Posted on Tue, Apr. 08, 2003 By Trebor Banstetter Star-Telegram Staff Writer

FORT WORTH - American Airlines will file for bankruptcy protection next week if any of its three unions rejects plans for $1.6 billion in concessions, union leaders told members Monday.

Airline employees are pondering whether to approve the new contracts, which will mean hefty pay cuts, layoffs and tightened work rules. For pilots and ground workers, voting is expected to be completed on Monday. Flight attendants will have until 10 a.m. on April 15, union officials said.

"A 'no' vote will trigger a bankruptcy filing the day following the voting deadline," Jim Little, international vice president of the Transport Workers Union, told members Monday. "This is a fact that has been bluntly stated by the company, without reservation."

Also Monday, American announced that it will cut its May flight schedule more deeply than expected. Bookings have been down because of the war in Iraq as well as the continued economic slowdown, airline officials said.

The airline's domestic routes will be cut 2 percent more than originally planned next month, and international flights will be down 13 percent more than planned, airline officials said.

It was another sign that despite the recent progress with labor, American's ability to stay out of bankruptcy court remains uncertain.

"The network carriers will have to be restructured," Ray Neidl, airline analyst for Blaylock & Partners, said in a note to investors. "The question is will it be in or outside of bankruptcy."

Union officials said that American has given them little reason to doubt that a bankruptcy filing will soon follow if union members reject the concessions.

"The company has alluded to the fact that if one of the employee groups were to fail to ratify the agreements, they would certainly file," said George Price, a spokesman for the Association of Professional Flight Attendants.

Although American executives have raised the specter of bankruptcy before, airline officials have declined to disclose when a filing might take place.

But Little of the Transport Workers Union, which represents 34,000 mechanics and other ground workers, said the airline has informed the union that a Chapter 11 filing would take place almost immediately after any negative vote.

"Anyone who thinks a 'no' vote will result in additional negotiations or, better yet, an unchanged contract, has ignored the news and ignored the facts," he said in his message to union members. "Bankruptcy is certain without these concessions in place."

American has warned its unions that bankruptcy lenders would demand an additional $500 million in annual labor concessions in a Chapter 11 case.

"We have made it clear that we need ratification from all three unions in order to continue to avert bankruptcy," said Bruce Hicks, an American spokesman. "If the union members don't ratify [the concessions], there won't be any return to the negotiating table."

American came within minutes of filing last week when a vote by leaders of the pilots' union to accept a tentative concessions agreement kept the airline temporarily out of bankruptcy.

Fort Worth-based American, the largest employer in North Texas, has lost $5.2 billion in the past two years, and is expected to lose $800 million during the first three months of 2003.

The carrier, which is the world's largest, has been struggling with a steep downturn in business travel and fierce competition from discount airlines such as Southwest Airlines and AirTran Airways.

Last year, the carrier launched a campaign to cut $4 billion in annual costs and return to profitability. In addition to asking employees for $1.8 billion in labor costs, executives say they cut $900 million in operating expenses last year and hope to cut $1.1 billion more over the next several years.

American's flight schedules will be slashed even further next month, officials said. With the new cuts announced Monday, the carrier's domestic flight network will be down 10.7 percent from its size May 2002, and its international network will be down by 5.5 percent, said Tara Baten, a company spokeswoman.

Baten emphasized that none of American's routes will be eliminated.

"These are selected frequency reductions," she said. "No destination will lose service altogether."

The cuts are "in line with reductions we're seeing throughout the industry due to the war in Iraq and economic conditions," Henry Joyner, American's senior vice president of planning, said in a statement.

Baten said the airline does not yet know if the additional cuts will mean more layoffs.

The reductions will affect some routes from Dallas/Fort Worth Airport, Baten said. Fewer flights will be available to Miami; Chicago; San Jose, Calif.; San Juan, Puerto Rico; Calgary, Alberta; and LaGuardia Airport in New York.

International routes from D/FW that will be affected include Caracas, Venezuela; Tokyo; Paris; Frankfurt; London; and Mexico City.

Baten could not say how many flights to each city will be eliminated.

PJStar.com April 5, 2003

Whether you were looking for a new car, a plane ticket or even a new pair of shoes, 2002 was a great year to be a buyer of just about anything to help you get around.

If you were a seller, ’02 was pretty much a train wreck.

A recent Consumer Price Index report by the Bureau of Labor Statistics shows prices for a wide range of transportation-related goods and services either fell or remained flat between the Decembers of 2001 and 2002.

At the same time, the overall CPI - the rate of inflation in price of all goods - hit a benign 2.4 percent in 2002 amid a nationwide economic malaise.

The notable exceptions? You won’t be shocked if you ever leave your house or pay your bills. Gasoline prices skyrocketed throughout 2002, and car insurance prices took a big upward hike. But those increases were the exception and far from the rule for transportation-related buys of all kinds.

The average price of all new cars and trucks - amid zero-percent financing deals designed to spur car-buying demand - fell 2 percent; used car and truck prices (hit hard by buyers being lured by cheap financing for new cars) dipped by 5 percent; and car and truck leases fell 2 percent.

The only increased pricing for car acquisitions was a modest one: rental car and truck costs went up 0.5 percent.

The cost of getting a set of tires for your car was up a tiny 0.1 percent, while car repair costs were up 3.7 percent, not much over the rate of inflation. Car-related governmental regulatory fees were up 3.3 percent, while car insurance costs were up 9 percent.

The biggest transportation-related increase - indeed, one of the biggest consumer-related price increases of any type - was in gasoline, up 24.8 percent for all grades and up 25.8 percent for unleaded regular-grade gas.

The blame for gas price spikes at the end of last year fell on the threat of the now-real war with Iraq, low reserves and political woes in Venezuela, America’s fourth-largest crude oil source.

Going by plane? Airfares were down 2.4 percent, as a post-Sept. 11, 2001, travel slump and a business traveler revolt against high walk-up fares continued through 2002. How about by boat? Ship fares were down 1.8 percent.

For those without wheels and lacking access to a jet or yacht, public transportation fares were down 0.9 percent, while footwear prices were up only 0.1 percent in the discount-crazy retail industry.

The bottom line? While investors decried depressed stock prices stemming from slack revenues, and while some industries (notably airlines) struggled to bring costs in line with what consumers were willing to pay, 2002 was a great time to go somewhere on the cheap.

But buyer beware: Businesses of all types won’t be able to sustain themselves - and the jobs they offer - without a reasonable increase in prices or a major restructuring of business models this year.

To see the 96-page price report yourself (which includes not only transportation-related items but just about any consumer-related goods or services) go online to www.bls.gov/cpi/cpid0212.pdf.

• Omar Sofradzija covers transportation issues for the Journal Star. His column appears every other Saturday. He can be reached at 686-3187 or osofradzija@pjstar.com, or by mail c/o Journal Star, 1 News Plaza, Peoria, IL 61643.

Sherry Cooper <a href=www.nationalpost.com>Financial Post Friday, March 28, 2003

I was in New York City this week meeting with institutional money managers. The city is vibrant, alive with the first blush of spring, yet a strong undercurrent of concern is there. Fear of terrorist reprisals has tightened security measures and heightened a general level of awareness. However, New Yorkers are learning to live with it. The streets are still busy, the theatres are full, and outside our offices on Times Square, the pedestrian gridlock is still evident around the clock. While the media emphasizes the rush for gas masks and duct tape, none of that kind of panic is evident to the casual observer.

To be sure, the economy has slowed. The jobless rate in New York City is 8.6%, well above the national average of 5.8%. Office vacancy rates are high in downtown Manhattan, as there was a net decline of more than 43,000 jobs last year, battered by layoffs in virtually all sectors except health care and social services. Tourism is down sharply so hotel occupancy rates remain low, and big-name restaurants are offering discounts. Even reservations are easy to get.

All over the United States the loss of business and consumer confidence is palpable. The war seems less distant and less like a Star Wars video game. The euphoria evident in the first few days ended last weekend as casualties mounted, prisoners were taken and the Iraqi Republican Guard and Fedayeen fought back hard. The stock market surge culminating in the melt-up last Friday was sharply unravelled early this week. Yet gold prices, at US$330 an ounce, remain well below the US$389 level posted in February. Oil prices, as well, have come off their peak despite disruptive unrest in Nigeria and continuing concerns in Venezuela. And the U.S. dollar has barely changed from where it was before the war began. Of course, all of this could deteriorate rapidly if Iraq were to use chemical weapons, or attack Israel, or if terrorist attacks on American soil were to begin again.

In this potentially inflammatory environment, traditional economic analysis can go only so far. All standard models would suggest that the economy should be rebounding as we move into the second half of this year, and I still believe that it will. But as Alan Greenspan and Company suggest, it is difficult to assess the risks as long as the war is still going strong. And in many ways, the risks are imponderable -- scenario analysis and worst-case planning become almost unfathomable in a world where weapons of mass destruction could suddenly annihilate thousands, or maybe even tens of thousands. So what is the ordinary investor, consumer or business manager to do?

Canada is, in many ways, isolated from the worst of the psychological effects of post-terror turbulence and war. We may be kidding ourselves, but we believe our cities are safe, our children are invulnerable, and our government is neutral, even anti the American position. Yet we know that al-Qaeda cells exist in Canada and that budding terrorists may have moved through our borders into the United States. Moreover, 85% of our population lives within 300 km of the U.S. border, too close for comfort for many.

And perhaps the biggest risks lie in our economic dependence on the United States, a point driven home by the attention given to comments by Paul Cellucci, the U.S. ambassador to Canada, earlier this week. Delays at the border are already costly, and no doubt more stringent inspections will come. Should the United States suffer another domestic attack, draconian measures might well be taken to protect and insulate the country. With 33% of our economy in exports to the United States, any disruption in the transport of goods, services or people would be a devastating blow to our otherwise buoyant economy. We got a minor taste of that in the final quarter of last year when growth slowed to a mere 1.6% thanks to a marked weakening in automotive exports.

Canada is not alone in its reliance on the United States. Never before has the global economy been so U.S.-centric, as no other economy in the world could replace the United States as the importer of last resort. We cannot internally generate the economic power necessary to sustain our rapid employment growth and maintain our high level of confidence -- neither can Europe or Japan. So we are all in this together. It is not their problem, it is our problem, the problem of all supporters of order and freedom.

I'm optimistic. I believe the Americans and their allies will prevail. That the war will end in the next couple of months and order will be established in Iraq. The rebound in economic activity will be sizable and sustained. Stocks will rally and bond yields will rise. Oil prices will fall further and U.S. businesses will once again invest in their future prosperity and expansion. I have been telling this story here all week and mostly it falls on a very receptive audience. For all our sakes, let's hope I'm right.

Sherry Cooper is global economic strategist and executive vice- president, BMO Financial Group.

URL Thursday, March 27, 2003 By JO DEE BLACK Tribune Staff Writer

The scale finally tipped in the balancing act played at Joe's Delivery Service. The in-town courier, which delivers everything from prescriptions to paperwork, recently increased rates for the first time in four years.

Owner Joe Murray says escalating fuel prices are to blame.

"I've got to stay competitive to make a living," he said. "I have to make my payments, too. It's tough."

In Great Falls, businesses that offer delivery services are dealing with higher fuel costs in a variety of ways.

Murray said he used to spend about $800 a month for fuel for his business' three delivery trucks. Today, the bill for gasoline is about $1,000 a month and he expects it to go up to $1,200 a month soon.

A propane-operated van Joe's Delivery Service added to its fleet a few years ago is getting more use these days. The propane-powered vehicle gets about eight miles per gallon, compared with the 11 or 12 miles per gallon the gasoline-operated vans get.

"But with the price of gas now, it really doesn't matter," Murray said.

Regular unleaded gasoline is running about $1.63 a gallon in Great Falls; diesel prices are about $1.85 a gallon. A gallon of propane vehicle fuel costs about $1.26 in Great Falls.

According to the AAA Fuel Gauge Report, the average price of unleaded regular gasoline in Great Falls was $1.25 a gallon one year ago, diesel was $1.27.

Shumaker Trucking tacked a fuel surcharge on its bills to trucking customers to deal with higher prices.

"We've had to do it two or three times in our history," said owner Gene Shumaker. "Our customers realize what's going on. They all have to put fuel in their own vehicles."

Deliveries at Kranz Flowers and Gifts are carefully planned to maximize fuel economy, said owner Doug Forbes.

"We are trying not to raise our delivery costs and we are watching our routing to make sure deliveries are made in areas of town once or twice, not three and four times," Forbes said.

He recently hired a second driver to eliminate delivery backtracking.

"We've been through this before," Forbes said. A couple of years ago he traded in the shop's eight-cylinder vans for more fuel efficient models and cut the monthly gas bill in half from about $1,000 to $500.

Shumaker is optimistic prices will come back down, but Murray isn't betting on it.

"From what I understand, there's no end in sight," he said.

Crude oil prices tumbled March 17 after President Bush announced the United States would go to war with Iraq unless Saddam Hussein left within 48 hours.

On March 12, the spot price of a barrel of crude oil on the West Texas Intermediate market was $37.87. The price dropped below $30 per barrel on March 19 for the first time since Dec. 13, according to the U.S. Department of Energy's Energy Information Administration.

The speech removed uncertainty over whether the war would happen, a factor pushing prices higher, according to the Energy Information Administration.

On Monday, prices at the pump for regular unleaded gasoline fell, after going up 13 of the past 14 weeks. Nationwide, the average price was $1.69 per gallon, still 34.81 cents higher than one year ago, according to the Energy Information Administration.

Spot prices for crude oil are rising again because of uncertainty about the length of the war. Oil exports from Iraq have halted.

In addition, unrest in Nigeria forced companies there to reduce exports by 800,000 barrels a day.

On the West Texas Intermediate market, the spot price for a barrel of crude oil was $27.18 Friday. On Tuesday, the price was $33.42.

Shakiness about the war comes at time when the U.S. oil market is rebalancing from shortages caused by a nationwide strike in Venezuela.

Exports from that country nearly stopped in December when opponents of Venezuela's President Hugo Chavez organized the strike. Of the 9 million barrels of crude oil imported daily by the United States, about 1.3 million are from Venezuela.

Oil production in that country has resumed. Striking workers say about 2.4 million barrels of oil are being produced a day, but the government claims that it's putting out more than the 3 million per day prestrike level.

<a href=www.voanews.com>VOANews Barry Wood Washington 25 Mar 2003, 00:06 UTC

APU.S. investors took a gloomier view of a quick end to the war in Iraq Monday, and sent stock market prices sharply down. The U.S. dollar also fell, while the prices of crude oil went up.

Crude oil prices Monday registered their biggest gain in 15 months as pockets of stiff Iraqi resistance to the U.S.-led invasion raised concern that Iraqi oil may not quickly return to world markets.

Oil for May delivery rose 6.5 percent or $1.75 in New York to just under $29 a barrel. Oil is still priced nearly 28 percent below its peak of just under $40 per barrel touched in late February.

Another development helped push crude higher. Ethnic strife in Nigeria has shut down 40 percent of that country's oil output. Venezuela, meanwhile, is getting its oil production back on line following a crippling strike.

The stock market fell sharply with the main index, the Dow Jones industrials, losing three and a half percent or 307 points to close at just over 8,200. The loss was the biggest in three months and reversed the 235-point gain of last Friday. Volume was light. The market was up sharply last week, its best five-day performance in 20 years.

Gold was higher and the dollar lower.

Travel-related stocks were the hardest hit as advance reservations for air travel are down amid war and terrorism related worries impact. Delta Airlines is the last carrier to announce capacity reductions and further staff reductions are expected. Oil and defense related issues closed higher.