June 32005

June 3, 2005

Payroll Growth Surprisingly Slow

U.S. employers added only 78,000 workers to their payrolls last
month, far fewer than expected, a government report showed today, but
the unemployment rate reached its lowest level since September 2001,
Reuters reported. “Payroll employment continued to grow over the
month in health care and construction, but was little changed in the
other major industry sectors,” the Labor Department said today. It
was the weakest month for non-farm job growth since August 2003. It also
marked a sharp slowdown in job creation after a 274,000 job surge in
April. However, the department said the unemployment rate moved down to
5.1 percent from April’s 5.2 percent as its separate survey of
households found employment growth slightly outstripping the expansion
of the workforce, the newswire reported.

Market Driving Risky Mortgages

Adjustable-rate and interest-only loans together accounted for 63
percent of all loan originations in the second half of 2004, the
Washington Post reported. Meanwhile, about a fourth of
buyers nationwide are taking interest-only loans, according to
LoanPerformance, a San Francisco-based company that tracks loan
originations. “It’s higher than we’ve ever seen in
recent years and probably ever,” said Doug Duncan, chief economist
of the Mortgage Bankers Association. Economist Charles W. McMillion,
president of MBG Information Services, said the trend could prove
financially hazardous both to borrowers and to the banks that make the
loans. “The rate at which these new financial instruments are
being used should be very troubling to regulators,” McMillion
said.

Delta Revises American Express Financing Deal

American Express Co. has agreed to ease the terms of a loan to Delta
Air Lines to match changes in a similar loan from General Electric Co.,
the airline said in a regulatory filing, Reuters reported. American
Express and GE in December agreed to extend the airline $1.1 billion in
financing. But the Atlanta-based carrier, hit by high fuel prices and
competition from low-cost carriers, is again fighting to avoid a
liquidity shortage later this year. As part of that effort, Delta this
week reached an agreement with GE to relax certain requirements under
its $630 million credit agreement with the airline.

UAL Reports Operating Loss of $47 Million for April

United Airlines on Thursday said its April operating loss was $47
million, which the bankrupt carrier said represented a $28 million
year-on-year improvement despite higher fuel costs, Reuters reported.
UAL Corp., the parent company of United, said mainline passenger unit
revenue rose 7 percent from a year earlier. Unit costs increased 7
percent overall, while decreasing 2 percent excluding fuel costs. The
airline also said it had met the terms of its debtor-in-possession
financing for the month.

Airline Shares Rally on Strong Continental Numbers

Airline shares were led higher yesterday by Continental Airlines
Inc., which posted stronger-than-expected May traffic that analysts said
should pave the way for a second-quarter profit, Reuters reported.
Continental shares were up $1.01, or 7.5 percent, at $14.47 in early
afternoon trading on the New York Stock Exchange, just off a 15-month
high reached earlier in the day.

Hawai's Bankruptcy Filings Jump 35 Percent

Hawai’s bankruptcy filings soared nearly 35 percent in May,
ahead of the new bankruptcy law, the Honolulu Advertiser
reported. There were 360 filings last month, versus 267 in May of last
year, according to figures released yesterday by the U.S. Bankruptcy
Court’s Honolulu office. During the first five months of the year,
filings were up about 2 percent from the same period a year earlier.

Hawaiian Airlines to Exit Bankruptcy Protection

Hawaiian Airlines Inc. will emerge from bankruptcy protection more
than two years after seeking protection from creditors, its parent
company, Hawaiian Holdings Inc., said, Reuters reported. The
Honolulu-based carrier filed for chapter 11 in March 2003, the second
time it sought court protection from creditors, after failing to win
concessions from aircraft lenders amid a severe slump in air travel.
Hawaiian Airlines said it had lined up necessary financing including $60
million from a series of 5 percent subordinated convertible notes to be
purchased by RC Aviation; a $50 million secured credit facility from
Wells Fargo Foothill; and a $25 million secured revolving loan from a
third lender.

Amcast Dumps Pensions

Amcast Industrial Corp. has become the latest member of the
nation’s smokestack industry to transfer its pension obligations
to the federal government, the Deal reported. The auto
parts maker on Tuesday won court approval of a motion to terminate its
pension plans through an oral order from Judge Lawrence S.
Walter in the U.S. Bankruptcy Court for the Southern District
of Ohio in Dayton. The move leaves the Pension Benefit Guaranty Corp.
facing an unsecured claim of $83 million, according to Jean R.
Robertson, counsel for the unsecured creditors at McDonald Hopkins Co.
in Cleveland.