Baidu Bubble Bursts and American Grounded
American Airlines announced it is planning to discontinue up to 30 routes due to the pandemic. The company received nearly $6 billion in federal aid early this year in a wider package to prop up the whole industry, but for American to receive the money they had to agree to certain conditions. American is required to maintain levels of service and prohibited from firing staff until September 30.
American is waiting until after that date to institute those changes, but the airline industry is lobbying for another large scale aid package. If American does not continue to follow the guidelines set out by the first federal aid package, they may be penalized in a potential future aid bill.
Baidu’s stock price dropped 8% in after-hours trading following a tumultuous afternoon for the Chinese tech company. China’s version of Google reported a 1% decrease in revenue last quarter, and its projections for next quarter show sales will continue to decrease.
Baidu is also the majority shareholder of iQiyi, a Chinese Netflix-style streaming service that disclosed it is under SEC investigation for allegedly inflating user numbers. The SEC probe into iQiyi came because of increased scrutiny on U.S.-listed Chinese companies after Luckin Coffee fabricated sales numbers earlier this year.
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