Business & Finance
Bankrupt Delta Air Lines annnounced wide-ranging austerity plans calling for 9,000 more layoffs, cuts in pay for every employee making more than $25,000 a year, and a deemphasizing of domestic route "capacity" in favor of more profitable international destinations. The moves came eight days after Delta sought Chapter 11 protection from creditors and one day after Northwest Airlines, which filed for bankruptcy at the same time, said it will lay off 1,400 flight attendants between now and January.
Troubled Sony Corp. said it will close 11 assembly plants and will pull the plug on - or at least downsize - 15 businesses that are not profitable. The moves, under a long-awaited restructuring plan announced Thursday by new British-American chief executive Howard Stringer, will result in 10,000 layoffs, more than half of them overseas. The Japanese electronics giant did not identify which divisions would be affected, although it denied speculation that it will sell its banking and insurance units. Although Sony pioneered the Walkman, compact disc player, and the Play Station, it has lost market share in recent years to such rivals as Apple Computer Inc., Samsung of South Korea, and Japan's Matsushita Electric Industrial Corp.
A $3.7 billion lawsuit filed in May against US accounting giant Ernst & Young, was dropped by Equitable Life Assurance Society, Britain's oldest mutually owned underwriter. Equitable, which came close to collapsing five years ago, had accused Ernst & Young of failing to warn of its deep financial problems when signing off on audits in the late 1990s. The claim of negligence was the largest in British history, but the plaintiff said it had to recognize the high risk of failing to recover any loss, which would make further pursuit "foolhardy." Ernst & Young, which admitted no liability, called the dropping of the suit a "humiliating climbdown" that it hoped would deter "similar opportunistic claims in the future."
Fitness First, a health-club chain with operations in 15 countries, was acquired by buyout specialist BC Partners for $1.5 billion - more than twice its selling price in mid-2002, the financial news service Bloomberg.com reported. Under Cinven Group, the seller, Fitness First has grown to 424 outlets and more than 1 million members and has been opening about 40 new gyms a year. The chain is based in Poole, England. Its new owner and Cinven Group both maintain their headquarters in London.