A breakup of Enron Corp. appears increasingly likely as the bankrupt energy trader's creditors and new managers near an agreement that would resolve one of the most complex bankruptcies in US corporate history, the Financial Times reported. The sell-off would involve bundling assets as viable businesses rather than liquidating them, the paper said.
Citing an increase in fuel prices, Continental Airlines imposed a $20 per-round-trip fare hike Friday, and American Airlines and US Airways quickly followed suit. Other carriers reportedly are considering increases but are reluctant to impose them due to intense competition.
Elsewhere in the struggling airline industry:
• Unions representing United's pilots and flight attendants reacted angrily to proposed deeper pay cuts, saying the bankrupt carrier has not sufficiently justified increasing them from $2.4 billion to $2.56 billion.
• Frontier Airlines won approval of a $63 million federal loan guarantee, which will back a $70 million financing package for the Denver-based budget carrier.
Agreement in principle on a $4.7 billion deal to sell Canada Life Financial Corp. to rival Great-West Lifeco Inc. was announced by the parties. Canada Life is based in Toronto; Great-West Lifeco in Winnepeg, Manitoba.
Plans to raise $2.5 billion in new investment from foreign sources were outlined by Sumitomo Mitsui Financial Group (SMFG). The bank, Japan's second largest, said the effort to avoid a government bailout will begin next month and will be aimed at institutional investors. The target will be over and above the $1.27 billion that US financial-services giant Goldman Sachs announced in mid-January it would invest in SMFG. At last report, SMFG was expecting to write off $5.8 billion in nonperforming loans by the close of the current fiscal year, although that figure could well rise, company executives suggested.
Reducing costs prior to a planned spinoff by drugmaker Merck & Co, pharmacy-benefits management specialist Medco Health Solutions said it will lay off 600 workers and close a mail-order facility in Mechanicsburg, Pa. Several states have been looking into allegations that Medco, based in Franklin Lakes, N.J., gave its parent preferential treatment when marketing pharmaceuticals.