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October 5, 2004
US Airways to Cut Hundreds of Management, Nonunion Jobs
US Airways Group Inc. announced it plans to eliminate
“hundreds” of management and nonunion jobs by the end of the
month and cut top executives’ pay by between 5 and 10 percent, the
airline told its employees yesterday, The Washington Post
reported. The cuts in executive salaries and benefits will bring them
more in line with management compensation at low-cost carriers America
West Holdings Corp. and JetBlue Airways Corp., the airline said.
The Arlington, Va.–based airline, which last month filed for
protection from its creditors for the second time in two years, said the
cuts are aimed at helping trim about $45 million from its $201 million
management payroll. The reductions are deeper than the $30 million in
management cuts the airline implemented during its first chapter 11
reorganization. US Airways executives said that without the pay cuts,
the airline could be forced to liquidate by February. The airline said
that it plans to ask a bankruptcy court judge on Thursday to impose a
temporary 23 percent pay cut on its labor groups that have not already
agreed to concessions. The airline has reached agreement with its 150
flight dispatchers as well as its flight-crew instructors and
flight-simulator engineers.
August Factory Orders Dip, Aircraft Dive
New orders at U.S. factories showed strength in August, even though a
drop in aircraft orders pulled the overall indicator lower, the U.S.
Commerce Department reported on Monday, Reuters reported. The department
said factory orders shrank 0.1 percent in August, posting the first
decline in four months after gaining a revised 1.7 percent in July. This
was originally reported as rising 1.3 percent. The dollar and 10-year
U.S. government Treasury bonds were steady on the news, which analysts
said was being overshadowed by more influential releases later this week
including the September employment report, the newswire reported. Wall
Street had forecast orders to grow just 0.1 percent after modest August
readouts from surveys of purchasing managers amid soaring oil
prices.
Federal-Mogul Asks to Borrow $1.93 Billion From Citigroup
Southfield, Mich.–based Federal–Mogul Corp., maker of
Champion spark plugs and Anco windshield wipers, asked a U.S. Bankruptcy
Judge for permission to borrow as much as $1.93 billion from Citigroup
Inc. to help fund its reorganization, Bloomberg News reported.
Federal–Mogul, the world’s largest maker of engine bearings
and seals, asked U.S. Bankruptcy Judge Raymond T. Lyons in
Trenton, N.J., to approve a $500 million loan to help pay for operations
during reorganization and $1.43 billion of financing for use after the
company exits bankruptcy. Billionaire financier Carl Icahn, who is
Federal Mogul’s largest creditor, and other bondholders support
the company’s request, according to a lawyer involved in the
negotiations. The $500 million loan would replace bankruptcy financing
from JPMorgan Chase & Co., which was approved by a judge days after
Federal–Mogul’s October 2001 chapter 11 filing.
WeddingStores Enters Chapter 7 Bankruptcy
Altoona, Pa.–based WeddingStores Inc., which has been selling
bridal gowns for more than a century, has entered chapter 7 bankruptcy,
ending almost any chance that its Kaufman’s Wedding World Stores
will reopen, the Associated Press reported. Objections to a bankruptcy
judge’s order filed Friday can be filed within 10 days, but that
is unlikely, an attorney for the chain said Monday. Twenty-one
Kaufman’s Wedding World stores closed in early September, but a
judge ordered them reopened for four days to allow frantic brides-to-be
enough time to scoop up wedding gowns and other merchandise that had
already been ordered. There are Kaufman’s Wedding World stores in
Pennsylvania, Maryland, West Virginia and Ohio.
Alabama-based Citation Files for Bankruptcy
Birmingham, Ala.–based Citation Corp., which operates 17
facilities including one in Brewton, has filed for chapter 11 bankruptcy
protection in the U.S. Bankruptcy Court in Birmingham, the Brewton
Standard reported. Company spokesman Gene Monteith said last week
that the move should not mean any changes for the Brewton facility in
the immediate future. Citation President and CEO Ed Buker said the
quality of product and delivery to customers will remain high priorities
while Citation begins implementing operational efficiencies needed to
strengthen the company. The company designs, develops and manufactures
high-quality cast, forged and machined components for several market
segments, including the automotive, heavy truck, construction aerospace,
agricultural and commercial industries. Citation operates facilities in
Alabama, Indiana, Wisconsin, Michigan, Illinois, Texas and North
Carolina. The company employs 5,100.
PBGC
PBGC to Assume Responsibility for Kaiser Aluminum Pension Plan
Kaiser Aluminum said it has been notified by the Pension Benefit
Guaranty Corporation (PBGC) that the PBGC will assume responsibility for
the Kaiser Aluminum Pension Plan (KAP) retroactive to April 30, 2004,
according to the Business Wire. The plan covers active and retired
employees at certain of Kaiser’s facilities who are represented by
the United Steelworkers of America (USWA). In February 2004, Kaiser had
obtained a ruling from the U.S. Bankruptcy Court for the District of
Delaware that the company met the legal requirements for a distress
termination of the KAP and several other plans. Subsequently, Kaiser
applied for distress termination of the plan effective April 30, 2004.
The PBGC assumed responsibility for Kaiser’s salaried employee
pension plan in December 2003 and the inactive pension plan in June
2004.
PBGC to Assume Control of Fruehauf Worker Pensions
The Pension Benefit Guaranty Corp. (PBGC) on Monday announced it
will assume responsibility for retirement plans of former workers of
bankrupt truck maker Fruehauf Trailer Corp., Dow Jones Newswires
reported. PBGC said it was going to make up a $7 million shortfall in
the Fruehauf’s
retirement plan. The truck maker liquidated in bankruptcy in 1998,
according to the PBGC. Since then, the pension plan has been sponsored
by Pension Transfer Corp. of Corona del Mar, Calif. The PBGC estimates
Fruehauf’s plan has about $54 million in assets to cover more than
$61 million in benefit liabilities.
Two Former Parmalat Auditors Are Ordered to Stand Trial
Two former auditors of Parmalat Finanziaria SpA were ordered to stand
trial for false accounting and market rigging under a fast-track
procedure, the first indictments since the massive fraud scandal at the
Italian-based dairy giant, according to the Wall Street
Journal. The two former auditors, Maurizio Bianchi and Lorenzo
Penca, both worked at Grant Thornton’s former Italian office. The
decision by Judge Cesare Tacconi was made during a closed-door
preliminary hearing at Milan’s courthouse that marks the beginning
of the judicial process over who is to blame for the Parmalat scandal.
Prosecutors Tuesday were trying to convince a judge to order 29 people
to stand trial for their roles in the collapse of Parmalat, which owes
creditors €14 billion ($17.2 billion). The closed-door preliminary
hearing at Milan’s courthouse was the first of at least two
hearings scheduled to decide on the prosecutors’ requests for
indictments. Prosecutors earlier this year formally requested the
indictment of Mr. Tanzi as well as of several other former company
employees, including top financial officers and accountants. In a
separate probe, prosecutors in Parma have been investigating Mr. Tanzi
and other former top executives for alleged fraudulent bankruptcy and
other charges.
How Airlines Lost When They Resisted Change for 25 Years
When Congress deregulated the U.S. airline industry in 1978, many
fares came down, flights increased and air travel took off, the
Wall Street Journal reported. But one side of the business
changed much less: airline costs. To keep their grip on the market for
more than two decades without rewriting expensive labor contracts or
improving efficiency, big airlines used a bag of tricks: frequent-flier
plans, the “hub” system of controlling key markets and
international alliances to keep business customers. Read the full
article at online.wsj.com
Chairman Loans Connecticut Telecom Firm Another $250,000
The chairman of General DataComm Industries Inc.’s board of
directors loaned the struggling Naugatuck-based company another $250,000
last month to help it pay lenders, GDC said in a Monday regulatory
filing, according to Knight Ridder/Tribune Business News. Since
December, Howard S. Modlin, chairman of GDC’s board, has loaned
the company more than $1 million, providing cash to help it meet
obligations in what has been a difficult financial stretch since
emerging from bankruptcy protection. In all, Modlin and John L. Segall,
another of GDC’s directors, have loaned the company $1.6 million.
The company, which makes products such as modems, routers and switches
that help users access and build telecommunications networks, said it
has been hurt by the telecommunications industry’s continued
slump, and it has reported falling sales in each of its three fiscal
quarters since emerging from bankruptcy protection Sept. 15, 2003.
Bankrupt St. Louis-area Great Plains Airlines Tries to Sell FAA
Certificate
Bankrupt Great Plains Airlines, which owes $750,000 to St. Clair
County, Mo., is trying to sell its federal operating certificate and
some airplane parts for $400,000, according to court filings Monday,
Knight Ridder/Tribune Business News reported. According to her status
report to the Bankruptcy Court in Tulsa, Okla., U.S. Trustee Mary E. May
said she is aware of at least one offer to buy the airline’s
Federal Aviation Administration certificate and certain parts for
$400,000. In its bankruptcy court filing, Great Plains said it has
“virtually no cash,” although St. Clair County lent the
airline $750,000 last year to spur activity at MidAmerica Airport. The
carrier filed for chapter 11 bankruptcy protection in January. The
airline acknowledged in its report Monday that if an acceptable offer
for the operating certificate is not received, the bankruptcy case may
be converted to a chapter 7 liquidation, which would allow the trustee
to sell airplane parts and tools now in the possession of Oklahoma
Regional Jet Center.
Michigan-based Auto Supplier Gets Commitment for up to $60 Million
in Credit
Less than a week after it filed for chapter 11 protection,
Intermet Corp. has obtained a commitment for up to $60 million in credit
from one of its lenders, according to Knight Ridder/Tribune Business
News. Intermet, an automotive supplier based in Troy, Mich., filed for
bankruptcy protection last Thursday, citing unprecedented increases in
the price of raw materials, particularly scrap steel. Intermet said on
Monday it had obtained a lender’s commitment for a 12-month,
secured debtor-in-possession line of credit. If bankruptcy court
officials in Michigan approve the agreement, it could give Intermet $20
million of available credit, with another $40 million subject to further
court approval and other conditions.
Credit Cards Blamed for Rise in Bankruptcy Among College
Students
Filing for bankruptcy is on the rise among college students,
according to a report from WOKR13.tv in Rochester, N.Y. Experts say that
a major contributing factor to the disturbing trend is the easy
availability and use of credit cards. While some students rely on credit
cards for college-related expenses like books and supplies, once they
start getting and using them, the habit can be hard to break. Read the
full article at
href='http://www.wokr13.tv/news/local/story.aspx?content_id=D0A8B5E7-D54D-4CFB-BD75-9F4C8E862447'>www.wokr13.tv/news/local/story.aspx?content_id=D0A8B5E7-D54D-4CFB-BD75-9F4C8E862447.