January 6, 2006
Delphi Given More Time to File Bankruptcy Plan
A federal bankruptcy judge yesterday granted auto parts maker Delphi Corp. six additional months, or until Aug. 5, to file a reorganization plan, Reuters reported today. Delphi expects to emerge from chapter 11 sometime in 2007 and will likely seek more extensions, Delphi's attorney, Jack Butler, told the court. Separately, bankruptcy Judge Robert Drain approved a schedule to hear on Jan. 27 part of Delphi's key employee compensation plan. Delphi's union workers, who face proposed job, wage and benefit cuts, and others have objected to the proposed compensation plan. The January hearing would focus only on compensation through June 2006, pushing back to July a hearing on proposed incentives tied to Delphi's planned emergence from bankruptcy. Read more.
With Consumers Wary, Bush Summons Cavalry
Frustrated that Americans are giving him low marks for economic stewardship, President Bush and about two dozen of his top aides will hit the road today to argue that the economy is in better shape than many people think, and that Bush deserves some of the credit, the Los Angeles Times reported today. They may find that much of the nation is skeptical, as polls show that more than half of the public thinks the economy is in bad shape and that Bush is doing a poor job of managing it. In one recent survey, three in 10 participants said the country was in a recession, even though the economy has grown for the last few years. Read more.
U.S. December Payrolls Rose 200,000, BN Survey Shows
U.S. employers probably added 200,000 jobs last month as their outlook for the economy improved and more workers idled by hurricanes found jobs, economists said before today's government report. The gain, the median of 64 forecasts in a Bloomberg News survey, would follow the addition of 215,000 jobs in November. The unemployment rate may have held at 5 percent. December's gain would mark the second month of recovery since Hurricanes Katrina and Rita knocked thousands of Gulf Coast residents out of their homes and jobs and caused energy prices to surge temporarily. Business investment in equipment and employment may play a larger role in economic growth this year, helping to overcome any weakness in consumer spending because of a slowdown in housing, economists said. The Labor Department is scheduled to release its report at 8:30 a.m. in Washington. Forecasts for payroll growth ranged from 130,000 jobs to 330,000. Estimates for the unemployment rate ranged from 4.9 percent to 5.1 percent. Read more.
Portland Archdiocese Vows to Continue Work Despite Court Ruling
Despite a court ruling that could significantly boost the amount the Portland Archdiocese must pay for sex-abuse settlements, archdiocesan leaders said the local church and its work will endure, the Catholic News Service reported yesterday. In a ruling that asserted the primacy of secular law over church law in the matter of bankruptcy, U.S. Bankruptcy Judge Elizabeth Perris said the archdiocese is the owner of parish and school properties. A similar decision last August against the Diocese of Spokane, Wash., is now under appeal, and Portland archdiocesan attorneys are studying appeal options. Read more.
Airlines
Northwest Angers Pilot Union with Plan
Bankrupt Northwest Airlines yesterday detailed plans for a new regional carrier, further outraging its pilots and other workers who have said they may strike if the airline wins court permission to void their labor contracts, Reuters reported yesterday. The No. 4 U.S. carrier said that the new airline would fly 70- to 100-seat planes in medium-sized markets, such as Minneapolis to Albuquerque and Detroit to El Paso. It views such markets as key to its growth. The Air Line Pilots Association said the proposal encroaches on the jobs of Northwest pilots, who have the right under their contract to fly all aircraft with 70 seats or more. Its flight attendants and ground workers' unions each asserted that they have the right to strike if the court allows Northwest to void the contracts. Read more.
United Tipped to Emerge from Bankruptcy, Delta Continues to Struggle
United Airlines has indicated that its creditors have voted to approve its reorganization plan, a significant development in its bid to come out of bankruptcy in early 2006, M-travel.com reported today. Even as analysts warn that fuel costs and a high debt load still present high hurdles for the carrier, experts are confident that United will leave court protection in February after missing previous timetables for exit. United has undergone extensive restructuring, including $7 billion in yearly cost reductions from renegotiated airplane leases, new labor contracts, some 20,000 job cuts and the elimination of pension obligations. Meanwhile, Delta Air Lines has recorded a net loss of $181 million for November. The November net loss was $164 million and its operating loss was $107 million on revenues of $1.29 billion and expenses of $1.4 billion. According to Associated Press, the airline pushed its red ink to $11.6 billion since January 2001. Read more.
Independence Air Makes Final Flight
Like Eastern, TWA and Pan Am before it, Independence Air flew into the history books last night, the Associated Press reported yesterday. The final arrival at Washington Dulles International Airport, Flight 687 from Tampa, Fla., touched down shortly after 9 p.m. EST. The pilot, Capt. Curt Selbert, said he played the Vera Lynn song "We'll Meet Again" on the plane's PA system. "Not a dry eye in the house, including mine," he said afterward. Read more.
Ford's Debt Rating Lowered Two More Steps
Even before Ford Motor introduces the turnaround plan it is calling "The Way Forward," Standard & Poor's put Ford's debt rating two notches further into junk yesterday, less than a month after a similar move at General Motors, the New York Times reported today. S.& P. warned that problems at GM, which might be forced to seek bankruptcy protection, could make a Ford comeback more difficult. The agency reduced its rating on Ford and its Ford Credit financing arm to BB- from BB+. It said the outlook for both was negative, meaning the ratings could be cut again if the company's prospects did not improve. Ford has $141.7 billion in outstanding debt. On Jan. 23, Ford is set to unveil its second turnaround effort in four years. Ford, which held about a quarter of American automobile sales at the start of the decade, ended 2005 with 17.4 percent, a level it was last at in the early 1980s. Read more.
Krispy Kreme Terminates Licenses for Franchisee that Sued It
Krispy Kreme Doughnuts Inc. has terminated the franchise rights of Great Circle Family Foods LLC, a financially troubled Southern California franchisee that last September sued Krispy Kreme, the Triad Business Journal reported yesterday. Krispy Kreme, based in Winston-Salem, Mass., said yesterday that it ended the franchise agreement because of Great Circle's failure to pay royalty and brand fund fees. The company said the franchisee had been given a chance to make the payments, but had refused. In the lawsuit, Great Circle charged that Krispy Kreme executives lied to them, overcharged them and was trying to force the company into bankruptcy. Read more.
Loretto Corp. Files for Chapter 11
A corporation closely affiliated with the Loretto Utica Center in Utica, N.Y., filed for federal bankruptcy protection, but its attorney said yesterday that residents shouldn't notice any change in adult-residence or health-care services, the Utica Observer-Dispatch reported today. Loretto-Utica Properties Corp. filed for chapter 11 protection Dec. 15, listing just more than $4 million in assets against $28.5 million in debt, according to court filings with the U.S. Bankruptcy Court for the Northern District of New York. Much of the debt was tied up in a $21 million mortgage with General Electric Capital Healthcare Fund, according to court documents. Loretto-Utica Properties Corp. also owes about $2.9 million to the city for various loans and other programs and another $1.3 million to the city Urban Renewal Agency, according to the documents. Read more.
International
Prague’s Setuza Threatened with Bankruptcy
The possibility that food company Setuza may end up in bankruptcy has increased, the Mlada fronta Dnes reported today, but Setuza rejected the information in a statement. If agreement is not reached on a debt-for-equity swap between the PGRLF fund and Setuza, PGRLF is ready to file for the company's bankruptcy. Bail-out agency Ceska Konsolidacni Agentura (CKA) has had its claim on Setuza, worth a nominal CZK 4.1 billion, appraised at CZK 410 million. The CKA will sell the claim to the Farming and Forestry Support and Guarantee Fund PGRLF, which is supposed to exchange the debt for Setuza shares. Read more.