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May 11, 2005
Asbestos Fund Would Benefit Companies—Consumer Group
U.S. asbestos makers and some large Fortune 500 companies would reap
billions in savings under proposed legislation to set up an asbestos
fund, the consumer group Public Citizen said yesterday, Reuters
reported. A day before the Senate Judiciary Committee resumes its work
on the bill to establish a $140 billion privately funded asbestos trust,
Public Citizen released estimates of how some large companies now facing
asbestos lawsuits would gain. Meanwhile a Republican senator whose vote
could be pivotal to the bill’s fate said he thought it represented
a “wealth transfer” from small asbestos defendant companies
to large ones. Sen. Sam Brownback (R–Kan.) said he was hoping to
amend the bill to ease the fund’s burden on small companies,
saying that if he succeeds, “there’s a chance I could”
vote for the legislation.
Judge Approves United’s Plan to Cut Pensions
A judge approved a deal yesterday between bankrupt United Airlines
and the government that will let the carrier terminate its pension plans
and save about $645 million annually over five years, Reuters reported.
United, a unit of UAL Corp., will grant the federal Pension Benefit
Guaranty Corp. up to $1.5 billion in securities to settle the
agency’s main claims in bankruptcy court and clear the way for it
to assume control of four plans. If carried out as planned by United, it
would be the largest corporate pension default in U.S. history. Judge
Eugene Wedoff of the U.S. Bankruptcy Court for the Northern District
of Illinois ruled after a day-long hearing on the unique settlement
opposed by United’s unions.
Delta Air Warns of Sizable Losses, Bankruptcy Threat
Delta Air Lines warned again that it expects to post
“substantial” losses for the rest of 2005 and could be
forced to seek bankruptcy-court protection if it can’t come up
with additional cash or renegotiate certain debt covenants, the
Wall Street Journal reported. The outlook, disclosed in the
Atlanta airline’s quarterly report to the Securities and Exchange
Commission, is the latest sign that steep job and wage cuts since last
summer and the restructuring of Delta’s route network
haven’t been enough to solve the financial problems at the
airline, the newspaper reported.
Hawaiian Airlines Pilots Ratify Labor Contract
Hawaiian Airlines pilots have ratified a new three-year labor
agreement, the final hurdle for the carrier to emerge from bankruptcy
protection, airline and union officials said yesterday, the Associated
Press reported. All six of Hawaiian’s unions have negotiated new
contracts, a condition for the carrier to exit from its two-year-old
bankruptcy reorganization. In March, the membership rejected a previous
agreement, which delayed the bankruptcy proceedings and caused
Hawaiian’s management to file a motion seeking U.S. Bankruptcy
Judge Robert Faris to impose a contract on the pilots.
Stelco Expects to Exit Protection by September
Stelco Inc.’s CEO said on Tuesday the insolvent steelmaker now
expects to emerge from bankruptcy protection in September, Reuters
reported. The company, which received protection under the
Companies’ Creditors Arrangement Act in January 2004, had
previously said it hoped to emerge from creditor protection by late June
or early July.
AaiPharma Files for Chapter 11 Reorganization
Drugmaker aaiPharma Inc. yesterday said it filed for chapter 11
reorganization in U.S. Bankruptcy Court in Delaware and completed a deal
to receive $210 million in debtor-in-possession financing, Reuters
reported. The Wilmington, N.C.–based company on Monday said it had
signed a pact to sell its pharmaceuticals divisions for $170 million,
which was contingent on the bankruptcy filing.
Wheeling Pittsburgh Turns Quarterly Profit
Steelmaker Wheeling Pittsburgh Corp. yesterday posted a quarterly
profit after a loss last year, Reuters reported. In a press release, the
Wheeling, W.Va.–based company that emerged from bankruptcy in
mid-2003 independent of holding company WHX Corp., said first-quarter
earnings were $8.1 million or 56 cents per share, compared with a net
loss of $6.7 million, or 71 cents per share, a year ago.
EU Decision on Alitalia May Come June 1
The European Commission may take a decision on whether to approve or
reject struggling Italian airline Alitalia’s restructuring plan on
June 1, a spokesman for the European Union (EU) executive said
yesterday, Reuters reported. “The commission may make a decision
in early June—possibly the first of June,” said commission
transport spokesman Stefaan de Rynck. He said competition experts and
others within the commission were currently studying the restructuring
plan to make sure it complies with EU rules on state aid.
Earnings Drop 46 Percent, May Stores Reports
May Department Stores, which has agreed to be bought byFederated
Department Stores, reported a 46 percent drop in first-quarter earnings
on Tuesday as it struggled with weak sales of adult apparel and seasonal
clearance markdowns, the Associated Press reported. The company, which
operates Lord & Taylor, Famous-Barr, the Jones Store, Filene’s
and other regional department stores, said its net income was $41
million, or 13 cents a share, for the three months ended April 30.
Maytag May Be on Verge of Ending Dividend
Following an 80 percent drop in first-quarter earnings and a
pummeling of Maytag’s share price in recent weeks, Maytag’s
board, scheduled to meet tomorrow, is widely expected to discuss the
continuing of the quarterly cash payout, which has stood at 18 cents a
share since 1998. Any cutback in the dividend could add pressure to
Maytag’s stock price, the newspaper reported.