Business & Finance
Despite its recent expressions of optimism, the Air Line Pilots Association said contract negotiations with US Airways Group have broken down. The carrier has said that new deals are necessary to avoid a return to bankruptcy court and possible liquidation. It is seeking $295 million in pay and benefit cuts from the pilots in a third round of concessions, and $800 million in overall givebacks by employees.
Deeply troubled Alitalia opened negotiations on new contracts with its employee unions, warning that it has "20 days of life left" unless they and shareholders OK a turnaround plan by Sept. 15 that almost certainly will result in lost jobs and other operating cost cuts. Austerity measures taken so far still leave the state-owned Italian carrier up to 60 percent more expensive to fly than its competitors, chairman Giancarlo Cimoli said, and it will fall about $20 million short of its revenue target for August. Cimoli also complained of growing absenteeism among employees as the airline's financial problems mount.
New doubt was cast on the megamerger announced earlier this month between struggling UFJ Holdings Inc. and Mitsubishi Tokyo Financial Group, as rival Sumitomo Mitsui placed a $29.2 billion hostile takeover offer on the table. The latter also would provide $6.4 billion to help UFJ improve its nonperforming loan portfolio. UFJ said it remains committed to its planned link-up with Mitsubishi Tokyo but would seek independent advice on the merits of the new offer, which is valid for 30 days, Bloomberg.com reported. A merger with either suitor would create the world's largest bank.
IBM announced it will hire 600 more people by year's end at its Canadian subsidiary, doubling the number already added to the payroll since Jan. 1. The move is driven by the company's strengthened focus on the connection between information technology and its consulting business. IBM Canada already has a workforce of 20,000 people.
El Paso Corp., the nation's largest natural gas pipeline operator, said it anticipates a $3.7 billion writedown on properties and shareholder equity as it works to square its finances with actual assets. The balance-sheet changes are a consequence of El Paso's announcement in February that it was slashing estimates of proven oil and gas reserves by 41 percent, which triggered a review of its financial statements from 1999 through 2003. Proven reserves are monitored closely by analysts as an estimate of a company's profit potential.