| 12/30/04:
United Airlines' Billion Dollar Pension Bailout
SUSIE GHARIB: More trouble tonight for United
Airlines. Late today its flight attendants union authorized so-called
chaos strikes against the carrier if a bankruptcy court lets the airline
dump its collective bargaining agreements with employees. Court hearings
begin next Friday on those agreements. The news comes after a major
development today for United`s pilots. The Federal government is taking
responsibility for part of the pension plan of the carrier`s pilots union.
That gives the bankrupt airline and its parent company some financial
relief. The Pension Benefit Guarantee Corporation will now be liable for
about $1.5 billion in guaranteed benefits, the third largest claim in the
agency`s history. Today`s move covers about 14,000 active and retired
pilots, but not UAL`s other labor unions. But analysts say the agency will
probably have to take over those as well.
WILLIAM WARLICK, AIRLINE ANALYST, FITCH RATINGS: I think ultimately
any new investor who would fund an exit from Chapter 11 will be looking for
all of the defined benefit plans to be terminated. And even with the pilot
plan gone, United would still be looking at potentially $600 million to
$800 million a year in annual cash funding requirements.
GHARIB: But the agency taking over UAL`s pension has cash problems of
its own. Stephanie Woods spoke today with the executive director of the
Pension Benefit Guarantee Corporation and asked Bradley Belt why the agency
is taking over United`s pilots` pension now.
BRADLEY BELT, EXEC. DIR., PENSION BENEFIT GUARANTY CORPORATION: In
this case, by terminating the plan now and taking this action, we save the
pension insurance program up to $140 billion in present value terms.
STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The way the
United pilot`s contract reads United also has to dump the pensions for its
other employees. How quickly do you anticipate taking over those pensions?
BELT: We hope that we don`t have to at all. The starting point is
that companies that make pension promises should honor those pension
promises and they should maintain their pension plans. We would hope that
United would be able to maintain all its other pension plans. Certainly the
employees in those pension plans have indicated they do not want to
terminate those pension plans and we also believe those pension plans are
affordable.
WOODS: United`s pilot pension program alone is under funded by nearly
$3 billion. The PBGC has a deficit of $23 billion. Is this a liability
that PBGC can handle?
BELT: This will not have an impact in and of itself on our deficit
position, but it`s clear that these types of large claims are something
that put the financial integrity of the pension insurance program at risk
over the long term. There`s no question about that and that`s the reason a
change in the legal framework in the statute is so critically important and
that why we intend to work very closely with Congress to affect those
appropriate changes next year.
WOODS: What`s to keep other troubled companies from following suit and
dumping their pension liabilities on the PBGC?
BELT: Certainly one of the concerns we have is that they will look to
try to do that. Any number of airline companies CEO`s that are not now
bankruptcy have indicated that they consider that to be a viable option,
enter bankruptcy and try to shed their pension liabilities, shift those
costs onto the Federal government, onto other premium payers. We will
certainly insist that they meet all the statutory criteria. I think one
can certainly make the case that unfortunately the current law allows that
to happen too easily and that certainly what we have seen with respect to
United Airlines, what we`ve seen with U.S. Airways, Bethlehem Steel and
other cases in the past.
WOODS: If I have a defined benefit plan and my company is struggling,
what recourse do I have?
BELT: First and foremost you need to become better informed so that
you actually know the true financial health of your pension plan.
Unfortunately under current law, most employees are not aware of the true
financial health of their employer`s plan so there is not much they can do
about it. If they are better informed, they can start making better
decisions and they can talk to management. They can put pressure on the
company to make sure the plan is appropriated funded. They can obviously
make appropriate planning for their own financial future if they understand
that they`re at the risk of losing some pension benefits should the plan
terminate.
WOODS: Does this United default put the system at risk? What company
is going to want to be the last one with a defined benefit plan?
BELT: I think one of the real fears of the part of companies who have
acted responsibly and prudently is that they understand that they`re at
least nominally on the hook for the under funding in the system to make up
the PBGC`s deficit. Our revenues are from premiums paid by plan sponsors.
Certainly nobody wants to be the last person standing and there is a real
fear, you have some analysts suggest that there would be a rush to the
exits. Companies can terminate their plans if they are fully funded and to
the extent that they are fully funded or close to being fully funded, they
can put additional monies and exit the system which further exacerbates the
problem because you lose your revenue base, employees do lose because they
can no longer accrue benefits. It impairs the retirement security of many
millions of Americans so that`s certainly something we want to try to avoid
have happen.
WOODS: We`ve been speaking with Bradley Belt, executive director of
the Pension Benefit Guarantee Corporation. Thank you.
BELT: Thank you Stephanie.
Nightly Business Report transcripts
are available on-line post broadcast. The program is transcribed
by eMediaMillWorks. Updates may be posted at a later date.
The views of our guests and commentators are their own and
do not necessarily represent the views of Community Television
Foundation of South Florida, Inc. Nightly Business Report,
or WPBT. Information presented on Nightly Business Report
is not and should not be considered as investment advice.
Copyright (c) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/30/04:Kasit Piromya U.S. Ambassador to Thailand On The Tsunami Disaster
SUSIE GHARIB: The death toll in south Asia took a shocking vault higher
today. Now more than 125,000 people are believed to have perished from
Sunday`s earthquake and tsunamis. Thousands more are still missing. And
for the survivors, aid for the survivors rather is pouring in from around
the world, including $250 million pledged by the World Bank today.
Secretary of State Colin Powell paid a condolence visit to the embassy of
Thailand this morning, conveying the best wishes of President and Mrs.
Bush. Powell says the administration is determined to do what is necessary
to deal with this challenge.
COLIN POWELL, U.S. SECRETARY OF STATE: This is going to be a massive
effort. It`s going to take a great deal of money and I`m pleased with the
response that we have seen from the international community and the United
States will continue to add to the commitment we have already made as the
need is known and after we have had a chance to of course consult with the
Congress.
GHARIB: Also at the embassy of Thailand this morning, NIGHTLY BUSINESS
REPORT`s" Washington bureau chief Darren Gersh. More than 4,500 deaths are
reported in Thailand, many of them foreign tourists visiting the country`s
beach resorts over the Christmas holiday. Darren talked with Ambassador
Kasit Piromya and began by asking about the current state of relief
Thailand is receiving from the U.S.
KASIT PIROMYA, AMBASSADOR OF THAILAND TO THE UNITED STATES: I think
the United States was the first country to arrive in Thailand, so at the
moment there are three aircrafts already doing the search and rescue
operation. One C130 has already arrived with the medical equipment, food,
water and by tomorrow an assessment team from U.S. AID will be in Bangkok
to assess the situation as well as to coordinate with other donor agencies,
including the national organizations.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Many countries
have expressed the need for foreign assistance. What does Thailand need?
Do you need assistance in terms of dollar contributions or technical
capabilities?
PIROMYA: Types of needs at the moment would be first the immediate
activities in the rescue and search operation, in the medical site of the
autopsy, forensic and inclusive of the body bags, refrigerated coffins, the
chemicals to prevent the spread of possible disease and so on. We need the
management know how of the rehabilitation and reconstruction, so more on
the brain trust and the experience sites of all the friendly countries and
international organization, but in terms of the financial means to
recuperate, to reconstruct the whole area, I think we have our own
resources to cater to this type of need.
GERSH: There are some reports I have been hearing this morning that
the government relief effort still is not being well coordinated on the
ground in Phuket and in the areas that have been hardest hit. Can you just
tell us a little bit why, if that`s true and why that may be taking so
long?
PIROMYA: No. I think we`re talking about three days of rescue
operation. That would be of course lack of better coordination but I think
that is natural. But (INAUDIBLE) at least every Thai agency, every Thai
NGOs, volunteers are working very intensively but I think one must admit
that in a situation like this there would be a lack of coordination messy
at the beginning but things will settle down.
GERSH: This is the prime tourist area, one of the prime tourist areas
in the world and my understanding of the preliminary damage estimates are
that in terms of hotel damage, it was something on the order of $330
million and they`re talking of perhaps hundreds of thousands of people
losing their jobs. Can you put this into perspective? How big of a hit is
this to the overall tourism industry in Thailand?
PIROMYA: Well, this is the peak season and then we have about 10
million visitors a year and the months between October to February we would
have say five million in the country. Maybe around one million to two
million foreigners would be in the southern part of Thailand so at the
moment we have maybe hundred and hundred of thousands of foreign visitors
so it will definitely be affected immediately and maybe in the medium (ph)
term, one or two year, so it would be affected 20, 30 percent definitely
immediately, at this point in time but we are quite confident that we would
be able to overcome the situation within a short span of time.
GERSH: I was actually somewhat surprised when I saw that the initial
estimate of the overall damage in Thailand`s economy was just on the order
of .3 percent of GDP. Does that seem like a reasonable estimate?
PIROMYA: Maybe a bit more, because our GDP is more than a $100 billion
U.S. and the tourism industry is the highest, foreign earning and then that
would constitute maybe $20 billion and then if you say that over 20 percent
of the tourist income come from southern part of Thailand, then one could
have come to about I don`t know, 1, 2 percent of the GDP. But this is
underestimation at the moment.
GERSH: Ambassador Piromya, thank you and we wish your country a speedy
recovery.
PIROMYA: Thank you for your concern. Thank you.
Nightly Business Report transcripts
are available on-line post broadcast. The program is transcribed
by eMediaMillWorks. Updates may be posted at a later date.
The views of our guests and commentators are their own and
do not necessarily represent the views of Community Television
Foundation of South Florida, Inc. Nightly Business Report,
or WPBT. Information presented on Nightly Business Report
is not and should not be considered as investment advice.
Copyright (c) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/30/04:
The Economic Outlook For 2005
SUSIE GHARIB: Despite higher oil prices, rising interest
rates and a weakening dollar, the U.S. economy turned in a
strong performance this year. And as Erika Miller reports,
2005 is also expected to be a good year for the economy.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: The
economy turned in a banner performance in 2004. Economists
estimate that gross domestic product, the total output of
goods and services, rose 4.5 percent for the year. The last
time growth was this strong was during the boom years of 1997
and 1999. It would also be the biggest year-over-year gain
in GDP in over two decades. Most economists see another strong
showing in 2005, with GDP growth of between 3.5 and 4 percent.
STEVEN WIETING, SR. ECONOMIST, CITIGROUP: It will be very
similar to the year past, probably lots of broad-based, moderate
growth, which is a little different from the late 1990s experience,
of hyper-growth in one industry. So it should be fairly healthy
growing forward. MILLER: But a big unknown is the how
quickly the Federal Reserve will boost short-term interest
rates. If the hikes are gradual, as the Fed has done so far,
economists don`t see much of an impact. DAVID RESLER,
CHIEF ECONOMIST, NOMURA SECURITIES: I don`t think that the
increase in short-term interest rates and even if it is accompanied
by increases in long-term rates that move in tandem with short-term
rates, that it would have a very important impact on those
people who have borrowed heavily in the last couple of years.
MILLER: Another big concern is the direction of oil prices.
If crude averages under $40 a barrel, experts predict a slight
boost to consumer spending. But if prices head back to the
record $55 mark, economists warn growth would certainly be
choked off. Another major wildcard is the falling dollar.
So far, the decline has been gradual and welcomed by economists,
because it makes American goods cheaper abroad and helps erode
America`s record trade deficit. But if the greenback falls
more quickly, the concern is foreign investors will dump their
U.S. assets, sending stocks plunging and interest rates soaring.
RESLER: I think that`s a risk that I`d put a 5 to 10 percent
probability on -- not very likely, but it is something that
would perhaps create some problems. MILLER: Not surprisingly,
economists say the threat of terrorism looms over all their
forecasts. They warn a strike in the U.S. or escalation abroad,
could be devastating to business and consumer confidence.
Erika Miller, NIGHTLY BUSINESS REPORT, New York.
To Learn More about this topic, click
here.
Nightly Business Report transcripts
are available on-line post broadcast. The program is transcribed
by eMediaMillWorks. Updates may be posted at a later date.
The views of our guests and commentators are their own and
do not necessarily represent the views of Community Television
Foundation of South Florida, Inc. Nightly Business Report,
or WPBT. Information presented on Nightly Business Report
is not and should not be considered as investment advice.
Copyright (c) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/30/04:
Commentary: Hang Up On Cellphones On Planes
JEFF YASTINE: Tonight`s commentator says New Year`s resolutions are old hat. He has
a different approach to the New Year. Here`s Irving R. Levine, dean of
international studies at Lynn University and former chief economics
correspondent for NBC News.
IRVING R. LEVINE, DEAN EMERITUS, INTERNATIONAL STUDIES, LYNN
UNIVERSITY: It`s that time of year for New Year`s resolutions and economic
forecasts. But resolutions are seldom kept and most forecasts don`t pan
out. So instead this year, I`m making a New Year`s appeal. I appeal to
Federal regulators to reject proposals that would allow cell phones to be
used on airplanes. There are already too many in-flight miseries, such as
inadequate knee-room.
It`s bad enough to sit next to someone who coughs or sneezes or near a
crying baby, sweet though the child may be. It`s one thing to tolerate a
passenger who can`t resist the craving for a phone fix and briefly uses the
built-in pay phone. But imagine all around you passengers conducting
business or courtships or family arguments, with the chorus of "can you
hear me now?" Good-bye to the opportunity to nap, to read, or even to think
quietly.
Cell phones may even add to the hazards of flying by provoking cell
phone rage. The only beneficiaries of cell phone use will be phone
companies and airlines, which will get a cut of the fees. But for the rest
of us long- suffering flyers, my appeal to Federal regulators is, please
hear us now. I am Irving R. Levine.
Nightly Business Report transcripts
are available on-line post broadcast. The program is transcribed
by eMediaMillWorks. Updates may be posted at a later date.
The views of our guests and commentators are their own and
do not necessarily represent the views of Community Television
Foundation of South Florida, Inc. Nightly Business Report,
or WPBT. Information presented on Nightly Business Report
is not and should not be considered as investment advice.
Copyright (c) 2003 Community Television Foundation of South
Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
12/30/04:
Paul Kangas' "Stocks In The News"
JEFF YASTINE: On Wall Street, stocks traded sideways all day, with activity
slowing to a crawl in this next to last trading session of the year. Not
much phased investors though, not oil above $43 a barrel or the dollar
hitting another new low against the euro or steel stocks selling off on
concerns about excess inventory in China.
The NASDAQ moved a tad higher in erratic trading, but the Dow barely
budged until a quick drop into the close. The blue chips closing off
nearly 29 points at 10,800.3. The NASDAQ rising just over a point to
2178.34 and the S&P 500 gaining a fraction to 1213.55. In the bond market,
the 10-year note rising 20/32 to 99 31/32. That puts the yield at 4.26
percent.
And starting off our list, Pfizer (PFE) down $0.25. Celebrex is still
on the market but a lot of people no longer want to take the drug. A market
research firm says Celebrex prescriptions have fallen by more than half
since concerns were raised about Celebrex and potential heart damage.
Lucent Tech (LU) slipping a touch.
General Electric (GE) gaining $0.04.
EMC (EMC) up $0.18.
And Fannie Mae (FNM) gaining nearly $1. Investors apparently
applauding the company`s plans to sell up to $5 billion in preferred stock
to satisfy new minimum capital requirements for the mortgage seller.
Citigroup (C) gaining a couple of pennies there.
And AK Steel Holding (AKS) down nearly $2 or 12 percent. For months,
the worry has been that China can`t get enough steel. Well, today a "Wall
Street Journal" article highlighted worries about a build up in steel
inventories and steel making capacity in China. China, the report said, was
a net exporter of steel last month. That news was a punch in the gut to
U.S. Steel stock, which had been climbing upward for months.
Insteel Industries (IIIN), NovaAmerican, Nucor Corporation (NUE),
Oregon Steel Mills (OS), U.S. Steel Group (X) all reversed to the downside
and that was on large volume.
Time Warner (TWX) shares nearly unchanged for today.
Sprint FON Group (FON) edged up a fraction.
And Nortel Networks (NT) down a penny.
Shares in Symbol Technologies (SBL) jumping over $1. The company
withdrew plans for a huge stock offering to fund its purchase of a private
firm Matrix. Instead it will borrow it, about $250 million at 5 percent to
fund that acquisition.
Shares in Sinopec Beijing Petrochemical (BYH) rising over $2. China
Petroleum is offering to take Sinopec private in a deal worth nearly $500
million.
And shares in VimpelCom (VIP) climbed another or nearly 6 percent
after a 7 percent run yesterday. The company says its 2001 back tax
payments will be only a fraction of what was previously expected and that
news was similar to yesterday`s announcement about 2002 back taxes.
Hollinger International (HLR) tumbled over 2 1/2. The newspaper
publisher has not yet filed its 2003 annual report and it`s seeking a two
week extension to avoid being delisted from the New York Stock Exchange.
Hollinger publishes the "Chicago Sun Times" among other papers and its
former chairman, Conrad Black has been in hot water with the SEC.
Over on the NASDAQ, NASDAQ 100 (QQQQ) tracking stock falling $0.03.
Microsoft (MSFT) falling $0.14. The company`s pulling the plug on its
passport user ID system, which was supposed to make it easier for people to
surf and shop the web securely. Passport`s been disappointing, had
disappointing response from the public. EBay is also dropping use of that
Microsoft product.
Google (GOOG) rising $4.70 to a new high there.
Cisco Systems (CSCO) gaining $0.11.
Intel (INTC) was unchanged.
Taser International (TASR) also a new high, up $1.50
eBay (EBAY) gaining $0.20.
Oracle (ORCL) up $0.16.
Apple Computer (AAPL) up $0.36.
And Symantec (SYMC) gaining $0.60.
Action Products International (APII) surging over $1.50. It`s saw an
85 percent increase in sales of its toys in December.
CoTherix (CTRX) gained a little over 2. The FDA approved its Ventavis
inhaled therapy drug for pulmonary arterial hypertension. That stock`s
doubled since it went public in October.
And here`s Hi-Tech Pharmacal (HITK) which fell $1. The company said
the SEC is conducting a formal investigation of trading in the company`s
stock through the middle part of last year, apparently involving the
trading activity of certain officers or directors. They are unnamed.
And those are our stocks in the news tonight.
Nightly Business Report transcripts are
available on-line post broadcast. The program is transcribed
by eMediaMillWorks. Updates may be posted at a later date. The
views of our guests and commentators are their own and do not
necessarily represent the views of Community Television Foundation
of South Florida, Inc. Nightly Business Report, or WPBT. Information
presented on Nightly Business Report is not and should not be
considered as investment advice. Copyright (c) 2003 Community
Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED.
Terms of use.
12/30/04:
Market Stats
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 10800.30 -28.89 - .3
HIGH 10850.18
LOW 10799.71
NASDAQ COMP. 2178.34 +1.34 +.1
HIGH 2182.37
LOW 2176.40
VOLUME 828.7
PREVIOUS 926.4
UP VOLUME 438.0
DOWN VOLUME 368.4
DOW TRANSPORTS 3808.60 -1.69 - .0
DOW UTILITIES 336.86 +.70 + .2
CLOSING TICK +637
S&P 500 1213.55 +.10 + .0
S&P 100 576.10 -.43 - .1
MIDCAP 400 664.50 +1.53 + .2
REUTERS/CRB 283.90 -.40 - .1
NYSE COMPOSITE 7253.56 +11.32 + .2
VALUE LINE 404.84 +.66 + .2
RUSSELL 2000 653.06 -.28 - .0
DJW 5000 11987.82 +5.84 + .1
U.S. TREASURIES
5-YEAR NOTE 3.50%
Dec. 15,2009 99 13/32 +8/32 + 3.64
10-YEAR NOTE 4.25%
Nov. 15,2014 99 30/32 +20/32 + 4.25
30-YEAR NOTE 5.375%
Feb. 15, 2031 107 12/32 +1 4/32 + 4.87
LEHMAN BROS.
LONG BOND INDEX 1750.25 +8.15
DOW CLOSE 10800.30 -28.89 - .3
ADVANCES 1912
DECLINES 1349
NEW HIGHS 261
NEW LOWS 2
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
PFE Pfizer 27.01 -.25 -.9
LU Lucent Tech 3.75 -.01 -.3
GE GE 36.60 +.04 +.1
EMC EMC Corp 14.82 +.18 +1.2
FNM Fannie Mae 71.33 +.95 +1.4
C Citigroup 48.03 +.02 +.0
AKS AK Steel Holdings 13.89 -1.95 -12.3
TWX Time Warner 19.41 -.01 -.1
FON Sprint 24.89 +.01 +.0
NT Nortel Networks 3.48 -.01 -.3
NASDAQ CLOSE 2178.34 + 1.34 + .1
VOLUME 1,404.3
PREVIOUS 1,508.5
ADVANCES 1681
DECLINES 1386
NASDAQ ACTIVES
QQQQ Nasdaq 100 39.99 -.03 -.1
MSFT Microsoft 26.76 -.14 -.5
GOOG Google 197.60 +4.70 +2.4
CSCO Cisco Systems 19.42 +.11 +.6
INTC Intel 23.25 unch. unch.
TASR Taser Intl 32.59 +1.50 +4.8
EBAY eBay 117.77 +.20 +.2
ORCL Oracle 13.88 +.16 +1.2
AAPL Apple Computer 64.80 +.36 +.6
SYMC Symantec 25.45 +.60 +2.4
AMEX CLOSE 81.87 - 1344.86 - 94.3
INDEX SHARES
DIA DIAMONDS TRUST 107.84 -.43 -.4
QQQ NASDAQ 100 39.99 -.03 -.1
SPY S&P DEP.RECEIPTS 121.13 -.23 -.2
STOCKS IN THE NEWS
IIIN Insteel Inds 18.00 -1.85 -9.3
TONS Novamerican 50.95 -7.75 -13.2
NUE Nucor 51.38 -3.49 -6.4
OS Oregon Steel 19.34 -2.33 -10.8
X US Steel Corp 50.04 -2.90 -5.5
SBL Symbol Tech 17.24 +1.37 +8.6
BYH Sinopec Beijing 23.63 +2.02 +9.4
VIP Vimpelcom 35.78 +2.01 +6.0
HLR Hollinger Intl 15.68 -2.63 -14.4
APII Action Products 4.45 +1.56 +54.0
CTRX CoTherix 12.02 +2.04 +20.4
HITK Hitech Pharmacal 18.05 -1.00 -5.3
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