Business & Finance
Deeply indebted Delta Air Lines acknowledged that its own auditor, in a regulatory filing Wednesday, has "raised substantial doubt about the company's ability to continue as a going concern." Deloitte & Touche examines the Atlanta carrier's books. In another statement, Delta said its 2003 annual report has been revised to "disclose ... the possibility of a Chapter 11 filing in the near term." The airline owes creditors $20 billion and continues to seek $1 billion in concessions from its unionized pilots. The givebacks are considered critical as it struggles with "near historically high" fuel costs and declining passenger-mile yields.
For the second day in a row, a union representing Alitalia employees gave the struggling Italian airline further hope that it can survive its financial crisis. Following the lead of the pilots' union Tuesday, the representative of its ground-crew employees agreed to a new contract that calls for 2,500 job cuts. Alitalia originally had wanted 3,500 layoffs but said the deal still should result in a saving of $182.5 million over the next two years. The pilots' union agreed to 289 layoffs, which should help save an estimated $63 million. The airline was meeting Thursday with negotiators for its flight attendants' union.
Lone Star Funds of Dallas agreed to buy $4.4 billion in mostly defaulted loans for an undisclosed price from Hypo Real Estate Group, Germany's No. 2 commercial real estate lender, Bloomberg.com reported. Hypo reportedly will spin off the loan portfolio into a new company owned by Lone Star.
Perrier, the world-famous mineral water brand, would become a stand-alone company and could be sold to the highest bidder under a plan announced Wednesday by food marketing giant Nestlé SA. The company threatened such a move once before, last March, but analysts said the prospect has new impetus because a communist-backed trade union blocked a deal calling for 800 job cuts after other unions had agreed to it. Nestlé says the long-term outlook for Perrier remains strong but that production costs are too high. Nestlé also markets San Pellegrino, Contrex, Aquarel, and other bottled waters.