The End of Mask Mandates

The good and bad of ending mask mandates

Major U.S. airlines have lifted mask mandates after a federal judge ruled that face coverings would no longer be required on airplanes, trains and other public transportation.

The ruling, which the Biden administration may appeal, comes as air travel is rebounding. More than two years into the pandemic, people seem eager to travel again, even though higher fuel costs have pushed up ticket prices. Delta had its best sales month ever in March. Even corporate travel is looking strong. While the end of mask mandates could accelerate these trends, it’s not necessarily a boon for airlines — or any company relaxing its masking rules.

Ditching face coverings might lead to more flight disruptions. It could mean more coronavirus cases among airline employees, which might disrupt schedules when staffing is already stretched. (Yesterday alone, thousands of flights within, into or out of the U.S. were delayed and more than 200 were canceled.) Delta also had to revise its mask update after initially incorrectly saying that the coronavirus had become “an ordinary seasonal virus.”

For flight crews, the mask changes could spur a different conflict. Enforcing mask rules was frustrating for the industry’s workers, especially flight attendants. (As of April 12, the F.A.A. had investigated 1,150 reports of unruly passengers this year, and more than 700 of those were related to mask wearing.) Without a mask mandate, the tension could be over seating arrangements, because some passengers may not want to sit near someone without a mask.

Ending mandates may have other ripple effects beyond airlines. Many people are already unnerved about Covid safety measures — whether they consider them too strict or too lax — and dealing with increasingly disjointed rules adds to the stress.

• A number of companies have started pressing employees to return to the office more regularly, and some workers, especially those with compromised immunity or unvaccinated children, may be reluctant to commute when there are fewer restrictions in place.

• The federal ruling on transit does not apply to state and local transportation agencies: In New York, masks are still required on the subway, but travelers can take them off on Amtrak trains or on public transportation in New Jersey.

• Uber and Lyft announced yesterday that they were dropping mask requirements in the U.S., but they noted that guidelines set by the cities and countries where they operate would supersede their own rules.

HERE’S WHAT’S HAPPENING

Netflix’s stock tanks after it loses subscribers for the first time in a decade. The streaming giant said subscriptions dropped by 200,000 in the first quarter, and the decline could get worse in the current quarter. Netflix attributed the results to factors like increasing competition, price increases and rampant password sharing.

Amazon faces new lawsuits in connection with a December warehouse collapse. The plaintiffs in the latest legal actions, including the family of a worker who died after a tornado struck the Amazon facility in Illinois, claim that workers tried to leave but were told by managers that they would be fired if they did.

No more free lunch at Goldman Sachs. The bank told employees yesterday that it would soon end the pandemic-era perk of free lunches for those who come into the office. Softening the blow, the bank also plans to distribute 15 percent of the carried interest of its private equity funds among top executives, a perk worth hundreds of millions of dollars, The Wall Street Journal reports.

The I.M.F. is the latest institution to cut its economic growth forecast. The organization said yesterday that global output was expected to slow sharply this year. The pandemic, rapid inflation and Russia’s war in Ukraine will be key topics in Washington this week, during the spring meetings of the I.M.F. and World Bank.

Blackstone gets into student housing in a big way. The private equity firm announced a nearly $13 billion deal to acquire American Campus Communities, which owns more than 200 properties near universities across the country. The deal, which adds to Blackstone’s $500-billion-plus real estate holdings, comes as an activist investor pressured American Campus Communities to sell.

Who will lend to the world’s richest man?

Ever since Elon Musk announced his intention to buy Twitter, the No. 1 question on Wall Street has been: How will he finance it? He has begun to try. His advisers at Morgan Stanley have been calling around to drum up interest from lenders to join in the $43 billion bid, DealBook’s Lauren Hirsch reports.

So far, Musk is focused on raising debt. Some of this could come from preferred debt and Musk borrowing against his Tesla shares. Tesla reports earnings today, and Musk may be asked about his plans for Twitter on the call.

A debt-heavy deal for Twitter would be the largest leveraged buyout in decades. But Twitter isn’t the sort of company that can take on a lot of debt. It produces about $1 billion in operating earnings per year, and analysts say it could handle about $20 billion in additional debt on its balance sheet. If Musk’s bid stays above $40 billion, that leaves a lot of equity for him to scrounge up.

Who will back him? Some investors, concerned about the risks of teaming up with the mercurial billionaire and a company as politically contentious as Twitter, are wary of getting involved in the bid. Underscoring the fraught politics of the situation, Gov. Ron DeSantis of Florida, a Republican, said yesterday that he would hold Twitter’s board “accountable for breaching their fiduciary duty” in its resistance to Musk’s bid. What’s more, Musk has not publicly articulated his plan for Twitter. He has also suggested that profit is not his focus, which won’t go over well with traditional Wall Street financiers. “This is not a way to sort of make money,” Musk said in an interview at a TED conference last week.

Musk also faces potential legal challenges to his bid. Former S.E.C. officials told DealBook that regulators could already be looking into how Musk handled his proposed takeover. Musk first filed the wrong form detailing his Twitter investment, and another form was filed late. “This is not rocket science,” said Harvey Pitt, a former S.E.C. chairman, calling the filing errors “serious and troublesome.”

S.E.C. scrutiny could complicate Musk’s bid, but it is unlikely to derail it. Pitt said lenders would not back away because of filing issues. Other Wall Street lawyers agreed that given Musk’s high-profile, large banks would probably be willing to lend to him even if he was under investigation by regulators. But Kenneth Abbott, a former chief risk officer of Barclays who is now at the Zicklin School of Business at Baruch College, said that banks would take a hard look at this sort of transaction. “I think lending officers and banks would generally be hesitant to extend credit to individuals under investigation by the S.E.C.,” Abbott said. “This isn’t necessarily an absolute statement, but there are reputational risks involved here.”

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“If employers are like, ‘Hey, yeah, you need to come into the office, you need to spend this money on gas, you have to eat at the office,’ people are going to go, ‘This is too expensive.’”

— Erika Lance, head of human resources at the software company KnowBe4, on how working from the office — the commute, coffee, food — is far pricier than it was when offices shut down in 2020.

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Government, guns and your money

Because governments buy guns to arm the police, taxpayer money makes up a significant chunk of the firearms industry’s income. So officials can use their procurement power to promote public safety. And they can even expand that effort to include financial institutions that handle government business and also work with gun makers.

A new report from the gun policy group the Brady Campaign looks at New Jersey’s efforts to take this approach. The analysis — shared first with DealBook — examined hundreds of pages of responses from the gun industry and financial institutions to inquiries from New Jersey, after a 2019 executive order required officials to promote responsible practices among those providing services to the state. The report sheds light on the role businesses can play in encouraging gun safety.

Financial institutions can do “a lot more,” said Christian Heyne, the vice president of policy at Brady. Ninety such institutions responded to the state, outlining their policies on doing business with the gun industry. Here are some examples:

• BMO Capital Markets does not provide banking services to companies that make or sell assault-style weapons or high-capacity magazines.

• Goldman Sachs does not invest its own money directly in businesses that are mainly focused on making handguns.

• U.S. Bank requires proof of a client’s compliance with the law and disclosure around fines or lawsuits relating to noncompliance.

Simply asking questions helps generate debate. A majority of respondents had broadly relevant policies focused on institutional risk, if not gun-specific guidelines. But Heyne noted that the state’s questions prompted many to make voluntary changes. The idea, he said, is to incentivize practices that align with a jurisdiction’s principles.

Procurement is a “cutting-edge” policy tool, said Josh Scharff, senior counsel at Brady. Scharff and his colleagues want more jurisdictions to follow a similar path, so that the few businesses that seem indifferent to public safety stop winning government contracts.

But some states are going the other way. For example, Texas passed a law last year requiring banks that underwrite municipal bonds there to certify that they don’t exclude the firearms industry. In Louisiana, officials last fall kept JPMorgan Chase out of a bond deal because it limited how it works with gun makers.

THE SPEED READ

Deals

• Just Eat Takeaway is considering selling off Grubhub, which it bought for $7.3 billion in a deal announced in 2020. (Bloomberg)

• Rupert Murdoch’s News Corp is reportedly set to enter the sports-betting market, joining with partners to start an online betting company in Australia. (WSJ)

• A consortium led by KKR has made a $14.9 billion offer to buy Australia’s largest private hospital operator. (FT)

Russia-Ukraine war

• After more than 30 years operating in Russia, the German software firm SAP joined the long list of businesses exiting the country. (Bloomberg, NYT)

• Multinational companies are still paying almost 200,000 employees in Russia. (FT)

• Wimbledon reportedly plans to bar Russian and Belarusian players from competing in the tournament. (NYT)

Policy

• Gov. Ron DeSantis of Florida is looking to revoke Walt Disney World’s special tax status. (WSJ)

• Ireland is considering banning crypto donations to political parties, aiming to protect elections from foreign interference. (Fortune)

• The Education Department announced one-time waivers to help millions of borrowers move closer to student loan forgiveness. (NYT)

Best of the rest

• “Feeling the Squeeze? How to Be a Thrifty Traveler as Prices Soar.” (NYT)

• You can probably guess which U.S. billionaire was mentioned the most on social media in the past three months. (Axios)

• Meet Joe Kahn, the next executive editor of The Times. (NYT)

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