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October 18, 2004
Retail Sales Rise
U.S. retail sales rose by the most in six months in September, as
discounts generated the biggest jump in spending for autos in three
years, Bloomberg News reported. Retail sales rose 1.5 percent, following
a 0.2 percent decline in August, the Commerce Department said. Sales
rose 0.6 percent, excluding autos. While both figures exceeded median
forecasts, pushing down bond prices and helping retailer shares, other
reports suggested companies and consumers are cautious about the
economic outlook. “Our view is [that] the fourth quarter is going
to be OK but not as strong as the growth we had in the first
half,” George Pipas, Ford Motor Co.’s manager of sales
analysis, said in an interview, the newswire reported.
United Airlines Seeks New Negotiation with Unions, Lawyer Says
UAL Corp.’s United Airlines told unions that it needs new
negotiations on contract changes to increase labor savings, company
lawyer James Sprayregen said in bankruptcy court, Bloomberg News
reported. UAL CFO Jake Brace declined to comment on what changes the
company will seek. The added savings will go beyond the $1.1 billion in
labor and other cost reductions that Chicago-based UAL last month said
it was seeking, Brace told reporters after the court hearing.
US Airways
US Airways Wins Approval for 21 Percent Pay Cuts
US Airways Group Inc. won court approval to suspend its union
contracts for four months and impose a 21 percent pay cut for employees,
Bloomberg News reported. U.S. Bankruptcy Judge Stephen S.
Mitchell approved the airline’s request to suspend labor
agreements, as negotiations continue. The ruling follows four days of
hearings that started on Oct. 7. “What we have here is a ticking
fiscal time-bomb,” Mitchell said this afternoon. “Because
the meltdown might happen some months from now does not mean that the
relief is not needed,” the newswire reported.
US Airways Says Not Selling Aircraft
US Airways said on Saturday it has no current plans to reduce its
fleet of aircraft, disputing postings on the Internet that the bankrupt
carrier has put planes up for sale, Reuters reported. “Some
individuals intent on spreading rumors and fear have decided to start
circulating two-year-old notices from our previous restructuring
regarding potential aircraft for sale,” Chris Chiames, senior vice
president of corporate affairs said in a statement, the newswire
reported.
Loral Space Gives Bondholders Option to Buy $30 Million in
Notes
Loral Space & Communications Ltd. agreed to give its bondholders
the option of purchasing an additional $30 million in new notes under a
plan to exit bankruptcy, Bloomberg News reported. The bondholders, who
will own all of Loral’s common stock under the proposed plan,
already had an agreement to receive $200 million in new notes to be
issued by the company’s Loral Skynet unit. The New York-based
company plans to file the new proposal with the U.S. Bankruptcy Court in
New York by Oct. 22, the company said in a statement distributed by PR
Newswire.
Delta Air’s 3rd-Quarter Loss Widened, Cash Reserve Fell
Delta Air Lines Inc. said its loss widened to as much as $675 million
and its cash fell in the third quarter, pushing the airline closer to a
possible bankruptcy filing, Bloomberg News reported. Cash reserves were
$1.45 billion on Sept. 30, the company said in a filing, increasing
pressure on the Atlanta-based airline to agree with pilots on $1 billion
in wage and benefit concessions. Delta shares had climbed almost 30
percent this week as the airline and its pilots union discussed an
agreement, the newswire reported.
SEC Investigates Six Companies on Pension, Benefit Accounting
The Securities and Exchange Commission (SEC) is investigating whether
six large companies could have manipulated earnings by using certain
assumptions to calculate liabilities and costs for pensions and retiree
health benefits, the Wall Street Journal reported. The
inquiry focuses on assumptions companies use to calculate current
pension expenses, which can have an effect on income, the online
newspaper reported.
Northwest Pilots Representatives Endorse Pay Cut Agreement
Leaders of the union for Northwest Airlines pilots voted unanimously
on Saturday to endorse a tentative agreement that will cut pilot
compensation by $265 million annually, the Associated Press reported.
The Master Executive Council of the Northwest branch of the Air Line
Pilots Association voted 10–0 to submit the two-year deal to union
members for their ratification. Northwest has said it needs $950 million
a year in worker concessions to avoid bankruptcy. The pilots were the
first bargaining unit at the Eagan-based carrier to agree, and
negotiators for both sides announced the tentative agreement
Thursday.
Star Suspends Payout, May Seek Bankruptcy
Star Gas Partners LP today said it has suspended distributions on its
common partnership units and warned it may have to seek bankruptcy
protection unless it can arrange new financing for its heating oil unit,
Reuters reported. Star, a distributor of propane and heating oil, said
its Petro unit has suffered from an inability to pass on record heating
oil prices to customers and from larger-than-expected customer attrition
rates.
Toymakers Disappoint, Warn on Holidays
The two top U.S. toymakers, citing uncertainty in the economy and the
retail sector, posted disappointing third-quarter results today, and
lowered expectations for the crucial
Thanksgiving–to–Christmas season, Reuters reported. Mattel
Inc. said third-quarter earnings slid 5 percent, with sales down 2
percent on a 13 percent drop in Barbie sales. Hasbro Inc. said cost cuts
helped it post higher third-quarter earnings from a year ago, but the
result was weaker-than-expected with revenue down 2 percent as sales of
its once-hot Beyblade continued falling.
Bankrupt Kaiser in Agreement with PBGC
Bankrupt Kaiser Aluminum said on Friday it had reached a settlement
with the Pension Benefit Guaranty Corp., subject to approval from the
U.S. Bankruptcy Court from the District of Delaware, Reuters reported.
Kaiser said under the agreement it will continue to sponsor specified
pension plans for hourly employees at plants in Los Angeles; Tulsa,
Okla.; Sherman, Texas; and Bellwood, Va., and will satisfy the estimated
minimum funding standard of $4.4 million for these plans.
Grace Nears Deal to Emerge from Chapter 11
W.R. Grace & Co. on Friday said it may be close to a deal with
its biggest creditors on a plan to emerge from bankruptcy, driving the
chemical maker’s stock up 11 percent to a four-year high, Reuters
reported. Grace held off filing its own reorganization plan with the
bankruptcy court while it negotiates with those creditors, a group of
claimants from asbestos lawsuits. The company had been expected to file
its plan with U.S. Bankruptcy Court in Wilmington, Del., on Thursday,
but the company filed a motion to delay it.