Business & Finance
US Airways reported a loss of $1.65 billion last year - down from $2.1 billion in 2001 and significantly less than its larger rivals in the troubled industry. The carrier said it expects to turn a profit by next year. Savings from layoffs and wage cuts helped limit fourth-quarter losses to $794 million, as the company seeks to emerge from bankruptcy in March.
WorldCom, as expected, announced further job cuts as new chief executive Michael Capellas works to bring the telecom giant out of bankruptcy this year. In addition to the 5,000 new layoffs, WorldCom said it will consolidate networks, trim facilities, and renegotiate supply contracts under a plan to save $2.5 billion annually.
Following the lead of insurance industry rivals, AIG (American International Group) announced it will set aside $2.8 billion more to cover anticipated needs in its property- casualty operations. Unlike its competitors' motivations, however, the extra reserve is intended for healthcare liability, worker compensation, and class-action suits stemming from corporate bankruptcies or accounting scandals, a senior executive said, rather than for asbestos-related claims. He cited a "rampant rise in jury awards" and "record high levels of severity and frequency" in insurance settlements. AIG's move will result in a $1.8 billion pretax charge for the fourth quarter of 2002.
General Electric's consumer finance division will buy the lending unit of British banking giant Abbey National PLC for about $1.4 billion, the companies said. The deal, widely expected in financial circles, is aimed at helping Abbey National return its focus to such core businesses as retail and commercial banking, financial planning, and asset management.