Posted at 2:48 p.m., Wednesday, October 3, 2007
Business Briefs: late flights, slower economic growth
Associated Press
WASHINGTON (AP) With one in four domestic flights arriving late this year, the airline industry is hearing from passengers and the government that patience is wearing thin.Aviation officials are considering forcing carriers to shrink their flight schedules or to pay more to fly during peak travel periods, though the traveling public could end up with higher fares as a result.
"Ideally, you want a solution that maximizes value for the flying public, not a blunt tool" like a mandate to cut a certain percentage of flights or price jumps that are then passed onto consumers, airline consultant Robert Mann of Port Washington, N.Y. said.
On Wednesday, the Transportation Department said 25.2 percent of domestic flights arrived late between January and August easily the industry's worst performance since comparable data began being collected in 1995.
NEW YORK (AP) The shriveled housing market may be a drag on U.S. business activity, but it hasn't stopped it. The nation's service economy, like its manufacturing sector, slowed in September but still saw growth.
The service sector hasn't seen a month of contraction in four-and-a-half years, according to the Institute for Supply Management's monthly reports.
The ISM's index gauging the health of non-manufacturing industries registered at 54.8 in September. That's down from 55.8 in August and below the 12-month high of 60.7 reached in June, but above 50 the threshold between expansion and contraction.
The trade group's index, now at its lowest point since March, was in line with economist estimates.
The service sector makes up about 80 percent of U.S. economic activity, and on Monday the ISM also reported slower growth in the manufacturing sector. With both portions of the economy losing steam, the Federal Reserve may feel inclined to lower interest rates further.
PARIS (AP) Just as Airbus began selling its oft-delayed superjumbo as a success story, a report of "massive insider trading" at parent company EADS was leaked to the media Wednesday raising the question of whether the beleaguered company can ever get ahead of its problems.
The preliminary report by the stock market regulator, suggesting that EADS executives sold shares and exercised stock options after learning about significant delays to the A380, came less than two weeks before a glitzy ceremony marking the delivery of the first superjumbo to Singapore Airlines.
EADS Chief Executive Louis Gallois, who did not sell shares at the time, tried to downplay the findings, which judicial officials said Wednesday had been delivered to the prosecutor's office.
FRANKFURT, Germany (AP) Deutsche Bank AG said Wednesday it will write off about $3.12 billion in losses from the U.S. mortgage morass, but that gains from asset sales and tax credits will allow Germany's biggest bank to report a third-quarter profit of about $1.98 billion.
In the face of the 2.2 billion-euro writedown, the latest to hit major banks in the United States and Europe, Chief Executive Josef Ackermann remained upbeat about the bank's future and the industry.
The news sent Deutsche Bank shares higher to close at 95.51 euros ($135.56), or up 2.14 percent in Frankfort, and up $2.67, or 2 percent, to close at $135.04 in New York Wednesday.
Deutsche Bank said in a statement that it would take a charge of approximately 1.5 billion euros ($2.13 billion) on residential mortgage-backed securities, structured credit products, along with as much as 700 million euros ($991.6 million) on its leveraged loans and loan commitments.
NEW YORK (AP) Bear Stearns Cos. said Wednesday it is laying off 310 workers and fusing its two mortgage businesses, after turmoil in the home loan industry contributed to a dramatic slide in the investment bank's profit this summer.
The news came only hours after Credit Suisse Group said problems in the mortgage market will linger as long as 18 months. It announced a fresh round of layoffs in its commercial mortgage-backed securities division, mostly in New York.
Bear said it is integrating its Bear Stearns Residential Mortgage and Encore Credit divisions into a single subsidiary. The new unit will soon begin offering loans that are eligible to be purchased by government-sponsored entities. Such loans are considered safer than most.
WASHINGTON (AP) Efforts in Congress to let mortgage companies Fannie Mae and Freddie Mac refinance more at-risk loans could have a key flaw: many of those loans were made with such loose standards that borrowers are likely to default anyway, analysts said.
Top Democrats in the House and Senate on Wednesday urged the White House to do more to help borrowers struggling to repay loans resetting at higher rates. They advocated further raising the caps that limit how much money the two government-sponsored mortgage companies can invest in home loans and securities backed by them.
While the government last month nudged those limits slightly higher, the action did not go as far as Democrats, or the companies, had hoped amid a surge in defaults among loans made to people with weak, or subprime, credit.
PHILADELPHIA (AP) Wal-Mart workers in Pennsylvania who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages, a judge ruled Wednesday.
About 125,000 people will receive $500 each in damages under a state law invoked when a company, without cause, withholds pay for more than 30 days.
A Philadelphia jury last year awarded the workers the exact amount they had sought, rejecting Wal-Mart's claim that some people chose to work through breaks or that a few minutes of extra work here and there was insignificant.
Similar suits charging that Wal-Mart violated state wage laws are in play across the country.
A California trial ended with a $172 million verdict that Wal-Mart is appealing while the Bentonville, Ark.-based company settled a Colorado suit for $50 million.
NEW YORK (AP) The women at the center of a lawsuit against Bloomberg LP alleged in court papers Wednesday that Mayor Michael Bloomberg has "fostered, condoned and perpetuated" discrimination against female employees at his financial information company.
Tanys Lancaster, Jill Patricot and Janet Loures filed a motion to join the case brought last week by the federal government against the company. The lawsuit accuses Bloomberg LLP of discriminating against women who were pregnant or on maternity leave.
The mayor stepped down as chief executive in 2001 to run for office but retains 68 percent ownership of the company. The women's complaint alleged he is more active in day-to-day operations than he claims.
DETROIT (AP) In the document that spells out the tentative pact between General Motors Corp. and the UAW, their futures are listed as: "demand and business case dependent," "no future product allocation," or even possible sale or closure.
Fifteen factories in places such as Orion Township; Wentzville, Mo.; and Wilmington, Del.; have been left on shaky ground by the pact that the United Auto Workers hailed as having won unprecedented job security from GM.
Most of the 15 factories will see their current work go out of production in 2011, when the four-year contract would expire, with the next generation of their main products listed as dependent on demand and business cases, according to a UAW document called the "white book" that spells out contract details.
At four of the factories, the document says no future product has been identified for them.
The automaker has 58 factories in the United States.