Executive Business Briefing

Oct. 24, 2001 at 7:13 AM
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Here is a look at Wednesday's top business stories:

AMR posts $414 million loss

FORT WORTH, Texas, Oct. 24 (UPI) -- Citing the financial effects of the Sept. 11 terrorist attacks and the continuing weakness of the U.S. economy, AMR Corp., the parent company of both American Airlines Inc. and TWA Airlines, reported a third quarter net loss of $414 million, or $2.68 a share.

The results included $397 million in special charges for the Sept. 11 attacks and a credit of $508 million for government aid for lost revenue.

AMR said its loss before special items was $525 million, or $3.40 a share.

The latest loss compares with a net income of $322 million, or $1.96 a share during the same period last year.

Operating revenues fell to $4.82 billion from $5.26 billion a year ago.

"With the economy weak and fuel prices still relatively high, we and the rest of the industry were experiencing a very difficult financial quarter even before the Sept. 11 attacks," said Don Carty, AMR's chairman and chief executive officer.

"But the attacks and their aftermath further weakened traffic and had a staggering effect on our overall financial performance, producing the largest quarterly loss in our long and proud history," Carty said.

Carty said AMR took a number of steps to respond swiftly to the crisis.

"First, American cut its daily flight schedule by about 20 percent to better align its capacity with reduced demand. Second, the company advanced the retirement of older aircraft and deferred delivery of new aircraft, sharply reducing capital spending. Costs were further cut by closing facilities, trimming food service, and aggressively reducing overhead," Carty said.

Additionally, in a move Carty described as "sad and exceptionally painful," AMR eliminated the equivalent of about 20,000 jobs around its system.

The company also took steps to limit the number of people affected by the reductions, and used a portion of the federal aid payments to put together a package of payments and other benefits for those who were affected.

Also as part of the cost-cutting effort, Carty announced that he and the entire board of directors would take no compensation for the rest of 2001, and that every senior officer and officer of the company had taken voluntary paycuts.

AMR also created an "American Heroes" program that allows employees to take voluntary pay reductions to help the company.

"We are in the midst of the worst financial crisis in the history of the industry," Carty said, "and yet we have many formidable strengths as we manage our way through the crisis and look to the future. Our brand is strong, our global route network is intact, we have an excellent fleet, we are the only carrier with more legroom throughout coach, AAdvantage remains the industry's premier frequent flyer program, and we have the most dedicated corps of employees in the business.

"All this gives us a solid base for winning back our customers, which in the end will be the key to resolving our financial challenges," Carty said.

Stocks end mixed in Tokyo

TOKYO, Oct. 24 (UPI) -- Stock prices on the Tokyo Stock Exchange ended narrowly mixed Wednesday amid profit taking in technology issues after recent sharp gains, although downside support proved solid on the back of active short-covering in major bank shares.

Prices rose in Hong Kong, Taiwan, South Korea and Sydney, Australia.

Japan's blue-chip Nikkei Average of 225 selective issues, which jumped 296.15 points Tuesday, slipped 59.41 points, or 0.55 percent, to 10,802.15 -- its first decline in four sessions.

But the broader Topix index rose 4.48 points, or 0.40 percent, to 1,100.22, ending above the psychologically key 1,100-mark for the first time since Sept. 4.

Advances outnumbered declines 850 to 446, while another 185 issues settled unchanged.

Volume rose to an estimated 843.15 million shares from 733.60 million shares changing hands Tuesday.

Analysts said short covering in bank stocks supported the market after a weeklong slump.

Sentiment toward the banking sector improved somewhat as coalition parties agreed on terms for strengthening the role of the Resolution and Collection Corp. to enable the state-backed debt collection body to buy more bad loans from banks and play a role in corporate rehabilitation.

Japan's Prime Minister Junichiro Koizumi said the nations' banks don't require another round of public fund injections now, though such a move may become necessary at a later time to avoid disruption to the financial system. He also repeated the government's stance that it won't further delay the planned introduction in April 2002 of a limited bank deposit guarantee system.

Meanwhile, technology stocks ended mostly weaker on profit taking, especially after declines in U.S. stocks on Tuesday.

Analysts said they will continue to monitor the spate of corporate earnings reports through the end of November. Leading high-technology companies, such as Sony, are slated to release their first half earnings later this week and next week.

In trading, Mizuho Holdings, the world's largest bank by assets, rose 3.7 percent, UFJ Holdings rose 4.7 percent, Sumitomo Mitsui Banking rallied 8.2 percent and Asahi Bank added 1.6 percent.

Meanwhile, Fujitsu lost 1.1 percent after posting dismal results for the first half and again slashed its estimates for the full fiscal year. Fujitsu now expects to break even on a group operating basis, although it had previously projected a profit in its July estimate.

Among some of the other active issues, NEC Corp. rose 3.4 percent, Hitachi added 0.7 percent, Mitsubishi Electric lost 1.8 percent, Toshiba slipped 0.9 percent and Tokyo Electron added 1.7 percent.

Elsewhere in Asia, prices ended marginally higher on the Hong Kong Stock Exchange after drifting in listless trading ahead of a one-day public holiday.

After a brief, early afternoon dip, the Hang Seng Index added 23.62 points, or 0.23 percent, to 10,243.50, helped by gains in market heavyweights HSBC and Hutchison Whampoa.

Ahead of Cheung Yeung Festival on Thursday, investors are sidelined, and there was buying in select blue-chips. The local stock market is closed Thursday for the holiday.

In trading, HSBC rose 1.5 percent, port-to-telecoms conglomerate Hutchison Whampoa added 0.4 percent, New World Development gained 5.9 percent, Hang Lung Development added 0.8 percent and Henderson Land Development rose 1.8 percent.

Meanwhile, China Mobile eased 0.4 percent and China Unicom fell 2.0 percent on profit taking. China related stocks racked up impressive gains on Tuesday after Chinese regulators' decided to suspend the controversial state share sale scheme.

Prices also ended higher on the Taiwan Stock Exchange, lifted by strength in technology issues. The Weighted Index rose 112.25 points, or 2.90 percent, to 3,986.67.

In trading, United Microelectronics climbed 6.8 percent and Taiwan Semiconductor Manufacturing jumped 7 percent.

Prices also ended higher on the South Korean Stock Exchange. The key Kospi Composite Index rose 10.99 points, or 2.07 percent, to 541.49, regaining the 540-level for the first time since terrorist attacks.

Banks and brokerage shares led gains with Kookmin Bank rising 4.2 percent and Daewoo Securities rising 3.9 percent.

Elsewhere around the region, prices ended higher in sluggish trading on the Australian Stock Exchange. The blue-chip All Ordinaries Index rose 32.80 points, or 1.04 percent, to 3,182.10.

Australia and New Zealand Banking Group added 0.7 percent after the lender said its net profit for the year to Sept. 30 would be at the top end of current market expectations.

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