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October 15, 2004
Shoppers Spring Back to Life in September
Shoppers propelled sales at the nation’s retailers last month
by a strong 1.5 percent, the Washington Post reported. The
sizable gain reported by the Commerce Department today, came after
shoppers took a bit of a breather in August, causing sales to dip by 0.2
percent. September’s strength was led by a rebound in sales at
automobile dealerships, yet consumers also spent on a wide variety of
goods—including electronics and appliances, building materials,
garden supplies and clothing. The sales figure for September was much
better than the 0.6 percent rise that some economists were
forecasting.
Carper Almost ‘Unglued’ by Defeat of Class Action
Measure
Sen. Thomas Carper (D-Del.) told business executives yesterday that
the Senate’s GOP majority was to blame for the collapse of a
compromise bill to overhaul the rules for class action lawsuits, Reuters
reported. He said election-year maneuvering spelled the end of a bill he
co-sponsored and was supported by business interests. Carper said he was
“bewildered” that GOP leaders failed to move the bill
through the Senate, even though 63 senators pledged their support for
the legislation.
Deliberations on the bill fell apart in July, after Senate Majority
Leader Bill Frist (R-Tenn.) tried to bar senators from offering
unrelated amendments on all issues except the minimum wage. Frist needed
at least 60 votes to block a filibuster by invoking cloture on his
procedural motion. But Carper and most other Democratic co-sponsors of
the bill joined with their Democratic colleagues and a few Republicans
to reject cloture on a 44-43 vote.
US Airways
Judge Approves Finance Extension for U.S. Airways
A federal judge on Thursday approved an agreement between the
government, lenders and US Airways to extend financing needed to keep
the bankrupt airline flying until mid-January, Reuters reported. Stephen
Mitchell of the U.S. Bankruptcy Court for the Eastern District of
Virginia signed off on the deal, which permits US Airways to keep
drawing from the balance of nearly $1 billion in loans, mostly backed by
the government, that were secured in 2003 at the end of the
company’s last bankruptcy.
The agreement with the federal Air Transportation Stabilization
Board, Bank of America and the airline’s top investor, Retirement
Systems of Alabama, requires US Airways to keep a certain amount of cash
on hand each week.
US Airways Presses for Court Imposed Cost Cuts
Record-high fuel prices have eroded US Airways’ financial
projections in just the past few weeks, and have heightened the need for
immediate court-imposed cost cuts on union workers, the company’s
CFO said on Thursday, Reuters reported. David Davis told a bankruptcy
court judge the company has lowered its worst-case cash estimates for
the next five months by up to $70 million due largely to fuel prices
that have topped $54 per barrel, the newswire reported.
Pilots Union Agrees to Cuts at Northwest
Northwest Airlines and its pilots union reached tentative agreement
yesterday on a deal that would save the airline $300 million in labor
costs, the New York Times reported. Leaders of the Air Line
Pilots Association, which represents pilots at Northwest, will now
decide whether to submit the two-year agreement to members for a vote.
The tentative settlement includes $265 million in cuts, the first
granted to the airline by any of its labor groups. It comes more than a
year after Northwest first sought the cuts. As part of the deal,
Northwest said, salaried employees will take cuts worth $35 million.
Before the tentative agreement can be carried out, Northwest must
renegotiate a $975 million credit arrangement, which expires a year from
now.
Citigroup, Bank of America Profits Rise
Citigroup Inc. and Bank of America Corp. on Thursday posted
double-digit gains in third-quarter profit, driven by growth in consumer
lending, deposits and credit cards, Reuters reported. Citigroup’s
profit rose 13 percent, while Bank of America’s earnings jumped 29
percent, although revenue at Citigroup, the world’s largest
financial services company, rose less than expected, and Bank of
America, the No. 3 U.S. bank, recorded a large one-time gain. “The
consumer was awesome, the standout in the quarter,” said Wayne
Bopp, an analyst for Fifth Third Investment Advisors in Cincinnati.
Fifth Third, with $35 billion of assets, owns shares in both banks.
“Bankruptcies are down, deposit growth and credit card income is
strong, and delinquencies are down,” Bopp said, the newswire
reported.
Loral Granted Extra Time to Submit Bankruptcy Papers
A bankruptcy judge on Thursday allowed Loral Space &
Communications Ltd., a satellite operator, another week to finalize a
summary of its reorganization that will be presented to the
company’s creditors, Reuters reported. Loral submitted its
reorganization plan in August, but asked the judge presiding over the
case for another week to prepare the so-called disclosure
statement—essentially a financial outline that is presented to
creditors. The disclosure statement was supposed to be submitted by
Friday, but a lawyer for the company said another week was needed to
“finalize all the documents.”
Delta Airlines
Delta and Pilots Strive to Avert Chapter 11 Filing
Negotiators for Delta Air Lines and its pilots union, are
“close to agreement” in several key areas of a new contract
aimed at helping the airline avert a bankruptcy filing, according to
people familiar with the talks, the Wall Street Journal
reported. The two sides plan to work through the weekend on the most
critical remaining issues, including guarantees on pensions and a
reduced pay scale for pilots.
Delta Air Lines Sees Loss Increasing
Delta Air Lines Inc. today forecast a much wider third-quarter loss
than Wall Street had estimated because of weak domestic fares and a
spike in fuel costs, driven by record-high oil prices, Reuters reported.
The airline, which again warned that it may have to seek bankruptcy
protection unless it can restructure its debt load, said it expects a
loss of $625 million to $675 million, or $4.99 to $5.39 per share,
compared with a loss of $164 million, or $1.36 per share, a year
earlier. The loss estimate includes charges of about $40 million for
selling eight planes and $14 million for its pilot pension plan.
ATA Airlines Announces Layoffs
ATA Airlines Thursday announced temporary layoffs of about 2 percent
of its staff amid speculation that the struggling carrier is holding
merger talks, the Wall Street Journal reported. ATA has
7,900 employees, including 2,500 in Indianapolis. Officials at the
company said the 156 layoffs will begin Oct. 31 and involve 150 flight
attendants, four flight engineers and two first officers. ATA said
autumn furloughs are usual because people travel less.
UK Enron Case Bankers to Appeal Extradition Ruling
Three British ex-bankers will appeal a decision by a UK judge that
they could be extradited to the United States to face trial over fraud
charges relating to disgraced energy group Enron, Reuters reported.
Their extradition case comes under UK legislation in force since January
this year, originally designed to speed up the extradition of suspected
terrorists. If found guilty in the United States the three have argued
they could face bankruptcy and up to 35 years in prison. They have
argued they would have to pay their own legal costs, estimated at $1
million to $2 million, and would likely not be granted bail. David
Bermingham, one of the three former bankers, said after the ruling they
would appeal to the High Court, the newswire reported.