Today, the Labor Department announced that new claims for unemployment benefits rose to 442,000 for the week ended April 12, up from the previous week's 412,000.
Continued claims (those made by people who have been unemployed for a week or more) jumped from 3.5 million to 3.57 million for the week ended April 5.
Robert Brokamp to the rescue, with tips for what to do if you're laid off.
In today's Motley Fool Take:
- Fresh Air for American
- Discussion Board of the Day: AMR
- Sears' Sad Situation
- Quote of Note
- Got French?
- David and Tom Gardner's Scorecard
- Quick Takes: Pepsi , General Motors, Peeps, more
- And Finally...
If you see the pilots, mechanics, and even ticketing agents of American Airlines treating the struggling air carrier's flight attendants extra special today, you can thank some last-minute union concessions for the added attention.
With parent company AMR
All told, the sum of the airline's concessions should help save the company $1.8 billion in annual operating costs. That's a lot of money, until you realize that the company needs a whole lot more.
AMR is $20 billion in debt right now. Even before one-time charges, the company still lost $2 billion last year and $1.4 billion the year before that.
If you saw the silver lining, maybe it's best to get off your cloud. Sure, you can take the $1.8 billion in potential savings, lay it over 2001's shortcoming of $1.4 billion and arrive at a theoretical profit. The problem is that the airline industry has changed dramatically over the past two years.
Most of the major carriers, American included, have been scaling back their flights. While the concessions will lower AMR's breakeven load factor substantially from last year's unfeasible 88%, there's something else missing from the AMR flight plan to health -- pricing flexibility.
It's not just Southwest
They started out lean, so there is no need for painful trimming and reinvention. Price wars have morphed into everyday low fares at levels where steep concessions are still a few notches removed from the bloated carriers' choke points.
Yes, AMR made major strides last night towards assuring its near-term survival, but will it be worth it, or is it just like waxing your car ahead of the rain cloud? Unless the passengers come back in droves, this might prove to be little more than a speed bump on the way to obsolescence out on the tarmac.
Will this bird fly? That's a question being posed on our discussion boards right now. Are the concessions enough? Will AMR also have to reinvent itself? How did the company's debt get this far out of hand? All this and more -- in the AMR discussion board. Only on Fool.com.
It probably seemed like such a good idea at the time. Sears
For a long time, it did work well, with Sears' healthy and growing credit unit driving the bulk of the venerable retailer's operating profits.
My, how times changed. Management must rue the day the company decided to sell more than just washing machines, clothes, and tools. For over two years now, as consumer default rates have risen, Sears has felt the bite of its customers' own lingering obligations.
Last month, Sears announced it would like to sell its credit division, but nothing has happened yet. In the meantime, as the just-announced quarterly results demonstrate, the credit monkey isn't off its back yet.
The credit division's operating profits for the first quarter tanked 10.8% to $395 million, a drop of $48 million. The provision for uncollectible accounts grew by $100 million, or 27%. And the net charge-off rate for the period increased from 5.43% to 6.11%. Ugly stuff.
What's also scary about this is that Sears' credit operations have moved beyond making up a chunk of operating income. In this quarter, the unit carried all of the company's operating income, with retail contributing a $23 million operating loss. So, you've got a very sick limb holding up an equally ailing body. Clearly, it needs to amputate its credit arm, but the rest of the body's not looking so healthy, either.
Sears says it will continue to "evaluate strategic alternatives" for the credit segment. Hopefully, it won't forget to juice its weak retail business at the same time.
"Wine makes a symphony of a good meal." -- Fernande Garvin, The Art of French Cooking
Sometimes protests of conscience speak volumes. Though some American groups actively promoted boycotts of French products over the country's active opposition to the U.S. in Iraq, it seems that many less politically active folks are quietly choosing to find alternatives to "Produits de France," as well.
Will it do any good? Apparently, the answer is yes, as French business organizations are beginning to complain bitterly that their government's position is hurting business.
Last year, the U.S. accounted for $1.8 billion in sales of French wines and spirits, a quarter of France's total exports. These and French cheeses may be the most obvious French products in America, but there are plenty more -- some that you would never consider.
Pernod Ricard owns Wild Turkey. Maybelline is one brand of French cosmetics conglomerate L'Oreal (OTC: LORLY). Universal Studios? Vivendi
Most concerning to the French ought to be the fact that this is such a quiet process -- not emotional at all for many. Which means that a long-term tectonic shift in brand value may be in motion as we speak. Much as the same way a watch marked "Made in Switzerland" garners a premium over the identical watch "Made in Malaysia," so, too, does the brand appeal of France mean big bucks. That Frenchness is now a liability, and that spells trouble.
Or opportunity. Because wine drinkers will continue to consume, as will folks who like the taste of stinky cheeses. And women will continue to buy the "hope in a bottle" offered by cosmetics. So, it may be a good time to look at investment ideas in brand alternatives to the big French offerings. Estee Lauder
It may be that this is temporary, and the world will go back to the way it was. But brand equity, as we have learned, can be a fragile thing, and habits, once changed, may become permanent.
Searching for stock ideas? The Motley Fool Stock Advisor, written each month by co-founders David and Tom Gardner, features an easy-to-follow stock scorecard so you can monitor the performance of their head-to-head investment picks in a multiyear battle. (You should hear them going at it here at Fool HQ...). Since last April, Tom is walloping the market with a 6.1% average annual return, and David is walloping Tom with a 19.1% return. The S&P 500 has lost 6.2% over the same time period.
Soft drink and snack food company Pepsi
As we pull into this Easter weekend, let's give some props to Peeps. The little bundles of marshmallow joy turn 50 this year, and they've never looked better. Produced by the private confectionery company Just Born, Peeps were originally created by a team of 80 women squeezing marshmallow from pastry tubes. Now, Just Born can turn out 4.2 million Peeps a day, and they come in many different shapes and colors. Long live the Peeps!
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News page.
- Tom Jacobs explains why the home mortgage is one of the last and most effective forms of forced savings.
- Reebok's back, baby. LouAnn Lofton sports the goods.
- Readers share smart ways to get rebates in Part 2 of Jeff Fischer's series.
- Modest sales growth clouds Mattel's stellar cost control and debt reduction.
- In Hot Topics, is the Berkshire pain almost over? One Fool thinks so.
- In Fool's School, which financial records should you keep?
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim