"Troubled times produce heroes." -- Chinese proverb
BREAKFAST WITH THE FOOL
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While Congress works on legislation that will provide financial aid to airlines, President Bush will ask lawmakers to hand over $5 billion in immediate cash to the shell-shocked industry. The Associated Press, quoting an anonymous administration official, says the cash would be coupled with help for the airlines' insurance liabilities. The House of Representatives hopes to rush through a $24 billion aid package that will be quickly sent to the Senate, and could possibly reach the president's desk before next week. That package would include loans as well as some cash that would not have to be repaid. Continental Airlines (NYSE: CAL) CEO Gordon Bethune says the industry is currently losing $15 million per hour, and the package is needed to restore some stability to the situation. In the meantime, more airlines announced staff reductions after the market closed yesterday. First, Mesa Air (Nasdaq: MESA) said it would cut 700 jobs and implement a temporary 10% pay reduction for most employees. Senior management's pay has already been reduced by 20%, and both the CEO and the company's president took a 50% cut. Later, heavyweights American Airlines parent AMR Corp. (NYSE: AMR) and United Airlines parent UAL (NYSE: UAL) announced layoffs of some 20,000 employees each. That represents 14% of American's staff, and 20% of United's. Following Boeing's (NYSE: BA) actions Wednesday, job cuts now total almost 100,000 people industry wide. One company bucking the layoff trend, however, is SkyWest Airlines (Nasdaq: SKYW). COO Ron Reber says no layoffs are in the works. The company's "plans for growth are still intact," he says, and it still plans to take delivery of the 106 Canadair Regional Jets it ordered from manufacturer Bombardier. SkyWest operates as United Express and Delta Connection in 74 cities.
Media companies have also been adversely affected by the terrorist attacks. Knight-Ridder (NYSE: KRI) and Tribune Co. (NYSE: TRB), which teamed up in August to acquire online job recruitment site Headhunter.NET (Nasdaq: HHNT), both came out with bad news after the bell yesterday. Knight-Ridder CEO Tony Ridder says many advertisers pulled ads after the attacks, and, combined with the increased expenses due to extended coverage of the tragedy, he expects about a 25% year-over-year drop in earnings per share. Citing the same reasons, Tribune expects third-quarter and full-year earnings to come in below expectations. The Securities and Exchange Commission says it doesn't yet know if those associated with last Tuesday's hijackings also exploited the markets in order to profit from the attacks. The agency says it's "vigorously pursuing all credible leads," but wouldn't release any other details. Networking equipment maker 3Com (Nasdaq: COMS) reported fiscal first-quarter results that saw revenue fall 58% from the same period last year. The company also "found opportunities" to reduce staffing by another 1,000 people and expects to end the quarter with 6,000 workers. It employed 12,000 last November. The nation's number-two hospital operator, Tenet Healthcare (NYSE: THC), says it will top estimates when it releases fiscal first-quarter earnings on Oct. 3. Its expected earnings per share of $0.65 - $0.67 would represent 35-40% growth over last year. Rex Moore's mental acuity has shown a 3%-5% year-over-year decrease, though it's up inconsequentially sequentially. At press time he held no positions in any of the companies mentioned in this article. The Motley Fool is investors writing for investors.
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