%1

Congress should pass a new economic-relief package this year, Senate Majority Leader Mitch McConnell said on Wednesday, as prospects for Democrats’ multitrillion-dollar stimulus bill faded along with their chances for full control of the government, the Wall Street Journal reported. Lawmakers have been deadlocked for months over further aid, with Republicans insisting on liability protections for businesses and Democrats seeking aid for state and local governments. With the outcome of Tuesday’s elections still in doubt, McConnell (R-Ky.) signaled that he would try to move this year, with President Trump assured of still being in office for at least that time. “We need another rescue package,” McConnell said. “Hopefully the partisan passions that prevented us from doing another rescue package will subside with the election. We need to do it, and I think we need to do it before the end of the year. McConnell said he would support including more funding for schools, hospitals and a popular small-business loan program, but not a more sweeping proposal that Democrats have sought. He also noted that Congress will have to move to keep the government running before its current funding expires on Dec. 11. McConnell said that he and House Speaker Nancy Pelosi (D-Calif.) agreed to pass full-year spending bills in December.

Pet-supply retailer Pet Valu Inc., buckling under the pressure of restrictions related to the coronavirus pandemic, plans to close its nearly 360 stores and warehouses in the U.S., WSJ Pro Bankruptcy reported. The specialty retailer of premium pet food and supplies said Wednesday it expects to wind down all of its 358 stores and warehouses in the Northeastern and Midwestern U.S., as well as its corporate office in Wayne, Pa. “After a thorough review of all available alternatives, we made the difficult but necessary decision to commence this orderly wind down,” said Jamie Gould, Pet Valu’s recently appointed chief restructuring officer. Pet Valu, owned by consumer-focused private-equity firm Roark Capital Group, said that its stores have been hurt by the pandemic, which has prompted a raft of retailers to file for bankruptcy and close stores. The U.S. company licenses its name and contracts for certain services from Pet Valu Canada Inc., a separate entity that isn’t part of the wind-down. The Ontario-based company will continue to operate its roughly 600 stores, franchise locations and e-commerce site in Canada. The U.S. chain, which has been operating for more than 25 years, said it expects to begin store-closing sales in the coming days. In the meantime, all Pet Valu stores in the U.S. remain open. The company said it has stopped taking online orders on its Pet Valu U.S. e-commerce site.

U.S. private payrolls increased less than expected in October and activity in the services industry cooled, providing early signs of a slowdown in economic growth as fiscal stimulus diminishes and new COVID-19 infections surge across the country, Reuters reported. The recovery from the coronavirus pandemic could also be impacted over the next few months by political uncertainty following Tuesday’s cliffhanger presidential election, which economists warned could cause businesses to be more cautious about spending decisions. The election hung in the balance on yesterday, with a handful of close-fought states set to decide the outcome in the coming hours or days. “This is not a good outcome for the economy since the headwinds from rising Covid cases, troubled state and local government finances and falling incomes as unemployment benefits expire, are growing in strength,” said James Knightley, chief international economist at ING in New York. Private payrolls increased by 365,000 jobs last month after rising 753,000 in September, the ADP National Employment Report showed on Wednesday. Economists polled by Reuters had forecast private payrolls would advance by 650,000 in October. Job gains last month were broad, though they were concentrated in industries directly impacted by the coronavirus crisis, including the leisure and hospitality sector. The resurgence in COVID-19 cases across the country could lead to renewed business restrictions to slow the spread of the respiratory illness as winter approaches.

Mexican airline Aeromexico has requested permission from U.S. bankruptcy court to dismiss 1,830 employees in a cost-saving measure to weather the economic shocks of the coronavirus crisis, according to court filings filed yesterday, Reuters reported. The proposed layoffs, of 855 unionized workers and another 975 who do not belong to a union, would save the company $44 million on a recurring annual basis, Aeromexico said. Although the cuts will first cost the company $31 million in severance benefits, Aeromexico said the expected outcome “significantly outweighs the program’s one-time cost.” Aeromexico sought approval from the court to carry out the layoffs by the end of the month, according to the court filings. The company did not specify which positions would be eliminated. Aeromexico in June began a chapter 11 restructuring process in the U.S., becoming the third Latin American airline to file for bankruptcy protection, and has since received approval for up to $1 billion in financing. Read more. 

With the COVID-19 pandemic grinding international travel to a halt, experts on an online panel at ABI’s International Insolvency Forum set for Nov. 18-20 will provide their insights into distressed non-U.S. airlines filing for chapter 11 protection, and how their cases may differ from domestic carriers. Click here to register. 

Senate Majority Leader Mitch McConnell (R-Ky.) said that he expects Congress to move another coronavirus relief package “right at the beginning” of 2021, breaking from Speaker Nancy Pelosi (D-Calif.), who told reporters Thursday she wants to get a deal in the lame-duck session, The Hill reported. “We probably need to do another package, certainly more modest than the $3 trillion Nancy Pelosi package. I think that’ll be something we’ll need to do right at the beginning of the year,” McConnell said on Friday. “We could target it particularly at small businesses that are struggling, and hospitals that are now dealing with the second wave of the coronavirus, and of course the challenges for education, both K-12 and college,” the GOP leader said. McConnell offered a slower timeline than other lawmakers, who expect a deal to move after the election but before the end of the year or before the end of President Trump’s first term in January. Pelosi told reporters on Thursday of her expectation of reaching an agreement with the Trump administration in the lame-duck session.

A new phase of the economic crisis is looming for the winner of Tuesday’s presidential election: potentially massive defaults by jobless Americans on consumer loans as the chances for more federal relief this year diminish, Politico reported. Both President Donald Trump and Democrat Joe Biden have called for robust new rescue packages for an economy still suffering from the pandemic, but Congress's inability to agree on key issues such as the size of unemployment benefits has kept the talks at an impasse for months. Now, millions of Americans are running out of money and will face hard choices between food purchases and payments on rent, credit cards and student loans. Generous unemployment benefits and stimulus checks given out earlier this year helped many people weather the early months of the crisis — with some even managing to increase their savings. But that support has faded and some of it will run dry by the end of the year. JPMorgan Chase Institute found that in August alone, typical unemployed families spent two-thirds of the additional rainy day funds that they’d built up over the previous four months. The “Lost Wages Assistance” aid program that Trump ordered after the expiration of more generous federal benefits — including a $600-a-week boost in jobless payments that ended on July 31 — helped bolster some families in September. But by early this month, much of that small pot of money had already been depleted. As a result, the largest U.S. banks warned investors this month that they expect credit card delinquencies to start mounting early next year. And with coronavirus cases spiking in places like the Midwest, pressure could increase on already struggling small businesses, pushing jobless numbers back up. In a Census Bureau survey this month, roughly a third of small businesses reported only having enough cash to get them through a month or less.

Exxon Mobil Corp. said yesterday that it could cut its global workforce by about 15 percent, including deep white-collar staff reductions in the U.S., as the COVID-19 pandemic batters energy demand and prices, Reuters reported. Exxon and other oil producers have been slashing costs due to a collapse in oil demand and ill-timed bets on new projects. The top U.S. oil company earlier outlined more than $10 billion in budget cuts this year. “The impact of COVID-19 on the demand for Exxon Mobil’s products has increased the urgency of the ongoing efficiency work,” the company said. An estimated 14,000 employees globally, or 15 percent, could lose jobs, including contractors, spokesman Casey Norton said. The figure will include losses from restructurings, retirements and performance-based exits. Exxon had about 88,300 workers, including 13,300 contractors, at the end of last year.

Delta Air Lines Inc. and the union that represents its pilots have reached a preliminary cost-cutting deal that will prevent furloughs until Jan. 1, 2022, the union said yesterday, Reuters reported. Delta MEC, a unit of the Air Line Pilots Association, said that the agreement — which still needs approval from Delta’s nearly 13,000 pilots — will cut monthly minimum guaranteed hours by 5 percent. In September, Delta reached a tentative agreement with the negotiating committee of its pilots’ union to reduce the number of furloughs by 220, bringing the new total number of job reductions to 1,721. The airline industry has been hit hard by the coronavirus outbreak as travel has been restricted amid the pandemic, with Delta and other airlines focusing on cutting costs, boosting liquidity and restoring customer confidence.