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November 2, 2004
Consumer Spending Rebounds in September
Sales incentives from auto makers helped consumer spending in
September, but tepid income growth and dwindling savings levels raised
concern that the spending gains could be short-lived, the Wall
Street Journal reported. The Commerce Department said yesterday
that personal consumption rose 0.6 percent, after dropping by a revised
0.1 percent in August. Personal income rose 0.2 percent after a revised
0.3 percent increase in August. Disposable personal income, or income
after taxes, rose 0.1 percent in September, following a revised 0.2
percent advance in August, the online newspaper reported.
Delta in $500 Million Financing Deal with GE
Delta Air Lines Inc. on Monday said General Electric Co.’s GE
Commercial Finance has agreed to provide it $500 million of financing,
Reuters reported. Up to $100 million of the financing will be provided
by American Express Co. under a deal announced last week. The new
financing commitment comes just days after the airline won a tentative
agreement with its pilots that will save it $1 billion a year. Delta
hopes the pilot deal and other cost-saving measures will help it
restructure without seeking chapter 11 protection. American Express said
it would lend Delta up to $600 million last week, in part by extending a
credit card marketing partnership with the airline. Delta said $300
million of the GE financing will be in the form of a senior secured
revolving credit facility, and $200 million will be in the form of a
senior secured term loan, the newswire reported.
Kaiser Subsidiaries File for Liquidation
Kaiser Aluminum, taking another step towards its goal of emerging
from bankruptcy next year, said yesterday that two of its subsidiaries
have filed for joint liquidation, Reuters reported. Alpart Jamaica Inc.
and Kaiser Jamaica Corp. will have about $278.4 million in cash
available for distribution to creditors when the liquidation plan is
approved by the U.S. Bankruptcy Court of Delaware, the company said.
Citigroup Denies Claims of Parmalat Wrongdoing
Citigroup Inc. yesterday denied claims it helped defraud the
insolvent dairy group Parmalat, Reuters reported. In a filing with the
Court of Parma’s bankruptcy division in Italy, Citigroup said that
the administrator’s claims of complicity in Parmalat’s
accounting scandal are “factually baseless,” and
“unfounded and completely false.” In July Parmalat’s
administrator Enrico Bondi sued Citigroup and accused the bank of
helping defraud the Italian food firm, its shareholders and creditors of
billions of dollars, the newswire reported.
Airlines Will Lose $5 Billion This Year—IATA Executive
The global airline industry will lose about $5 billion this year and
more bankruptcies of carriers are likely, due in part to rising fuel
costs, an International Air Transport Association (IATA) official said
on Monday, Reuters reported. “We expected to have a profit this
year but we will have a loss, worldwide speaking… we will have
around $5 billion losses this year instead of $3 billion profit,”
Patricio Sepulveda, IATA vice president for Latin America and the
Caribbean, told reporters. “Unfortunately, we will have more
(bankruptcies). The picture is not good. Many, many airlines are facing
technical bankruptcy but they are still flying,” he said at the
opening of the 13th regional conference of the Airports Council
International of Latin America and the Caribbean.
Discount Airlines Become Vulnerable
The flood of bad news in the past week highlights how bad things are
economically for airlines, the Wall Street Journal
reported. Last week saw UAL Corp.’s United Airlines and US Airways
Group Inc. report combined third-quarter losses of more than half a
billion dollars. Discount airlines like America West Holdings Corp. and
AirTran Holdings Inc. suffered losses, too, while earnings were down
sharply at JetBlue Airways. And the financial collapse of the low-cost
carrier ATA Holdings Corp.—which filed for bankruptcy protection
from creditors—shows that the weakest airlines, whether they are
higher-cost carriers or discounters, are going to have a difficult time
anytime oil prices double, the online newspaper reported.
‘Operation Silver Screen’ Targets Bankruptcy Fraud
Throughout the United States
United States Attorneys have filed criminal charges against 21
individuals in 11 different districts on a variety of federal bankruptcy
fraud counts, Lawrence Friedman, Director of the Executive Office for
United States Trustees announced in a press release last week.
“Operation Silver Screen” spotlights the indictment of 21
individuals in 17 separate prosecutions and demonstrates the breadth of
enforcement actions taken by the Department of Justice in combating
bankruptcy fraud and protecting the integrity of the bankruptcy system.
These cases collectively involve: the concealment of more than $7
million in assets; illegal conduct by an attorney and a certified public
accountant; use of false Social Security numbers and false identities;
submission of forged documents; false statements; and various fraudulent
acts. More information is available at
href='http://www.usdoj.gov/ust/press.htm'>www.usdoj.gov/ust/press.htm.
Southwest Is Adding Flights to Protect Its Chicago Hub
Southwest Airlines said yesterday that it would add 16 flights a day
from Chicago Midway Airport, moving to protect a valuable hub amid the
fight breaking out over the assets of ATA Airlines, the New York
Times reported. Southwest said that beginning in January, it
would add the flights to 13 cities that it already served from Midway.
The announcement came a week after ATA filed for bankruptcy protection.
At the same time, ATA said it would sell its operations at Midway and
gates at La Guardia Airport in New York and Reagan National Airport in
Washington to AirTran Airways for $87.6 million.
Pricing Game Is on for Wal-Mart, Toys R Us
After the 2003 holiday price war, Toys R Us Inc. is pricing many
items close to its chief rival, Wal-Mart Stores Inc., Reuters reported.
“The last couple of years Toys R Us got caught off-guard in terms
of pricing, and they said they would be more aggressive this
year,” said Jim Silver, publisher of industry magazine Toy Book.
Shares of Toys R Us were up 4.7 percent at $18.86 in Monday afternoon
trading, its highest level in more than 2 1/2 years, the newswire
reported.