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MONEY WATCH.Navigation: Main page Author: Lim, Paul J. Section: Money & Business
More Unfriendly Skies In announcing the air carrier's quarterly results last week, UAL Chairman Glenn Tilton noted that "by maintaining focus on United's customers, our employees turned in operational performance near top levels in the company's history." But instead of bonuses, many workers can now expect their future pension benefits to be slashed. That's because a bankruptcy court judge approved United's request to offload pension plans covering 120,000 current and retired workers to the Pension Benefit Guaranty Corp. While United unions vowed to fight what will amount to the biggest pension default in U.S. history, an even bigger threat is looming. Once United jettisons its underfunded pensions, it will enjoy a competitive advantage over other carriers with similar pension shortfalls. Delta, with a $5.3 billion pension deficit, already warned investors last week about possibly having to file for bankruptcy. While Delta is trying to avoid that route, United may have set an unfortunate precedent. Consumers: Do as I Do, Not as I SaySince consumer spending is the lifeblood of the U.S. economy, Wall Street constantly monitors the pulse of would-be shoppers. This could explain why investors are down in the dumps. The only thing households seem to be in the mood to buy is Prozac. Last week, the University of Michigan's closely followed consumer sentiment index fell for the fifth straight month. But confidence surveys miss a key aspect of American consumerism--sometimes, being depressed motivates shoppers to spend more. Case in point: The Commerce Department reported last week that retail sales in April jumped 1.4 percent--a full percentage point better than most economists had expected. No wonder Dean Croushore, an economics professor at the University of Richmond, notes that economists "can ignore consumer-confidence indexes in forecasting consumption spending." Storm Clouds Over BentonvilleIt's an age-old Wall Street tradition to blame weather for bad business. It's also a sure sign there are underlying problems at the company doing the finger-pointing (after all, no one credits better-than-expected weather when record profits are reported). This explains why the markets reacted so negatively last week when Wal-Mart CEO Lee Scott attributed lackluster first-quarter earnings at the world's biggest retailer in part to "a cooler and wetter spring than normal." Funny, Mother Nature didn't seem to rain on rival Target's parade. Wal-Mart is now warning investors that second-quarter profits will also fall short of analysts' expectations. Does Wal-Mart know something the Weather Channel doesn't? PHOTO (COLOR) PHOTO (COLOR) ~~~~~~~~ By Paul J. Lim in the Fair Use guidelines of the 1976 U.S. Copyright Act. info [at] singlearticles.com Powered by CommonSense |
Wolf at the door. Mr. Big. Your Child's Health. |
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