WITH FARES DROPPING AND FUEL COSTS RISING, the biggest carriers in the U.S. airline industry are finding it even more difficult to stay aloft financially.
For example, Atlanta-based Delta Air Lines said earlier this week it may seek bankruptcy protection unless it receives significant wage cuts from its pilots. The nation's third-largest airline has lost more than $3 billion and laid off 16,000 employees in the last three years.
Delta's situation has worsened as jet fuel prices skyrocketed last year. Then there's the increasing competition from low-fare carriers like Southwest Airlines and JetBlue. In addition to providing cheaper flights, these airlines aren't burdened with the debt problems plaguing Delta, US Airways, American Airlines, United, and Continental.
Because of more solid financial footing, Southwest and JetBlue can broker deals for cheaper fuel, a process called hedging, which has helped make these airlines turn quarterly profits.
Fuel hedging allows airlines to essentially buy a guarantee that the price they pay for fuel, their second-biggest cost behind labor, will remain the same or be capped at a certain amount regardless of price fluctuations.
With the market price for jet fuel in the mid-$30 per barrel range, Southwest and JetBlue are paying in the mid-$20s because of their current fuel hedges.
New and unimproved
IT'S SOMETIMES HARD TO BELIEVE BUD SELIG WAS A successful businessman before becoming Major League Baseball's commissioner in 1998.
Mr. Selig recently visited Oakland Coliseum for the first time in 15 years and quickly declared that the Athletics needed a new stadium in order to survive.
But is that true? The A's have won the American League West the past two seasons and their $59 million team payroll is higher than 14 other teams.
Meanwhile, of the five teams that built new ballparks in the 1990s, only the Atlanta Braves have continued to win and spend. The other four-the White Sox, Orioles, Indians, and Rangers-all raised spending initially, but quickly returned to their historically low levels of spending when the effects of a new ballpark didn't pay off in consistent playoff appearances.
Still, nine more teams followed suit by opening new parks in the last four years. Many of these clubs have seen steep declines in revenues and spending since the inaugural season in their new digs with no noticeable difference in the standings.
Struggling jeans maker Levi Strauss & Co. will sell its popular Dockers brand, an 18-year-old clothing line that helped make casual pants fashionable. It is estimated that Levi's, which has suffered through seven consecutive years of sliding sales and thousands of layoffs, could fetch more than $1.5 billion for its Dockers brand, which would make a significant dent in Levi's $2.2 billion debt.
Universal Studios joined with NBC to form NBC Universal, a media conglomerate that will rival Time Warner Inc. and Viacom Inc. in industry clout. The deal brings together television's top-rated network among the 18-49 age group; a major movie studio; a television production studio; a handful of cable TV channels including USA, Sci-Fi, CNBC, and Bravo; and a group of 29 television stations.
Ford Motor Company closed its oldest manufacturing plant, an 86-year-old factory built under the guidance of Henry Ford. Production at the Dearborn, Mich., assembly plant, which was the birthplace of the Mustang, will be moved to a factory in Flat Rock, southwest of Detroit.
After posting a first-quarter loss of $388 million, MCI said it will eliminate 7,500 jobs this year. The company, which changed its name from WorldCom during two years in bankruptcy protection, said its weak performance is the result of intense price competition within the telecommunications industry.