Wednesday PM March 11th, 2009
by: Ed Mayberry, March 11, 2009 9:03:02 pm
A union says American Airlines will lay off 323 flight attendants on April 1st. Fort Worth-based American and other carriers are struggling with a slump in travel during the economic downturn. The furloughs--layoffs with recall rights--affect some workers who were only recently recalled by the nation's second-largest airline operator after previous layoffs. The Association of Professional Flight Attendants says the number of furloughs might have been higher but for some employees taking leaves of absence or sharing jobs. American executives plan to cut the carrier's U.S. capacity nine per cent this year, but February traffic tumbled 13.5 per cent from a year earlier. Fewer flights mean less need for flight attendants and other employees.
Dell is laying off workers around the world but won't say how many or where. The computer maker will confirm only that some of the employees are based at an assembly plant in North Carolina. Dell opened the North Carolina factory in 2005, after state and local officials promised economic incentives worth more than $300 million. Dell planned to invest $100 million and create 1,500 jobs. Dell spokesman Jess Blackburn said the layoffs were part of the company's efforts to streamline. But he would not say how many positions the company was cutting in North Carolina—or elsewhere. The Round Rock-based company has been shifting work from its own factories to contract workers in the last year as the personal computer market has declined.
Television company Belo Corporation says it plans to cut about 150 jobs, reduce some employee salaries by five per cent and suspend its 401(k) matching contributions to help reduce cash operating expenses by about ten per cent this year. The five per cent salary reduction will affect employees who are part of the Dallas-based company's management-compensation programs. The suspension of the 401(k) matching program, however, will apply to all employees. Belo says the cost-cutting measures will take effect in mid-April. President and Chief Executive Dunia Shive said the new steps and past cost-cutting initiatives will reduce 2009 cash operating expenses by about ten per cent, excluding severance costs.
National Semiconductor says it's cutting more than a quarter of its work force as it faces a steep decline in sales. The Santa Clara, California-based chip maker says it's eliminating 1,725 jobs. That includes 875 jobs to be cut with the closing of plants in Arlington and Suzhou, China. The layoffs will cost $160 million to $180 million in severance and other charges. From $130 million to $145 million will likely be recorded in this fiscal quarter. The cuts came as national recorded a 71 per cent decline in its third-quarter earnings to a profit of $21.1 million. Sales fell more than one-third to $292 million from $453 million.
Officials say Texas employers probably will pay more taxes next year thanks to an overloaded state unemployment fund. Texas Workforce Commission administrators told a special state house panel studying the federal stimulus package that the state paid $64 million in unemployment benefits last week. That more than twice as much as in the same week last year. Commission Executive Director Larry Temple testified that the unemployment insurance trust fund is expected to have just $48 million October 1st when it's required by law to have $860 million. The commission's staff is looking at a combination of higher taxes, borrowing from the federal government and issuing bonds to rebuild the fund. Under the recently passed federal stimulus bill, Texas could receive $556 million immediately if it broadens eligibility to cover some nontraditional employees such as part-time workers.
American Airlines plans to cut U.S. flying by nine per cent this year and trim international capacity 2.5 per cent amid falling travel demand in a recession. The announcement came from the parent of Fort Worth-based American--AMR. AMR Chief Financial Officer Thomas Horton says bookings over the next four months are running about 2.5 percentage points behind the pace of the same period in 2008. International bookings are running 4.5 points behind—signs that weak February traffic trends could continue through spring and into early summer. American's February traffic tumbled 13.5 per cent from a year earlier. Other major U.S. carriers also reported declines. But AMR, which also operates American Eagle, expects a break with falling oil prices. It plans to spend $3.5 billion less on fuel this year than a year ago.
Delta Air Lines announced it will cut international flying another ten per cent beginning in September. United Airlines is cutting international flying 15 per cent in the first quarter. Standard & Poor's airline equities analyst Jim Corridore says international flights are being cut now because airlines already pared their domestic schedules last year. He notes that Houston-based Continental Airlines has not announced major international capacity cuts--at least not yet.
The performance and baggage handling of U.S. airlines improved in January. Cancellations declined from year-ago figures. Figures show complaints to the Department of Transportation also dropped year-over-year, though there was a sizable increase compared with December. The DOT's Bureau of Transportation statistics says the 19 carriers reporting on-time performance recorded an overall on-time arrival rate of 77 per cent in January. That's better than January 2008's 72.4 per cent and December 2008's 65.3 per cent. In January, the carriers canceled 2.3 per cent of their scheduled domestic flights. That's down from the 2.9 per cent cancellation rate of January 2008 and the 3.3 per cent rate posted in December 2008. The airlines overall posted a mishandled baggage rate of 5.2 reports per 1,000 passengers in January. That's better than January 2008's rate of 7.39 and December 2008's 6.96 rate. Hawaiian topped the list with a January on-time arrival rate of 90.8 per cent, while Dallas-based Southwest Airlines had the second-highest on-time arrival rate, at 83.3 per cent.
President Barack Obama has signed a $410 billion spending package that will keep the federal government operating through September. The bill includes thousands of earmarks, which are targeted spending items inserted by individual lawmakers. Obama has criticized the overuse of earmarks, and he called the bill imperfect. But he said it is necessary to keep federal agencies from closing down. Obama signed the bill in private, an indication of his discomfort with it.
Lawmakers are proposing creation of a new government agency that could stop lenders from offering risky financial products to consumers. Supporters say the legislation's broader goal is to apply the same type of consumer protections in the financial sector that exist for other products such as children's toys and pharmaceuticals. The lawmakers say that could help prevent future financial crises by limiting the spread of destructive products such as mortgages that borrowers can't afford to pay. Harvard law professor Elizabeth Warren, chair of a Congressional panel overseeing the $700 billion bank rescue program, says such a regulator could have taken steps to prevent the spread of mortgages that borrowers couldn't afford, the root of the current financial crisis.
ConocoPhillips expects its global oil and gas production to be flat this year — compared to 2008. Houston-based ConocoPhillips is working to sharply reduce capital spending and cut costs. The nation's third-largest oil company told Wall Street analysts that it's sticking by its $12.5 billion capital spending budget announced in January. That's when it also said it was cutting 1,300 jobs, or about four per cent of its work force. This year's capital budget is 37 per cent lower than last year's outlay of $19.9 billion. ConocoPhillips, like others in the industry, has faced difficult market conditions amid the global recession. CEO Jim Mulva told analysts that signs of a rebound have yet to emerge, but he's hopeful for the start of a recovery sometime in 2010. Conoco expects 2009 production of 1.8 million barrels of oil equivalent a day — roughly the same as 2008 levels.
A senior Kuwaiti official says OPEC is likely to announce a production cut during its meeting Sunday in Vienna. Supreme Petroleum Council member Emad al-Atiqi told Kuwait's al-Seyassah daily in remarks published Wednesday the Organization of the Petroleum Exporting Countries' decision "is expected to be endorsed unanimously due to what is happening with prices." OPEC members have offered conflicting signals ahead of the meeting. But some members are stressing more compliance with earlier 4.2 million barrels per day in cuts, which analysts say has restricted crude's collapse amid faltering demand. Prices have plummeted from mid-2008 highs of $147 per barrel to around $46.
A senior Algerian official also says OPEC will discuss a production cut during its meeting on Sunday in Vienna. Algeria's energy minister Chakib Khelil told a conference that the Organization of the Petroleum Exporting Countries will debate the usefulness of curbing output to support market prices.
Energy Secretary Steven Chu says that if OPEC cuts production to increase oil prices, it could severely hamper global economic recovery. Chu told reporters after a Senate hearing that he'll speak to OPEC oil ministers before the cartel's meeting Sunday to urge them to keep production at current levels. He said a production cut would "create a huge strain on the ability of the world economy to recover."
The federal deficit soared to $765 billion in the first five months of the budget year, well on its way to hitting the Obama administration's projection of a record annual imbalance of $1.75 trillion. The Treasury Department says the deficit for February was $192.8 billion. That's a record for the month and up ten per cent from a year ago, but below analysts' expectations of $205.7 billion. The huge deterioration in the government's finances reflects the recession, which has cut into tax revenues, and the large amounts of money being spent from the $700 billion financial rescue plan that Congress passed in October.
Texas leads the nation in wind power. Now a group that backs energy is pushing for the state to tap into the sunshine. California-based Vote Solar Initiative took out ads in several Texas newspapers. The group claims solar energy could create 45,000 to 90,000 jobs across the state for electricians and engineers, plus in sales. The ads urge readers to contact legislators to "ask for bold solar policies." The group says the ads ran in the Midland Reporter-Telegram, the Abilene Reporter News,/em>, the Dallas Morning News and the Austin American-Statesman. A bipartisan group of legislators has filed dozens of bills aimed at the boosting the state's solar industry.
A court-appointed receiver is proposing to lift a freeze on additional accounts with the troubled financial companies owned by Texas billionaire Robert Allen Stanford. The Stanford Financial Group receivership announced that most remaining brokerage accounts could be released to their owners, a plan that would have to be approved by the federal judge overseeing the case. A hearing is scheduled for Thursday in federal district court in Dallas. The proposal would affect accounts with at least $250,000 in them, accounts held by J.P. Morgan Clearing, and any accounts managed by Stanford companies. On Monday, a ruling took effect lifting a freeze on about 12,000 investor accounts valued at $250,000 or less as of February 28th.
The Houston Community College and Houston Independent School District have broken ground on a new campus with facilities for both on North Drennan near Navigation Boulevard. The Felix Fraga campus will have an academic center for HCC and a new East Early College High School for HISD. Students who graduate from the high school will receive an associate's degree from HCC as well as their high school diploma.
Tomball Independent School District is staging a job fair tomorrow afternoon at 5 p.m. at Tomball Junior High School on Quinn Road. The school district is seeking teachers, paraprofessionals and bus drivers, as well as child nutrition, custodial and maintenance staff.
Copper producer Asarco plans to sell its Amarillo refinery and other operating assets to Sterlite for $1.7 billion Sterlite is a subsidiary of Indian Metals and Mining Company, Sterlite Industries and London-based Vedanta Resources. The Amarillo Globe-News reports Sterlite won't take on asbestos and environmental claims from previous Asarco operations in the U.S. The other assets being sold include three copper mines, associated mills and SX-EW plants in Arizona, a copper smelter in Arizona and rod and cake plants and precious metals facility in Texas. A bankruptcy judge in Corpus Christi must approve the deal since it's part of Tucson-based Asarco's plan to reorganize under Chapter 11. A spokeswoman says no immediate changes were expected at Amarillo's copper refinery, which has about 350 workers.
Department store owner Neiman Marcus says it posted a loss in its fiscal second quarter due to a series of large write-downs totaling more than half a billion dollars. The company says it lost $509.3 million in the quarter ended January 31st. That's compared with a profit of $44.3 million in the same quarter last year. Quarterly revenue fell 21 per cent to $1.08 billion. The results were hurt by several large one-time charges, including write-downs on trade names and on other assets. Those charges totaled $560.1 million during the quarter. Excluding those items, the company says it earned $187.3 million in the second fiscal quarter.