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October 4, 2004
Economy Improves, But Price of Oil a Threat
A rebound in construction and auto sales and continued manufacturing
activity suggest economic growth bounced back to an annual rate of 4
percent to 5 percent in the just-ended third quarter after slipping in
the second quarter to a 3.3 percent rate, the Wall Street
Journal reported. But high oil prices could be a problem, the
newspaper reported. Consumer spending slowed sharply in May and June
when oil topped $40 a barrel. Gasoline prices subsequently dropped and
resulted in a decline in long-term interest rates, which reignited home
sales. With crude oil prices up over $50 a barrel, the apparent rebound
appears threatened, the Journal reported.
US Airways
US Airways Ordered to Stop Maintenance Outsourcing
Bankrupt US Airways has been ordered by an independent arbitration
board to stop outsourcing certain maintenance work on Airbus planes, the
carrier’s mechanics union said on Friday, Reuters reported. The
International Association of Machinists said a three-member panel
assigned to resolve the dispute with the company said the airline was
“well aware” of its maintenance obligations under its
contract with the union and should not have farmed out work to an
Alabama subcontractor last year. “The company is ordered to cease
and desist in outsourcing Airbus (heavy maintenance) work,” the
System Board of Adjustment said in a partial summary of its ruling
disclosed by the mechanics union. A federal appeals court ordered the
case to arbitration in February, the newswire reported.
US Airways Pilots to Resume Talks on Pay Cuts
The pilots' union of bankrupt airline US Airways failed over the
weekend to agree to a new round of pay cuts and will resume its
deliberations on Tuesday, the New York Times reported. The
newspaper reported today that leaders of the US Airways pilots’
union will meet in Pittsburgh to consider a tentative agreement that
would grant $300 million in wage and benefit cuts to the struggling
airline. At a two-day meeting in Charlotte, N.C., this weekend, union
officials failed to agree on whether to send the deal to members for a
vote. Approval by the master executive council of the Air Line Pilots
Association, which represents US Airways’ pilots, is needed before
all pilots can vote on the deal, according to the newspaper.
Air Canada Exits Bankruptcy After 18-month Reorganization
Air Canada, having pared debt and labor costs by a third, emerged
from 18 months under bankruptcy protection with Deutsche Bank AG and
Canadian Imperial Bank of Commerce among its biggest shareholders,
Bloomberg News reported. Ontario Superior Court Justice James Farley and
creditors had cleared the plan by the Montreal-based carrier. The
carrier said it expects annual cost savings to reach C$2 billion ($1.57
billion) by 2006, mostly from employee givebacks and lower aircraft
lease payments. Air Canada needed lower expenses to compete with
low-cost WestJet Airlines Ltd. and Jetsgo. Air Canada projected in a
regulatory filing June 30 that it would have C$2.87 billion of long-term
debt when it exits bankruptcy, down from C$4.3 billion when it
filed.
Enron
Enron’s Chief Financial Officer Resigns
Enron Corp. on Friday said CFO Raymond Brown resigned to pursue other
job opportunities and will be replaced on an interim basis by Robert
Bingham, Reuters reported. Houston-based Enron is winding down its
operations by selling off pipelines and utilities. It’s expected
to emerge from bankruptcy later this year. Bingham, who will also serve
as Enron’s interim treasurer, has been an employee at Kroll Zolfo
Cooper, a consulting and crisis management firm led by Enron interim
Chief Executive Steven Cooper since 1999, the newswire reported.
California’s Claims Against Enron Must Stay in N.Y. Bankruptcy
Court
A federal bankruptcy judge in New York has barred California from
pursuing its claims in a pending suit against Enron Corp. arising from
that state’s energy crisis a few years ago, Law.com reported.
Judge Arthur Gonzalez, who also presides over the WorldCom
bankruptcy,
held that California, like most of the other Enron creditors and
claimants, must adjudicate its claims in his bankruptcy court. Read the
article at
href='http://biz.yahoo.com/law/041001/e24fc97b2554ff0579ec8a0527384204_1.html'>biz.yahoo.com/law/041001/e24fc97b2554ff0579ec8a0527384204_1.html.
Bankruptcy Court Approves Hawaiian Deal with Boeing
Hawaiian Holdings announced today that a bankruptcy court has
approved the previously announced restructuring and settlement between
the company and Boeing Co., Reuters reported. In a filing with the
Securities and Exchange Commission, Hawaiian said terms of the
agreement, relating to 14 Boeing aircraft, got court approval on Sept.
27. According to the filing, Boeing’s $66.5 million claim against
Hawaiian Airlines was also allowed.
Footstar Fights to Regain Concessions at Kmart
Footstar Inc. said on Friday it would fight to regain rights to
operate shoe concessions at Kmart stores, a key to the bankrupt shoe
retailer’s survival as it restructures its business, Reuters
reported. Kmart Holdings Corp., which owns 49 percent of the discount
family footwear concessions at its stores, said it opposed granting
those rights to Footstar, according to a motion filed on Thursday with
the U.S. Bankruptcy Court for the Southern District of New York.
Footstar concessions at Kmart stores account for the vast majority of
the footwear retailer’s revenue. Kmart said it could not get
reliable financial information from Footstar for the past 18 months, the
newswire reported.
WestPoint Stevens to Shut Down N.C. Plant That Employs 300
WestPoint Stevens Inc., the bankrupt maker of Ralph Lauren Home,
Martha Stewart and Disney Home sheets and towels, said it will close a
factory in Hickory, N.C., which employs about 300 workers, Bloomberg
News reported. The West Point, Ga.-based company said in a statement
issued by PR Newswire that shutting some U.S.-based manufacturing will
help the company operate more efficiently. The company has closed
factories as it prepares to reorganize its business. In January, the
company announced it was closing four factories in Georgia, Alabama and
Louisiana and firing 975 workers.
Auto Parts Supplier Files for Bankruptcy
Troy, Mich.-based Intermet Corp., an auto parts supplier to Ford,
Chrysler, Delphi Corp. and other automakers, has filed for federal
bankruptcy protection, United Press International reported. The
158-year-old company, which started as Columbus Iron Works, will
continue to operate under chapter 11 protection. The company did not
announce any layoffs or plant closings as it prepares to restructure.
Intermet blamed its financial woes on a sharp jump in the price of
steel, resin used to make plastic, and other raw materials, the
Detroit News said. Citation Corp., an Alabama-based
supplier of cast metal auto parts, filed for chapter 11 bankruptcy
protection last week.
Jacksonville Bankruptcy Court Goes Electronic
All attorneys filing a bankruptcy case in Jacksonville, Fla., are now
required to file their cases electronically, according to the
Financial News & Daily Record. According to an order
issued in June by the U.S. Bankruptcy Court’s Jacksonville
Division of the Middle District of Florida, bankruptcy cases filed by an
attorney via paper documentation will no longer be accepted. Individuals
without legal representation may continue to file their bankruptcy
pleadings on paper. A deputy in charge of the U.S. Bankruptcy
Court’s Jacksonville division said attorneys will have to complete
a mandatory training course to use the new filing system, the newspaper
reported. Read the full story at
href='http://www.jaxdailyrecord.com/showstory.php?Story_id=41655'>www.jaxdailyrecord.com/showstory.php?Story_id=41655.
Davenport Bishop Warns of Bankruptcy
Bishop William Franklin said the Roman Catholic Diocese of Davenport
lacks the financial resources to compensate victims of abuse by priests
and warned that a settlement could force the church into bankruptcy, the
Associated Press reported. Franklin also said that no decision had been
made for meeting the monetary demands set forth recently in negotiations
with 37 men who say they were sexually abused by priests in the diocese
during the past 50 years. “The diocese will make every effort to
settle these cases, but you must know that chapter 11 bankruptcy may be
the only way to fairly and honorably compensate all victims,” he
said, the newswire reported. The Davenport Diocese, like a number of
others around the nation, has been hard hit in the last five years by
sexual abuse lawsuits aimed at former priests, with some of the cases
dating back to the 1950s.
Three Banks to Pay $111 Million over WorldCom
Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp.
will pay $111 million to settle a lawsuit by the Retirement Systems of
Alabama over losses related to the collapse of WorldCom Inc. stock and
bonds, Bloomberg News reported on Friday. Court papers describing the
settlement were not immediately available. A lawyer for the Alabama
pension fund did not immediately return a call seeking comment. The fund
is also the lead investor in US Airways Group Inc., which sought chapter
11 bankruptcy protection last month. WorldCom sought chapter 11
protection in 2002 and emerged earlier this year as MCI Inc.