Monday PM January 4th, 2009
by: Ed Mayberry, January 4, 2010 9:01:42 pm
Some airlines are keeping their new year's resolution to raise fares. Farecompare.com, a fare-tracking Web site, says United Airlines added as much as $10 round-trip to U.S. fares. Most of the increases United filed were $6 round-trip. Farecompare says the other big airlines matched, except discounters Southwest, JetBlue, and Airtran. Rick Seaney of Farecompare says the price increases avoided routes that overlap with the cheaper airlines. The increases also don't apply to fare sales that are running through March. Seaney says this makes four successful airfare hikes for 2009. Airlines have been eager to begin raising fares after using discounts to fill seats during the recession.
The new CEO of Continental Airlines says he will refuse to accept a salary or annual bonus until the company makes a full-year profit. Jeffery A. Smisek, who became CEO Friday after Lawrence Kellner stepped down to join a private-equity firm, told employees about his pledge. Continental, the nation's fourth-largest airline by traffic, lost $367 million in the first nine months of last year. Smisek said if employees want better pay and benefits, they need to focus on making money. He said he was making his pledge because "the tone for any business is set at the top."
The Department of Labor's Occupational Safety and Health Administration proposes $1,477,500 in penalties against CES Environmental Services for violations leading to a fatal explosion at the company's Griggs Road facility last July. An employee cleaning a tank was killed when an altered piece of equipment ignited flammable vapors inside the tank. The death was the third in less than a year at those facilities. OSHA issued 15 willful citations over unsafe electrical equipment and two additional related citations. OSHA also issued 54 additional citations for serious violations. CES has 15 business days to reply.
U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted. An Associated Press tally found 1.43 million filings, an increase of 32 per cent from the previous year. There were 116,000 recorded bankruptcies in December, up 22 per cent from the same month a year before. Filings have been rising steadily each year since the beginning of 2006, shortly after Congress overhauled the U.S. bankruptcy system. Bankruptcies surged to around two million in 2005 as consumers rushed to file before the new law took effect but then plummeted in 2006. They've been climbing ever since. The west saw a particularly fast rise in 2009, with Arizona jumping 77 per cent and Wyoming up 60 per cent from 2008.
A private trade group says manufacturing activity grew at the fastest pace in more than three years, a sign the pace of recovery is picking up. The Institute for Supply Management, a trade group of purchasing executives, says its manufacturing index read 55.9 in December after 53.6 in November. A reading above 50 indicates growth. Analysts polled by Thomson Reuters had expected a reading of 54.3. New orders, a signal of future production, jumped to 65.5 from 60.3 in November. The index, which also includes production, employment, inventories and prices, first showed growth in August after 18 months of contraction. Measures of manufacturing in the UK, the Eurozone and China also grew in December.
Construction activity fell for a seventh consecutive month as spending on both residential and commercial projects declined, a worrisome sign that lingering troubles in construction will act as a drag on the overall economic recovery. The Commerce Department says that construction spending dropped 0.6 per cent in November, a bigger decline than the 0.4 per cent fall that economists had been expecting. The weakness was widespread with spending on housing falling by the largest amount since June and non-residential building dipping for an eighth consecutive month. While the overall economy began growing again this past summer, the worry is that weakness in such areas as construction will dim prospects for a recovery strong enough to reduce double-digit unemployment.
Harris County Transit Services has expanded its bus service to areas traditionally not serviced by METRO, more than doubling the current service to over 60 linear miles and tripling the number of stops. The routes link Pasadena, Baytown, La Porte, Clear Lake, Seabrook, South Houston, Highlands and Crosby into a single transit system. The expansion is funded by a $2.6 million grant from the Houston Galveston Area Council.
The Internal Revenue Service plans to start regulating paid tax preparers, requiring them to register with the government, pass competency tests and adhere to ethical standards. The new regulations will not be in effect for the current filing season--individual tax returns are due April 15th. But IRS Commissioner Doug Shulman said tax preparers will be held to higher standards in future years as the IRS steps up its oversight. More than 80 per cent of taxpayers use a paid tax preparer or tax software to complete their yearly returns. However, paid tax preparers are unregulated in many states, unless they are also attorneys, certified public accountants or enrolled agents who represent taxpayers before the IRS.
Federal Reserve Chairman Ben Bernanke says stronger regulation is the best way to prevent financial speculation from getting out of hand and throwing the economy into a new crisis. But he isn't ruling out higher interest rates to stop new speculative investment bubbles from forming. The Fed chief's remarks were his most extensive on the subject since the housing market's tumble led to the gravest financial crisis since World War II--and perhaps the worst in modern history, in his view. Critics blame the Fed for feeding that speculative boom in housing by holding interest rates too low for too long after the 2001 recession. But Bernanke, in a speech to the American Economic Association's annual meeting in Atlanta on Sunday, defended the central bank's actions. He said extra-low rates were needed to get the economy and job creation back to full throttle after the September 11th attacks and accounting scandals that rocked Wall Street. Bernanke says the direct links were weak between super-low interest rates and the rapid rise in house prices that occurred at roughly the same time. He said the stance of interest rates during that period "does not appear to have been inappropriate."
The French oil company Total is moving into the U.S. natural gas market with a $2.25 billion deal with Oklahoma's Chesapeake Energy. Total said it will pay $800 million in cash for a 25 per cent stake in Chesapeake's Barnett shale assets, which hold vast quantities of natural gas in northern Texas. The French company will pay an additional $1.45 billion to help fund 60 per cent of Chesapeake's share of drilling and completion expenses. Total's move comes just a few weeks after Exxon Mobil said it would buy natural gas producer XTO Energy in a $31 billion all-stock deal. Chesapeake Energy is based in Oklahoma City.
A Texas company that's the number one producer in North Dakota's oil patch has begun shipping rich bakken crude to Oklahoma by rail. EOG Resources of Houston says the first shipment from its new terminal in northwestern North Dakota was due in Oklahoma today. The company has said the terminal near Stanley is capable of loading 60,000 barrels of oil onto one 100-car unit train each day. Crude from North Dakota's oil patch will be unloaded in Stroud, Oklahoma, and sent through a new 17-mile pipeline to a terminal in Cushing, Oklahoma.
Drug maker Novartis announced plans to take over Alcon. Alcon is based in Huenenberg, Switzerland, and has its U.S. headquarters in Fort Worth. The company employs some 15,000 people worldwide and specializes in surgical equipment and devices, contacts lens solutions and other consumer eye-care products. Novartis is offering to pay $38.5 billion for the 77 per cent stake it does not already own in a deal that would make it one of the biggest players in the global market for eye-care products. The Swiss pharmaceutical company will purchase nestle SA's 52 per cent stake for $28 billion before carrying out a merger with Alcon. The Basel-based drug maker had already purchased 25 per cent of Alcon from Nestle in April 2008 for $11 billion.
Washington's Department of Transportation has hired a Texas company to manage electronic toll accounts and customer service for the Tacoma narrows bridge and two other projects. The Department says Electronic Transaction Consultants of Plano has been awarded a five-year, $23 million contract that begins this month. Etc will start managing the toll accounts for the bridge west of Tacoma in 2011. It already manages tolls for the high-occupancy lanes on State Route 167 south of Seattle, and starting in 2011 it will handle the planned tolls for the SR 520 bridge that connects Seattle with the suburbs east of Lake Washington.
Venezuela's exports of oil and fuel to the United States are falling. The U.S. Energy Information Administration says shipments of crude oil and refined products from the South American country to the U.S. dropped to 955,000 barrels a day in October of 2009, down 17.8 per cent compared to the same month a year earlier. The U.S. figures show average imports from Venezuela were down seven per cent in the 12-month period ending in October, compared to the previous year-long period. The reduction is partly due to an OPEC mandate to cut 166,000 barrels a day last year. Venezuela is also shipping more fuel to allies such as China. The latest export figures were published by Venezuela el Universal daily.
The first key economic reports of 2010 will focus on manufacturing and the job market. On Friday, the Labor Department releases the monthly unemployment report. Analysts look for the jobless rate to hold steady at ten per cent. Later this week the auto manufacturers release their monthly sales figures.