May 10, 2004

U.S. Consumer Debt Up
$5.7 Billion In March

Consumer credit grew moderately
in March, as shoppers took out more loans for cars and other items,
according to a Federal Reserve report on Friday, Reuters reported.
Consumer debt, excluding mortgage-related credit, grew by a
smaller-than-expected $5.7 billion in March, the Fed said. February
credit growth was revised down, to a gain of about $900 million from the
previously reported $4.1 billion gain. Wall Street economists had
projected a $7.0 billion jump in borrowing. The March gain was led by
nonrevolving debt, which includes fixed-term loans for cars, boats,
tuition expenses and other items. The Fed report said nonrevolving
credit grew $3.1 billion in March, after a revised $700 million gain in
February. Revolving credit, which tracks credit and charge card usage,
advanced by $2.6 billion, up sharply from the revised $200 million gain
in February, the newswire reported.

US Airways Not Ruling Out 2nd
Bankruptcy

US Airways Group Inc. on Friday
said it hopes to begin implementing cost cuts by mid-year but that it
could consider another bankruptcy filing if it is unable to do so,
Reuters reported. The airline is seeking cost cuts of at least 25
percent and has turned to labor groups for more givebacks. Failure to
achieve the cost cuts 'will force the company to re-examine its
strategic options, including but not limited to asset sales or a
judicial restructuring,' US Airways said in a filing with the U.S.
regulators. The company has said it is considering the sale of some of
its assets, including its East Coast shuttle, Reuters
reported.

Settlement Hits Citigroup in
Pre-Trade



Citigroup's shares dropped more than 2 percent on Monday ahead of
the open after it said it would pay $2.65 billion to settle a
class-action suit, Reuters reported. The lawsuit had been brought by
holders of WorldCom securities who alleged that the bank had been a
participant in the massive fraud at WorldCom through its dealings with
the phone company, the newswire reported.

United Airlines CEO Says Loan
Deserved

United Airlines, which met
again this week with Washington officials to seek approval for a big
loan guarantee, says it has met all requirements and deserves the aid,
Reuters reported. CEO Glenn Tilton said United has met the terms for a
loan guarantee set out in the October 2001 federal legislation that
established the Air Transportation Stabilization Board (ATSB). No date
has been set for a vote by the three ATSB members from the Federal
Reserve, Department of Transportation and Treasury Department. Tilton
said United's business plan includes conservative projections about
future revenue along with significant cost cuts already in place. The
plan has not been made public, the newswire reported.

Low-cost ATA's Parent Posts
Wider Loss

ATA Holdings Corp., which
narrowly averted bankruptcy earlier this year by restructuring debt with
bondholders, on Friday posted a much wider quarterly loss on a charge
related to the debt exchange, Reuters reported. The parent of low-cost
carrier ATA also said it has asked pilots and flight attendants to
postpone scheduled pay raises for 2004 and 2005. The airline has been
struggling with rising fuel prices amid stiff competition, particularly
on its east-west routes. ATA Holdings posted a net loss of $64.7
million, or $5.47 per share, compared with a loss of $11.4 million, or
97 cents per share, in the same quarter a year earlier, the newswire
reported.

Retirees Sue Monsanto,
Pharmacia

A group of former Monsanto Co.
employees filed a lawsuit on Friday against the agrichemical company,
seeking to ensure coverage of an estimated $1.3 billion in benefits to
24,000 retired employees and their families, Reuters reported. 
 The suit was filed in U.S. Bankruptcy Court in New York where
Monsanto's former affiliate, chemicals maker Solutia Inc., is attempting
to sort through a high level of debt. The lawsuit also names Solutia as
a defendant, as well as Pharmacia Corp., a former Monsanto affiliate
that is now a subsidiary of Pfizer Inc., the newswire
reported.

size='3'>A Dubious Distinction

 

According to the Coalition for Litigation Justice,
953 asbestos cases were filed in Madison County, Ill last year, the
National Law Journal reported.
class='text1'>'How is it that one small county in one state is home to
one-quarter of all mesothelioma cases filed in the United States?'
former U.S. Attorney General Griffin B. Bell asked at a recent
symposium. Read the article at
href='http://www.law.com/jsp/article.jsp?id=1083783537860'>http://www.law.com/jsp/article.jsp?id=1083783537860.

New World Pasta Bankruptcy
Filing Expected (WSJ)

Pasta maker New World Pasta is
expected to seek chapter 11 bankruptcy protection as soon as today, the
Wall Street Journal reported. A privately held company with
$160 million of bonds and $139 million in bank loans, New World had been
trying for months to negotiate a deal with its creditors. The company
told 'people involved in the effort' that it intended to seek bankruptcy
protection in a Harrisburg, Pennsylvania federal court, the
Journal said.

Lawyers Warned About Becoming
Defendants

Lawyers at a major litigation
conference are being warned that instead of being seen as advocates for
their clients they themselves could become defendants in criminal
prosecutions and civil lawsuits, Reuters reported. Speakers at the
annual conference of the American Bar Association's litigation section
said the situation for attorneys had changed drastically since the Enron
Corp. scandal. A bankruptcy judge ruled in December that Enron's
creditors could sue two Houston law firms, an auditor and about three
dozen former executives in connection with the collapse, which cost many
former employees their retirement funds. 'Times are different now,'
Ellen Leggett, president of Leggett Jury Research of Pasadena,
California, told one session. She said that while there was nothing new
about jurors seeing corporations as greedy, they now saw some lawyers
and accountants as participants in wrongdoing, the newswire
reported.

Adventures in Cost
Cutting

The past 30 years are filled with examples of
companies that have tried to cut costs -- only to have their efforts go
awry, the Wall Street Journal reported. One example is the cost
cutting of Albert J. 'Chainsaw Al' Dunlap in 1998 at Sunbeam
Corp.'s, the household-appliance company that later filed for
bankruptcy-court protection. More recently there are examples like
AT&T Corp., Ford Motor Co., or American Airlines parent AMR Corp.,
whose share prices are lower today than they were five years ago,
despite aggressive cost-cutting efforts. Read the article at
href='http://www.wsj.com/'>www.wsj.com (subscription required).