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October 29, 2004
Economy Grew at 3.7 Percent Rate in Third Quarter
The U.S. economy grew at a 3.7 percent annual rate in the third
quarter this year, bolstered by strong consumer spending and accompanied
by the lowest inflation in decades, the Commerce Department said today,
Reuters reported. The third-quarter expansion in gross domestic product
came in below Wall Street economists’ forecasts for a 4.2 percent
pace of growth but still was up from 3.3 percent in the second quarter.
Consumer spending, which accounts for about two-thirds of economic
activity, increased at the fastest rate in a year, the newswire
reported.
Consumers Save Less Amid High Health Costs
A rising number of Americans say health care is the most critical
issue facing America today, and many are having trouble covering the
costs, the Associated Press reported. A survey released yesterday by the
Employee Benefit Research Institute in Washington, D.C., found that 22
percent of those surveyed ranked health care the nation’s No. 1
problem, ahead of terrorism, the economy, the war in Iraq, education,
the budget deficit and taxes. Last year, health care ranked behind the
economy as the top problem, and in 2002 it was second to terrorism, the
study showed.
Trump Hotels Q3 Quarter Loss Doubles
Trump Hotels & Casino Resorts Inc. reported yesterday that its
third-quarter loss doubled as it prepared to reorganize its debt in
bankruptcy court, Reuters reported. The net loss was $25.1 million, or
84 cents per share, compared with a net loss of $12.4 million, or 43
cents per share a year earlier, said Trump. Earnings before interest,
tax, depreciation and amortization, non-recurring debt renegotiation
costs and corporate expenses fell to $70.1 million from $73.4 million at
the company.
ATA Board Agrees to Employee Retention Bonuses
The board of ATA Holdings Corp., parent of low-cost air carrier ATA
Airlines, has approved payments to key executives and employees who stay
with the company after its bankruptcy filing, according to a regulatory
filing, Reuters reported. The retention plan agreement applies to seven
executives, including CEO George Mikelsons as well as 44 other
employees, ATA said in a U.S. Securities and Exchange Commission
filing.
Enron, Merrill Lynch Barge Case Goes to Jury
Arguments in the first criminal trial linked to scandal-ridden Enron
Corp. wrapped up on Thursday, and the case was turned over to the jury
to decide whether the six defendants engaged in a bogus deal to
illicitly boost Enron’s earnings, Reuters reported. Prosecutors
contend the two former mid-level Enron employees and four former Merrill
Lynch bankers took part in a sham sale of three power generating barges
in Nigeria to Merrill in 1999 to help the now-bankrupt energy giant fill
an earnings gap and meet Wall Street expectations. The 12-person jury
heard nearly six weeks of testimony in the case in U.S. District Court
and will consider whether the defendants are guilty of conspiracy and
fraud.
Delta Pilot Pay Cuts May Not Be Enough
Delta Air Lines Inc. CEO Gerald Grinstein yesterday said that even if
the carrier’s pilots approve a $1 billion cost-cutting agreement,
the airline may still have to seek chapter 11 bankruptcy protection, the
Washington Post reported. Negotiators for Delta’s
pilots union tentatively agreed to a five-year contract late Wednesday
that cuts pilots’ pay by 32.5 percent starting Dec. 1 and allows
for no raises. Under the terms, pilots also get options to purchase 30
million shares, or 15 percent of the company. In an internal message to
employees yesterday, Grinstein applauded the agreement but said there
was no certainty that the carrier would not have to seek bankruptcy
protection, the newspaper reported.
UAL May Breach Financing
United Airlines could default on its bankruptcy financing agreement
before the end of the year and is in talks with lenders about
restructuring the deal, the company said on Thursday, Reuters reported.
United reported a narrower third-quarter net loss of $274 million even
though fuel costs rose more than 56 percent. “United’s
financial performance, like the rest of the industry, was severely
affected by low yields and the soaring cost of fuel during one of the
traditionally most profitable periods,” said Jake Brace, the
company’s CFO.
US Airways, UAL Post Third-Quarter Losses
US Airways Group Inc. and UAL Corp.’s United Airlines, both
operating under bankruptcy court protection, reported losses in the
third quarter yesterday, blaming record high fuel prices and an
inability to raise fares amid stiff competition, the Washington
Post reported. Budget carrier JetBlue Airways Corp., one of the
nation’s best-performing airlines, said yesterday its profit fell
more than 70 percent in the quarter from the same period a year ago. All
three airlines failed to meet Wall Street analysts’ estimates.
Southwest Air Looks to Grow in Chicago as ATA Wilts
Southwest Airlines plans to step up operations at Chicago Midway
Airport due to the bankruptcy of low-cost rival ATA Airlines and it may
bid on some of the troubled carrier’s assets, Southwest CEO Gary
Kelly said on Thursday, Reuters reported. Southwest is also considering
backing away from its long-held policy of not assigning seats on its
flights.
Kaiser Aluminum Says Rusal Has Winning Bid for QAL
Kaiser Aluminum, hoping to emerge from chapter 11 bankruptcy
protection next year, said on Thursday that Russia’s Rusal was the
successful bidder for Kaiser’s interests in Queensland Alumina,
Ltd., Reuters reported. The successful bid for QAL, which operates an
alumina refinery in Australia, provides for a base price of $401 million
in cash. In addition, Rusal will purchase Kaiser’s alumina and
bauxite inventories and assume Kaiser’s obligations of
approximately $60 million of QAL debt, it said.
City Looking to Leave Bankruptcy Behind
Three years after going bankrupt, the city of Desert Hot Springs is
having its chapter 9 status removed today with the city’s newly
issued bonds expected to pay off its $10.85 million debt, the Desert Sun
reported. The city recently issued 40-year bonds totaling $12.785
million—more than a half of its annual budget—to pay off its
debt incurred through a failed 14-year legal battle with a developer
over a private housing project in the city, the newspaper reported.