Friday PM October 1st, 2010
by: Ed Mayberry, October 1, 2010 8:10:00 pm
Continental and United Airlines have completed their deal to merge into the world's biggest airline. The combined airline will be called United Airlines, with Continental's colors and globe logo on the tail. Jeff Smisek is president and CEO of the new United."I am very focused on making sure that we promote a culture at the new United of working together, treating co-workers and our customers with dignity and respect and providing clean, safe and reliable air transportation. We are in a service business. It’s the people who get the job done and make all the difference in your travel experience. We understand that and are committed to achieving sustained meaningful profitability. We remain confident that we can deliver on our previously announced net synergies of $1 to $1.2 billion per year by 2013.”
People flying on Continental will continue use the Continental website, kiosks and ticket counters, and those flying on United will continue to use United's facilities. The parent company will be called United Continental Holdings and shares have begun trading on the New York Stock Exchange under the ticker symbol "UAL."
BP says the cost of its Gulf of Mexico well blowout has reached $11.2 billion, and the company has put up some assets to guarantee payment of claims. BP says that it had pledged royalty interests in production from several platforms in the Gulf including Thunder Horse, which began production two years ago. Lamar McKay, the president of BP America, says the collateral backs up the company's commitment to pay all legitimate claims arising from the disastrous blowout of the Macondo well. BP says more than $1.2 billion has been paid so far to tens of thousands of claimants affected by the spill. The announcement comes as Bob Dudley took over as chief executive of the company, replacing Tony Hayward.
The Interior Department has created a new agency to collect billions of dollars in royalties for onshore and offshore drilling. The new Office of Natural Resources Revenue is separate from the agency that oversees offshore drilling and regulates leasing. That agency, the Bureau of Ocean Energy Management, Regulation and Enforcement, replaced the former Minerals Management Service last summer amid criticism of lax oversight in the wake of the BP oil spill. Interior Secretary Ken Salazar said taxpayers will be better protected by a collection agency that is no longer linked to drilling oversight. Greg Gould, a longtime Interior official, will head the 600-employee agency. Interior collected $10.6 billion last year from leasing activities on federal land and offshore.
Another chunk of the Gulf of Mexico has been opened to fishing after seafood tests and surveys found no oil contamination threat. The 5,628-square-mile area is just west of the Mississippi River Delta and about 75 miles south of the blown out BP well. The National Oceanic and Atmospheric Administration said no oil or sheen has been seen in the area since August 6th. Federal officials said about 26,287 square miles of federal waters remain closed. That’s about 11 percent of the Gulf. At the height of the spill, about 37 percent of federal waters in the Gulf were closed, or 88,522 square miles. NOAA administrator Jane Lubchenco said the seafood in the newly reopened area is safe to eat.
A plan to extend the deadline for using about $40 million in federal Hurricane Ike relief funds in Texas has failed in Congress. The new fiscal year, the accounting period of the federal government, began today. The bill that failed would have extended Thursday's deadline for using what remained of $600 million in social services block grants for the Houston-Galveston areas for recovery from Ike. The hurricane blasted ashore at Galveston on September 13th, 2008. Gulf Coast Interfaith says a total of about $100 million in federal funds is being lost by social service agencies helping disaster victims in Texas, Florida, Missouri, Louisiana and Illinois.
The average price of gasoline in Texas dropped slightly to $2.55 this week. The weekly AAA Texas price survey said the average price of a gallon of unleaded regular dropped by two cents across Texas. The national average also dropped two cents per gallon to $2.69, staying well above the Texas average. The auto club said the market is still recovering from a major pipeline disruption and the reopening of two pipelines in the Midwest earlier this month. Retail gas prices fell as crude oil prices increased. The cheapest average price in Texas is San Antonio at $2.50. The most expensive gas is in Amarillo at $2.67. Both are two cents less than last week.
The Obama administration is signaling new cars and trucks could be required to reach an average of 62 miles per gallon by 2025. The government is laying out possible ranges of fuel efficiency requirements for the fleet of new cars and trucks being built later this decade. People familiar with the discussions say the Transportation Department and Environmental Protection Agency will say new vehicles as a group may need to meet requirements in a range from 47 mpg to 62 mpg by 2025. The people spoke on condition of anonymity because they were not authorized to speak in advance of an official announcement on Friday. The government will outline early plans for mileage standards for the 2017-2025 model years. Rules adopted earlier this year will boost the fleet average to 35.5 mpg by 2016.
Attorneys for Houston-based KBR again want a federal judge in Pittsburgh to dismiss a lawsuit by the mother of a Pittsburgh-area soldier electrocuted in 2008 in Iraq. An appeals court in August refused to dismiss the lawsuit after KBR argued it can't be sued for military decisions. The lawsuit contends KBR is responsible because it maintained the barracks where the army says a water pump shorted out and electrified Staff Sgt. Ryan Maseth's shower water. KBR attorneys say three army investigations completed during the appeal have showed no one agency or company is to blame for such deaths, and that court rulings in similar cases bolster their argument that they can't be sued for “military” decisions, such as which pre-existing buildings were used to house soldiers. The plaintiffs have until October 8th to respond to KBR's request that a judge issue an expedited schedule to consider arguments and evidence to dismiss the case.
An industry trade group says manufacturing activity expanded in September for the 14th straight month, but at a slower rate than in the previous month. The Institute for Supply Management says its manufacturing index read 54.4 in September, down from 56.3 in August. a reading above 50 indicates growth. Strong growth in the industrial sector has helped lift the country out of the recession. Last month's report was better than expected and triggered an explosive rally on Wall Street. That kicked off the best September for the stock market since 1939. The Dow Jones industrial average gained almost eight percent for the month.
Construction spending rose in August as a big jump in government building projects offset further weakness in the private sector. The Commerce Department says construction spending edged up 0.4 percent in August following a 1.4 percent drop in July. While spending on government projects rose 2.5 percent, spending on private construction projects dropped to the lowest level in 12 years. The weakness in construction activity has been a major drag on the overall economy. Given continuing problems in housing and commercial real estate, analysts are not looking for a sustained rebound in the building industry for some time to come.
Consumer spending rose by a moderate amount in August while incomes increased by the largest amount in eight months, a gain that was propelled by the resumption of extended unemployment benefits. The Commerce Department says that spending increased 0.4 percent in August, matching the July increase. The two increases followed June's flat reading on spending. Incomes were up 0.5 percent, better than a 0.2 percent rise in July and a flat reading in June. More spending and increased income is helping to sustain the economy, which is growing at subpar levels.
The holiday hiring picture looks a bit merrier this year. Macy's, Toys r Us, Pier 1 and Borders all plan to hire more temporary holiday workers this year than last, emboldened by several months of sales gains and a slowly improving economy. The jobs probably won't be enough to be a dent in the nation's nearly ten percent unemployment rate, but for Americans desperate for some work, they're far more than an early Christmas present. Retailers overall will add between 550,000 and 650,000 jobs this holiday season, according to a forecast from the national outsourcing firm Challenger, Gray and Christmas. The firm expects hiring to increase over the 501,400 temporary jobs retailers added last year between October and December.
A top Federal Reserve official says the Fed is likely to take additional action to boost the economy and lower unemployment. William Dudley, president of the Federal Reserve Bank of New York, says the pace of the economic recovery has been disappointing. He worries that if the economy doesn't show stronger growth, the risk of a deflation outbreak rises. That's a dangerous and widespread decline in goods and services, wages and in the values of homes and stocks. The Fed is considering buying more government debt to force down rates on mortgages and other loans to entice Americans to spend more. Doing so would bolster the economy.
President Barack Obama's $800 billion-plus economic stimulus law may not be earning good grades with the public, but the White House claims it's on track to produce the promised 3.5 million jobs. The report says about two-thirds of the stimulus money has been spent via tax cuts or government spending and remarkably little of the money has gone out fraudulently. The stimulus bill was passed in February of last year to try to reverse the worst recession since the Great Depression. The White House and many economists credit it with giving the economy a needed jolt. But republicans counter that it's been ineffective, citing a nationwide unemployment rate still hovering near ten percent.
Supporters say a plan meant to save San Antonio $22 million in utility expenses over the next decade also should reduce dependence on natural gas and cut down on greenhouse gas emissions. The plan approved by the San Antonio city council includes replacing thousands of water and electrical fixtures in the convention center, the Alamodome and at San Antonio International Airport. The San Antonio Express-News reports the city will replace more than 27,000 light fixtures and add 1,400 lighting sensors to detect when rooms are empty. The plan also calls for better air conditioning controls. Mayor Julian Castro says the upgrades are an important step for San Antonio to achieve energy savings and be more environmentally responsible.
The Postal Service expects to lose about $6 billion this year because of steep declines in mail volume. The announcement comes a day after regulators refused to allow the Post Office to raise the cost of mailing a letter by two cents. Postmaster General John Potter says the Post Office is still considering whether to appeal that decision or make a new rate hike request. The latest loss is a bit less than the $7 billion the post office had been expecting. But it's on top of a $3.8 billion loss the year before. Mail volume is down 20 percent over the past two years due to the recession and more communications moving to the Internet. Potter plans to keep pushing in Congress to reduce mail delivery to five days a week and to shutter thousands of post offices.
General Electric is launching a mobile device aimed at helping natural gas drillers recycle water used in a controversial gas drilling process known as hydraulic fracturing. The truck-sized, transportable device would cut down on both the amount of fresh water used and wastewater currently trucked long distances for disposal. The company's mobile evaporator would allow natural gas producers to reuse some of the millions of gallons of water used to extract natural gas from dense shale deposits deep underground through the so-called “fracking” process. Water is mixed with chemicals and sand and pumped at high pressure thousands of feet below the surface to create fissures in the rock and release the gas. Fracking uses a large amount of fresh water and produces billions of gallons of wastewater annually.
Hewlett-Packard is signaling that expanding the company's software business will be a top priority for its new CEO. In hiring Leo Apotheker, the former head of business software maker SAP, the company set of speculation that it wants to bulk up that side of its business. In a conference call, Apotheker called software the “glue” that holds together the different parts of the company. Hewlett-Packard is trying to build on its personal computer and printer businesses by expanding into technology services, data storage and security. Analysts have questioned hiring a CEO who resigned abruptly from his last job after less than two years in the position. The company defended its pick, saying Apotheker was the only candidate offered the position.
IBM is rolling out new software and services that can help companies make their buildings more energy efficient. IBM says with its sustainability management system, building-management systems from companies like Schneider Electric and Honeywell/Tridium can gather real-time data from different systems--such as heating, lighting or elevators--and IBM's software can suggest or automatically make adjustments that will improve energy use. IBM says it is first putting this smart energy technology in its Armonk, New York. headquarters and its Rochester, Minnesota, manufacturing facility. IBM also says it's expanding its work with energy management company Schneider Electric to come up with services that help monitor and make buildings more energy efficient.
General Motors says its sales sputtered in September, but Ford and Chrysler say theirs were up. Ford turned in the strongest performance. The automaker says its U.S. sales were two percent higher than August and 46 percent better than September of last year. Sales of its redesigned Ford Edge and Lincoln MKX set monthly records, while the new subcompact Fiesta also drew buyers into showrooms. While Chrysler has struggled much of the year because of an aging model lineup, its sales rose one-half percent from August, and a whopping 61 percent from September 2009. Chrysler says the new Jeep Grand Cherokee helped. It's the first of a string of new or updated models due out this year. GM's sales fell about six percent from August. But that was still 10.5 percent better than the previous September. The end of the cash for clunkers program dampened sales for all three Detroit automakers last year.
Toyota says its U.S. September sales fell from the prior month as demand for its Lexus luxury models slipped. September sales fell about one percent, weighed down by a 13 percent drop in Lexus. The weaker performance by the high-end brand was offset by steady sales of Toyota brand cars and trucks. Toyota's sales rose 17 percent compared with September last year.
The government says the planned February release of the new high-tech $100 bill has been postponed because of printing troubles. The Bureau of Engraving and Printing, which produces the government's paper money, says the new bills have come out of some of the initial printing runs with unwanted creases. The bills have been redesigned with sophisticated elements aimed at thwarting counterfeiters. The Federal Reserve says that the release of the bills, originally set for February 10th, will be delayed until the problem is resolved. The Fed, which puts the currency into circulation, said it will announce a new date as soon as possible.
The host committee for Super Bowl XLV in Texas has dropped the price for sponsorships for the game. Committee President and Chief Executive Officer Bill Lively says the price has been reduced from $1 million to $717,000 because the game at Cowboys Stadium in Arlington is only four months away. Lively says perks such as concert tickets and trips to other Super Bowls are no longer available. The Dallas Morning News reports that the committee has 13 founding sponsors. That's two short of its goal. Lively says the committee's focus is now on getting a larger number of smaller donations starting at $50,000. The total amount raised by the committee is $25.5 million. The group is seeking $30 million. The game is February 6th, 2011.