Sterling Airways Goes Bankrupt and Leaves Hundreds Stranded at Airport

Icelandic-owned Sterling Airways has cancelled all flights, leaving hundreds of passengers stranded at London Gatwick and thousands stranded across Europe.

The low-cost airline, which flies from Gatwick to Copenhagen, Stockholm and other Scandinavian cities, said it was filling for bankruptcy and blamed the Icelandic financial crisis for its decline.

The airline is owned by Iceland's Northern Travel Holdings and employs around 1,100 staff.
It flew to 40 destinations, mainly from its hubs in Copenhagen, Oslo and Stockholm.

The airline issued the following information:

Dear customers, employees and other stakeholders,

During the last few weeks, the management, board of directors, and the shareholder of Sterling Airlines A/S have been fighting a battle to keep the company alive. Sadly, this has not had a positive outcome, and we have therefore decided to file for bankruptcy which will be done later today.

Background

During the last three years, Sterling Airlines A/S has been through a lot of changes and since acquired by new shareholders in spring 2005 the company has taken on a merger with Maersk Air A/S. In 2005, the total loss of both airlines exceeded 800 MDKK and both owners wanted out one way or the other. Therefore, all jobs in both airlines were at stake and so was also the competitive landscape in Scandinavian aviation since only the presence of a low cost carrier would ensure healthy competition and pricing on the market.

The merger process started in the autumn of 2005 and lasted until mid-year 2006, and by that time we employed over 1,200 employees with far more job security than before, and we had expanded our route network to enable more customers in Scandinavia to travel for less money.

Our operation was progressing positively and our finances were improving considering the massive losses that had been encountered in the preceding years. In 2007, we were doing very well and saw that more and more customers were choosing Sterling, and we ended the year with a positive EBITDA (operational profit) for the first time in many years.

Oil and financial crisis

With the global financial recession that started in the autumn of 2007, Sterling by winter 2007 – 2008 was seeing signs of stagnation in the market. Significant fuel cost increases, and at the same time a planned heavy expansion of our activities, made us more exposed than we would have been otherwise.

By spring 2008, the airline industry was hit by decreasing demand and rapidly increasing fuel prices. That led to Sterling accumulating large losses. During summer and autumn the management of Sterling implemented a restructuring plan of the company resulting in a reduction in fleet and manpower, and a pull-out of a lot of loss-making activities, without compromising our services. The full effect of these actions were planned to have impact start of 2009.

To get the company restructured, the shareholder of Sterling gave financial support from the end of July 2008 to the end of September 2008 transferring 444.5 million DKK to the company. The plan was to continue financial support into 2009. On the 29th September 2008, the Icelandic financial environment started to collapse. Over a 3 to 4 weeks period, the whole financial system melted down, and that resulted in our shareholder being unable to continue his support to the company. Negotiations have been conducted with several potential investors, but it was impossible to make ends meet. The inevitable result is that Sterling Airlines A/S has no option but to file for bankruptcy.

Sterling Airlines’ trademark has always been excellent staff and service. Among the staff the Sterling spirit will continue to exist. We have made our mistakes over the years. But hopefully we have done more right than wrong, and at least we have made the market more competitive to the benefit of our customers.

Information to Sterling Passengers

Customers who have directly purchased their tickets on Sterling’s website will unfortunately not be refunded neither will their return flights. You therefore have to book your return flights with another airline company.

If you have paid for a flight by credit card, we advise you to contact your bank or credit card company to ask for a possible refund.

Customers who have booked their flights through a travel agency or tour operator should initially contact them.

Passengers who have booked their tickets through Sterling, but is flying with Norwegian, should contact Norwegian directly on one of the below phone numbers:

+47 21490015 (from outside Norway)
815 21 815 (from Norway)

Passengers currently staying abroad in hotels, or hiring a car through Sterling business partners, are still able to stay in their hotel or keep the hired car for the relevant period of time, as such services are paid for through our business partners and not Sterling. However as for your return flight, you will need to find alternatives for your final destination.

Please note that if you have booked your travel/hotel/car through a travel agency or tour operator, please contact them upon your return for possible refund of expenses for your return flight.

We understand that most travel insurance does not protect holders from airline insolvency but should you have taken insurance please contact your insurance company for clarification.

We will later put on a FAQ and hope that this will help you in this very unfortunate situation.

Those who have paid by credit card are advised to contact their bank or credit card company to ask for a possible refund.

Customers who have booked their flights through a travel agency or tour operator should initially contact them.

Source : eturbonews
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession]

19,683 Tech Layoffs And Counting

This has been a brutal month or so for tech layoffs. According to our Layoff Tracker, there have been 19,683 job eliminations at tech companies announced since mid-September, and we're not even counting the 24,600 people at Hewlett-Packard who are being eliminated as a result of its merger with EDS.

But only five big companies make up more than 90 percent of the layoffs: Xerox (3,000), Dell (8,900), Yahoo (1,500), eBay (1,500), and German chipmaker Qimonda (3,000). The other 33 companies are mostly startups, and collectively account for 1,683 layoffs. Although three more companies (Sony Ericsson, Nvidia, and TicketMaster) account for an additional 1,110 job losses.

After stripping those out, you get closer to a pure number of layoffs at tech startups: 573

That is the equivalent of about 57 startups with ten people each. And those are just the ones that we or other news outlets have been able to confirm. Our list of tips is much longer than that and we are working through it to confirm as many as we can. For instance, Cake Financial has laid off 30 percent of its staff, or 6 people.

Another company with unreported layoffs earlier this week was Meraki, which I've confirmed let go 20 percent of its staff (10 people). That makes Meraki the third Sequoia-backed company to announce layoffs this week. (The other two were Mahalo and imeem). Sequoia urged all of its portfolio companies to make cut-backs earlier this month.

At least most of these startups are already done with their layoffs, unlike Yahoo which announced a 10 percent cut is coming but won't say who exactly is losing their jobs for another few weeks. Layoffs are bad enough, but don't prolong the misery.

Check out Techcrunch Layoffs List

Source : WashingtonPost
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession]

Xerox To Lay Off 3000 Staff

Xerox has become the latest technology heavyweight to issue a major round of layoffs.

The company revealed on Thursday that the sagging economy has forced a reorganisation plan which could see some 3,000 jobs eliminated. Such a cut would remove five per cent of Xerox's total workforce.

News of the cuts came as the company revealed its quarterly earnings report. Xerox managed to pull in a $258m profit with help from a surge in sales to developing countries.

However, sales in the US took a hit and the company expects its numbers to follow suit as the economic downturn continues.

"The resulting shift in revenue mix does put pressure on our gross margin," said Xerox chairman and chief executive Anne Mulcahy.

"To better align our operations with these changes, we are accelerating actions to reduce our cost base and drive operational improvements across the board, giving us more flexibility in our business in this unpredictable economy. "

News of the cuts follows an announcement from Yahoo that its own economic worries will lead to 1,500 layoffs. Earlier this month, chipmaker Micron revealed that it would be cutting roughly 3,000 jobs.

Earlier this week Michael Dell said that his company was nearing the end of its major 9,000-person layoff campaign.

Source : Vnunet
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession]

Dell Plans to Cut 8,900 Jobs

Dell, the world's second-biggest computer maker, expects to grow faster than the industry this year but its CEO said it is hard to say whether the global PC market will improve heading into the year-end.

Michael Dell also told a briefing for reporters on Wednesday that the company had basically completed its previously announced job cuts, as it realigns its business to confront slowing demand.

The company had said it planned to cut 8,900 jobs, and that it would invest in infrastructure and acquisitions.

Dell also told Wednesday's briefing that the company would use cash flow to make acquisitions.

Dell, which trails Hewlett-Packard in the computer sector, said last month that slow demand had spread from the United States to Europe and Asia, and had not rebounded as expected after the summer lull. In August, it posted a steep drop in second-quarter profit, saying that companies were becoming more conservative in spending.

But the chief executive said his company was performing well in unit shipments compared with the overall industry.

"For the first nine months of this year, according to IDC, Dell grew a few points faster than the overall industry for our unit growth. We expect for the full year, Dell will grow faster than the industry," Michael Dell said.

In China and Hong Kong, Dell has seen 30 percent sales growth so far this year, in line with recent years, although that fast-growing market also poses uncertainties.

"Honestly, how things will turn out next year is hard to say," Alex Yung, Dell China vice president, told Reuters.

"We don't know what kind of policy the Chinese government will come up with. If they continue to encourage domestic consumption, we wouldn't be too worried," he said.

"And also if the Chinese banks are not pulled too far (into global financial turmoil), we wouldn't be too worried."

The company's 30 percent sales growth in China so far this year compares with 30 to 40 percent growth over the last five to six years, he added.

Yung told reporters later at a presentation that the company was seeing a mixed performance in various sectors of the market in China, with a particularly major impact on demand from export-oriented small companies, which have been hurt by the global economic slowdown.

"The consumer segment is doing very well," he said.

"From the commercial side, we see continued good growth in the public sector, state-owned enterprises and also some of the global businesses that we have locally. We definitely see some challenges in the small and medium-sized businesses."

Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession]

Yahoo to cut 1,500 jobs

Yahoo has announced disappointing quarterly financial results and revealed that the feared job cuts will be much worse than expected.

The company reported that third-quarter profits slumped by 64 per cent to $54.3m compared with $151.3m last year. Yahoo plans to cut 10 per cent of its workforce, more than 1,500 people, 50 per cent higher than expected.

"The steps we are taking this quarter should deliver short-term benefits to operating cash flow, and substantially enhance the nimbleness and flexibility with which we compete over the long-term," said Jerry Yang, co-founder and chief executive of Yahoo.

Falling consumer spending hit Yahoo's profits hard in the last quarter, but the company hopes that the job cuts and other belt-tightening initiatives will save the company $400m.

More job losses are also expected among Yahoo’s staff of contractors, which number 2,000, according to the company. It will also attempt to make savings in reducing the amount of property it holds.

"We are conducting a deep review of our cost structure to identify more opportunities to enhance efficiency and build a stronger and more profitable Yahoo," said Yahoo president Sue Decker.

Yahoo's results contrast with those of Google, which were upbeat despite the spending squeeze.

The news will also be troubling for those who invested heavily in Yahoo stock, such as Carl Icahn and oil speculator T Boone Pickens, in the expectation that the company would be sold to Microsoft.

Shares in Yahoo rose slightly to more than $12 at news of the job cuts, but are still nearly half as valuable as they were at the start of the year.

Under the circumstances Yang may face legal problems after the news that he turned down an offer of $40 per share from Microsoft last year.

Source : vnunet
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession]

Global Rout Sinks Market; Dow below 10,000

U.S. stocks fell on Monday, with the Dow diving more than 500 points to below 10,000 for the first time in four years, as investors feared the widening fallout from the credit crisis would drag the economy into recession.

Wall Street's tumble was part of a global sell-off. But as severe as the U.S. losses were, they were still significantly less than the sharp declines across Europe and in emerging markets, such as Brazil, where trading was halted after a 15 percent drop in its benchmark index.

The financial sector was again a main catalyst for the drop, but the turmoil quickly spread to energy and others.

Among financial services stocks, Citigroup Inc tumbled over 10 percent to $16.40. The Federal Reserve is pushing Citigroup Inc and Wells Fargo & Co to compromise over their competing bids for hobbled U.S. bank Wachovia Corp that could result in them carving up its assets, people familiar with the matter said.

Citigroup said it is suing Wachovia and Wells Fargo, and it is seeking more than $60 billion in damages over Wells Fargo's competing bid for Wachovia.

Persistent strains in the credit markets added to fears about the wider economic outlook, while a spate of bank rescues in Europe increased concerns about the stability of global financial institutions.

"What we're seeing here is a complete global crisis. We're seeing a complete deleveraging and that is what's taking us down further," said Anthony Conroy, head trader for BNY ConvergEx, an affiliate of the Bank of New York, in New York.

"On the recession question, if you look at all the economic data for the past month or so, in fact we're in one. It's just a question of -- how severe?"

The Dow Jones industrial average .DJI slid 537.86 points, or 5.21 percent, to 9,787.52. The Standard & Poor's 500 Index .SPX tumbled 64.37 points, or 5.86 percent, to 1,034.86. The Nasdaq Composite Index .IXIC lost 119.47 points, or 6.13 percent, to 1,827.92.

The Dow fell below 10,000 for the first time since October 2004 and hit a session low of 9,738.30 -- down 587 points, or 5.69 percent from Friday's close.

Wells Fargo slipped 3.7 percent to $33.28 and Wachovia shares dropped almost 10 percent to $5.61. The S&P financial services companies' index .GSPF fell 5.6 percent.

Among other financial services stocks, Bank of America fell 4.6 percent to $32.90 after the bank agreed to settle claims brought by U.S. attorneys-general regarding risky loans originated by mortgage lender Countrywide Financial in a deal that could be worth more than $8.6 billion.

JPMorgan Chase slid 5.7 percent to $43.27, and helped drag on the Dow.

The market's tumble suggested that the $700 billion U.S. financial sector rescue plan passed by Congress on Friday was not bringing immediate relief to financial markets' woes.

Source : More on Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic]

159,000 Jobs Lost in September, the Worst Month in Five Years

The American economy lost 159,000 jobs in September, the worst month of retrenchment in five years, the government reported on Friday, amplifying fears that an already painful downturn had entered a more severe stage that could persist well into next year.

Employment has diminished for nine consecutive months, eliminating 760,000 jobs, according to the Labor Department’s report. And that does not count the traumatic events of recent weeks, as a string of Wall Street institutions collapsed, prompting the $700 billion emergency rescue package approved by Congress on Friday.

“It’s a dismal report, and the worst thing about it is that it does not reflect the recent seizure that we’ve seen in the credit markets,” said Michael T. Darda, chief economist at MKM Partners, a research and trading firm in Greenwich, Conn. “There’s really nothing good about this report at all. We’ve lost jobs in nearly every area of the economy, and this is going to get worse before it gets better because the credit markets have deteriorated basically on a daily basis for the last few weeks.”

Though the bailout may restore order to the financial system and eventually filter through the economy by making it easier for businesses to secure capital, few analysts expect it to swiftly reverse the nation’s fortunes. Housing prices continue to fall, eroding household wealth just as millions suffer the weight of unmanageable debt. The deteriorating job market has taken paychecks out of the economy, reinforcing a predilection for thrift that has cut sales from car showrooms to hair salons.

Banks should see their balance sheets improve as the government relieves them of disastrous investments, yet they may remain skittish and reluctant to lend.

“At best, the bailout stops a much deeper decline in activity,” Mr. Darda said, “but it’s not like they’re going to do this and all of the sudden the clouds part and the skies are clear.”

Only a few weeks ago, many economists still held hopes that the economy might recover late this year or early next. But with the job market now contracting faster, and fear dogging the financial system, the broad assumption has taken hold that 2008 is a lost cause.

Most economists have concluded that the economy will struggle well into next year. More pessimistic forecasts envision the economy remaining weak through most or all of next year.

“This is an economy in recession, and every dimension of the report confirms that,” said Ethan S. Harris, an economist at Barclays Capital. “This has been preceded by a slow-motion recession. Now we’re going into the full-speed recession that will last somewhere between three and five quarters.”

For the first eight months of the year, the economy lost an average of 75,000 jobs each month. September’s report more than doubled the pace.

“A lot of companies came to the realization that there was no momentum in the economy to pick them up in the second half of 2008,” said Steve Drexel, chief executive of Corestaff Services, a staffing company in Houston. “They had been hanging on to people and hoping things would improve, but now a lot companies are just sort of retrenching.”

The unemployment rate remained steady at 6.1 percent in September, but economists said that reflected how people who had given up looking for work were not counted. Over the last year, the unemployment rolls have swelled by 2.2 million, to 9.5 million. On Friday, Goldman Sachs forecast that the jobless rate would reach 8 percent by the end of next year, which would be the highest in 25 years.

In Charlotte, Mich., Sean Schwartz, 26, has been out of a job for nearly two months since his last stint as a construction worker. His $750-a-week paycheck has been replaced by a $620.10 unemployment check every other week.

Mr. Schwartz and his wife — who works at Wal-Mart — have a 2-year-old daughter and are expecting a baby in December. His job search has turned up little beyond fast-food jobs at a fraction of his previous earnings. Mr. Schwartz is becoming anxious.

“We’re not getting the bills paid,” he said, estimating that his family is behind $5,000 on medical bills for his daughter and his wife’s prenatal care. “It’s rough. There’s nothing really out there.”

As the impact of Wall Street’s distress ripples out, economists expect opportunities to grow leaner still. On Friday morning, banks needing to borrow from other banks were paying nearly 4 percent more in interest than the Treasury offers on savings bonds — a spread reflecting a general unwillingness to part with cash. That spread was wider than after the 1987 stock market crash.

Source : NYTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic]