royal College of Nursing, Pat Cullen, told the British Broadcasting Corp. that the National Health Service is struggling with staff absences as Omicron spreads. The U.K. Health Security Agency’s chief has indicated that the British government might decide whether to introduce more restrictions in England by assessing the wider social impact of the infection, rather than the severity of the disease itself.

Prime Minister Boris Johnson has said his government won’t introduce further restrictions before Christmas, but it is possible more measures would be introduced next week. Scotland, Wales and Northern Ireland have already announced wider social restrictions after Christmas.

Elsewhere, Thailand detected its first domestic cluster of Omicron transmissions, in Kalasin province, north of Bangkok. Bangkok also canceled city-led New Year celebrations, including midnight prayers that are typically held by thousands of Buddhist monks. In New York City, Mayor Bill de Blasio said on Thursday that attendance at the annual New Year’s Eve celebration in Times Square will be limited to 15,000 compared with the typical 58,000.

Austria has joined other countries now considering a fourth vaccination, which will be offered to healthcare workers and other key employees if it is approved. Israel has already made plans to offer a fourth shot to people over 60 years old, while Germany is considering a similar course of action.

Also in Europe, the Spanish government this week reintroduced an outdoor mask mandate amid a surge in infections. The Italian government did likewise on Thursday, the same day the country reported its highest number of daily infections since the start of the pandemic.

Write to Melissa Korn at melissa.korn@wsj.com and James Hookway at james.hookway@wsj.com

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Business

Stock Market Today: Dow Rose as Moderna Slumped Again

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The


Dow Jones Industrial Average
had one of its best days this year on Monday, as value and defensive stocks led a rebound from last week’s market declines.

The news Monday was relatively positive, with signs that the Omicron variant of Covid-19 might be less severe than earlier strains and reports that China is considering easing monetary policy. On the Federal Reserve policy front, the latest reporting suggested that the central bank could announce plans at its next meeting to more quickly pull back from its bond-buying program.

The Dow surged 647 points, or 1.9%, for its best one-day point gain since November 2020 and the largest percentage increase since last March. The


S&P 500
closed up 1.2% and the Nasdaq Composite rose 0.9%, while the small-cap


Russell 2000
gained 2.1%, for its fourth-straight daily move of 2% or more.

Post-pandemic reopening stocks were among the biggest gainers on Monday. The


U.S. Global Jets
exchange-traded fund (ticker: JETS) added 5.3%, as


American Airlines Group

(AAL) added 7.9% and


United Airlines Holdings

(UAL) jumped 8.3%. Cruise lines


Carnival

(CCL) and


Royal Caribbean Cruises

(RCL) surged 8.0% and 8.3%, respectively.


Marriott International

(MAR) added 4.5%,


Live Nation Entertainment

(LYV) rose 6.1%, and


Cinemark Holdings

(CNK) gained 7.7%.

S&P 500 value stocks as a group gained 1.4% on Monday, versus a 0.9% rise for growth stocks in the index.

Investor attention remains focused on the newly discovered Omicron variant of coronavirus, news of which recently brought about the Dow’s worst day of the year and saw volatility rock markets last week. The latest headline driving sentiment comes from South Africa, where data—though from a small sample size—suggest that symptoms caused by Omicron were milder than with other variants.

Investors aren’t out of the woods yet, however. The broad market will remain sensitive to daily headlines about Omicron—both good and bad.

“It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be,” said Russ Mould, an analyst at broker AJ Bell. “It would be naive to rule out further volatility as markets attempt to work out exactly what’s going on.”

On Monday, the news was positive and investors bought the market. All 11 S&P 500 sectors closed in the green.

Fed policy has been pushing investor sentiment the other way. Chair Jerome Powell indicated last week that the central bank would consider speeding up its slowing, or tapering, of monthly asset purchases, which add liquidity to markets, amid higher inflation.

“We’re really at a fascinating crossroads in markets at the moment,” said Jim Reid, a strategist at Deutsche Bank. “The market sentiment on the virus and the policy makers at the Fed are moving in opposite directions.”

Those trends mean different things for different kinds of stocks and indexes.

If Omicron is less severe than feared, then the economy might hold up better than expected. That would be good for economically-sensitive cyclical stocks, like many of those in the Dow. Higher bond yields and interest rates, however, can put downward pressure on stock valuations, particularly those with nosebleed price-to-earnings ratios, many of which are found in the Nasdaq.

“Like Friday, how the Nasdaq trades will likely determine the day, as markets want to see the tech sector stabilize after intense weakness late last week,” wrote the Sevens Report’s Tom Essaye. “If the Nasdaq can stabilize, the broad market can bounce.”

The tech-heavy index bounced from a loss of about 1% shortly after Monday’s opening bell.

In the commodity space, oil prices rose Monday after Saudi Arabia raised its January prices for Asian and U.S. customers over the weekend by $0.60, in a sign of firmer demand expectations.

Futures contracts for the international oil benchmark Brent rose 4.6%, to above $73 a barrel, with U.S. futures for West Texas Intermediate crude up 4.9% to about $69.50 a barrel.

“Given that OPEC+ is proceeding with its planned 400,000 barrels per day increase this month, it appears that Saudi Arabia is taking a punt that Omicron is a virus in a teacup,” said Jeffrey Halley, an analyst at broker Oanda. “Saudi Arabia’s confidence, along with the South African Omicron article over the weekend, is a boost to markets looking for good news in any corner they can find it.”

Cryptocurrency markets remained depressed after digital assets took a tumble over the weekend.


Bitcoin
and


Ether,
the two leading cryptos, remained off their lows following the stark fall Saturday, but were slipping after steadying Sunday. Bitcoin was trading hands around $49,000—down from more than $57,000 as recently as Friday—with Ether holding above $4,000.

Here are several stocks on the move Monday:


Nvidia

(ticker: NVDA) was among the most actively traded stocks in the U.S. Monday, closing down about 2.1%. Shares of fellow semiconductor firm Advanced Micro Devices (AMD) lost 3.4%.


Lucid Group

(LCID) stock dropped 5.1% after the electric-vehicle startup revealed that it had received a subpoena from the Securities and Exchange Commission, without offering many details.


Kohl’s

(KSS) gained 5.4% after an activist investor said it should explore selling itself.


Moderna

(MRNA) fell 13.5% after its president said that the risk that vaccines don’t work as well against Omicron is high. Pfizer (PFE) stock slid more than 5%.

Alibaba Group Holding (BABA) stock closed up 10.4% after a management shakeup at the e-commerce giant.


Deutsche Bank

(DB) rose 3.6% after JPMorgan upgraded the bank to Overweight from Neutral, adding that the group shows positive revenue developments in key divisions.

Pharma giant


Roche

(ROG.Switzerland) rose 1.5% in Zurich after announcing that it would release rapid antigen tests for Covid-19 and flu viruses next month.

Food delivery group


Just Eat Takeaway.com

(JET.U.K.) fell 4.9% in London following a price target cut and downgrade to Market Perform from Outperform by Bernstein, which sees few positive catalysts in the pipeline for the company.

Write to Jack Denton at jack.denton@dowjones.com

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Business

Stock Market Today: Alibaba Gains, Novavax Drops, and the Dow Rises

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Macro concerns such as supply-chain issues appear to be on the back burner amid earnings season.


Brendan Smialowski/AFP via Getty Images

The stock market was higher Wednesday, as investors weighed the prospect of strong corporate earnings against broader concerns over the economy.

In midday trading, the


Dow Jones Industrial Average
added 160 points, or 0.5%, while the


S&P 500
—which marked its fifth consecutive session of gains Tuesday—rose 0.4%. The


Nasdaq Composite
was up 0.2%.

Earnings season continued apace Wednesday, with


Abbott Laboratories

(ticker: ABT),


Verizon

(VZ),


Biogen

reporting Wednesday morning—they all beat—following


Netflix

(NFLX) and


United Airlines

(UAL) results Tuesday evening. One thing that stands out: With 16% of S&P 500 market cap having reported, results are nowhere near as good as bank earnings suggested last week, according to Credit Suisse strategist Jonathan Golub. While earnings have topped estimates by 14.1% overall, financials have topped forecasts by 21.6%, while everyone else has surpassed expectations by just 6.3%. It’s something to keep an eye on as earnings season progresses.

Wider concerns around familiar themes—such as inflation, central bank stimulus, and supply-chain disruptions—appear to have been allayed for now, as profit margins continue to hold up.

“Whilst inflation concerns are still very much bubbling under the surface of markets, risk appetite strengthened further yesterday thanks in no small part to decent earnings reports,” said Jim Reid, a strategist at Deutsche Bank. “There are no signs of widespread erosion of margins at the moment. Perhaps there is so much money sloshing about that for now prices are broadly being passed on.”

Still, bond yields now sit above 1.6% after trading over 1.65% on Tuesday, and that could pressure stocks. Higher bond yields typically weigh on technology companies in particular, because they tend to discount the present value of future cash flows, and the valuations of many tech companies are grounded in profits expected years in the future.


Tesla

(TSLA) and


IBM

(IBM) are among the companies releasing financial results in the day ahead.

Meanwhile,


Bitcoin
prices touched an all-time high above $66,000. The leading cryptocurrency has been buoyed by the launch of the first exchange-traded fund tracking regulated Bitcoin futures—a landmark moment for the crypto industry. 

Trading in the ProShares


Bitcoin Strategy ETF
(BITO) began Tuesday and most of the substantial volume was driven by high-frequency traders and retail investors, according to analyst Jeffrey Halley of broker Oanda.

“Although a regulated ETF based on regulated futures does fit nicely into the mandates of many in the institutional space, I suspect they may wait a while before dipping their toes in the water,” Halley said.

Here are eight stocks on the move Wednesday:


Novavax

(NVAX) dropped 11% following a report alleging that manufacturing problems jeopardize billions of Covid-19 vaccine doses set to be delivered to low- and middle-income countries.

Verizon gained 2.6% after the company reported better-than-expected earnings.

Netflix stock fell 1.2% despite reporting better-than-expected earnings after Tuesday’s close. The stock was downgraded to Hold from Buy at Deutsche Bank.


Alibaba

(BABA) stock rose 0.5% one day after gaining 6.1% on reports that it would make its own chips and that Jack Ma would be traveling to Europe.

The U.S.-listed shares of Dutch semiconductor equipment manufacturer


ASML

(ASML) fell 4.3% after the company outlined revenue guidance for the next quarter below Wall Street’s estimates.


Nestlé

(NESN.Switzerland) rose 3.3% in Zurich, as the food and drinks giant raised its full-year sales outlook after posting revenue ahead of analyst expectations—citing strong retail spending.


Deliveroo

(ROO.U.K.) rose 3.2% in London, as the food delivery company upgraded its full-year forecast after reporting strong order growth in the third quarter.


Kering

(KER.France) fell 4% in Paris, as the luxury-goods group, which owns brands including Gucci, saw sales growth held back in the crucial Asian-Pacific region by rising Covid-19 cases over the summer. But the company as a whole posted sales ahead of expectations.

Write to editors@barrons.com

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Business

Remote Workers Can Live Anywhere. These Cities (and Small Towns) Are Luring Them With Perks.

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Shara Gaona didn’t know much about Topeka when the pandemic struck. But the remote-working United Airlines analyst, untethered from her Chicago office, decided to move to the Kansas capital and collect $10,000 in local government incentives.

Topeka is on a growing list of locations—from Bemidji, Minn., to the state of West Virginia—dangling incentives to entice remote workers. Many companies are offering office-free jobs, and some workers are willing to relocate for cash, cheaper housing or other perks.

“I’ve had a lot of people ask me, ‘What the hell are you doing in Topeka?’ ” Ms. Gaona said. “Well, they’re giving me $10,000.”

The 41-year-old sold her Chicago condo early this year, and she and her fiancé, Matt Gordon, are renovating a house in Topeka they plan to move to soon. The couple, who had office-based jobs at

United Airlines Holdings Inc.

UAL -0.73%

before the pandemic, can continue working remotely, Ms. Gaona said.

Similar incentive programs existed before the Covid-19 pandemic, including in Vermont and Tulsa, Okla., while others were in the works. But they started sprouting up quickly after Covid-19 shut down traditional offices, including a Paducah, Ky., program that launched in August.

Shara Gaona and her fiancé, Matt Gordon, are in the process of moving to Topeka after leaving Chicago. They plan to continue working remotely for United Airlines, as they have since the pandemic began.



Photo:

Christopher Smith for the Wall Street Journal

Ms. Gaona sold her condo in Chicago and plans to move in to a new home in Topeka once renovations are complete.



Photo:

Christopher Smith for the Wall Street Journal

In addition to financial offers, some places are offering extra perks, like a free year at a co-working space in Bemidji, free coffee and martial arts classes in Stillwater, Okla., and subsidized rafting and rock climbing in West Virginia. A new program in Greensburg, Ind., includes a couple in town who offered to serve as “grandparents on demand” to help with babysitting and Grandparents Day at school. In Topeka, the sandwich chain Jimmy John’s had kicked in $1,000 for remote workers who moved to one of its local delivery zones, though this promotion just ended, according to an economic-development spokesman.

These incentive programs mark a shift from an older economic-development model: trying to persuade companies, rather than individuals, to relocate. In some cases, communities say they are hurting more for people than for jobs. They also hope an influx of skilled workers will make them look more appealing to large employers. It is also hard not to join the fray.

“Is this the new arms race? I would say yes,” said Justin Minges, chief executive at Stillwater’s chamber of commerce.

An Indianapolis-based company called MakeMyMove debuted a website in December that acts as a listing site and portal for such incentive programs. The company said there are now at least 24 programs specifically targeting remote workers in the U.S., including 19 launched since the pandemic began. The company also acts as a paid consultant to help create some of these programs.

Cash payments can have requirements pegged to people staying a certain amount of time or making enough money, and bigger paychecks can mean bigger payments. Topeka pays $10,000 to home buyers making at least $60,000, but less to those with lower salaries. Officials with several programs say they believe that paying to attract people with high-salary jobs will pay off as the movers spend in their new communities.

A farmers market in downtown Topeka.



Photo:

Christopher Smith for the Wall Street Journal

Officials running these programs are betting the U.S. will never completely return to pre-pandemic office life. Remote job listings in the U.S. with salaries topping $80,000 reached about 15% of all job listings in the third quarter of this year, up from about 13% in the prior quarter and 4% in late 2019, before the pandemic started, according to Ladders Inc., which runs the job site theladders.com.

“This is a real, structural permanent change in the American workforce,” said Ladders CEO Marc Cenedella.

While the mobile workforce grows, so does the competition. Stillwater, a city of 48,000 people, has thus far made offers to four people after launching a program in July that uses city funding to offer $5,000 in home-buying assistance. No one has moved yet, and at least two of these applicants are weighing other incentive programs, according to the chamber of commerce.

One is Torin Dougherty, a 27-year-old

3M Co.

employee in Minneapolis, who plans to visit Stillwater for the first time this weekend. But he may also apply to a few other programs, including in Tulsa and a regional program covering part of Alabama, he said. He’s going to visit Tulsa, too, after a week and a half in Stillwater.

Torin Dougherty, 27 years old, is weighing various options as he makes plans to take his permanently remote job with him to a new city.



Photo:

Ackerman + Gruber for The Wall Street Journal

Mr. Dougherty built a spreadsheet to rank municipalities he is considering making his new home, based on factors from financial incentives to access to outdoor activities.



Photo:

Ackerman + Gruber for The Wall Street Journal

Mr. Dougherty has made a spreadsheet to rank the various places, comparing them on fields like presentation on their websites, length of applications and access to activities like hunting and fishing. He’s weighing not just the money, but also opportunities to help build the programs and put a stamp on the local community, he said. If he were to move to Stillwater, he would first rent a place to live, and is talking to the chamber of commerce about potential rental assistance.

The San Francisco native has spent most of his life in California and Minnesota, and said he wants to experience more of the country.

“It’s really important for your own experience to see what else is out there,” Mr. Dougherty said.

Wish You Were Here

Some of the incentives available to remote workers who move to selected locales:

Topeka, Kan.

Incentives include: Up to $10,000 in cash, with the highest amount available to home buyers making at least $60,000, and lesser amounts for lower salaries and renters.

Requirements: Applicants have to come from outside Topeka and Shawnee County, must stay a year or money can be clawed back. Minimum salary for program is $35,000.

Bemidji, Minn.

Incentives include: Up to $2,500 in reimbursement for expenses such as moving, one-year membership at co-working space and chamber of commerce, a “Community Concierge” program to introduce new arrivals to the community.

Requirements: Applicants must come from at least 60 miles away.

West Virginia

Incentives include: $12,000 in cash, with $10,000 paid over the first 12 months and $2,000 after a second year. Other perks include free co-working space and a year of free outdoor recreation, with the total incentive package valued at more than $20,000, according to the program.

Requirements: Applicants must come from out of state and participate in interviews. Program is currently aimed at bringing people to the cities of Morgantown and Lewisburg, with a third community to be added next year.

Stillwater, Okla.

Incentives include: $5,000 toward a home purchase within city limits, estimated $2,000 in free coffee for a year from a local company, free martial arts classes, other gifts from local stores and restaurants via the chamber of commerce.

Requirements: Requires a job with full-time work at home, but chamber says hybrid workers who commute may also be eligible.

The Shoals (Alabama)

Incentives include: A reimbursement of up to $10,000 based on salary, with the highest amount paying to people who make above $124,800.

Requirements: Salary of at least $52,000, staying in the region a year to collect the full amount.

Several communities say early demand is strong. Tulsa’s three-year old program has already brought in more than 1,100 people. A two-county Alabama program in a region dubbed the Shoals has received roughly 1,800 applications since launching in mid-2019. So far 71 newcomers have arrived. The screening process there requires making sure applicants meet qualifications, such as salary and employment requirements. Program administrators also interview applicants to make sure they understand the community, including that they would be moving to an area with small towns, where they will rely on a car and not public transit.

“We don’t want someone to move here and regret it,” said Mackenzie Cottles, a spokeswoman for the Shoals Economic Development Authority, which runs the program.

This Alabama program is funded thus far with about $600,000 through a half-cent in sales taxes already collected to cover economic development, Ms. Cottles said. Payments to people moving in can reach up to $10,000 depending on salary.

In West Virginia, a program offering up to $12,000 in cash along with outdoorsy perks has netted 50 remote workers and another 60 family members, though not all have moved yet. Launched in April, it is funded by a $25 million gift from Brad Smith, a native of the state and executive chairman at TurboTax maker Intuit Inc., and his wife Alys.

The program is currently aimed at sending people to the cities of Morgantown and Lewisburg. The program is sponsoring a picnic and kayaking event for recent relocators this weekend.

Quintina Mengyan, 29, director of customer experience at Chicago-based ticket marketplace Vivid Seats, moved to Morgantown with her boyfriend in August. West Virginia was new to her, but she has already added a side job coaching lacrosse at West Virginia University. She also said she has considerably more space to work in a new townhouse, where she has a dedicated office.

In Chicago, Ms. Mengyan said, office closures “quickly evolved to me feeling suffocated in a 618-square-foot apartment with my boyfriend and 80-pound dog.”

Paying to lure new residents has drawn some skeptics. In Vermont, some lawmakers have questioned whether payments are really the deciding factor when people move there, though its programs have paid out money for hundreds of people who moved to the state, including recipients and their family members. Lawmakers this year re-funded the program but also called for a study on its effectiveness.

“I can see where this is going to end up going to people who were going to move to a community anyway,” said Tessa Conroy, an assistant professor at the University of Wisconsin-Madison who studies economic development. “Or maybe you do manage to attract someone. Is that really the ideal resident, someone who was paid?”

Communities should also invest in keeping people who already live there, and who might be disgruntled to see money spent on luring newcomers, Ms. Conroy said.

Jack Calcutt, who manages a global sales team for financial-information firm

FactSet Research Systems Inc.

and used to work from a Norwalk, Conn., office, received Topeka’s incentive for taking his job and family, including six children, there in late 2020. The family would have gone anyway, he said, as his wife is from the area. They had long thought about moving there and he suddenly had the chance to take his job on the road.

But the family is also grateful for the support, and Topeka has proven to be an excellent fit, Mr. Calcutt said. “It feels like Topeka wants me here, and that gives me a degree of loyalty for the community,” he said.

Jack and Katie-Scarlett Calcutt accepted Topeka’s incentive to move from Connecticut with their six children—and Mr. Calcutt’s remote job.



Photo:

Christopher Smith for the Wall Street Journal

‘It feels like Topeka wants me here,’ Mr. Calcutt said, calling the city an excellent fit for his sprawling family.



Photo:

Christopher Smith for the Wall Street Journal

The city of 127,000 and surrounding county first launched an incentive program in late 2019, aimed at helping local companies fill jobs. They added remote-worker incentives last year.

SHARE YOUR THOUGHTS

If you moved to work remotely during the pandemic, how did you decide where to go? Join the conversation below.

The program, with funding to cover roughly 15 to 20 new remote workers a year, has fielded some 535 applications since it rolled out in August of 2020 and approved 19 remote workers, according to Bob Ross, a spokesman for the local economic-development agency. Requirements include proof of employment outside the local county; if a recipient doesn’t stay a year, the program can claw the money back.

Ms. Gaona is temporarily living in Mexico’s Yucatán Peninsula while organizing renovations on her Topeka house. She said she welcomed the change from Chicago but has some concerns about life in a smaller city, including things like easy access to a gym and grocery store.

“We don’t have to stay forever,” she said. “But if we like it, we can.”

Write to Jon Kamp at jon.kamp@wsj.com

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Business

Boeing Faces New Hurdle in Delivering Dreamliners

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Federal air-safety regulators have stripped

Boeing Co.

BA 3.28%

’s authority to inspect and sign off on several newly produced 787 Dreamliners, part of heightened scrutiny of production problems that have halted deliveries of the popular wide-body jets.

The Federal Aviation Administration said its inspectors, rather than the plane maker’s, would perform routine pre-delivery safety checks of four Dreamliners that Boeing has been unable for months to hand over to its airline customers while it grapples with various quality lapses.

The agency has long empowered Boeing to perform the final safety signoffs on the FAA’s behalf, allowing it to issue what are known as airworthiness certificates needed to hand over new jets to airlines. The FAA said it has withheld the same authority on some of the planes in previous years to keep inspectors’ skills current.

Now, the FAA said its move to withhold final-approval authority was part of a broader set of actions directed at Boeing’s 787 production issues. A spokesman said the agency could decide to have its own inspectors sign off on more Dreamliners. “We can extend the retention to other 787 aircraft if we see the need,” he said.

A Boeing spokesman said Wednesday that the company has engaged the FAA throughout its efforts to resume Dreamliner deliveries and would follow the agency’s direction on final approvals as it has in the past. The spokesman said Boeing was “encouraged by the progress our team is making” on restarting the deliveries.

After halting deliveries in October, Boeing has built up an inventory of more than 80 newly produced, undelivered Dreamliners, according to aviation consulting firm Ascend by Cirium. Boeing has said it expects to resume deliveries by the end of March.

The wide-body jets have an excellent safety record and are used frequently on international routes. Boeing learned of the FAA’s move in January and has already factored the FAA signoffs into its expected delivery schedule, a person familiar with Boeing’s planning said.

Among specific aircraft slated for final approvals by agency inspectors are two Dreamliners ordered by

United Airlines Holdings Inc.

United expects to receive the planes in late March or early April, a person familiar with the Chicago-based carrier’s plans said this week.

The Boeing spokesman said the manufacturer would adjust its delivery plans if needed so it can take the time to conduct comprehensive 787 inspections “to ensure each meets our rigorous engineering specifications.”

The suspension of deliveries has cut off a significant source of cash paid by customers as the plane maker navigates the Covid-19 pandemic and weak demand in global air travel. Bernstein analyst

Doug Harned

has estimated the Dreamliner delivery slowdown could cost Boeing as much as $8 billion in cash flow through 2020 and 2021. He expects half of that to be recovered next year as airlines take delivery and pay the rest of the cost.

Boeing said in January that it would likely continue burning cash this year but has adequate liquidity after raising billions of dollars in debt last year. Investor optimism about the broader travel recovery helped lift its shares by 21% last week. The stock gained another 3.3% on Wednesday, valuing Boeing at $149 billion.

While limited in scope, the FAA move on the Dreamliner is similar to a step the agency took after two crashes of Boeing 737 MAX jets killed 346 people in 2018 and 2019.

The FAA stripped Boeing of its authority to perform the pre-delivery safety checks on MAX jets in late 2019. At the time, a faulty flight-control system and production-related missteps with that aircraft were under congressional and regulatory scrutiny. The FAA approved the 737 MAX to resume passenger flights last year.

The Dreamliner lapses are among several quality problems Boeing has faced in recent years in its commercial, defense and space programs.

Many of the 787 quality lapses involve tiny gaps where sections of the jet’s fuselage, or body of the plane, join together. Problems have emerged in other places, too, including the vertical fin and horizontal stabilizer at the tail, according to a March 12 FAA summary of the agency’s regulatory actions viewed by The Wall Street Journal.

Boeing has previously disclosed problems with a factory process used to generate small shims—materials used to fill the small gaps where the aircraft sections are joined together. Such gaps could lead to eventual premature fatigue of certain portions of the aircraft, potentially requiring extensive repairs during routine, long-term maintenance.

In its summary, the agency said it would hold on to its Dreamliner approval authority “until it is confirmed all shimming issues are resolved and airplanes conform to the FAA-approved design.”

Write to Andrew Tangel at Andrew.Tangel@wsj.com

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Business

Is Travel Coming Back? Airports Have Busiest Days Since March 2020

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Airline executives said they are starting to see a path out of the coronavirus pandemic as more passengers resume travel, following a weekend when airport volumes hit their highest levels in a year.

Delta

DAL 2.33%

Air Lines Inc. bookings began picking up five or six weeks ago as people have begun making plans for spring and summer, Chief Executive Officer

Ed Bastian

said at an industry conference Monday.

“We’ve seen some glimmers of hope over the last year, but they’ve been false hope,” Mr. Bastian said. “But this seems like it’s real.”

Airline stocks climbed Monday. Shares of

United Airlines Holdings Inc.

UAL 8.26%

rose 8.3%, while shares of

American Airlines Group Inc.

AAL 7.70%

climbed 7.7% and Delta shares rose 2.3%.

The pandemic brought travel to a near halt last spring. Travel restrictions and fear of infection kept people at home and out of airports for most of the year: U.S. airlines carried 60% fewer passengers in 2020 than in 2019, bringing passenger traffic to the lowest level since the mid-1980s, according to the Bureau of Transportation Statistics.

Major U.S. airlines lost about $35 billion in 2020. But on Monday, United and Delta said they could stop bleeding cash this month.

That was hard to imagine at the beginning of this year. Airline executives said January and February were even weaker than they expected, as a high numbers of cases, the rise of more contagious variants, and new Covid-19 testing requirements for people arriving from abroad had a chilling effect.

Executives said they remain cautious. The Centers for Disease Control and Prevention still advises against travel, and the number of people passing through U.S. airports is still half—or less—of what it was for most days in 2019, according to the Transportation Security Administration.

But the numbers are climbing. Airports screened nearly 1.36 million people Friday and more than 1.34 million people on Sunday, two of the busiest days since March 2020.

Numbers of new Covid-19 cases are dropping, and distribution of vaccine doses has picked up. President Biden said earlier this month that the U.S. will have enough vaccines for all American adults by the end of May.

Some states, including New York and Connecticut, are relaxing rules requiring that inbound travelers quarantine.

And there is more to do once people arrive. California, for instance, has paved the way for

Walt Disney Co.

’s Disneyland and other attractions to reopen at limited capacity if certain test positivity benchmarks are met. State and local governments—even in heavily restrictive states such as Michigan and Illinois—are allowing restaurants to seat some patrons indoors again.

Southwest Airlines Co.

LUV 1.75%

and JetBlue Airways Corp. also said Monday that more people are making plans to travel, booking vacations or trips to visit friends and family, helping to pare expected revenue declines this quarter.

Amy Curtis, who lives in Arizona, has been vaccinated since the end of February. When she learned over the weekend that her mother in Pennsylvania had also received her second shot, Ms. Curtis decided to book a visit.

“It was one of those impulsive things,” she said. “Life is so short—I feel like I need to take this opportunity. I don’t know when I may have it again.”

Ms. Curtis said she doesn’t yet feel comfortable traveling just for fun or vacation. But others are hitting beaches and ski resorts, according to airlines and analysts. JetBlue sold more bundled flight-and-hotel vacation packages last week than ever before, Chief Executive

Robin Hayes

said at the conference hosted by

JPMorgan Chase

& Co.

Bookings to destinations such as Florida and Hawaii, while still down from 2019 levels, are holding up better than other areas, according to data from ForwardKeys, a travel-analytics company. Domestic bookings were 42% of 2019 levels in the first week of January but were at 64% of 2019 levels in the first week of March, according to its data.

“There has been progressive growth in U.S. domestic bookings every week since the beginning of the year,” said

Olivier Ponti,

vice president of insights at ForwardKeys.

The recent uptick in flight bookings is helping to stem the amount of cash the carriers have been losing daily, executives said Monday. Airlines have been on track to burn through $150 million in cash a day during the first three months of this year, according to trade group Airlines for America.

United CEO

Scott Kirby

said at the conference Monday that the company expects its cash flow to turn positive, excluding debt payments, this month. Mr. Bastian also said Delta expects to stop burning cash as soon as this month.

“We know that we can’t yet put Covid in the rearview mirror,” Mr. Kirby said, noting that the airline remains unprofitable and would have to focus on repaying the debt it has taken on. But he said he expects there could be a steady travel boom on the way after a year when many people suspended or curtailed leisure experiences.

Airline executives have long said that travel demand would roar back once more people are vaccinated. While many international borders remain closed and businesses aren’t rushing to resume client meetings and conferences, executives said there are signs that pent-up demand is returning.

“Our last three weeks have been the best three weeks since the pandemic hit,”

American Airlines

AAL 7.70%

CEO

Doug Parker

said.

Airports in Paris and Singapore as well as airlines including United and JetBlue are experimenting with apps that verify travelers are Covid-free before boarding. WSJ visits an airport in Rome to see how a digital health passport works. Photo credit: AOKpass

Carriers are also on firmer financial footing, having secured three rounds of government aid to cover the costs of paying workers, in addition to billions of dollars of private funding. The American Rescue Act that President Biden signed into law last week includes $14 billion to cover salaries and benefits for airline workers in exchange for pledges not to furlough or lay off employees until the fall. That brings the total amount of government payroll support for airlines to $54 billion.

American Airlines also said last week it would raise $10 billion by putting up its frequent-flier program as collateral.

Mr. Parker said, “For the first time since this crisis hit a little over a year ago, we at American are not looking to go raise any money.”

How the Reopening Will Affect You

Write to Alison Sider at alison.sider@wsj.com

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