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October 1, 2004
New Chapter Set to Begin for Slimmer Air Canada
A new chapter in the 67-year history of Air Canada was to begin on
Thursday as the airline prepared to emerge from 18 months of bankruptcy
protection a less indebted carrier, Reuters reported. Shares in the
restructured carrier, Canada’s largest airline and the
world’s No. 11, were to begin trading in Toronto on Monday.
According to its restructuring plan, Air Canada will have cut its
workforce by at least 17 percent and trimmed its fleet by 13 percent
from early 2003 levels, to feature more regional jets from Bombardier
Inc. and Embraer SA, the newswire reported.
SEC Charges Raymond James with Fraud
The U.S. Securities and Exchange Commission (SEC) on Thursday charged
brokerage firm Raymond James Financial Inc. with fraud over the
misconduct of a former broker in 1999 and 2000, Reuters reported. The
SEC said it also brought additional charges against the St. Petersburg,
Fla.-based firm; a former president, Stephen Putnam; and a former branch
manager, David Ullom, for failing to properly supervise the activities
of former broker Dennis Herula. Raymond James CEO Richard Averitt said
the firm believes the fraud charge against the firm is “wholly
unjustified.”
Enron
Decision in Two Weeks on UK Enron Extradition Case
A U.K. judge is set to rule in two weeks on a case involving three
former U.K. bankers fighting extradition to the United States over
alleged fraud charges involving Enron executives, which concluded on
Thursday, Reuters reported. Judge Nicholas Evans said he would come back
with a decision on Oct. 15. The three Britons, Gary Mulgrew, Giles Darby
and David Bermingham, are alleged to have conspired with Enron
executives, including former finance chief Andrew Fastow, over the sale
of a stake in an Enron entity in 2000. U.S. prosecutors have accused the
three of seven counts of “wire fraud” through the U.S.
banking system and are seeking to extradite them for trial in Houston,
Texas, 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, the New York Law
Journal reported. Judge Arthur Gonzalez held that California,
like most of the other Enron creditors and claimants, must adjudicate
its claims in his Southern District bankruptcy court. Read the article
at
href='http://www.law.com/jsp/article.jsp?id=1096473920124'>www.law.com/jsp/article.jsp?id=1096473920124.
US Airways, Pilots Union Near Cost-cutting Accord
US Airways and its pilots union are close to reaching a $300 million
cost-cutting agreement, a key part of a restructuring plan that the
airline says it needs to help it emerge from bankruptcy, the
Washington Post reported. The two sides have held
continuous meetings this week at the airline’s major hub cities in
Pittsburgh and Charlotte.
The contract would reduce pilots’ pay by at least 17.5 percent
and cut the amount of the airline’s payments into the
pilots’ pension plan. The union is trying to eliminate a US
Airways proposal to permit the furlough of pilots regardless of
seniority, the newspaper reported.
Personal Bankruptcy Rates: Ten Times that of the Great
Depression
“Today, three out of five U.S. households are responsible for
the approximately $560 billion in outstanding credit card debt. Among
these ‘revolvers,’ credit card debt averages over $11,000
per household,” Fool.com reported. “The recent decade of
economic growth and falling unemployment has featured a perplexing
phenomenon: personal bankruptcy rates in the late 1990s (peaking at 1.4
million in 1998) soared to nearly ten times the rate of the Great
Depression.” Read the article at
href='http://www.fool.com/news/commentary/2004/commentary04093001.htm'>www.fool.com/news/commentary/2004/commentary04093001.htm.
Mesa Asks Unit Workers to Defer Some Pay
Mesa Air Group Inc., in an effort to cut costs, said on Friday its
senior management will reduce their salaries by 23 percent and will ask
employees of its bankrupt US Airways Express unit to agree to defer as
much as 23 percent of their salaries, Reuters reported. Any deferrals
will be repaid upon the carrier’s emergence from bankruptcy, said
Mesa, adding that any employee who elects to participate will also
receive a bonus equal to 20 percent of his deferral.
Dynegy Completes Sale of Illinois Power to Ameren
Dynegy Inc. said today that it had completed the sale of its Illinois
Power Company to Ameren Corp., a few days after U.S. regulators gave the
deal the final stamp of approval, Reuters reported. Dynegy, which has
been selling assets over the past few years to strengthen the
company’s financial position that deteriorated with Enron’s
bankruptcy and the collapse of energy trading, said that the $2.3
billion transaction would bolster its position. In a statement, Bruce A.
Williamson, Dynegy’s chairman and chief executive officer, called
the move a “key element” in the company’s efforts to
restructure and solidify its financial position, the newswire
reported.
More Distress Seen for Large U.S. Airlines—Experts
Major U.S. airlines are likely to face several more years of distress
that a possible liquidation of bankrupt US Airways Group won’t do
much to alleviate, industry experts said on Thursday, Reuters reported.
The carrier, which sought bankruptcy protection earlier this month for
the second time in two years, has only 4 percent to 5 percent of the
U.S. air travel market, Ray Neidl, director of research for Calyon, told
an airline restructuring conference in New York. The chief beneficiaries
of a US Airways liquidation, which Neidl put at 50-50 odds, would be the
low-cost carriers, whose cost base and business strategies have hammered
large carriers like US Airways in recent years, the newswire
reported.
Kmart Said to Be Weighing Headquarters Move
Retailer Kmart Holdings Corp. is considering moving its headquarters
from Michigan, the state’s economic development agency said on
Thursday, Reuters reported. A spokesman for Kmart declined to comment on
a possible headquarters move. Kmart had slightly more than 2,000
headquarters workers as of February, and said it was cutting 10 percent
of its headquarters staff in August. Possible relocation sites include
cities within and outside of Michigan. A report by the Detroit News on
Thursday said one of the cities Kmart was considering is Atlanta, the
newswire reported.