Newsletter: California Inc.: United likely to face grilling over recent passenger incidents
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I’m Business columnist David Lazarus, and here’s a rundown of upcoming stories this week and the highlights of last week.
Trading resumes Monday after an inauspicious statistic Friday. Retail sales slipped despite a relatively healthy job market, down a seasonally adjusted 0.2% last month. Since the start of 2017, Americans have cut back on purchases at auto dealers and restaurants and bars, two major sources of sales gains in prior years. Consumer spending represents about two-thirds of total U.S. economic activity.
LOOKING AHEAD
Gas plan: The future of the Aliso Canyon gas storage facility will be the focus of a public hearing Monday evening in Northridge. The meeting, sponsored by the California Public Utilities Commission, will offer an opportunity for the public to comment on “the long-term feasibility of minimizing or eliminating the use” of Aliso Canyon, the site of a massive 2015 methane gas leak. The meeting begins at 6 p.m. at the Northridge Woman’s Club, 18401 Lassen St., Northridge.
Tax deadline: Tuesday is the deadline to submit your tax return to the IRS. Don’t complain — you got three extra days this year. The normal tax day, April 15, fell on a Saturday. The deadline would normally be shifted to Monday, except that’s when the District of Columbia observes Emancipation Day, which is actually April 16, but because that falls on a Sunday, the holiday was bumped to Monday. Under the tax code, legal holidays in Washington, D.C., affect the filing deadline nationwide.
Flying finances: United Airlines will hold a conference call and live webcast Tuesday to discuss its financial results from the first quarter of 2017. The airline could face questions about its customer service and public relations after last week’s forceful removal of a passenger. United has been the target of much outrage and ridicule over the incident that left Dr. David Dao bloodied. The carrier said it needed the seats of Dao and three other paying passengers for its own employees.
Church funding: On Wednesday, the U.S. Supreme Court — with newly appointed Justice Neil Gorsuch giving the panel a full roster of nine judges — will hear arguments in a long-pending religious-rights challenge to state bans on the funding of church schools. The dispute involves Trinity Lutheran Church in Columbia, Mo., and a state program that donates old tires used for “rubberizing” playgrounds. Nonprofits could obtain the tires, but Missouri officials turned down Trinity’s application because of the state’s ban on funding for churches.
Bank settlement: Wells Fargo and the attorneys who negotiated a $110-million class-action settlement with the bank have until Thursday to submit their plan to a federal judge. That plan will include estimates of how many of the bank’s customers might be eligible for the settlement, which aims to resolve a suit over the bank’s creation of unauthorized accounts. A handful of attorneys representing Wells Fargo customers in other cases have said they plan to object to the settlement plan and either continue fighting the bank in court or push for a bigger payout.
THE AGENDA
Monday’s Business section looks at the uncertain future of nuclear power. Westinghouse Electric Co. — long considered the leader in nuclear power development — has filed for bankruptcy protection. The move puts in jeopardy the completion of two nuclear plants in the Southeast that had been heralded as proof the industry’s future was still vibrant. It also comes as California nears elimination of its last remaining nuclear power plant.
STORY LINES
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Mystery infections: Over the course of eight months, a lethal bacteria infected 10 already critically ill infants in UC Irvine Medical Center’s neonatal intensive care unit — but the outbreak was not made public until last week. Orange County health officials have known about the continuing hospital-acquired infections since the middle of December, when lab tests confirmed that five infants had been infected by the same strain of a superbug. UCI doctors have still not found the source of the infections.
Go east: Residents of coastal Southern California are increasingly making the decision to move away — a trend many economists blame on a housing shortage driving rents and home prices sharply higher during the economic recovery. Many are looking toward the Inland Empire and nearby states for additional square footage and a lower mortgage payment.
Jobs moved: Sacramento will lose 1,100 jobs over the next 18 months as rocket engine maker Aerojet Rocketdyne plans to relocate or cut positions there and move jobs to Alabama, Canoga Park and other locations. The changes are the next phase of a multiyear plan initiated in 2015 to reduce costs and increase operational efficiency, the company’s CEO said. Sacramento jobs in space programs will move to Canoga Park, where the company has its space headquarters.
Harassment alleged: Another woman has accused Fox News anchor Bill O’Reilly of sexual harassment. Former TV news correspondent Wendy Walsh contends O’Reilly went back on a stated commitment to get her a position as a paid contributor at Fox News after she rejected his advances at a 2013 dinner meeting at Hotel Bel-Air. She is not seeking any monetary compensation from O’Reilly or Fox News, but has chosen to go public with her story “for my daughters.” She has also filed a complaint with the human resources hotline of Fox News parent 21st Century Fox.
Our bad: United Airlines Chief Executive Oscar Munoz went on an apology tour last week, pledging to change policies and reimburse customers on a flight in which a passenger was dragged off a plane — all in an attempt by the company to put behind it a raging public relations disaster. But experts in branding and crisis public relations say it may be too late to minimize the damage that video of the incident — and United’s original non-apology blaming the passenger — wreaked on the airline.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Investing insight: The success of money manager Guggenheim Partners, which oversees assets of $260 billion, can be traced to an idea Scott Minerd got from Adam Smith’s “The Wealth of Nations,” writes Bloomberg. Minerd’s idea set off a reorganization of the investment house — with striking results. “The $5.7-billion flagship Guggenheim Total Return Bond Fund has beaten 97% of its peers over the past five years, chalking up a better record than similar funds headed by fixed-income gurus.”
Defense contracts: A secretive Silicon Valley start-up is trying to force its way into the insular world of U.S. military contracting, Fortune says. Palantir Technologies “began an unprecedented battle eight years ago to crash a long-running, exclusive party involving the annual dispensing of hundreds of billions of taxpayer dollars.” But even though Chairman Peter Thiel is President Trump’s pal, the upstart company is struggling to unseat traditional contractors.
Tesla’s rise: Over the last month, stock in electric car maker Tesla has enjoyed an extraordinary surge. But now even some of Tesla’s biggest fans say the company is overvalued, the New York Times reports. Tesla’s stock price has risen so high that the Palo Alto company is at or near the market value of auto giant General Motors. Some worry that exuberant investors are ignoring the challenges of turning battery-powered cars into mass-market products.
Made in USA: The man who worked all his adult life to turn Tom’s of Maine from a maker of hippie toothpaste into a $100-million company is now turning his attention to making clothes, reports Inc. Tom Chappell believes he can upend the apparel industry by making clothes in the United States in an environmentally sensitive way. “He’s figured out how to source what he says is the finest wool fiber grown in America, and process the yarns, fabrics, dyeing, and sewing according to stringent environmental standards.”
Making games: The video game industry is evolving into a business dependent on outsourcing and temporary workers, the Wall Street Journal reports. A small group of full-time employees handle the most important tasks in developing a game, with the rest of the work is farmed out to contractors and subcontractors. “People who make video games are often hired quickly through Craigslist and gaming website Gamasutra or by word of mouth — and then are let go just as fast.”
SPARE CHANGE
OK, best movie involving video games (but not “based” on games)? Definitely not this unfunny loser from Adam Sandler. On the other hand, this one was pretty clever. I loved this one. But the digital trophy is shared by this classic and this classic.
For the latest money news, go to www.latimes.com/business. Mad props to Scott J. Wilson for helping put this thing together.
Until next time, I’ll see you in the Business section.
