AstraZeneca is cutting nearly a quarter of its U.S. sales force in a second wave of redundancies in as many months as it seeks to reduce costs.
Britain's second biggest drugmaker said on Wednesday it would cut about 1,150 sales representative and management jobs at a cost of between $50 million and $100 million, charged in the fourth quarter.
Rich Fante, president of AstraZeneca U.S., said it was a difficult decision to make the reductions, which represent 24 percent of the U.S. sales organization and come on top of 400 job U.S. losses announced in October.
"The changes we are making, however, will help us deliver better results for our business and, most importantly, continue delivering on our mission of patient health," he said.
Since restructuring costs are not included in the company's core earnings measure, the cost of the cuts will not have any impact on its guidance for core earnings per share for 2011.
Generic competition and pricing pressures are already weighing on AstraZeneca's sales in the world's biggest market and things are about to get tougher.
Over the next few years, analysts forecast a steady decline in sales at the London-based group because patents expire on big sellers like Nexium for heartburn and schizophrenia drug Seroquel.
What is more, it faces a major challenge to its biggest-selling medicine Crestor, following the arrival of cheap generic copies of Pfizer's market-leading cholesterol pill Lipitor, which hit the market at the end of November.
AstraZeneca has relatively few new drugs to replace such blockbusters, leaving its sales line exposed and its management under pressure to cut costs wherever possible.
The latest round of job cuts, which are expected to be finalized by early February 2012, are in addition to the wide-ranging program of 8,000 job cuts, designed to be implemented over several years, that AstraZeneca announced in January 2010.
The likes of Pfizer, Merck and Novartis have also announced major job cuts but the scale of the retrenchment has been particularly severe at AstraZeneca.
The impact of the latest U.S. changes will vary by geography and selling teams and a company spokeswoman said AstraZeneca was looking to make greater use of alternative methods for promoting its medicines, such as online tools.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Financial Collapse RSS
Dec 7, 2011
Nov 29, 2011
American Airlines files for bankruptcy
American Airlines filed for bankruptcy protection on Tuesday to cut labor costs in the face of high fuel prices and dampened travel demand, capping a prolonged descent for what was once the largest U.S. carrier.AMR Corp, the parent of American Airlines, also filed for bankruptcy and replaced its chief executive.
The company, which employs about 88,000, has been mired for years in fruitless union negotiations, complaining that it shoulders higher labor costs than rival domestic and foreign carriers that have already restructured in bankruptcy.
United Continental Holdings Inc's United Airlines and Delta Air Lines Inc, both of which used Chapter 11 to cut costs and later found merger partners, are now the largest U.S. carriers. American ranks third.
"The world changed around us," incoming Chief Executive Tom Horton told reporters on a conference call. "It became increasingly clear that the cost gap between us and our competitors was untenable."
AMR named Horton as chairman and chief executive, replacing Gerard Arpey, who retired.
American plans to operate normally while in bankruptcy, but the Chapter 11 filing could punch a hole in the pensions of roughly 130,000 workers and retirees.
AMR pension plans are $10 billion short of what the carrier owes, and any default could be the largest in U.S. history, government pension insurers estimated.
Ray Neidl, aerospace analyst at Maxim Group, said a lack of progress in contract talks with pilots tipped the carrier into Chapter 11, though it has enough cash to operate. The carrier's passenger planes average 3,000 daily U.S. departures.
"They were proactive," Neidl said. "They should have adequate cash reserves to get through this."
PROBLEMS TO ADDRESS
Bankruptcy gives AMR a chance to pare less profitable operations, and could result in the sale of flight routes. The process also gives AMR more flexibility, according to Jack Williams, a professor of law at Georgia State University.
"There are considerable tax benefits that they will be able to use in a bankruptcy case, and they will be able to more aggressively manage their liabilities," Williams said.
But analysts question whether the bankruptcy will address operational shortcomings that have eroded revenue.
"Bankruptcy is not necessarily the be-all, end-all," said Helane Becker, an analyst with Dahlman Rose & Co. "They've got more problems to address in addition to the cost problem."
Shares of AMR closed Tuesday down $1.36, or 84 percent, at 26 cents, down from a 52-week high of $8.89 on January 7. Stock typically is wiped out in bankruptcy.
Shares of rival airlines rallied on expectations that reduced competition could boost fares. AMR had kept a lid on industrywide fares in its effort to keep its airplanes full.
United Continental shares closed up 6.3 percent at $17.63, Delta rose 5 percent to $7.80 and US Airways Group Inc climbed 4.4 percent to $4.46.
AMR shares were halted 28 times on the NYSE on Tuesday for triggering a circuit breaker rule, activated when a stock moves up or down at least 10 percent within five minutes.
SLIMMED-DOWN AMR
In its bankruptcy petition filed in Manhattan, AMR reported assets of $24.72 billion and liabilities of $29.55 billion. The company has $4.1 billion in cash.
One bankruptcy rule is "don't wait too long," Harvey Miller, a partner at Weil, Gotshal & Manges representing AMR, said at a court hearing. "Don't wait until the course is irreversible. That is what American Airlines is doing today."
AMR's bankruptcy filing showed few details about how the company would proceed, said Stephen Selbst, a bankruptcy attorney with Herrick Feinstein in New York.
"It's possible they are still in negotiations and don't want to put something on paper that might prejudice those negotiations," he said.
Experts believe AMR stands to save billions by restructuring its obligations in bankruptcy.
"AMR will no longer have its defined benefit pension plan, helping absorb nearly $7 billion in debt," Morningstar equity analyst Basili Alukos said.
"I imagine the company can save between $1.2 billion to $1.5 billion in labor costs, in addition to savings on repair and maintenance and better fuel burn," he said.
MERGER IN THE OFFING?
AMR said the bankruptcy has no direct legal impact on non-U.S. operations. It also said it was not considering debtor-in-possession financing.
But it could susceptible to unsolicited takeover bids from rival carriers. AMR has long said it could thrive on its own.
Robert Herbst, an analyst with AirlineFinancials.com and a former American pilot, said there was a "95 percent" chance American would join up with another carrier within two years.
"US Airways is probably toward the top of the list but it wouldn't be the only (potential merger partner)," he said.
A US Airways representative did not immediately return a phone call seeking comment.
Most large U.S. carriers are the products of mergers.
United Continental combined the former United Airlines and Continental Airlines, while Delta bought the former Northwest Airlines. US Airways was formed from a 2005 merger with America West Airlines.
US Airways and United Airlines filed for bankruptcy protection in 2002, and Delta and Northwest in 2005. US Airways had tried to buy Delta out of bankruptcy.
Japan Airlines Co, one of American Airlines' alliance partners, filed for bankruptcy last year.
American Airlines said it would remain an active member of the oneworld global airline alliance.
LABOR PAIN
American struggled with labor costs despite massive concessions from unionized workers in 2003, which enabled it to avoid Chapter 11 at the time.
"That deal wasn't good enough," former American chief Robert Crandall told Reuters. "The other airlines that went bankrupt cut their costs much deeper than American.
"If you look at all of the elements of the problem, they all stem back to costs," he said. "It hasn't cut capacity effectively given the constraints" that labor placed.
Contract talks with pilots hit a wall in recent weeks over wages, benefits and work rules. Talks with unionized flight attendants have also flagged.
"While today's news was not entirely unexpected, it is nevertheless disappointing that we find ourselves working for an airline that has lost its way," David Bates, president of the Allied Pilots Association, said in a statement.
A wave of pilot retirements this year prompted speculation of a Chapter 11 filing, given that the retirements could preserve pensions that might be at risk of being terminated.
"The 18-month timeline allotted for restructuring will almost certainly involve significant changes to the airline's business plan and to our contract," Bates said.
The case is In re: AMR Corp, U.S. Bankruptcy Court, Southern District Of New York, No. 11-15463.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Nov 14, 2011
Mizuho net falls 25 percent, plans 3,000 job cuts
Mizuho Financial Group maintained its full-year net profit forecast on Monday after reporting that first-half profit fell 25.4 percent, weighed down by the absence of hefty bond trading gains that lifted its profits the previous year.
Japan's top three banks are announcing their first-half results on Monday, and Mizuho, the second-largest by assets, had been expected to lag rivals.
Results of the other two, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are expected to show they are on track to beat their full-year forecasts.
Unlike their Western rivals, Japanese banks largely escaped the brunt of Europe's debt crisis due to limited exposure to the region, while bad-loan costs remained low at home as the number of bankruptcies in Japan continued to decline.
Mizuho said net profit was 254.67 billion yen ($3.3 billion) for April-September, down from 341.76 billion yen in the same period last year. Second-quarter profit fell to 158.31 billion yen from 191.91 billion yen in the year-ago period, according to Reuters calculations from first-half and first-quarter figures.
For the full year to next March, the bank kept its net profit forecast at 460 billion yen, above an estimate of a 433.9 billion yen by Thomson Reuters Starmine's SmartEstimate.
The bank also said on Monday that it plans to cut 3,000 jobs, or about 5 percent of its work force, by March 2016 through the merger of its corporate and retail banking units.
Shares of Mizuho have fallen 33 percent so far this year, compared with a 16 percent drop in the benchmark Nikkei average.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Japan's top three banks are announcing their first-half results on Monday, and Mizuho, the second-largest by assets, had been expected to lag rivals.
Results of the other two, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group, are expected to show they are on track to beat their full-year forecasts.
Unlike their Western rivals, Japanese banks largely escaped the brunt of Europe's debt crisis due to limited exposure to the region, while bad-loan costs remained low at home as the number of bankruptcies in Japan continued to decline.
Mizuho said net profit was 254.67 billion yen ($3.3 billion) for April-September, down from 341.76 billion yen in the same period last year. Second-quarter profit fell to 158.31 billion yen from 191.91 billion yen in the year-ago period, according to Reuters calculations from first-half and first-quarter figures.
For the full year to next March, the bank kept its net profit forecast at 460 billion yen, above an estimate of a 433.9 billion yen by Thomson Reuters Starmine's SmartEstimate.
The bank also said on Monday that it plans to cut 3,000 jobs, or about 5 percent of its work force, by March 2016 through the merger of its corporate and retail banking units.
Shares of Mizuho have fallen 33 percent so far this year, compared with a 16 percent drop in the benchmark Nikkei average.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Oct 7, 2011
Sony to close Japan plant, lay off 100 contract workers
Sony Corp will merge two of its wholly owned manufacturing subsidiaries, resulting in the closure of an equipment plant north of Tokyo and the eventual layoff of about 100 contract workers, the company said on Friday.
The move, which takes effect on April 1 next year, comes as analysts and investors urge the company to pull off a drastic restructuring of its loss-making television division.
Sony Manufacturing Systems, which makes factory equipment, will be absorbed by Sony EMCS, the electronics giant's main domestic manufacturing subsidiary, which makes items such as televisions and computers at various sites around Japan.
The 411 regular workers at Sony Manufacturing Systems will be kept on at a different site, but 100 non-regular workers will not have their contracts renewed.
The company is considering selling off the buildings and land at the Saitama site, about 60 km (36 miles) north of Tokyo, a Sony spokesman said.
Source : reuters [tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Sep 28, 2011
BAE Systems to cut nearly 3,000 UK jobs
Europe's biggest defense contractor BAE Systems said it will cut nearly 3,000 jobs in Britain as smaller global defense budgets hit orders for its fighter jets.
BAE said the four partner nations in the Eurofighter Typhoon program -- the UK, Germany, Italy and Spain -- were slowing production rates to help ease their budget pressures, affecting the workload at a number of sites.
The company, one of the largest prime contractors in the U.S, said production was also slowing on the F-35 Joint Strike Fighter jet, a U.S. program led by Lockheed Martin for which BAE produces the tailplane.
"Pressure on the U.S. defense budget and top level program changes mean the anticipated increase in F-35 production rates will be slower than originally planned, again impacting on our expected workload," said BAE in a statement on Tuesday.
The 2,942 job cuts from Britain's biggest manufacturer are a blow to the Conservative-led coalition government, which is seeking to rebalance the economy away from an over-reliance on financial services jobs in the overheated south-east of England.
Latest figures show unemployment rose at its fastest pace in two years, totaling 7.9 percent of the workforce.
Trades Union Congress chief Brendan Barber, speaking at the opposition Labour party conference in Liverpool in north-west England, said the job cuts were "yet another devastating body blow to our manufacturing base."
Many of the job losses will come from the north-west, traditionally a center of British manufacturing. Two - in Warton and Samlesbury and involved in Typhoon and F-35 production - are based in Lancashire.
A third site in north-east England, Brough, makes the Hawk training aircraft. BAE said it had begun consultation on ending manufacturing capability at Brough, which also runs a structural testing facility. Around 400 posts will remain there from a current workforce of 1,300.
Critics of the government say its austerity program is choking off growth and risks plunging the country back into another recession.
Unite, the biggest trade union representing BAE workers, vowed to fight the lay-offs.
"The government cannot sit on its hands and allow these highly skilled jobs to disappear," it said.
"It's a dark day for thousands of skilled men and women across the country and it is a dark day for British manufacturing. BAE Systems have dealt a hammer blow to the UK defense industry and Unite is determined to fight the cuts."
Weapons makers globally are bracing for more cuts in defense spending sparked partly by this summer's debt-ceiling deal in the United States -- the world's biggest arms market.
British industry body ADS said it feared that the job losses would be "only the tip of the iceberg," citing a fall in government defense spending from 10 percent 20 years ago to 5 percent currently.
"With such cutbacks under governments that have included all three major parties this is not a party political issue but a matter of the national interest that has a profound impact on the capabilities of both our Armed Forces and our industrial base," ADS chairman Ian Godden said in a statement.
Howard Wheeldon, Senior Strategist at BGC Partners, said he had believed for some time that such a course was inevitable.
"While the loss...will be a serious blow to hopes of rebuilding the manufacturing skills base as a public company BAE must in terms of employment cut its coat according to the cloth available."
The U.S. defense department is cutting at least $350 billion from previously projected spending, and additional cuts could kick in if Congress fails to find more deficit reductions by year-end.
Britain, meanwhile, slashed its defense budget by 8 percent last year to help reduce its deficit, hitting BAE, which makes around a fifth of its revenue in the UK.
BAE, which has already laid off around 15,000 employees worldwide over the last two years, reported a decline in first half pretax profit in July.
The company, which has a 33 percent stake in the Eurofighter joint venture company alongside EADS and Finmeccanica, is continuing to pursue Typhoon sales in India, Japan, Oman and Malaysia and has said exporting the fighter aircraft remains a priority.
British and U.S. arms suppliers have been battling to win new business in emerging defense markets as they look to offset the belt-tightening at home.
Source : Reuters [tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Aug 1, 2011
HSBC sheds 30,000 jobs, posts surprise profit rise
HSBC will shed 30,000 jobs as it retreats from countries where it is struggling to compete, Europe's biggest bank said on Monday after it reported a surprise rise in first-half profit.
Shares in HSBC rose over 4 percent after it unveiled first-half pretax profits of $11.5 billion, up from $11.1 billion a year ago and better than the $10.8 billion average in a Reuters poll of analysts.
The bank also said it had cut 5,000 jobs following restructuring of operations in Latin America, the United States, Britain, France and the Middle East and that it would cut another 25,000 between now and 2013.
"There will be further job cuts," Chief Executive Stuart Gulliver told reporters on a conference call. "There will be something like 25,000 roles eliminated between now and the end of 2013."
The cuts equate to roughly 10 percent of HSBC's total workforce. They come on top of planned reductions in overall headcount in a program of disposals that also forms part of a plan to focus on HSBC's Asian operations.
The bank is reversing a strategy that had been criticized for "planting flags" around the world.
Gulliver's far-reaching plan unveiled three months ago aims to slash costs and he intends to sell, shut or slim down retail banking in 39 countries.
HSBC said on Sunday it would sell 195 U.S. branches to First Niagara Financial for about $1 billion in cash, and close another 13 of the 470 sites it had.
The bank also intends to sell HSBC's U.S. credit card portfolio, which has more than $30 billion in assets, a move which would free up capital. Capital One Financial Corp and Wells Fargo are among the bidders, sources have said.
Another suitor could be Barclays.
HSBC is the first of Britain's big banks to report for the quarter. Rivals are also cutting jobs and shaking up their business model as the euro zone debt crisis has hit fixed income trading revenues hard and tougher regulations are hurting returns for investors.
The bank on Monday highlighted risks to global economic recovery from increased regulation, particularly as governments grapple with sovereign debt crises and try to plug holes in their budgets.
"The pace and quantum of regulatory reform continues to increase at the same time as the global economy appears to be losing momentum in its recovery," HSBC said.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Jul 26, 2011
Blackberry RIM Cuts 2,000 Jobs
Research in Motion said it will cut 2,000 jobs (approximately 11% of the company’s workforce) and reorganize upper management.
The company’s COO Don Morrison will retire, and Thorsten Heins will take over the expanded role of COO, product and sales.
The move comes after weak financial results in Q1 and an even worse outlook for the future. As a result of the bleak Q1 report, RIM’s sharestook a beating, dropping 20% overnight.
Once a dominant force in the smartphone market, RIM recently fell to third place behind Apple’s iOS and Google’s Android. The imminent layoffs are necessary to keep the company financially sound, but RIM will have to rethink its entire smartphone and tablet strategy to catch up with its rivals.
Source : Mashable
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
May 11, 2011
Cisco warns of sales miss, eyes $1 billion savings
Cisco Systems Inc warned that it will fare worse this quarter than Wall Street had feared, and laid out plans for global job cuts as it struggles to revive growth.
Shares of Cisco fell 3 percent after the world's largest networking equipment maker projected nearly flat sales growth this quarter.
CEO John Chambers, who admitted last month that the Silicon Valley bellwether had lost its way, cautioned that Cisco's fiscal year starting August would also not live up to the company's previous growth expectations.
The company is preparing a round of layoffs around the world, aiming to cut annual expenses by $1 billion, Chambers told analysts on a Wednesday conference call.
Most of the cutbacks would be done by the end of the company's fiscal first quarter, though Chambers would not be drawn on their scale. Employees hurt by the layoffs would know by the end of the summer.
"Cisco is a very strong company in a healthy market with a few problematic areas," he said.
But his optimism failed to impress shareholders, who sent Cisco shares down in late trade after the weak guidance. Cisco's sales warning obliterated an initial 4-percent lift after the company posted quarterly earnings that exceeded low expectations.
"Cisco is in a period of transition. There's a very negative camp that believes that Cisco is in a long decline ... which is why the stock is so inexpensive," said Evercore Partners analyst Alkesh Shah.
The results come as Chambers works to turn around the Silicon Valley bellwether.
Since the rare admission, he has trimmed the company's bloated management structure, offered early retirement to some employees, killed the Flip camcorder and laid off 550 workers. Chambers said he would decide on the next round of layoffs very quickly.
"Each time we've done this in the past, we've done it crisply and emerged out of it stronger. ... We want to do it surgically instead of with a blunt instrument," he said.
"We were all here for the last couple of weeks, 9:30 at night, although the pizza wasn't too good."
ZEROING IN ON SWITCHES
Cisco warned that overall fourth-quarter revenue would be flat to just 2 percent higher than a year earlier, implying a range of $10.84 billion to $11.05 billion, below expectations for $11.59 billion according to Thomson Reuters I/B/E/S.
Cisco shares slid 1 percent to $17.72 after rising as much as 4.2 percent to $18.53 from a Nasdaq close of $17.78.
During the conference call, analysts grilled Chambers about his plans for reviving his bread-and-butter business of selling the plumbing of the Internet and corporate networks. They zeroed in on its switching business, where sales fell 9 percent in the third quarter after sliding 7 percent in the second quarter.
Chief Financial Officer Frank Calderoni told Reuters he could not say when Cisco's switching business would grow again.
Before the company gave out weaker-than-expected guidance investors had been hoping the results would beat forecasts.
The company reported profit, excluding items, of 42 cents per share, for the fiscal third quarter ended April 30, beating the average analyst forecast of 37 cents according to Thomson Reuters I/B/E/S.
"This relieves a bit of investor concern in the near term," said Gleacher & Co analyst Brian Marshall. "While April results look decent relative to expectations, we've longer-term issues the company needs to address."
It delivered a non-GAAP gross margin of 63.9 percent, ahead of its forecast of 62 to 63 percent.
Net income fell to $1.8 billion, or 33 cents per share, from $2.2 billion, or 37 cents per share, a year earlier.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Feb 16, 2011
Borders files for bankruptcy, to close 200 stores
Borders Group Inc filed for bankruptcy protection and said it would close about one-third of its bookstores, after years of shriveling sales that made it impossible to manage its crushing debt load.
The long-expected Chapter 11 filing will give the second-largest U.S. bookstore chain a chance to try to fix its finances and overhaul its business in an attempt to survive the growing popularity of online bookbuying and digital formats.
But the chain still faces questions about its longer-term survival in the face of competition from larger rival Barnes & Noble Inc and discounters such as Wal-Mart Stores Inc and Costco Wholesale Corp, as well as from Web retailer Amazon.com Inc and from Apple Inc in electronic books.
Borders President Mike Edward said his chain "does not have the capital resources it needs to be a viable competitor." He said the bankruptcy was essential for Borders to restructure its debt and still operate.
Borders, which was founded in 1971 and bought by Kmart in 1992, had liabilities of $1.29 billion and assets of $1.28 billion as of December 25, according to documents filed on Wednesday with the U.S. Bankruptcy Court in Manhattan. Borders has had net losses totaling $680.6 million since the beginning of its 2007 fiscal year.
The pioneer of book superstores plans to abandon some of its highest profile locations, closing a store in its hometown of Ann Arbor, Michigan, as well as one on Manhattan's Park Avenue.
All 200 closings will be superstores, and about 6,000 jobs will be affected, the company said. It has the option of closing up to 275 in all, according to court documents. It said the stores it wants to close lose a combined $2 million a week. The closings will start by Saturday. The company said it will honor gift cards.
Borders operates 642 stores, including about 500 superstores as well as more than 100 smaller Waldenbooks locations. Almost all of the stores closed by the company in recent years were Waldenbooks locations.
"Waldenbooks really is a specialty retailer," said Mark Freiman, a retail consultant with Focus Management Group. "Borders is category killer and essentially a category killer in book is going to go away. There is no question about it."
The largest U.S. bookstore chain, Barnes & Noble, has had success with its Nook e-reader and online store, allowing it to stay in contention with online book pioneer Amazon.com. Borders has lagged well behind.
Borders made a major strategic error in 2001 when it handed off its online business to Amazon. It relaunched borders.com in 2008, but in the first three quarters of 2010, online sales made up only 2.3 percent of revenues.
The chain's difficulties have been worsened by the revolving door in its executive suite in recent years. The company has had four chief executive officers in the past three years and two chief financial officers in 2010.
Sales declined by double-digit percentage rates in 2008, 2009 and in the first three fiscal quarters of 2010. During those nine months, sales came to $1.54 billion.
SMALL BOOST FOR B&N?
The bankruptcy could help sales of traditional books at Barnes & Noble, at least temporarily, analysts said. Credit Suisse estimates that 70 percent of Borders stores are near a Barnes & Noble store. Barnes & Noble operates 717 superstores.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
May 20, 2010
Air France-KLM posts 1.55b net loss
Air France-KLM posted record losses of ?1.55 billion (?1 = RM4.04) on Wednesday, as a shock new book on its safety record added to the problems facing Europe's biggest airline.
The giant net loss for the 2009-2010 financial year came as the Franco-Dutch carrier grappled with the global economic crisis and the fallout from a deadly accident last year.
Slumping air traffic, particularly for cargo, drove the company to its biggest loss since Air France and KLM merged in 2004. The latest results followed ?811 million (?1 = RM4.04) in red ink the previous year.
"2009-10 will go on record as our 'annus horribilis.' The global 'economic crisis had a profound effect on the entire airline industry," chief executive Pierre-Henri Gourgeon said in a statement.
He noted the company also had to grapple with an accident last June that saw Air France Flight 447 from Rio to Paris break apart and plunge into the Atlantic, killing all 228 people on board.
Against that backdrop, the company scrapped its dividend payment for the 2009-2010 financial year.
Gourgeon said restructuring of the airline's cargo business began bearing fruit in the fourth quarter, although the company's fuel bill rose for the first time during the year as the price of jet fuel surged 31 per cent.
The figures were released as the company's safety record came under harsh scrutiny with "The Hidden Face of Air France," an investigation by journalist Fabrice Amedeo into what he alleges are failures in Air France's management culture leading to a lax attitude to flight safety.
The carrier rejects the allegations.
Air France flights have fallen victim to several accidents in recent years and, according to the French daily Liberation, statistics compiled online rank its safety record as only the 65th best in the world.
And with 1,783 fatalities in its history, according to a tally compiled by the Swiss-based website "Aircraft Crashes Record Office," Air France has been the second deadliest airline for passengers after Russia's Aeroflot.
Germany's Lufthansa, which is of similar size and age, is in 43rd place.
"Air France has a fleet of ultramodern planes, and its pilots are among the best in the world... but its safety statistics are those of a second division company," Amedeo wrote in his book.
Gourgeon told reporters the book "is not worth a response," insisting that safety was the "number one concern of Air France." The company said separately that its safety standards "meet the most stringent requirements in the international aviation industry," noting it was continuously working on improving flight safety.
Source
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The giant net loss for the 2009-2010 financial year came as the Franco-Dutch carrier grappled with the global economic crisis and the fallout from a deadly accident last year.
Slumping air traffic, particularly for cargo, drove the company to its biggest loss since Air France and KLM merged in 2004. The latest results followed ?811 million (?1 = RM4.04) in red ink the previous year.
"2009-10 will go on record as our 'annus horribilis.' The global 'economic crisis had a profound effect on the entire airline industry," chief executive Pierre-Henri Gourgeon said in a statement.
Against that backdrop, the company scrapped its dividend payment for the 2009-2010 financial year.
Gourgeon said restructuring of the airline's cargo business began bearing fruit in the fourth quarter, although the company's fuel bill rose for the first time during the year as the price of jet fuel surged 31 per cent.
The figures were released as the company's safety record came under harsh scrutiny with "The Hidden Face of Air France," an investigation by journalist Fabrice Amedeo into what he alleges are failures in Air France's management culture leading to a lax attitude to flight safety.
The carrier rejects the allegations.
Air France flights have fallen victim to several accidents in recent years and, according to the French daily Liberation, statistics compiled online rank its safety record as only the 65th best in the world.
And with 1,783 fatalities in its history, according to a tally compiled by the Swiss-based website "Aircraft Crashes Record Office," Air France has been the second deadliest airline for passengers after Russia's Aeroflot.
Germany's Lufthansa, which is of similar size and age, is in 43rd place.
"Air France has a fleet of ultramodern planes, and its pilots are among the best in the world... but its safety statistics are those of a second division company," Amedeo wrote in his book.
Gourgeon told reporters the book "is not worth a response," insisting that safety was the "number one concern of Air France." The company said separately that its safety standards "meet the most stringent requirements in the international aviation industry," noting it was continuously working on improving flight safety.
Source
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Air France KLM sinks to €1.56 billion fiscal-year loss
Air France KLM Group reported a heavy net loss of €1.56 billion ($1.93 billion) for its fiscal year ended March 31, nearly double its €814 million deficit in the prior year, but management reiterated that it believes a breakeven operating result is possible in the current financial year excluding the impact of pre-2009 fuel hedges and subject to costs related to the closure of European airspace owing to volcanic ash.
The group estimates that the Icelandic volcano-related disruptions April 15-21 caused €260 million in lost revenue with a €160 million impact on its operating result.
CEO Pierre-Henri Gourgeon said, "2009-10 will go on record as our 'annus horribilis.' The global economic crisis had a profound effect on the entire airline industry. In addition, Air France KLM had to contend with the tragedy" of the A330-200that crashed last May 31, killing 228 (ATWOnline, May 7). Results for FY2009-10 include a negative impact of €637 million linked to pre-2009 fuel hedges.
Revenue fell 15% year-over-year to €20.99 billion including a 13.6% decline in passenger revenue to €16.27 billion. Total operating expenses dropped 14.8% to €13.24 billion. Operating loss deepened to €1.28 billion from €186 million in the prior year.
Passengers carried dipped 4.1% to 71.4 million and RPKs fell 3.2% to 202.5 billion on a 4.3% cut in capacity to 251.1 billion ASKs. Passenger load factor improved 1 point to 80.7%. Yield was down 10.8% on the previous year to €0.0765 and RASK decreased 9.7% to €0.0615. CASK slid 4.6% to €0.0646.
For the fiscal year's fourth quarter ended March 31, AF KLM posted a €691 million net loss, up 44.3% from a €479 million deficit in the year-ago period. Quarterly revenue slipped just 0.8% year-over-year to €5.02 billion as both passenger and cargo demand picked up and restructuring of the cargo business launched in the previous quarter started to bear fruit. Unit revenue was up 2.7% per ASK and 30.9% per ATK.
Operating costs dipped 1.4% to €5.52 billion and 4.1% excluding fuel, reducing operating loss for the quarter 7.1% to €497 million, of which €381 million was attributed to passenger activity. Excluding the negative impact of fuel hedges, operating loss would have been €324 million.
The company is in negotiations with the relevant authorities concerning the eventual level of compensation for the volcano disruptions, Gourgeon said, noting that AF KLM also is "actively working with the authorities to define a comprehensive and pragmatic approach to the volcanic ash risk so as to avoid the repetition of unnecessary flight operation stoppages in the future."
Source : ATWOnline
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Europe to lose 1,000 flights to volcanic cloud: Eurocontrol
The volcanic ash cloud playing havoc with airline schedules will mean the loss of 1,000 flights in Europe on Monday with airports in Britian and the Netherlands hit, the Eurocontrol agency said.
The cloud was however expected to disperse over the day, Europe's intergovernmental air traffic coordinating agency said, as British and Dutch airports were closed because of the risks of flying through the ash.
"On Monday Eurocontrol expects 28,000 flights in Europe. This is approximately 1,000 less than on a normal day, and is due to the expected impact of the current closure of airspace in the south-east of the UK and in the Netherlands," it said.
The areas of ash concentration are mainly at low levels. During the course of the day, the current cloud is expected to disperse somewhat," it said in one of its regular updates.
By 1200 GMT "the cloud is expected to mainly affect Northern Ireland, parts of Scotland and parts of south-west UK," it said.
There may also be some disruption to flights in the greater London area and there would be delays due to congestion in airspace adjacent to closed areas, Eurocontrol warned.
The ash cloud forced the closure of Amsterdam's Schiphol airport and those in Rotterdam and Groningen until 2:00 pm (1200 GMT) Monday, Dutch officials said.
London's main airports Heathrow and Gatwick reopened Monday after being forced to close overnight by the ash cloud billowing from the Eyjafjoell volcano in Iceland, but other British airports remained shut.
However there were no incoming flights at Gatwick airport in the morning and departing flights were subject to delay and cancellation.
Scotland's busiest airport, Edinburgh, plus Aberdeen and Inverness were closed while Wales's main airport Cardiff was shut, as was Swansea.
In England, Bristol in the southwest and Farnborough, southwest of London, were also closed until 1200 GMT.
The volcanic dust at more concentrated levels presents a danger to plane engines, though some industry officials have complained that the safety measures and airport closures have been excessive.
The latest ash closures came at the beginning of a week where air travel disruption was already expected due to a five-day strike by British Airways cabin crew set to kick off on Tuesday.
Much of European airspace was shut for up to a week in April following Eyjafjoell's eruption.
It was the biggest shutdown of the continent's airspace for more than 50 years.
Air travellers were advised to contact their airline for the latest flight information.
On Sunday, Eurocontrol said, disruptions in Ireland and the north-west of Britain resulted in a loss of some 400 flights.
Source :EconTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The cloud was however expected to disperse over the day, Europe's intergovernmental air traffic coordinating agency said, as British and Dutch airports were closed because of the risks of flying through the ash.
"On Monday Eurocontrol expects 28,000 flights in Europe. This is approximately 1,000 less than on a normal day, and is due to the expected impact of the current closure of airspace in the south-east of the UK and in the Netherlands," it said.
The areas of ash concentration are mainly at low levels. During the course of the day, the current cloud is expected to disperse somewhat," it said in one of its regular updates.
By 1200 GMT "the cloud is expected to mainly affect Northern Ireland, parts of Scotland and parts of south-west UK," it said.
There may also be some disruption to flights in the greater London area and there would be delays due to congestion in airspace adjacent to closed areas, Eurocontrol warned.
The ash cloud forced the closure of Amsterdam's Schiphol airport and those in Rotterdam and Groningen until 2:00 pm (1200 GMT) Monday, Dutch officials said.
London's main airports Heathrow and Gatwick reopened Monday after being forced to close overnight by the ash cloud billowing from the Eyjafjoell volcano in Iceland, but other British airports remained shut.
However there were no incoming flights at Gatwick airport in the morning and departing flights were subject to delay and cancellation.
Scotland's busiest airport, Edinburgh, plus Aberdeen and Inverness were closed while Wales's main airport Cardiff was shut, as was Swansea.
In England, Bristol in the southwest and Farnborough, southwest of London, were also closed until 1200 GMT.
The volcanic dust at more concentrated levels presents a danger to plane engines, though some industry officials have complained that the safety measures and airport closures have been excessive.
The latest ash closures came at the beginning of a week where air travel disruption was already expected due to a five-day strike by British Airways cabin crew set to kick off on Tuesday.
Much of European airspace was shut for up to a week in April following Eyjafjoell's eruption.
It was the biggest shutdown of the continent's airspace for more than 50 years.
Air travellers were advised to contact their airline for the latest flight information.
On Sunday, Eurocontrol said, disruptions in Ireland and the north-west of Britain resulted in a loss of some 400 flights.
Source :EconTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Thai protests: the economic impact
The night market at Patpong is usually packed with tourists As clashes between Thai forces and anti-government protesters in Bangkok continue, there are growing fears about the impact the protests are having on the Thai economy.
The protesters, called red-shirts after the colour they have adopted, converged on Bangkok in March. They want Prime Minister Abhisit Vejjajiva to resign, with many supporting former prime minister, Thaksin Shinawatra, who was ousted in a coup in 2006.
The latest round of violence has left 36 dead and some 250 injured.
The crisis has left the city a virtual no-go zone for tourists with hotels, shops and restaurants faced with a sharp drop in the number of visitors.
Some businesses in Bangkok's shopping district had to close their doors altogether when anti-government protesters occupied the area last month.
And there are now fears that the political unrest could harm Thailand's economic growth and put off foreign investors.
Fewer touristsTourism makes up about 6% of Thailand's economy, but accounts for 15% of the country's workforce.
The British Foreign and Commonwealth Office currently advises against all but essential travel to Bangkok, but Abta, the UK travel association, says that while British tourists are rearranging their holidays, they are not cancelling altogether.
RED-SHIRT PROTEST
Continue reading the main story- 14 Mar: Red-shirts converge on Bangkok, occupy government district
- 16 Mar: Protesters splash their own blood at Government House
- 30 Mar: Talks with government ends in deadlock
- 3 Apr: Occupy Bangkok shopping district
- 10 Apr: Troops try to clear protesters; 25 people are killed and hundreds injured
- 13-17 May: 36 killed in Bangkok clashes
"The majority of the country is not a problem at all," Abta says. "Places like Ko Samui and Phuket - seen as the 'real' Thailand - are not affected by this.
"Many people may have been planning on just going to Bangkok for a couple of days of their trip. What we suggest people do and what they are doing is amending their itineraries so they don't go to Bangkok now."
But while the island resorts may still be attracting the tourists, the capital certainly is not.
Following clashes last month between soldiers and protesters, hotel occupancy in Bangkok was down to 20% at a time when it is normally at 80% or 90%, government spokesman Puttipong Punnakan has said.
Shops and mall operators have not only had to deal with fewer tourists, but the red shirts' occupation of the Rachaprasong shopping district has also forced many to shut up shop.
"Shops and department stores in the red zone have now lost about 1bn baht ($31m; £21m) a day," Thanapol Tangkananan, president of the Thai Retailers' Association said after April's clashes.
Growth revisionsThai Finance Minister Korn Chatikavanij has forecast economic growth of between 4.5% and 5% this year, but the civil unrest is threatening to reduce that figure.
After meeting with business associations, Mr Chatikavanij has said the protests could cut 0.3% off his forecast.
Analysts have said growth could be as much as 2% lower than the government estimate if the clashes continue.
Protesters have been holding rallies in Ratchaprasong shopping district Thailand's economy relies heavily on exports and how the economy performs this year will largely depend on whether or not exporters are hit.
Richard Han, chief executive of electronic components manufacturer Hana Microelectronics, said in a recent interview that as long as the airports are open, business would be able to continue.
But he did voice longer-term concerns as to what customers would think about dealing with Thai companies in the future if the situation is not resolved.
Foreign investor fearsMeanwhile, Amata Corp, Thailand's biggest industrial land developer, is already having to deal with customer concerns.
It has revealed that some Japanese clients have delayed signing contracts because of the unrest and warned that sales might suffer.
Foreign investors have already shown some signs of withdrawing from Thailand - since violence broke out last month, foreign investors have sold $584m in Thai shares, leaving Thai stocks among the cheapest in Asia.
Investment firm Fidelity had said that should the ongoing crisis affect corporate earnings, it would reconsider its investment decisions.
"Our decisions around investing in Thailand are more driven by the underlying fundamentals of the companies," Gregor Carle, investment director at Fidelity, said.
But he went on: "If we feel that there is an escalation in events in Thailand that threatens the corporate environment, obviously we will adjust the portfolio to reflect that."
Source : BBC
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
May 19, 2010
Pfizer to cut 6,000 jobs
Drugmaker Pfizer Inc will cut 6,000 jobs, or 18 per cent of the workforce, at its 78 manufacturing plants over the next five years as it pares back operations following last year's purchase of rival Wyeth.
The firm plans to cease operations at eight plants in Ireland, Puerto Rico and the US by late 2015 and cut activities at six factories in those countries, plus Germany and Britain.
Pfizer had 40 manufacturing sites before acquiring more than three dozen Wyeth facilities in the October merger.
The affected plants make conventional pills, injectable medicines, biotech drugs and consumer healthcare products.
Pfizer will wind down their operations over the next 18 months to five years, depending on business considerations such as the time required to transfer product manufacturing.
The firm said in November it would close six research sites and trim jobs in the US and Britain as part of its absorption of Wyeth. It then began a six-month study of how to reconfigure its manufacturing sites.
"We have a complex network of manufacturing plants, with excess capacity that is not good for costs," Nat Ricciardi, Pfizer's president of manufacturing, said in an interview.
Pfizer can be more competitive, both in its operations and drug pricing, by streamlining its plants and improving their processes, Ricciardi said.
"It's not disproportionately Wyeth," Ricciardi said, adding that many legacy Pfizer plants and employees are on the target list. Half of the plants slated for ceased operations are legacy Pfizer sites, the firm said.
One of the biggest incentives for companies to merge is the ability to cut overlapping operations and employees. Pfizer said it is on track to realise total cost reductions from the deal of US$4 billion to US$5 billion (US$1 = RM3.24) by 2012.
Pfizer in early 2009, at the time the Wyeth deal was announced, said it expected to cut 15 per cent of the combined workforce - or almost 20,000 jobs.
The firm is counting on the savings to help offset expected plunging sales of its US$12 billion a year Lipitor cholesterol fighter, which will face generic competition late next year.
Source : BusinessTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The firm plans to cease operations at eight plants in Ireland, Puerto Rico and the US by late 2015 and cut activities at six factories in those countries, plus Germany and Britain.
Pfizer had 40 manufacturing sites before acquiring more than three dozen Wyeth facilities in the October merger.
The affected plants make conventional pills, injectable medicines, biotech drugs and consumer healthcare products.
The firm said in November it would close six research sites and trim jobs in the US and Britain as part of its absorption of Wyeth. It then began a six-month study of how to reconfigure its manufacturing sites.
"We have a complex network of manufacturing plants, with excess capacity that is not good for costs," Nat Ricciardi, Pfizer's president of manufacturing, said in an interview.
Pfizer can be more competitive, both in its operations and drug pricing, by streamlining its plants and improving their processes, Ricciardi said.
"It's not disproportionately Wyeth," Ricciardi said, adding that many legacy Pfizer plants and employees are on the target list. Half of the plants slated for ceased operations are legacy Pfizer sites, the firm said.
One of the biggest incentives for companies to merge is the ability to cut overlapping operations and employees. Pfizer said it is on track to realise total cost reductions from the deal of US$4 billion to US$5 billion (US$1 = RM3.24) by 2012.
Pfizer in early 2009, at the time the Wyeth deal was announced, said it expected to cut 15 per cent of the combined workforce - or almost 20,000 jobs.
The firm is counting on the savings to help offset expected plunging sales of its US$12 billion a year Lipitor cholesterol fighter, which will face generic competition late next year.
Source : BusinessTimes
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Jan 20, 2010
Japan Airlines files for bankruptcy protection
Japan Airlines filed for one of the country's largest bankruptcies, entering a restructuring that will shrink Asia's top carrier and its presence around the world.
A fleet of 279 aircraft, carrying nearly 12 million passengers a year on more than 400 routes, there's no doubt Japan Airlines is a high profile victim of recession.
The bankruptcy of the national flag carrier is a major blow for Japanese pride. JAL collapsed with $16.5bn of debt because the Japanese government is no longer willing to keep bailing it out.
About 15,000 workers will likely lose their jobs under JAL's administered restructuring, while the firm's creditors will suffer losses of more than $3bn.
RELATED NEWS
Bankrupt JAL scrambles to reassure passengers
Japan Airlines sought to reassure the travelling public Wednesday that it will keep flying despite declaring bankruptcy as its share price dropped to a new record low of just two US cents.
The debt-laden carrier apologised in full-page newspaper advertisements for causing "tremendous worries to customers" and promised that "JAL will keep flying" and that passengers' air miles will remain valid.
"Please be reassured and use us as before," the company pleaded.
The once iconic airline, a symbol of Japan's rise to prosperity, filed for bankruptcy protection Tuesday with 26 billion dollars in debt in the country's biggest post-war corporate failure outside the financial sector.
It is set to undergo a painful overhaul under a new corporate chief, with more than 15,600 jobs to be cut, reducing the workforce by a third, and many loss-making routes expected to be slashed.
JAL, which carries more than 50 million passengers a year, is set to receive almost 10 billion dollars in public funds and emergency loans under a three-year turnaround plan.
The Tokyo Stock Exchange will delist JAL shares by February 20, a move expected to wipe out shareholders' investments.
JAL shares were trading at a record low of two yen (two US cents), down three yen or 60 percent from Tuesday's close. The price could theoretically fall to a rock-bottom one yen.
"There are still people who are trading JAL, including those who are enjoying a one-month game, with the downside risk limited to one yen," said Hideyuki Higashi, a strategist at SMBC Friend Securities.
The company has made no announcement regarding its tie-up talks with American and Delta Air Lines, which are in a bidding war for a slice of the carrier, eyeing its lucrative Asian landing slots.
JAL is understood to prefer switching its alliance from the American Airlines-led oneworld grouping to SkyTeam with Delta.
But it is expected to take some time for JAL and Delta to clear anti-trust hurdles and get approval from US authorities for joint operations.
The government has tapped Kazuo Inamori, a 77-year-old entrepreneur, business guru and ordained Buddhist monk, to run the stricken airline during its overhaul, replacing Haruka Nishimatsu, who resigned as president Tuesday.
Yasuhiro Matsumoto, a credit analyst at Shinsei Securities, voiced optimism JAL will successfully implement the restructuring plan but said the company still lacks a solid long-term vision.
He said the turn-around plan involves "getting rid of money-losing businesses to return to profit and is not based on unfounded optimism that travel demand will grow in the future."
However, he said, the government still "has no growth strategy. It doesn't have a strategy on how JAL should design its international network."
The bankruptcy, shocking to many Japanese, dominated newspaper front pages.
The Nikkei business daily said debt-ridden JAL's failure should serve as a warning to other companies and the government in a country where the public debt now stands at about 180 per cent of gross domestic product.
"If you shun the pain that is ahead of you, greater pain will come someday," the Nikkei warned. "The fall of JAL, which shone in the past, sends this message to the state and companies."
Source : BBC AFP
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Nov 5, 2009
Microsoft cuts 800 jobs, completes layoff plan
Microsoft Corp said on Wednesday it is cutting a further 800 jobs across its operations, on top of 5,000 jobs already eliminated under a plan to reduce costs that was announced in January.
A spokesman for the world's largest software firm said the latest job cuts are spread across the company's global operations, but about 200 are in and around its headquarters in Redmond, Washington.
Microsoft originally had planned to cut 5,000 jobs, or about 5 percent out of 96,000, before June 2010. The Microsoft spokesman said that plan has been expanded with the new layoffs and is now complete, well ahead of schedule.
As of October 23, Microsoft had 91,005 employees worldwide, according to its website.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
A spokesman for the world's largest software firm said the latest job cuts are spread across the company's global operations, but about 200 are in and around its headquarters in Redmond, Washington.
Microsoft originally had planned to cut 5,000 jobs, or about 5 percent out of 96,000, before June 2010. The Microsoft spokesman said that plan has been expanded with the new layoffs and is now complete, well ahead of schedule.
As of October 23, Microsoft had 91,005 employees worldwide, according to its website.
Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Oct 31, 2009
Nine US banks seized in largest one-day haul
US authorities seized nine failed banks yesterday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation’s banking industry are being crippled by bad loans.
The move brought the total number of failed banks in 2009 to 115 — their highest annual level since 1992 — with analysts expecting more to come. Among the lenders seized yesterday was Los Angeles-based California National Bank, in what was the fourth-largest US bank failure this year.
The largest institution to fail in the current financial crisis was Washington Mutual, which boasted US$307 billion (1,044 billion) in assets when it was shuttered in September 2008.
US Bancorp yesterday acquired the nine banks that had been held by FBOP Corp, picking up US$18.4 billion in assets and US$15.4 billion of deposits.
Visibly worried employees lined up to file into Cal National’s head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers’ fate explained to them, regulators said.
“We’re getting ready to turn everything over to US Bank,” said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP’s assets. “They will continue to operate as normal in the interim,” she added, referring to lenders acquired from FBOP.
US Bancorp — which has been buying up distressed assets this year — is picking up the lenders once owned by FBOP, a private Illinois group with over US$18 billion in assets that owned banks in Texas, Illinois, Arizona and California.
Cal National is FBOP’s largest bank by branches. Others that will now go under the US Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.
“This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions,” said Rick Hartnack, vice chairman of consumer banking for US Bancorp.
“This transaction adds scale to our current California, Illinois and Arizona footprints.”
In the “near future”, all nine lenders’ branches will be re-branded US Bank, which is the California-focused unit of US Bancorp’s that operates a network of more than 770 branches across Illinois, Arizona and California.
US Bancorp did not specify what would happen to the new employees it inherits.
Cal National operates 68 branches across Southern California with more than US$7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover yesterday.
Cal National lost about US$500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.
According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat US$7 billion of assets.
A bank official who answered the main number at Cal National’s headquarters said they could not talk at the time.
Banks are still cleaning up their balance sheets from the recent credit boom that fuelled banks’ appetite to extend loans, many with poor underwriting and triggers that caused borrowers’ payments to spike to unaffordable levels.
More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.
Banks held about US$1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 per cent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.
Banks that analysts say could risk big losses include Salt Lake City’s Zions Bancorp, Columbus, Georgia’s Synovus Financial Corp and Dallas-based Comerica Inc.
Before FBOP, US Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, US Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The move brought the total number of failed banks in 2009 to 115 — their highest annual level since 1992 — with analysts expecting more to come. Among the lenders seized yesterday was Los Angeles-based California National Bank, in what was the fourth-largest US bank failure this year.
The largest institution to fail in the current financial crisis was Washington Mutual, which boasted US$307 billion (1,044 billion) in assets when it was shuttered in September 2008.
US Bancorp yesterday acquired the nine banks that had been held by FBOP Corp, picking up US$18.4 billion in assets and US$15.4 billion of deposits.
Visibly worried employees lined up to file into Cal National’s head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers’ fate explained to them, regulators said.
“We’re getting ready to turn everything over to US Bank,” said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP’s assets. “They will continue to operate as normal in the interim,” she added, referring to lenders acquired from FBOP.
US Bancorp — which has been buying up distressed assets this year — is picking up the lenders once owned by FBOP, a private Illinois group with over US$18 billion in assets that owned banks in Texas, Illinois, Arizona and California.
Cal National is FBOP’s largest bank by branches. Others that will now go under the US Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.
“This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions,” said Rick Hartnack, vice chairman of consumer banking for US Bancorp.
“This transaction adds scale to our current California, Illinois and Arizona footprints.”
In the “near future”, all nine lenders’ branches will be re-branded US Bank, which is the California-focused unit of US Bancorp’s that operates a network of more than 770 branches across Illinois, Arizona and California.
US Bancorp did not specify what would happen to the new employees it inherits.
Cal National operates 68 branches across Southern California with more than US$7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover yesterday.
Cal National lost about US$500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.
According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat US$7 billion of assets.
A bank official who answered the main number at Cal National’s headquarters said they could not talk at the time.
Banks are still cleaning up their balance sheets from the recent credit boom that fuelled banks’ appetite to extend loans, many with poor underwriting and triggers that caused borrowers’ payments to spike to unaffordable levels.
More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.
Banks held about US$1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 per cent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.
Banks that analysts say could risk big losses include Salt Lake City’s Zions Bancorp, Columbus, Georgia’s Synovus Financial Corp and Dallas-based Comerica Inc.
Before FBOP, US Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, US Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Oct 29, 2009
Time Inc. to cut US$100 m, and extensive layoffs expected
Signalling that worse times are ahead for magazines, Time Inc. is expected to announce next week that it will cut US$100 million (RM340 million) from costs, including another big round of layoffs.
Time Inc., the publisher of magazines like Time, Fortune, and People, has already cut costs drastically: a year ago, it announced it was dismissing 6 per cent of its work force, or about 600 people. The timing is coordinated with the third-quarter earnings announcement from its parent company, Time Warner, sources said. That is scheduled for Wednesday morning.
But that was apparently not enough to make up for revenue declines. The US$100 million in costs is expected to come largely from layoffs, said sources, who asked to remain anonymous as they were not authorised to discuss the matter.
Michael Nathanson, an analyst at Sanford C. Bernstein & Company, said that he expected third-quarter revenue at Time Inc. would fall about 19 per cent, to US$900 million.
“For the year, we’re at about US$3.7 billion, and this company had done almost US$5 billion as late as 2007,” Nathanson said.
Since 2004, Time Inc. has cut about US$800 million in costs, Nathanson said.
Over all, Nathanson said, he expects Time Warner to post earnings of 54 cents a share, well up from the 30 cents a share it posted in the third quarter of 2008.
Time Inc. has been cutting costs over the last several years. Since 2007, it has shut down magazines including Business 2.0, Cottage Living, Southern Accents and Life, which it had revived as a newspaper supplement. Last week, Fortune announced that it would no longer be published every other week, and would drop its frequency to 18 issues a year, from 25. A stricter expense-account policy has been in place for some time, and some magazines have decreased the weight of the paper they use.
A number of Time Inc. employees are covered by a union contract, which mandates severance in case of layoffs. Employees of Time, Sports Illustrated, People, Money, Fortune and Fortune Small Business are covered by agreements with the Newspaper Guild of America, said Bob Townsend, local representative for the guild.
Covered employees at those magazines are eligible for severance packages in a layoff, of two weeks’ pay for every year of employment, with a cap of 52 weeks’ pay. Longtime employees get a bonus, with 20-year veterans getting an additional eight weeks’ pay, and 25-year employees an additional 10.
Townsend said that the Guild was usually notified in advance of layoffs, but it had not heard anything yet. “We have not been told there are going to be any layoffs next week,” Townsend said.
Dawn Bridges, a Time Inc. spokeswoman, declined to comment.
The layoffs and cost-cutting follow moves at competitors. Forbes is in the midst of dismissing about 40 to 60 of its editorial staff, and most Condé Nast magazines are reducing their budgets by about 25 per cent, which has included handfuls of layoffs at many of its magazines.
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Time Inc., the publisher of magazines like Time, Fortune, and People, has already cut costs drastically: a year ago, it announced it was dismissing 6 per cent of its work force, or about 600 people. The timing is coordinated with the third-quarter earnings announcement from its parent company, Time Warner, sources said. That is scheduled for Wednesday morning.
But that was apparently not enough to make up for revenue declines. The US$100 million in costs is expected to come largely from layoffs, said sources, who asked to remain anonymous as they were not authorised to discuss the matter.
Michael Nathanson, an analyst at Sanford C. Bernstein & Company, said that he expected third-quarter revenue at Time Inc. would fall about 19 per cent, to US$900 million.
“For the year, we’re at about US$3.7 billion, and this company had done almost US$5 billion as late as 2007,” Nathanson said.
Since 2004, Time Inc. has cut about US$800 million in costs, Nathanson said.
Over all, Nathanson said, he expects Time Warner to post earnings of 54 cents a share, well up from the 30 cents a share it posted in the third quarter of 2008.
Time Inc. has been cutting costs over the last several years. Since 2007, it has shut down magazines including Business 2.0, Cottage Living, Southern Accents and Life, which it had revived as a newspaper supplement. Last week, Fortune announced that it would no longer be published every other week, and would drop its frequency to 18 issues a year, from 25. A stricter expense-account policy has been in place for some time, and some magazines have decreased the weight of the paper they use.
A number of Time Inc. employees are covered by a union contract, which mandates severance in case of layoffs. Employees of Time, Sports Illustrated, People, Money, Fortune and Fortune Small Business are covered by agreements with the Newspaper Guild of America, said Bob Townsend, local representative for the guild.
Covered employees at those magazines are eligible for severance packages in a layoff, of two weeks’ pay for every year of employment, with a cap of 52 weeks’ pay. Longtime employees get a bonus, with 20-year veterans getting an additional eight weeks’ pay, and 25-year employees an additional 10.
Townsend said that the Guild was usually notified in advance of layoffs, but it had not heard anything yet. “We have not been told there are going to be any layoffs next week,” Townsend said.
Dawn Bridges, a Time Inc. spokeswoman, declined to comment.
The layoffs and cost-cutting follow moves at competitors. Forbes is in the midst of dismissing about 40 to 60 of its editorial staff, and most Condé Nast magazines are reducing their budgets by about 25 per cent, which has included handfuls of layoffs at many of its magazines.
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
Oct 13, 2009
China has 130 billionaires
China’s super-rich have bounced back from the financial crisis with a vengeance, and the country now has more known dollar billionaires than any other country except the United States, according to a new report.
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The annual Hurun Report released yesterday said China has 130 known US dollar billionaires, up from 101 last year.
The number in the US is 359 while Russia has 32 and India 24, according to Forbes magazine.
A Warren Buffett-backed car entrepreneur worth US$5.1 billion (RM17.2 billion) has surpassed a disgraced appliance tycoon to become the richest person in China.
Huang Guangyu, the richest man in China last year, dropped to 17th on the list this year with a worth of US$3.4 billion, after he resigned as chairman of the country’s biggest appliance chain while under investigation for alleged economic crimes.
Car mogul Wang Chuanfu, as chairman of BYD Co, made big strides in the past year to become the first carmaker to launch the mass production of a plug-in hybrid electric vehicle.
The company also secured backing from US billionaire investor Buffett, whose MidAmerican Energy Holdings has a 9.9 per cent stake in the Hong Kong-traded company.
With help from a growing domestic car industry, Wang’s 27.8. per cent stake in BYD elevated him 102 places in Hurun Rich List’s 2009 rankings.
Second place went to Zhang Yin and family, owner of paper recycler Nine Dragons Paper, while in third place was Xu Rongmao and family, owner of Shimao Property Holdings.
China’s rich are also getting richer, with the average wealth on the list standing at US$571 million, up almost one-third from last year, said compiler Rupert Hoogewerf.
“With the greatest wealth destruction in the West of the last 70 years, we’ve seen China
“They’ve put the credit crunch behind them,” he said. “The key driver has been urbanisation. You’ve got all these cities being built, and that requires property developers, iron and steel manufacturers. The latest thing is cars.”
Hoogewerf also said the actual number of billionaires could be higher than estimated.
“Either they are super-discreet, or perhaps they haven’t come to the surface,” he said. “Having said that, the transparency of wealth... is now very much in the open. There’re many more listed companies.”
He said that among the people who probably should have been listed are Liu Chuanzhi, chairman of the world’s No. 4 PC maker Lenovo, and Chen Feng, founder of Hainan Airlines.
They are not on the list because it is not known how rich they really are.
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The Great Recession is Over
The worst US recession since the Great Depression has ended, but weak household spending as the labour market struggles to create jobs will slow the pace of the economy’s recovery, according to a survey released yesterday.
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
The survey of 44 professional forecasters released by the National Association for Business Economics, also known as the NABE, found that 80 per cent of the respondents believed the economy was growing again after four straight quarters of declines.
“The great recession is over,” NABE President-Elect Lynn Reaser said.
“The vast majority of business economists believe that the recession has ended, but that the economic recovery is likely to be more moderate than those typically experienced following steep declines.”
Recessions in the United States are dated by the National Bureau of Economic Research. The private-sector group, which does not define a recession as two consecutive quarters of decline in real gross domestic product, often takes months to make determinations.
The recession that started in December 2007 is the longest and deepest since the 1930s. It was triggered by the US housing market’s collapse and the ensuing global credit crisis.
While the economy is believed to have rebounded in the third quarter, analysts believe that ordinary Americans will probably not see much difference as unemployment will remain high well into 2010, restraining consumption.
“We don’t necessarily expect the US economy to fall into a double-dip recession. This time round, consumers will be reluctant to join the party,” said Paul Ashworth, senior US economist at Capital Economics in Toronto.
The NABE survey, conducted in September, predicted real GDP growth expanding at an annual pace of 2.9 per cent over the second half of this year. Output for all of 2009 is expected to contract 2.5 per cent and next year, rebound 2.6 per cent.
Much of the anticipated recovery was seen driven by businesses rebuilding their inventories after aggressively reducing unwanted stockpiles of unsold goods to match weak demand.
HOUSING PRICES TO HIT BOTTOM
Investment in the residential market would also add to growth, with the majority of the survey’s respondents convinced that the housing market downturn, which has lasted more than three years, was close to coming to an end.
About two-thirds of respondents believed house prices will reach a bottom this year. The survey found that high house prices would not pose a threat to the sector’s recovery.
The survey predicted that the unemployment rate will rise to 10 per cent in the first quarter of 2010 and edge down to 9.5 per cent by the end of that year. The labour market was not expected to regain most of the jobs destroyed in the recession until 2012 or beyond.
The weak labour market will continue to weigh on consumer spending, slowing the recovery. The jobless rate climbed to 9.8 per cent in September — a 26-year high — from August’s 9.7 per cent.
Labour market slack, combined with weak wage growth, meant inflation would not be an obstacle to the economic recovery and the Federal Reserve will not be under pressure to raise interest rates, the survey found.
“With improving credit markets, the US economy can return to solid growth next year without worry about rising inflation,” Reaser said.
The US central bank was seen leaving its overnight benchmark lending rate near zero until late next spring, followed by measured increases that would take the rate to 1 per cent by the end of 2010, the survey showed.
Despite signs of improvement in the financial markets, most respondents believed that it would take some time for them to return to normal. Only 29 per cent believed this would happen in the second half of next year.
Respondents also expected the US dollar to weaken further this year and into 2010, but did not see this contributing to a narrowing of the country’s trade
The dollar has lost about 5.8 per cent of its value against a basket of currencies so far this year, largely because of worries over the government’s growing budget deficit and expectations that the Fed will keep interest rates at super-low levels for a while.
Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]
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