Starbucks tells workers to return to office 3 days a week

Howard Schultz

David Ryder | Reuters

Starbucks corporate employees will be returning to the office at least three days by the end of the month.

Starting Jan. 30, employees within commuting distance will be required to report to the coffee giant’s Seattle headquarters on Tuesdays, Wednesdays and a third day decided on by their teams. The memo didn’t specify what qualified as commuting distance.

Workers closer to regional offices will also be required to come in three days a week, although the specific days aren’t mandated.

The coffee giant’s corporate workforce has been working remotely since the start of the pandemic. In September, Starbucks asked those workers to work from the office one to two days a week. But CEO Howard Schultz wrote in a memo to employees on Wednesday that badging data showed employees weren’t adhering to that.

The new policy is meant to “rebuild our connection to each other and synchronize teams and efforts,” said the memo from Schultz, who is departing the company this spring. He also compared corporate workers’ continued remote work to baristas, who never had that option.

Schultz stepped in as interim chief executive in April after former CEO Kevin Johnson retired. In his third stint at the company, he has announced a $450 million plan to reinvent Starbucks and fix what he called “self-induced mistakes.”

Starbucks isn’t the only company to mandate a stricter return-to-office policy recently. Bob Iger, returning for his second term at Disney, told employees on Monday that they must return to the office. Elon Musk set higher expectations for in-office attendance at Twitter after he acquired the social media company. And Apple mandated employees return to work three days a week back in September.

Disney opposes Nelson Peltz push to join board, names Mark Parker chairman

Mark Parker to replace Susan Arnold as Disney chair

The Walt Disney Company on Wednesday named Mark Parker, the executive chairman of Nike, its next chairman of the board, while also announcing it opposes activist investor Nelson Peltz’s attempt to join the board.

Disney’s announcements signal a potentially big and messy fight. Nearly two months ago, Peltz’s Trian Fund Management took an approximately $800 million stake in the company and began seeking a board seat. Trian reportedly wants to make operational improvements and reduce costs, and it has expressed its opposition to Bob Iger’s reappointment as Disney’s CEO.

“While senior leadership of The Walt Disney Company and its Board of Directors have engaged with Mr. Peltz numerous times over the last few months, the Board does not endorse the Trian Group nominee, and recommends that shareholders not support its nominee, and instead vote for all the company’s nominees,” Disney said in its release Wednesday.

Peltz is set to reveal more in a filing later Wednesday, CNBC’s David Faber reported.

The new drama at Disney comes after a rough year for the entertainment giant’s stock as soaring streaming costs and a slim slate of theatrical releases ate into profits. Shares of the company closed Wednesday at $96.33. A year ago, Disney was trading at around $160 a share.

Parker, who remain Nike’s executive chairman, will succeed Susan Arnold. Her 15-year term limit at Disney will to an end after the company’s next annual meeting of shareholders. The date for the meeting has yet to be announced. Disney’s board will be reduced to 11 members following Arnold’s departure.

Mark Parker

Chris Ratcliffe | Bloomberg | Getty Images

“During his four decades at Nike, Mark has led one of the world’s most recognized consumer brands through various market evolutions and a successful CEO transition, and he is uniquely positioned to chair the Disney Board during this period of transformation,” Arnold said in a statement Wednesday. Parker has been a member of Disney’s board for seven years.

Iger’s stunning return in November came with a promise of a two-year stint that would spark renewed growth. The CEO also plans to help find his next successor, after the tenure of his previous handpicked replacement, Bob Chapek, fell apart.

Disney previously announced companywide cost-cutting measures in November, including a ban on all but essential work travel and a freeze on new hires for all but a few critical positions. Iger upheld that hiring freeze when he returned to the helm of the company later that month.

“Mr. Iger’s mandate is to use his two-year term and depth of experience in the industry to adapt the business model for the shifting media landscape, rebalancing investment with revenue opportunity while bringing a renewed focus on the creative talent that has made The Walt Disney Company the envy of the industry,” the company said.

–CNBC’s Jessica Golden contributed to this report.

Alphabet to cut staff of health sciences unit Verily by 15%

The Verily website is displayed on a laptop computer in an arranged photograph taken in Arlington, Virginia, on Thursday, May 7, 2020.

Andrew Harrer | Bloomberg | Getty Images

In an email to employees on Wednesday, Verily CEO Stephen Gillett said the company will lay off 15% of its staff in a restructuring move, as it strives for financial independence from parent company Alphabet.

Verily, which specializes in health sciences, is one of Google’s sister companies, operating within Alphabet’s “Other Bets” category.

It’s the first known layoff to hit the Google parent company following a wave of industry layoffs and fears of a recession. Although Google has so far avoided the widespread job cuts that have hit other tech companies like Meta, employees have grown anxious if they could be next, CNBC has reported.

Gillett’s email instructed staff to work from home for the remainder of the week as Verily’s physical offices will be closed on Thursday and Friday. “Those who are in the office the office today can return home now,” it stated, specifying that the instruction also goes for employees who work from Google offices.

Some of Verily’s projects have included a contact lens that can detect diabetes symptoms, which was halted in 2018, and Project Baseline, an effort to aggregate health data with research organizations. It also provided a Covid-19 testing platform, which former President Trump highlighted at the start of the pandemic. 

Some of Alphabet’s Other Bets include their own equity structure, CFO Ruth Porat explained in 2019, and Verily has been raising money from outside investors for several years. In 2017, Verily took in $800 million of outside capital from Singapore’s Temasek, and has since raised more than $2 billion in several more equity rounds.

Gillett said the cuts reflect discontinued programs and team “redundancy,” according to the emails, which were viewed by CNBC. It says it will offer severance and outplacement services “in the coming weeks and months” but did not provide details yet.

Gillett’s note stated that it will be “reducing or sunsetting” some parts of the business while increasing investment in others. Specifically, Verily will be discontinuing some early stage products, including “remote patient monitoring for heart failure and micro needles for drug delivery,” the email states. “We cannot do everything and have had to make some difficult choices,” wrote Gillett. The email said the company would hold an all-hands meeting Jan. 18 to explain the changes in more detail.

Gillett’s note also outlines several executive changes and the departure of Jordi Parramon, the president of Verily’s devices businesses who had been with the company “since its early days.”

The note said the company will notify laid off employees with an email sent to their Verily and personal emails entitled “Important Update Regarding Your Role.” Those who still have jobs will receive an email titled “Your Role at Verily.” Those who work out of the U.S. will hear from their business leaders on Wednesday or Thursday, the note stated.

“While communicating via email is not ideal, this was a deliberate decision, enabling us to communicate as efficiently and simultaneously as possible. We’re also taking today and the rest of the week to ensure each impacted Veep has a personal discussion with a leader and HR partner to discuss the details, answer questions, and provide support through the transition,” read the note.

“As we move into Verily’s next chapter, we are doubling down on our purpose, with the goal to ultimately be operating in all areas of precision health,” the note stated. “We will do this by building the data and evidence backbone that closes the gap between research and care. We will also focus on building a financially independent company and a thriving company culture.”

Alphabet and Verily did not immediately respond to requests for comment.

What borrowers need to know about Biden’s student loan repayment plan

Valentinrussanov | E+ | Getty Images

The Biden administration rolled out a new proposal this week to dramatically lower monthly payments for some federal student loan borrowers.

If and when the overhauled income-driven repayment plan becomes available, some people could see their bills decrease by as much as a half, according to the U.S. Department of Education.

As student debt has become a bigger burden on households, more borrowers have enrolled in income-driven repayment plans, which date back to the mid-’90s. These plans cap borrowers’ monthly bills at a share of their discretionary income with the goal of making their debt more affordable to pay off.

Between 2010 and 2017, the share of undergraduate borrowers registered in the plans swelled to around 25% from 11% , and that percentage continues to rise.

Here’s what you need to know about the proposed plan.

How does the new plan differ from existing ones?

Who will qualify?

The new option should be available to borrowers with undergraduate and graduate student loans, although undergraduate borrowers will have lower payments.

Those with Parent Plus loans won’t be eligible to enroll in the overhauled plan.

Why salaries in the U.S. don't keep up with inflation

When will the option become available?

Is the forgiven debt taxable?

Flexport to lay off 20% of its global workforce

Ryan Petersen, chief executive officer of Flexport, participates in a panel discussion during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 4, 2022.

Bloomberg | Bloomberg | Getty Images

Supply chain software startup Flexport is laying off 20% of its global workforce, or roughly 640 employees, according to a memo from co-CEOs Ryan Petersen and Dave Clark.

Petersen started Flexport in 2013 because he figured there had to be a better way to manage the flow of goods that get put on cargo ships, planes, trucks and railroads and transported all over the world. The company’s freight forwarding and brokerage services are in the cloud, enabling it to analyze costs, container efficiency, and greenhouse gas emissions quickly and with more accuracy than legacy systems.

The company topped last year’s CNBC Disruptor 50 list, as supply chain bottlenecks roiled the global economy and it raised $900 million from investors at an $8 billion valuation. But now the co-CEOs say the company is being challenged as higher interest rates around the world hit demand.

“While we are looking forward to what’s to come in 2023, we must also make hard decisions necessary to set us up for long-term success. We are overall in a good position, but are not immune to the macroeconomic downturn that has impacted businesses around the world. Our customers have been impacted by these challenging conditions, resulting in a reduction to our volume forecasts through 2023. Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company,” they wrote.

Last year, the company announced that Clark, the former worldwide consumer chief at Amazon, would take the helm as CEO of Flexport on Sept. 1, replacing Petersen, who plans to transition into the role of executive chairman this March.

“As the economy recovers, we will be ready to be the Flexport that we all want to be–the one stop for customers to make the movement of goods around the world easy. But to do that, we’re going to need to be nimble, fiscally responsible and focused on building fast with operational excellence,” the memo reads.

The company said layoff packages will vary by geography, but for U.S. employees will include 12 weeks severance, 6 months extended health care, 2022 bonus payment, equity vesting acceleration including dropping the vesting cliff for those with 6 months or more of tenure, immigration support, and ability to opt into an alumni talent directory to help with future job opportunities.

Flexport joins a long list of tech companies cutting jobs after going on a hiring binge during the Covid pandemic.

Last week, Amazon said it would cut 18,000 jobs, more than the online retailer initially estimated last year, while Salesforce reduced its head count by more than 7,000, or 10%. Coinbase announced a 20% workforce reduction on Tuesday. Elon Musk slashed about half of Twitter’s workforce after taking the helm as CEO last year, and Meta cut more than 11,000 jobs, or 13%.

CNBC is now accepting nominations for the 2023 Disruptor 50 list – our 11th annual look at the most innovative venture-backed companies. Learn more about eligibility and how to submit an application by Friday, Feb. 17.

What the proposed ban on noncompete clauses means for you

FTC proposes new rule to ban non-compete clauses

Job hopping is widely considered the best way to improve your career prospects and pay.

Sometimes, noncompete clauses stand in the way. These contracts are meant to protect the investments companies have put into their businesses and employees. It’s estimated that more than 30 million workers — or roughly 18% of the U.S. workforce — are required to sign one before accepting a job.

Recently, the U.S. Federal Trade Commission proposed a new rule banning the use of noncompete clauses in employee contracts, which suppresses wages, hampers innovation and prevents entrepreneurs from starting new businesses, the agency said.

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The proposed rule would also require companies with existing noncompete agreements to scrap them and to inform current and past employees that they have been canceled.

“That’s part of what makes this so radical,” said Michael Schmidt, a labor and employment attorney at Cozen O’Connor in New York. Not only is “the federal government taking this action broadly but with practically no exception.”

As a result, the impact will be felt by companies with employees who are governed by noncompetes as well as companies looking to hire workers who are bound by noncompetes, said Benjamin Dryden, a partner at Foley & Lardner in Washington, D.C., who specializes in antitrust issues relating to labor and employment.

“This regulation will affect, more or less, every business in the country,” he said.

Noncompetes are increasingly used across industries

South_agency | E+ | Getty Images

“Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand,” FTC Chair Lina Khan said in a statement. 

In many cases, noncompetes affect white-collar workers in fields such as finance and technology but they are increasingly used across a wide range of industries, the FTC said, “from hairstylists and warehouse workers to doctors and business executives.”

One report from the White House and U.S. Department of the Treasury found that 15% of workers without a college degree are subject to noncompete agreements, as are 14% of workers earning less than $40,000. 

A ban could boost wages by nearly $300 billion a year and narrow the pay gaps between white workers and minorities, as well as between men and women.

If passed, this regulation “will open up more competition between companies for workers,” said Najah Farley, senior staff attorney at the National Employment Law Project.

Noncompetes degrade wages and working conditions by eliminating one of the most effective means workers have to improve their job quality — advocating for or moving to a better job.

Najah Farley

senior staff attorney at the National Employment Law Project

“Employers have taken advantage of the lack of laws and regulations in this area to push these agreements onto unsuspecting workers across all income levels and job titles,” Farley said.

“Noncompetes degrade wages and working conditions by eliminating one of the most effective means workers have to improve their job quality — advocating for or moving to a better job,” she said.

“When appropriately used, noncompete agreements are an important tool in fostering innovation and preserving competition,” Sean Heather, the U.S. Chamber of Commerce’s senior vice president for international regulatory affairs and antitrust, said in a statement. 

An outright ban is “blatantly unlawful,” Heather said. “Congress has never delegated the FTC anything close to the authority it would need to promulgate such a competition rule.” 

There are still several steps before the proposed regulation will go into effect, including the “inevitable litigation” challenging the FTC’s authority, Schmidt cautioned.

This rulemaking process could take up to a year or even longer if it gets tied up in the court system, Schmidt said.

What employees should do now

Thomas Barwick | Getty Images

What employers should do now

Companies should also take advantage of the FTC’s 60-day comment period and “let their voices be heard,” Schmidt advised.  

This is meant to be a “constructive process,” Dryden said. “If you think this will do harm to your legitimate business, submit comments to the FTC explaining your thoughts.”

“I wouldn’t be surprised if the FTC ends up scaling back this regulation,” he added.

Still, “there was clearly momentum building toward this,” Dryden said. In fact, many states already have limitations on noncompete agreements and it’s not surprising the federal government is testing a blanket ban under Section 5 of the FTC Act, which prohibits unfair methods of competition, he said. 

Nassau County GOP officials call on Rep. George Santos to resign

(The press conference is scheduled to start at 11:30 a.m. ET. Please refresh the page if the above video doesn’t start at that time.)

Top Republicans in Nassau County, New York, called on GOP Rep. George Santos to immediately resign Wednesday for fabricating major details of his resume.

“He’s disgraced the House of Representatives and we do not consider him one of our congresspeople,” Nassau County Republican Party Chairman Joseph Cairo said of Santos at a press conference.

The latest blow to Santos came as the embattled freshman congressman, who was sworn into office early Saturday morning, has admitted making up key elements of his personal life, and is now under scrutiny by federal and local lawmakers.

Santos has been caught embellishing and, at times, outright lying, about his past, including his claims that he worked on Wall Street.

Santos has apologized to anyone “disappointed by resume embellishments,” but he vehemently denies committing any crimes.

Cairo has previously said that Santos has “broken the public trust by making serious misstatements regarding his background, experience and education, among other issues.” As a member of Congress, Santos represents parts of Queens and Nassau County, a region of Long Island in New York. House Republican leadership have been quiet regarding Santos since he’s been sworn into Congress.

“Obviously, he’s addressed some of the concerns that we’ve had. In New York, they’re having a lot of internal conversations too. But at the end of the day, you know, he was seated, nobody objected to him being seated,” House Republican Majority Leader Steve Scalise, R-La., told CNBC on Wednesday after being asked whether Santos will serve his full two-year term.

Santos has said that all he’s guilty of is embellishing his resume and has committed no crimes.

The lies and embellishments he told during the election have also led to scrutiny from prosecutors in the Eastern District of New York who are examining Santos’ finances, including potential irregularities involving financial disclosures and an over $700,000 loan Santos made to his campaign while he was running for Congress during the 2022 midterms, according to NBC News.

The Campaign Legal Center, a nonpartisan campaign finance watchdog, filed an ethics complaint with the Federal Election Commission against Santos on Monday for allegedly violating campaign finance laws. Santos told reporters that he’s done nothing unethical.

Santos’ fundraising efforts during his successful 2022 run was also based, in part, on some of the false claims he’s made about his past. He would suggest to donors that he was Jewish when he was not and falsely told people he worked at Wall Street banks that don’t have any record of his employment. A Santos campaign staffer impersonated as Kevin McCarthy’s chief of staff in order to raise money for the campaign, CNBC and The Washington Times reported.

Did Trump donate his salary in 2020? Tax returns don’t tell full story

Former President Donald Trump arrives at his Mar-a-Lago home on Dec. 31, 2022.

Joe Raedle | Getty Images

When former President Donald Trump’s tax returns were issued publicly Dec. 30, some news reports suggested he didn’t donate his salary in 2020 — thereby breaking a campaign pledge — because the tax returns showed $0 of charitable gifts.

However, it’s unclear from the available data if he did or didn’t break his promise, due to how certain information is reported on tax returns, accountants said.

Here’s why: Trump reported a negative adjusted gross income in 2020, his last year in office. He didn’t pay federal income tax because he didn’t have any taxable income.

Trump’s -$4.8 million adjusted gross income in 2020 largely stemmed from $15.7 million in reported business losses that year from income sources like certain real estate, partnerships and S corporations, according to the tax returns. The House Ways and Means Committee released six years of Trump’s returns — 2015 to 2020 — after a lengthy fight to make them public.

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Taxpayers who itemize their tax deductions (instead of claiming a standard deduction) generally get a tax break for their charitable contributions. But that’s not the case if you report negative income and don’t pay income tax; you can’t get a tax deduction if there’s no income from which to deduct.

However, taxpayers can “carry forward” that unused tax break to future years — effectively using past charitable donations to reduce their tax bill later.

Trump may have done this in 2020 — though, again, it’s unclear. This “carry forward” tax maneuver is generally reported on a statement that’s separate from the Schedule A form that outlines annual itemized deductions, accountants said.

And that statement — typically a supporting document that’s attached to the tax return — wasn’t among the publicly released tax forms, said Hal Terr, a Princeton, New Jersey-based certified financial planner and tax partner at accounting firm Withum, Smith and Brown.

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Without that form, it’s unclear whether Trump reported a charitable deduction in 2020 and plans to use the associated tax benefit in future years.

“By looking at the return, you can’t say whether he did or didn’t without looking at the carryforward schedule,” Terr said.

A Trump spokesperson didn’t return a request for comment on this story. Trump had donated his $400,000 annual salary while in office in prior years.

IRS generally limits tax deductions for charitable gifts

How these carryforwards show up on tax returns may differ somewhat depending on the tax preparer and tax return software, accountants said.

For example, in 2017, Trump also reported a negative adjusted gross income, of -$12.9 million. That year, his Schedule A notes $1.86 million of charitable gifts made by cash or check. He couldn’t deduct these gifts due to his negative income, but the tax return references “STMT 16” — an apparent reference to an attached statement outlining a carryover of those donations.  

There isn’t a similar reference to a tax statement on Trump’s 2020 return — but that doesn’t mean the carryover didn’t occur.

“I think the difference is there are two different tax providers [and] how they prepare the return,” Terr said.

Top 10 highest returning ETFs in 2022

Last year was a brutal one for investors. The S&P 500 gave up more than 18% in 2022, and the broad bond market surrendered 13%.

But over short periods, there’s a good chance at least one exchange-traded fund is still performing well. ETFs are baskets of stocks that track the performance of a market index but trade inexpensively on an exchange like a stock, making them popular choice among retail investors.

While many ETFs are designed to track broad market indexes, more niche funds offer investors exposure to virtually any slice of the market, and one is bound to be working. But what works in one year may not work in the next, or over the long term.

“If we look at the top of the NFL standings, we can have a pretty good idea that those are the best teams,” says Russ Kinnel, director of manager research at Morningstar. “It doesn’t work that way in investing. There’s much more luck and randomness involved.”

You don’t have to look very hard at the list of the top-performing ETFs to get a sense of what worked in an otherwise bleak 2022.

The top performing ETFs in 2022: a fund tracking stocks in Turkey, one designed to hedge against hikes to interest rates and a selection of ETFs that invest in the energy sector. (Notably, this list excludes leveraged and inverse ETFs, which are generally considered tools of options traders unsuitable for long-term investors.)

While this list is helpful to understand what went on in 2022, it isn’t necessarily an indication of how any of these funds will perform in the future.

Why these ETFs stood out in 2022

It doesn’t get much more random than investing in an index of Turkish stocks — for the average U.S.-based investor, at least. But in a year when stocks sank the world over, that index returned 106%.

After a grisly 2021, Turkish shares turned things around in 2022, thanks largely to the country’s central bank slashing interest rates during a period when everyone else was raising them. With inflation through the roof (it hit 85.5% in Turkey at one point this year) and the value of the lira eroding, Turks turned to the stock market in the hopes of protecting their cash from rising prices.

The majority of the rest of the list reflects a gangbusters year for the energy sector. The Russian invasion of Ukraine contributed to a spike in oil and natural gas prices as the U.S. and European Union sought to crimp Russian energy exports.

As a result, oil and natural gas firms in the S&P 500 delivered an average return of more than 59% in 2022. None of the other 10 sectors managed a positive return.

How to invest in ETFs in 2023

It can be tempting to buy last year’s winners in the hopes that they can continue an upward run. But be careful, investing experts say. The trends that drive stock prices one way or another can change quickly.

In hindsight, some of the drivers behind these ETFs’ success may seem obvious. “Predicting sector performance can look deceptively easy,” says Kinnel. “You can say it was obvious that energy would be good. But look at performance in individual years, and you’ll see it’s actually really hard.”

It’s difficult to predict how any investment or group of investments will behave in the near term. While knowing how an investment has performed recently can be a data point in your larger analysis, it should never be the sole reason you buy, says Todd Rosenbluth, head of research at ETF research firm VettaFi.

“The adage that past performance isn’t a predictor of future results is likely going to be just as relevant in 2023 as it was throughout the history of investing,” he says. “The market environment this year is going to be different.”

Rather than asking, “What have you done for me lately?” step back and look at any prospective fund’s long-term performance. By looking at a fund’s last several calendar years, you can get a sense of how it performs year in and year out in different types of markets, both in absolute terms and relative to peer funds.

“A single-year performance is information, not a verdict,” says Kinnel.

More important, consider the specific role any fund might play in your long-term investing plans. While it may seem attractive to bet on the next slice of the market to take off, you’d be wise to avoid devoting major space in your portfolio niche funds, which can be volatile and unpredictable, experts say.

Funds that track stock market sectors may seem like an intuitive way to invest in the market, but don’t invest unless you already have a broad-based core portfolio, says Rosenbluth.

“These should be complementing your strategy rather than being your broader strategy,” he says.

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I live in an airplane in the woods for $370/month — take a look inside

FAA halts all U.S. departures to fix system outage

Shannon Stapleton | Reuters

Thousands of U.S. flights were delayed Wednesday morning after the Federal Aviation Administration suffered an outage of the system that sends messages to pilots.

The FAA said on its website that domestic departures would be paused until 9:30 a.m. ET. The agency said it was working to restore the Notice to Air Missions System. All flights currently in the air were safe to land, the agency said.

The White House said Transportation Secretary Pete Buttigieg had briefed President Joe Biden on the outage. “There is no evidence of a cyberattack at this point, but the President directed DOT to conduct a full investigation into the causes,” White House press secretary Karine Jean-Pierre said in a tweet.

More than 3,500 U.S. flights were delayed on Wednesday, according to FlightAware. Once the ground stop is lifted, residual delays could last hours from the backup.

“This technology issue is causing significant operational delays across the National Airspace System,” said Airlines for America, an industry group that represents major U.S. carriers, including Delta, American, United, Southwest and others.

Austin-Bergstrom International Airport in Texas said in a tweet that arriving and departing passengers should expect delays throughout the day.

The incident comes just weeks after bad weather during the busy holiday travel period prompted mass flight disruptions across the U.S. and days later, more than 15,000 Southwest Airlines flight cancellations after the carrier buckled from all the schedule changes.

Southwest is preparing to cancel flights on Wednesday to avoid further disruption, Casey Murray, president of the Southwest Airlines Pilots Association, told CNBC.

Shares of Southwest were about 1.5% lower in premarket trading Wednesday. Shares of other major airlines were little changed.

This is breaking news. Please check back for updates.