BUSINESS BRIEFS
American Air's U.S. capacity cuts permanent
Associated Press
FORT WORTH, Texas — Despite the big drop in fuel prices over the past two months, domestic capacity reductions American Airlines has been making are permanent, Chief Financial Officer Tom Horton said yesterday as he also suggested that the industry could see more consolidation in the future.
American, like other carriers, has announced U.S. capacity reductions caused by the high price of fuel, which soared to more than $147 a barrel on July 11. American, a unit of Fort Worth-based AMR Corp., said it would cut domestic capacity by as much as 12 percent after the busy summer travel season.
But since its July high, the price of oil has retreated significantly, but even so, Horton said firmly in an interview with The Associated Press that the capacity cuts are for good.
"The airplanes that we're grounding are older generation planes," Horton said. "They burn 35 percent more fuel per seat than the new generation planes. So, when you ground those planes, it would be very difficult to bring them back, not just in operations cost but also in maintenance infrastructure."
He added, "So, I would characterize those as permanent capacity reductions."
PENDING SALES FOR HOMES DROP
WASHINGTON — Pending U.S. home sales fell more than expected in July as the housing market's struggles continued, an industry group said yesterday.
The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell 3.2 percent to a reading of 86.5 from an upwardly revised June reading of 89.4. The index was 6.8 percent below year-ago levels.
ENRON INVESTORS TO SHARE BILLIONS
HOUSTON — Enron Corp. shareholders and investors will split about $7 billion from financial institutions accused of participating in the fraud that caused the once-mighty energy company to collapse.
The settlement amount was listed at $7.2 billion, a sum that has been accruing interest since 2002 and includes $688 million plus interest in attorneys fees.
The deal, approved late Monday by U.S. District Judge Melinda Harmon, and the attorneys fees are the largest in history in a U.S. securities fraud case.
FORD OWNERS GIVEN WARNING
WASHINGTON — The government is urging owners of 5 million recalled Ford vehicles to bring them to dealerships to repair a cruise control switch system that has been tied to engine fires.
The National Highway Traffic Safety Administration yesterday issued a second consumer advisory to owners of certain unrepaired Ford, Lincoln and Mercury sport utility vehicles, pickup trucks, vans and passenger cars who have not responded to previous recalls.
NHTSA said about 12 million vehicles have been part of the recall and nearly 5 million still have not been fixed. A similar warning was issued in February but officials said the rate of the vehicles being repaired has declined.
REYNOLDS TO CUT 570 TOBACCO JOBS
NEW YORK — Reynolds American Inc. and its tobacco unit, R.J. Reynolds, said yesterday they would cut about 570 jobs, or 10 percent of their American workforce, as cigarette sellers prepare to compete more aggressively for sales of smokeless tobacco products.
The company expects the job cuts at its headquarters in Winston-Salem, N.C., to save $100 million by the end of 2010 and $55 million a year after that. Employees will begin losing their jobs in the third quarter, but some cuts will take until the end of 2009.
Reynolds' move comes after its bigger rival, Philip Morris USA owner Altria Group Inc., said Monday it would buy UST Inc., the maker of Skoal and Copenhagen, for $10.4 billion.
