Archive for the ‘losses’ Category
- In: $100 | above | barrel | Delta Air Lines | losses | Northwest Airlines | oil | Post | Revaluations
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Like other airlines, Northwest has been hurt by soaring fuel prices. The company it is merging with, Delta Air Lines, raised ticket prices 6 percent and flew its planes with fewer empty seats.
Delta Air Lines and Northwest Airlines, preparing to merge amid a steep industry downturn, reported a combined first-quarter loss of $10.5 billion on Wednesday, most of it an accounting recognition that the two carriers are worth far less than when they emerged from bankruptcy a year ago.
Airline stocks were relatively stable Wednesday afternoon after plunging Tuesday, led by a decline of more than 35 percent at UAL, the parent of United Airlines. Northwest closed down 5 percent on Wednesday, to $7.10 a share, and Delta fell 3.5 percent, to $6.56 a share.
Across the industry, carriers are reeling from a huge increase in fuel costs — roughly 50 percent above first-quarter prices in 2007 — and preparing for a decline in demand with the economy faltering.
Delta and Northwest plan to merge, in hopes the combination would produce savings and other efficiencies of more than $1 billion by 2012. Others are in merger discussions, too. But for the industry to return to consistent profitability, airlines will need to push through big fare increases, which to date have been resisted by some discount carriers and by price-focused customers.
In the meantime, in a replay of the period after the attacks of Sept. 11, 2001, carriers will be reducing their domestic schedules, laying off workers, deferring investments in planes and other equipment, and generally hunkering down.
A handful of bankruptcies among smaller carriers already this year could grow to include bigger ones if oil remains above $100 a barrel.
As a buffer against the downturn, Delta had $2.6 billion in unrestricted cash and short-term investments and Northwest had $3.2 billion, both as of March 31.
- In: banks | Credit Suisse. | EU | European banks | Federal Reserve | inflation | leaders | losses | reveal | UBS
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EU leaders urged international banks to help calm markets by revealing recent losses, wrapping up two days of talks that come to a close Friday with a report showing inflation in the euro area hit a new high.
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The srength of the euro is a topic of increasing concern to EU leaders and was a “serious issue” at the summit.
Yearly inflation in the 15 nations that share the euro hit a revised 3.3 percent last month, the EU statistical agency said Friday — setting a new record as prices for oil and food surged.
The dollar’s extended slump was central to the discussions.
Just as Slovenian Prime Minister Janez Jansa called the euro’s strength a a “serious issue,” the euro hit a new high against the U.S. dollar, peaking at $1.5652.
A more expensive euro makes German cars and French wines tougher to sell to the EU’s biggest trade partner, the U.S. A strong euro, however, could ease inflation by cutting the import bill for dollar-priced oil.
The dollar has declined on pessimism about the U.S. economy, which has fed expectations that the Federal Reserve will continue to lower interest rates to jump-start the economy.
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EU leaders insisted in a draft declaration that the fundamentals of the economy remain strong. But the main lever to curb soaring inflation and runaway exchange rates — interest rates — lies outside their hands, and in the control of the fiercely independent central banks.
EU leaders urged member nations to hold off measures such as fuel taxes that would take more money out of shoppers’ pockets as they shell out more for basics.
The leaders plan to issue a statement expressing concern about “fragile” financial markets with credit tight and banks reluctant to disclose losses from complex investments in U.S. mortgage-backed securities. Those securities began to unravel rapidly last summer.
Banks worldwide have written off more than $150 billion in the past half-year, including large fourth-quarter write-offs by major European banks like UBS and Credit Suisse.
Yet Standard & Poor’s Ratings Services said Thursday it estimates writedowns of subprime asset-backed securities could reach $285 billion globally, up from its previous projection of $265 billion.
The statement from the EU will urge banks to provide “prompt and full disclosure of exposures to distressed assets.”
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