August 16, 2004
US
Air Nearing a Chapter 11 Filing?
US
Air Nearing a Chapter 11 Filing?
US Airways Group Inc. could
seek bankruptcy protection by mid-September if it does not get the cost
cuts it needs, investment bankers working for the airline's pilot union
said in a report, Reuters reported. US Airways shares fell more than 9
percent on Friday, after the 26-page report by Glanzer Co.
released this week to 3,400 Air Line Pilots Association (ALPA) members,
essentially confirmed the No. 7 U.S. airline's wary outlook for its
future. Bill Pollock, chairman of ALPA at the Arlington, Va.-based
carrier, said in a letter that the union's leadership 'does not disagree
in principle with the conclusions' reached by the union's
banker.
US Airways, in response, said
it will not comment on the specifics of the report. 'But we do concur
with the conclusion that it is in the best interests of the company and
employees that we quickly reach consensual agreements with all of our
labor unions so that we achieve the necessary cost reductions and can
fully implement our transformation plan,' the airline said, the newswire
reported.
U.S. Opposes
United Air Plan for Pensions
U.S. pension
insurers planned to ask a bankruptcy court to block plans by United
Airlines to stop funding its pensions, which the government says are
underfunded by $8.3 billion, Reuters reported. The Pension Benefit
Guaranty Corp. (PBGC), which insures corporate retirement plans covering
44 million people, has little recourse beyond court intervention to stop
the airline from executing its intention to save huge sums by halting
pension payments while in chapter 11. United announced last month that a
new debtor-in-possession financing agreement with its lenders prohibited
it from making new retirement payments while in bankruptcy. United wants
to remain in bankruptcy through the end of the year.
The airline missed a $72
million contribution in July and does not plan to meet a $404 million
payment in September and a $91 million contribution in October. The
company says it needs to cut more from its cost-heavy balance sheet to
attract investors, the newswire reported.
Kmart Swings to Second-quarter
Profit
Discount retailer Kmart Holding
Corp. reported today that the company swung to a profit in the second
quarter, but same-store sales were still in decline, the Associated
Press reported. Same-store sales fell nearly 15 percent
during the quarter, and total sales fell 15.3 percent to $4.79 billion
from $5.65 billion last year. The company said reductions in promotional
events and newspaper advertising as well as unseasonably cool weather in
the current quarter hurt sales of summer seasonal products, including
lawn and garden merchandise. These declines were offset by improved
margins as Kmart lowered inventory levels and had fewer clearance
markdowns and payroll expenses.
With Delta
Reeling, Chief Plans Unusual Bet on Premium Routes
Seven months after taking over as CEO of
the third-largest U.S. airline, Delta Air
Lines CEO Gerald Grinstein is working feverishly to save Delta
from catastrophe again, the Wall Street Journal reported.
Already in trouble before
the Sept. 11 attacks and in near free-fall since, Delta has had losses
of more than $5.6 billion over the past three years and racked up $20.6
billion in debt. If it keeps burning through cash at its current rate of
more than $4 million a day, it may be forced to file for bankruptcy in
the fall, according to internal company calculations. Read the full
article at www.wsj.com(subscription
required).
Penthouse to
Emerge from Bankruptcy This Month
A
U.S. court
has confirmed a plan that would allow the publisher of adult magazine
Penthouse to emerge from chapter 11 bankruptcy protection
later
this month, a major debtholder said, Reuters reported. PET Capital
Partners LLC, the holder of 89 percent of the senior notes of publisher
General Media Inc., said the plan was confirmed by the U.S. Bankruptcy
Court for the Southern District of New York. Under this reorganization
plan, holders of the company's senior notes would exchange them for all
of the new common shares of the reorganized company, representing all of
the new common equity, plus $27 million in new 13 percent term loan
notes, the newswire reported.