Axios Closer

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Tuesday ✅.

Today's newsletter is 695 words, a 2½-minute read.

🔔 The dashboard: The S&P 500 closed up 1.1%.

  • Biggest gainer? Oracle (+11.8%), the database software provider, beat expectations with results for its fiscal Q3.
  • Biggest decliner? Southwest Airlines (-14.8%) told investors that it was scaling back capacity growth expectations for this year. (See below.)

1 big thing: Boeing's troubles trickle down

Illustration: Maura Losch/Axios

Boeing's troubles are starting to cause some turbulence for major airlines, Nathan writes.

Why it matters: Carriers that were depending on new planes from Boeing to meet their growth plans are now scaling back expectations or scrambling to find other options.

Between the lines: Southwest Airlines today said it was lowering its 2024 capacity growth projection and re-optimizing schedules, driving its stock down 15% on the day.

  • Southwest — whose entire fleet is composed of Boeing 737s — noted an expectation that the manufacturer will deliver fewer 737 MAX aircraft than it previously expected, including no 737-7 planes this year.

Zoom out: Boeing is facing serious quality questions that have delayed production.

  • The FAA today said that an audit of the 737-9 MAX production line uncovered "non-compliance issues in Boeing's manufacturing process control, parts handling and storage, and product control."

The big picture: Fewer planes could mean less seating capacity and higher maintenance costs for airlines — and thus less revenue and more expenses.

  • With capacity growth projections now reduced 1–1.5 percentage points, Southwest is responding by implementing cost cuts, CEO Robert Jordan said on a conference call.

Other airlines, including Delta and United Airlines, have also been scrambling to compensate for Boeing delivery delays by securing Airbus planes.

Reality check: Airlines are balancing their near-term needs for aircraft with a longer-term view of the industry.

  • "We all need Boeing to be stronger, two years from now, five years from now, 10 years from now," Southwest's Jordan said. "And that takes precedent over delivery delays."

2. Charted: What drove February's inflation

Data: BLS; Chart: Axios Visuals

Gas prices are cheaper than this time last year, but they've been rising for the last several weeks — and that led to a higher-than-expected inflation jump in February, Nathan writes.

State of play: Gas prices were down 3.9% in February, compared with a year earlier, but up 3.8% from January.

  • Overall, the Consumer Price Index posted a 3.2% uptick over the last 12 months and a 0.4% jump over the previous month.

The big picture: For the second straight month, the CPI flashed signals that the 2023 disinflation trend may have stalled out at the start of 2024, our Axios Macro colleagues write.

3. What's happening

📺 Apollo Global Management reached out to CBS owner Paramount Global about a possible M&A deal. (Axios scoop)

🍼 Walgreens reached a settlement with New York over accusations that it overcharged for baby formula after the 2022 Abbott Nutrition recall. (Axios)

4. Game of TikTok

Shou Zi Chew, chief executive officer of TikTok, during a Senate Judiciary Committee hearing on Jan. 31. Photo: Kent Nishimura/Bloomberg via Getty Images

The House bill requiring Chinese-owned ByteDance to sell TikTok — or face a U.S. ban — will be voted on tomorrow morning.

  • However that goes, it faces a murky path through the Senate, Axios' Stef W. Kight and Stephen Neukam write.

State of play: TikTok launched an aggressive lobbying effort this week that includes its CEO holding meetings in the Senate and a campaign urging users to call their representatives.

  • Republicans and Democrats alike want to address the national security and data concerns posed by the Chinese Communist Party's control over ByteDance. But opinions vary on how best to do that.
  • And lawmakers have raised constitutional concerns over the House's legislation for specifically targeting TikTok.

What they're saying: "We need curbs on social media, but we need those curbs to apply across the board," Sen. Elizabeth Warren (D-Mass.) told Axios Pro's tech team.

Go deeper

5. Dry promotions 🧐

Illustration: Aïda Amer/Axios

"Dry promotions" are worthy of a raised eyebrow, Nathan writes.

The big picture: This is apparently the phrase to describe a promotion that doesn't come with a pay increase, according to the Wall Street Journal.

  • Dry promotions "present a career dilemma," WSJ reports. "And some data suggest they're becoming more common as companies manage their talent with tighter budgets."

💭 Nathan's thought bubble: It's a risky endeavor for employers who don't want to lose people to the competition to give them a better title — which will make them more appealing to other companies — without the money to show for it.

6. What they're saying

"Most of them don't include adequate measures to prevent misuse and keep drivers from losing focus on what's happening on the road."
— David Harkey, president of the Insurance Institute for Highway Safety, on a new IIHS finding that only 1 of 14 partially automated driving systems it tested received an "acceptable" rating.

Today's newsletter was edited by Pete Gannon and copy edited by Sheryl Miller.

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