Manufacturing probably grew at a faster pace in January, a sign the industry will lead the U.S. expansion early this year, economists said before today
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Reinsurance Group of America reported a lower profit for the fourth quarter, recording net income of $158.5 million, or $2.15 per share, compared with $196.7 million, or $2.62 per share, in the corresponding period a year earlier.
Quarterly premiums rose 13 percent, to $2 billion.
For all of 2011, the company earned $599.6 million, or $8.09 per share, compared with $574.4 million, or $7.69 per share, the previous year. The company, based in Chesterfield, is a large global provider of life reinsurance with offices in America, Europe, Asia, Australia, South Africa and Mexico, Barbados and Bermuda.
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With the worst recent financial record in the industry and poisonous labor relations, American Airlines wasn’t a very attractive target for buyers.
That view is changing now that American and parent AMR Corp. are reorganizing under the bankruptcy process at the same time that most other airlines have returned to profitability. Mergers have reduced competition and helped drive up fares.
Suddenly, American Airlines is in play. US Airways Group Inc. has hired advisers to study AMR, according to a source familiar with the situation, and reports say that Delta Air Lines Inc. and buyout firm TPG Capital are also weighing bids. None of the companies would comment.
Industry insiders expect every major U.S. airline to take a look at AMR. Despite losing money every year since 2008 and missing out on the airline merger mania of the past few years, American is still the world’s third-biggest carrier by passenger traffic. In bankruptcy, AMR could shed billions in debt, reduce its costs and still afford new planes _ a trifecta that has caught the eye of rivals.
“Everybody has to be thinking about how to deal with AMR in two years,” said Darryl Jenkins, a consultant who has worked for airlines on previous mergers. “They will be the most efficient carrier with a new fleet. They’re going to be very desirable.”
AMR’s CEO has said the best course for American is to remain independent. But if another airline makes an offer that sounds good to creditors and the bankruptcy judge, then it could make more sense for AMR to simply sell itself.
Wolfe Trahan & Co. analyst Hunter Keay put the chances of AMR emerging from bankruptcy as a stand-alone airline at no better than 20 percent. He thinks that with Delta’s access to borrowing and US Airway’s connections to deep-pocketed TPG, there could even be a bidding war for AMR.
Several other airlines or other suitors could pursue AMR. Each combination would carry its own pros and cons:
_ US Airways would get needed size. In the last few years, it failed in bids to buy or merge with Delta and United and now finds itself the nation’s fifth-largest airline.
“The combination that makes the most sense is US Airways with American because they both need a bigger presence to appeal to business travelers,” said Saranthi Syth, an analyst for Raymond James Financial Inc.
The US Airways hub in Philadelphia could help American expand service from the eastern U.S. to Europe and take pressure off American’s trans-Atlantic bottleneck at New York’s Kennedy Airport, said Bob McAdoo, an airline analyst for Avondale Partners.
Other analysts, however, said US Airways wouldn’t offer much help in key markets such as Asia, where American is weaker than United and Delta. Its hubs, including Charlotte, N.C., and Phoenix, are in the kind of secondary cities from which American has been retreating. And such a deal would merge two airlines with already poor labor relations and pilots represented by different unions.
US Airways has not yet discussed a merger directly with American, but has hired investment adviser Jim Millstein and Barclays Capital to study how a deal might look, a source with knowledge of the situation said free online credit report. This person requested anonymity because the status of the airline’s examination of American has not been publicly disclosed.
_ Delta would love to get American’s routes in Latin America, but analysts think a combination of these two would be too big to win regulatory approval without major divestitures _ both are already big in New York, for example. That has some experts thinking that Delta is only interested in cherry-picking parts of AMR if it is broken up.
_ United Continental Holdings Inc., the world’s biggest airline, would benefit by adding American’s operations at London’s Heathrow Airport. But a United bid would face the same _ or even tougher _ regulatory scrutiny than a Delta offer, and the company is still busy absorbing Continental. But few would be surprised if United is intrigued.
“If Delta is going to take a look at AMR, United will take a look at AMR,” said Sterne Agee analyst Jeff Kauffman.
_ TPG Capital would have one advantage: not being an airline, it would presumably face fewer regulatory hurdles. It has worked amicably with AMR and its new CEO. But it’s not clear how a buyer that’s not an airline will help boost AMR revenue and some analysts don’t believe TPG will be a serious bidder in the end.
American’s labor unions, despite a history of poor relations with management, are wary of a takeover. James C. Little, president of the Transport Workers Union, which represents American’s mechanics and other ground workers, said he fears that a buyer would send aircraft-overhaul work overseas. American employees do most of that work in the U.S., while rival airlines have outsourced it.
For now, at least publicly, American Airlines is taking the position that it would prefer to remain independent.
New CEO Thomas Horton, in a letter to employees two weeks after the bankruptcy filing, said “opportunists” might try to buy the company while it’s down but that “the best path for American is the one that leads us back to the top.”
McAdoo, the Avondale analyst, thinks American will most likely remain independent because its labor unions and new CEO might prefer that to being bought by another airline that has its own unions and CEO.
“Here’s a guy (Horton) who just got promoted to CEO,” McAdoo said. “Is he going to want to give up that title, and pair up with a company where he isn’t the CEO?”
Gordon Bethune, a former Continental Airlines CEO who evaluated offers for Delta during that airline’s bankruptcy, said AMR greatly helped its chances of remaining independent by filing for Chapter 11 when it still had $4 billion in cash _ enough to buy time.
“They don’t need financing,” Bethune said. “They don’t need to go begging and get involved with somebody they don’t want to get involved with.”
Subscribers of Time Warner Cable woke up New Year’s morning to find the sports channels MSG Network and MSG+ missing from their cable TV line-up.
The New York cable company says fans may miss games featuring the New York Knicks, Rangers and Islanders; the Buffalo Sabres; and New Jersey Devils. That’s because it has failed to reach an agreement with the MSG networks owner, Madison Square Garden Co.
It is the latest spat between a cable company and a channel provider that underscores the friction on both sides over the fees carriers pay for channels.
According to Time Warner Cable, MSG wanted a 53 percent increase in the rates it charges the cable network for its games. Time Warner said this demand came after the two companies had already agreed to a 6 no faxing pay day loans.5 percent rate increase last year.
“We hope the fans will remind MSG that in these economic times, no one can afford to pay 53 percent more for their channel,” said Mike Angus, senior vice president, Content Acquisition, for Time Warner Cable.
MSG says no agreement has been reached and has urged its customers to switch providers.
The first games scheduled in 2012 on MSG Networks are at 7 p.m. Monday: New York Knicks-Toronto Raptors and New Jersey Devils-Ottawa Senators.
Britain faces the
ExxonMobil Pipeline Co. crews have finished initial cleanup work on four sites contaminated when a pipeline carrying crude oil broke underneath the Yellowstone River three weeks ago.
The Environmental Protection Agency and the state Department of Environmental Quality will assess whether the cleanup is adequate.
DEQ Deputy Director Tom Livers tells The Billings Gazette that state standards require the cleanup to continue until the effort would be more harmful than beneficial to the environment.
So far, 46 sites have been identified for cleanup after an estimated 1,000 barrels of oil leaked into the river, starting on July 1.
International Bird Rescue of California was brought in by Exxon to clean wildlife affected by the spill. Jay Holcomb with the rescue group says they’ve only had to treat three birds.
Moody’s Investors Service on Friday downgraded Ireland’s government debt ratings to junk status, saying it believes Ireland will need further rounds of financing when the current European Union and the International Monetary Fund support ends in 2013.
The ratings agency cut Ireland’s bond ratings to “Ba1″ from “Baa3,” and said the outlook on the ratings remains negative.
Moody’s credits Ireland with a strong commitment to fiscal consolidation, but notes that implementation risks remain significant with its weak economy.
The analysts say the EU may require private sector creditor participation as a precondition for such additional support, a negative for holders of distressed government debt.
Ireland’s short-term issuer rating also was lowered by one notch to “Non-prime” from “Prime-3.”
Australia’s tax on carbon emissions will cost Qantas 110 million to 115 million Australian dollars ($118 million to $123 million) for the 2013 financial year and lead to an increase in passenger fares, the airline said Monday.
The flagship Australian carrier is one of the first of the nation’s major companies to release details of the financial impact of the tax, which will force the 500 worst polluters to pay AU$23 for every ton of carbon they emit.
The government released details of the tax on Sunday, saying it would help Australia lower its massive carbon emissions. Australia is one of the world’s worst greenhouse gas polluters because of its heavy reliance on coal for electricity.
The government is granting AU$9.2 billion in compensation over the next three years to industries affected by the tax, but Qantas said airlines are exempted from that assistance. The tax goes into effect on July 1, 2012.
Qantas said it would pass the costs onto its customers, with the tax adding an average of AU$3.50 to the price of a domestic flight ticket in the financial year ending June 30, 2013. The carbon tax does not apply to international flight fuel.
Qantas shares were down 2.5 percent to AU$1.95 in early afternoon trading.
President Barack Obama says back-channel talks with congressional leaders last weekend have produced new progress in advance of a White House session Thursday on deficit reduction.
The president is siding with House Speaker John Boehner in insisting that negotiators resist the temptation to “kick the can down the road” and settle for a makeshift, short-term solution to stave off a first-ever U.S. default next month.
At issue is the need to raise the government’s so-called debt limit to avoid a default on its obligations to bondholders and Social Security beneficiaries. Republicans want deficit cuts in the range of at least $2.4 trillion over 10 years to offset the amount of new government borrowing needed simply to avoid another vote before 2013.
Obama met with Boehner on Sunday, the first session since Republicans last month abandoned negotiations being led by Vice President Joe Biden.
The Biden talks had produced a series of tentative understandings on potential spending cuts totaling at least $1.6 trillion under administration math and $2 trillion or more under GOP math. But negotiators say a true agreement on those cuts _ to day-to-day agency operating budgets, defense, federal pensions and farm subsidies, among other things _ would require further sacrifice in the political priorities of Democrats and Republicans alike.
The administration says that if the government’s borrowing authority is not increased by Aug. 2, the U.S. will face its first default ever, potentially throwing financial markets into turmoil.
Obama isn’t calling for increases in tax rates. On Tuesday, the president urged Republicans to agree to eliminate “certain tax breaks and deductions for the wealthiest of Americans.” The White House is pressing for the repeal of tax breaks enjoyed by the oil and natural gas industry and limits on deductions claimed by people in the 35 percent tax bracket.
On Tuesday, Boehner attacked the latter proposal as an assault on small businesses but was subdued on questions like oil and gas subsidies or a much-publicized tax provision that gives favorable treatment to companies that buy corporate jets business cards.
“We’re not dealing just with talking points about corporate jets or other `loopholes,’” Boehner, R-Ohio, said. “The legislation the president has asked for, which would increase taxes on small businesses and destroy more American jobs, cannot pass the House, as I have stated repeatedly.”
In his remarks Tuesday, Obama said he strongly opposes a stopgap, short-term debt-limit increase, as suggested by some lawmakers.
“We’ve made progress, and I believe that greater progress is within sight, but I don’t want to fool anybody. We still have to work through some real differences,” the president said.
Obama’s tone was less partisan than at a news conference last week, as were the responses from Capitol Hill Republicans.
“I’m pleased the president stated today that we need to address the big, long-term challenges facing our country,” Boehner said in a statement.
Obama said Republican and Democratic leaders from the House and Senate were invited to meet on the issue Thursday at the White House. That would bring the top eight lawmakers together with Obama, Biden and top administration financial officials.
“It’s my hope that everybody’s going to leave their ultimatums at the door, that we’ll all leave our political rhetoric at the door,” Obama said.
In the Senate on Tuesday, Majority Leader Harry Reid, D-Nev., postponed a test vote on a Libya resolution amid increasing opposition from Republican lawmakers who insisted they should be working on financial security, not national security. Several Republican senators had indicated they would oppose using the week to debate the Libya measure.
Reid replaced the Libya measure with a nonbinding resolution calling on millionaires to pay a bigger share of the sacrifices needed to wrestle the deficit under control _ hardly a move that would eclipse any progress made at the White House.
Household Essentials, a Hazelwood-based distributor of ironing boards, hampers and other products for laundry and storage rooms, acquired Cedar Fresh, a cedar storage products manufacturer based in Miami.
Terms of the deal, which closed June 17, were not disclosed.
Cedar Fresh was founded in 1984 and makes cedar drawer liners, hangars and blocks that are designed to protect clothes and linens from moths.
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